There is a somewhat controversial, but influential, doctrine that has ruled the corporate world for a long time. Economist Milton Friedman proposed that the only social responsibility of a business is to increase profits and maximise returns to its shareholders.
Not every CEO and business owner will agree with this approach, but it is impossible to deny its significance to business decision making. But that was before the pandemic.
The outbreak proved an inflection point in the way we do business. Suddenly companies had to grapple with dwindling customers; they had to shave their workforces down to skeleton crews; and they had to sustain themselves in spite of supply chain disruptions and battered economies.
This triggered a shift from a shareholder-centric model for decision making to a richer, good-governance model — one that puts the health and resilience of a business at its centre. In a post-COVID era, businesses should be geared for sustainability and for continuity.
The framework for executive decision-making should be updated too, it should take into account future proofing and incorporate agility, decentralisation and data-driven insights.
The COVID-19 crisis forced every executive to make quick decisions, often under pressure and with tremendous impact. These were mediated entirely by technology. This was the most important lesson, one that has permanently altered the decision-making process. So, organisations have now removed boundaries and broken down silos to streamline the decision-making process.
Major business decisions are taken in single meetings, with minimal participants. In a post-COVID world, afflicted with flux, business decision making needs to be faster and more responsive.
If you want agility, you can’t micro-manage — and this applies to business decision making as well. Businesses have rightly traded in cumbersome bureaucracies for leaner, flatter organisational structures, peopled with empowered frontline leaders. Ideally, the company structure must be repurposed from a hierarchy to a dynamic network of teams.
This will allow the system as a whole to respond lot faster to challenges as well as opportunities. Delegation and decentralisation is the key to post-pandemic decision making.
Organisations need to investigate the effects of the pandemic on their specific business, their specific industry. Decision making must take on a fact-based approach. Data-driven decisions can make an organisation more resilient — that’s how some businesses were able to maintain their dominant positions in the market during the pandemic while so many went into freefall.
These organisations are also more likely to excel when the market recovers. Businesses should embed data, its analysis and reasoning into the everyday decision-making.
Business decision making has changed more in the last year than it has in several decades. Just because these are unprecedented times doesn’t mean businesses have to rely on intuition or fortune to make good decisions…
The writer is Managing Director, Metworld DMCC.