In this white paper, Greg Spira (Oliver Wight Americas) and Waj Azim (Becton Dickinson) take a closer look at the decision-making deficit — the gap that occurs when organizations have strong planning processes in place but still struggle to make timely, informed choices.
Many companies invest in frameworks like Integrated Business Planning (IBP) with the expectation of greater alignment, predictability, and performance. Yet when the results fall short, the process itself often takes the blame. In reality, the issue isn’t usually the design of the process; it’s the organization’s ability (or willingness) to make decisions. IBP and similar approaches are powerful enablers, but they can’t replace the human capability required to act with clarity and speed. Without that, even the most sophisticated planning process will stall.
This paper highlights the warning signs of a decision-making deficit, the risks it creates, and the strategies and best practices leaders can use to strengthen decision-making capabilities across their organizations.
Beyond the Process: Overcoming the Decision-Making Deficit
Structured business planning processes like Sales & Operations Planning (S&OP) or Integrated Business Planning (IBP) have become standard practice for businesses of all varieties.
These frameworks, and more importantly, the planning processes that support them, have been developed through decades of continuous improvement and evolution of enterprise planning best practices. When implemented well, a robust planning process will reinforce proper decision rights, logical connectivity of cross-functional processes, and cultural shifts enabling strong teamwork and delivering improved business results.
Organizations that invest in business planning processes should rightly expect significant improvements in alignment, predictability, and overall performance. These processes promise to harmonize strategy, synchronize operations, and ultimately drive superior business results. However, when organizations are underwhelmed by the results, they tend to blame the process, deeming it flawed or ineffective. While a well-designed process is a necessary foundation, the real bottleneck is often a lack of decision-making capability within the organization. IBP and similar frameworks are essential tools, but they cannot replace the need for people to make sound and timely business decisions.
When an organization lacks the capability or willingness to make timely, informed decisions, despite having robust planning processes in place, it will experience a decision-making deficit.
Running a business well requires coordinated decision-making. The level of maturity that an organization can expect from any planning process depends on the organization’s capability to make decisions. Similarly, decision-making depends on the organization’s ability to share and synthesize information, and the decision-makers’ ability to use that information wisely in making decisions. These gaps often go unnoticed during process design. Oliver Wight always reminds their clients that a process like IBP won’t make decisions for them. It will, however, often shine a bright light on what decisions are required. It’s then up to the leaders of the organization to have the capability and courage to act.
The Decision-making Deficit
To illustrate this challenge, let’s review the structure of the demand planning step that we see in many companies. After the month closes, a demand planner will generally compare last month’s actual orders against the plan and check for outliers that may have hurt forecast accuracy. They will then adjust forecasting algorithms for a better fit. This will be followed by discussions with marketing, product management, and sales counterparts to collect and incorporate new portfolio changes as well as market and customer insights. An updated demand plan will be developed and presented in a demand review or consensus forum with a cross-functional team, and consensus on the changes will be reached. The new demand plan will then be published in the demand planning system of record. This is a typical process, with a good level of discussion, a monthly discipline, and engagement of cross-functional partners. However, the maturity of discussions often remains stunted.
If this routine sounds familiar to you and resembles what you experience in your organization, consider the following questions:
- What decisions are being made, beyond just “what should the demand plan volume/value be?”
- What sort of decisions could or should be made? Rather than just predicting outcomes, could you be shaping them?
- If you wanted to make decisions to influence demand, are the right people involved? Is the right information to support those decisions available?
Now contrast this with the approach used at a consumer goods company, illustrated in Figure 1, where the monthly conversation happens in the following sequence:
- A demand planner reviews the month-end data and collaborates with the marketing manager and the finance analyst to review not only the demand plan metrics, but also the financial results and business trends while adjusting for new marketing insights and portfolio changes.
- The implications of this analysis and collaboration are then synthesized for the portfolio director, where the discussion graduates to multiple product lines and their interactions within the portfolio, debating the phase-in/phase-out of the different product lines and price points.
- The discussion then moves to the Vice President of Marketing, who drives the discussion to multi-tiered wargaming. This involves simulating competitive scenarios to test and refine business strategies in the market, with a focus on optimizing the marketing mix (product, price, place, promotion). This is a clear transition from tactical demand planning into forward-looking strategic scenario planning and decision-making.
- The results of these discussions are then presented to the president of the overall business for review and communication to the broader organization.
The second example illustrates an organization that embraces the process as a way to run the business. They use the process to make business decisions. In both cases, there is a monthly discipline, and a similar process is followed. The difference lies in the capability and willingness of the organization to use the process to make decisions.
Decision-making Capability
When decision-making stalls, it often signals deeper issues within the supporting capabilities of an organization. There are many foundational “building blocks” that lead to good decision-making. Here are a few examples:
Timely analysis of information: This involves the ability to quickly and accurately assess relevant data, identifying key trends, and drawing meaningful conclusions that inform choices. It’s about extracting the signal from the noise and avoiding getting bogged down in irrelevant details.
Balancing available data with the need for swift action: Decisions often need to be made with incomplete information. This includes knowing when to act, even without perfect data, and weighing the risks of acting too quickly versus the costs of delaying.
Moving beyond analysis paralysis to reach conclusions: Some individuals and teams fall into the trap of endless analysis, constantly seeking more data and validation, but never reaching a decision. Effective decision-makers know when they have enough information to make a call and are willing to commit to a course of action.
Taking ownership and accountability for decisions: Leadership requires the willingness to take responsibility for the outcomes of one’s choices, both good and bad. This fosters a culture of ownership and encourages individuals to make decisions with the organization’s best interests at heart.
These capabilities, like any, are developed with time and experience. An example of that progression, illustrated in Figure 2, was shared by a CFO who described what they needed to see in their team to earn the right to make decisions.
Capability starts with clearly and effectively explaining what has happened in the past. For example, explaining why sales were increasing, or why margins were decreasing, pointing not just to data, but also to insights that would answer why those things were happening. This capability signals an understanding of how the business works.
With a solid understanding of what truly drives the business, a person becomes capable of predicting future outcomes. Over time, a person with a track record of accurately predicting business outcomes will be trusted to make recommendations to influence those outcomes. Finally, once a leader has shown they can regularly make good recommendations, they can be empowered to make decisions on their own.
Like all capabilities, those supporting decision-making must be consciously fostered and developed. Leaders have an important role to play not only in making decisions but also in developing that capability. Like a muscle, decision-making must be exercised to stay in shape.
At one company, an executive was well known for regularly questioning and often overriding the recommendations brought to them by their team. The team, initially motivated to provide timely analysis and well-researched recommendations, soon learned that their efforts were futile. Their analysis and insights were rarely valued (at least not openly), and their recommendations were routinely dismissed or changed. The executive was micro-managing and failing to empower their team.
Consequences of the Decision-making Deficit
The consequences of a decision-making deficit can be substantial for any organization. When decisions are delayed or avoided, valuable market opportunities may be missed—such as entering a new market, launching a product, or responding to a competitor’s move. Without strong decision-making capabilities, an organization may find itself unable to adapt to new challenges or seize emerging opportunities, leaving it at a competitive disadvantage.
Moreover, inefficiency and wasted effort often result when decisions are not made in a timely or effective manner. Teams may spend excessive time gathering data that ultimately goes unused, or projects may stall due to a lack of clear direction. This not only drains resources but also undermines morale and momentum. The inability to make and act on decisions can ripple across an organization, affecting everything from strategic initiatives to day-to-day operations.
Ultimately, a decision-making deficit can undermine the very purpose of implementing a business planning process. If the process is not supported by individuals and teams who are capable and willing to make effective decisions, the organization will not realize the full potential of its investment.
Over time, the team members stopped putting in the effort required to make sound decisions. They reasoned that since the executive would ultimately make the decision, regardless of their input, there was no point in investing significant time and energy in the process. Without exercise, this led to a gradual erosion of their decision-making capability, which in turn further eroded trust in their leader.
Unfortunately, people are often put in decision-making positions before they are ready or without the right support structure around them. The old saying that “it’s lonely at the top” is true – the higher you go in an organization, the fewer places a leader can turn to for help. Here’s an example that illustrates why this is an issue, and how a lack of capability can create real problems for an organization.
In many companies – especially publicly traded ones – top-down guidance on revenue and profit expectations is common. Market and shareholder expectations often shape the annual budgeting process. However, these top-down targets rarely align naturally with the bottom-up plans developed by product managers, marketers, and sales teams. Gaps between the two are common. While the existence of a gap isn’t inherently problematic, how leaders respond to it can be.
Leaders must be able to identify the gap and understand its root causes. This requires grasping the assumptions and perspectives behind both the top-down and bottom-up views and then reconciling them. For instance, an electronics company had experienced several years of double-digit revenue growth. Shareholders expected that trend to continue. What they didn’t know was that a new competitor was about to enter the market – likely impacting future growth.
Without strong analytical capability, leaders might simply accept the top-down targets and impose them on their teams. This often leads to frustration and disillusionment, as leaders are unable to explain what it will take to meet the goals and instead resort to vague exhortations to “work harder.” This approach sets the business up for failure. In contrast, leaders who can articulate the nature of the gap are better positioned to manage expectations—internally and externally—and to identify the support needed to close it.
Decision-making Behaviors
While decision-making capability is foundational, there must also be a desire and willingness to use those capabilities to make decisions. When addressing a decision-making deficit, the behavioral aspects of decision-making should not be overlooked. A team might be well equipped with the analytical capability to make decisions, but be held back by risk aversion, fear of being wrong, or unclear decision-making authority.
Think back to the earlier example of publicly traded companies facing a gap between top-down expectations and bottom-up realities. Even when a leader understands and can explain a gap, they may hesitate to raise it. This reluctance can stem from pride, fear of failure, or discomfort with uncertainty. Often, the gap is clear, but the path to closing it is not. Still, early disclosure of bad news is always better than late surprises. Leaders who are confident enough to surface gaps early give themselves and their teams more time to explore solutions. This opens the door to scenario planning and wargaming – tools that help identify realistic paths to achieving business objectives. But doing so requires a high degree of confidence and courage.
Here’s another example: A company facing inflationary pressure decided to raise product prices to protect margins. The decision was made despite significant data to suggest that the price increase would be challenging to execute. This decision was made at the highest level by a leader who lacked the behavioral readiness to face those implications. They simply didn’t want to admit that their portfolio strategy wasn’t working.
As the price increases cascaded through the organization, the company lost significant volume and was priced out of key markets. Large customers, especially for commoditized products, turned to competitors. The result was not only a revenue shortfall but also a hit to overhead absorption, as fixed costs remained unchanged while volumes dropped.
Initially, the product leader placed blame on the sales organization, convinced that they weren’t doing enough to communicate the product value proposition to customers. The sales organization, in turn, blamed what they believed was a flawed product strategy. Eventually, both groups blamed their internal processes for the failure. In reality, the process was more than sufficient. Leaders simply didn’t want to face the real issues and accept that they may have made mistakes. Nobody was taking ownership of the problem.
Had the decision-makers moved beyond a simplistic “pass the buck” mindset and engaged in scenario planning, they could have explored more balanced options. This, however, requires a high level of maturity and a willingness to explore difficult alternatives. A more thoughtful approach might have preserved both margin and market share, but may have required a change in portfolio strategy. Ultimately, these are the sorts of difficult problems that should be dealt with by the most senior leaders in the company.
Here are a few examples of behavioral “red flags” to watch out for in your organization:
- Risk aversion and fear of being wrong: Individuals may avoid making decisions, particularly those with significant consequences, due to a fear of making a mistake or being criticized. This can lead to inaction and missed opportunities. A commonly observed behavior is the requirement for leaders to have the “meeting before the meeting,” where they will review information before it is shared with a wider audience to minimize the risk of criticism or embarrassment.
- Unclear decision-making authority: When it’s not clear who is responsible for making specific decisions, there is often confusion, delay, and a diffusion of accountability. People may be hesitant to act without explicit authorization, even when a timely decision is needed.
- The desire for excessive data and analysis as a stall tactic: In some cases, the demand for more and more data is not a genuine desire for better information, but a way to avoid making a decision. This “analysis paralysis” can significantly slow down the decision-making process and prevent the organization from responding quickly to changing circumstances.
Cultivating Decision-making Capability
To realize the full potential of business planning processes, organizations must actively cultivate and enhance the decision-making capabilities of their people. This requires an approach that addresses the various factors that can hinder effective decision-making.
Here are some strategies and best practices:
Setting Time Constraints
One of the most effective ways to combat analysis paralysis is to impose clear time constraints on the decision-making process. When individuals and teams know they have a limited time to make a decision, they are forced to prioritize the most critical information, focus on the essential issues, and avoid getting bogged down in unnecessary details. Techniques like short-term goal setting can be used to break down complex decisions into smaller, more manageable steps with specific deadlines. Additionally, adhering to deadlines in planning processes like IBP involves establishing clear timelines for each stage of the planning process and ensuring that these deadlines are consistently met. This approach requires strong process discipline, reinforced by leadership. There must be consequences for missing deadlines, and issues cannot routinely be allowed to be “taken offline” and left unresolved.
Embracing the “Roughly Right” Approach
In many business situations, perfect information is simply not available. Insisting on absolute certainty before making a decision can lead to costly delays and missed opportunities. Instead, organizations should encourage a “roughly right” approach, where decision-makers are empowered to make timely decisions based on the best available information, even if it is incomplete or imperfect. This involves recognizing that perfect information is rarely attainable or necessary and accepting that some level of uncertainty is inherent in most business decisions. It also involves prioritizing timely decisions over exhaustive analysis, focusing on making decisions quickly and efficiently rather than striving for absolute precision. Additionally, it requires overcoming the desire for more and more information by training individuals to identify the point at which additional information provides diminishing returns and to make a decision based on what they already know.
Fostering Open Dialogue and Critical Thinking
Effective decision-making depends on open communication, constructive challenge, and rigorous analysis. Organizations should foster an environment where individuals feel safe to question assumptions, challenge conventional thinking, and express differing opinions without fear of consequences. This involves promoting a culture of intellectual curiosity where people are encouraged to ask probing questions that reveal hidden biases or flawed reasoning. It also means creating a space where healthy debate and dissent are welcomed, ensuring everyone feels heard regardless of their position. Additionally, it’s important to make sure that all key assumptions behind a decision are clearly documented, shared, and reviewed by relevant stakeholders.
Incorporating Scenario Planning
Scenario planning is a strategic approach that involves developing a set of plausible future scenarios, each based on different assumptions. These scenarios are not intended to predict the future but serve as exploratory tools that encourage decision-makers to think creatively about potential developments and how their organizations might respond. Rather than focusing on forecasting a single outcome, scenario planning allows individuals to explore a range of possibilities, which can free them from the pressure of trying to predict what will happen and instead help them consider what might happen.
Incorporating scenario planning into the business planning process can significantly enhance decision-making capabilities. It improves the analysis of information by requiring decision-makers to consider a broader array of data and viewpoints, leading to a more thorough understanding of the issues involved. It also strengthens the ability to balance data with the need for swift action, as considering multiple scenarios enables the development of contingency plans and better preparedness for rapid changes. Furthermore, when decision-makers are actively involved in creating and evaluating scenarios, they gain a deeper appreciation of the uncertainties and trade-offs, which fosters a stronger sense of ownership and accountability for the decisions made.
Promoting Accountability and Ownership
When individuals are held accountable for their decisions, they are more inclined to dedicate the necessary time and effort to ensure those decisions are well-informed and effective. Likewise, when people feel a sense of ownership over the decision-making process, they are more motivated to engage actively and strive for the best possible outcomes. This sense of accountability and ownership can be cultivated by clearly defining decision-making roles and responsibilities, ensuring that everyone understands who is responsible for which decisions and that they have the authority and resources to act effectively. It also involves empowering individuals to take ownership of their decisions and the consequences, granting them the autonomy to operate within their areas of responsibility while holding them accountable for both successes and setbacks. Additionally, establishing performance measures that reward effective decision-making—such as including it as a key performance indicator and recognizing individuals or teams who consistently make sound and timely choices—can reinforce this culture of responsibility and engagement.
It’s important to note that through all these strategies, leaders play a crucial role in shaping the decision-making culture of an organization. They must model the behaviors they expect from others, empower their teams to make decisions, and create an environment where effective decision-making is valued and rewarded. To support time-constrained and “roughly right” decision-making, leaders must demonstrate a willingness to support decisions made with less-than-perfect information and adhere to deadlines. They must foster a sense of urgency around decision-making, emphasizing the importance of timeliness without sacrificing quality.
Perhaps above all else, leaders should have little tolerance for those who blame the process. Instead, they should expect those people to contribute to solutions and process improvement. If people stay focused on decision-making, then the needs of the process to support decision-making should remain clear.
Conclusion
While frameworks like IBP provide essential structure, it is the organization’s decision-making capability— not the process itself—that determines success. The success of any planning initiative ultimately hinges on the ability of individuals and teams to make sound and timely decisions.
Organizations must therefore prioritize the development of decision-making capability. This involves:
Driving timely action through clear time constraints and deadlines.
- Encouraging pragmatic choices by embracing a “roughly right” mindset over perfectionism.
- Fostering a culture of inquiry through open dialogue and critical thinking.
- Building ownership by clearly defining roles and holding individuals accountable.
- Preparing for uncertainty with scenario planning and strategic foresight.
- Empowering leadership to model and reinforce these behaviors consistently.
- Clarifying value expectations at each organizational level to ensure decisions are made at the right altitude.
- Translating vision into action by defining a clear end state and measurable milestones.
By embedding these principles and cultivating a culture of effective decision-making, organizations can transform planning from a procedural exercise into a strategic advantage, leading to improved business outcomes, increased agility and competitiveness, and a more sustainable path to long-term success.