Two events influenced Schneider Electric CIO Elizabeth Hackenson to distribute more decision-making authority throughout the company's IT organization. “During the pandemic, we needed people to make as many local decisions as possible,” which she says is essential to keep operations moving in the 100 countries in which the company operates. More importantly, the company's drive toward digital transformation required IT to accelerate its decision-making processes. Schneider Electric's IT organization achieved this goal by reducing the layers for budget and technology-related approvals and trusting that managers and employees would make as many of these decisions as possible within the framework of "delegated paths of authority." of the company
Royal Caribbean Cruises, which was forced to close for 18 months during the pandemic, initially went in the opposite direction, putting heavy pressure on the decision-making authority. “We reduced the time they were making decisions and how much we wanted to make them,” says CIO Martha Poulter. Today, however, the company has a structure for delegating more technical and expense-related decisions, and most decisions are now made at a lower level. “The goal is not to slow down teams, but to have continuous and fast governance,” she says.
Learn from your peers: check out ourCIO Status Reportabout the challenges and concerns facing CIOs today. | discover the7 skills of successful digital leadersIt's insecrets of highly innovative CIOs.
What's unusual is that these organizations are delegating more financial and technical decisions, says Daniel Sanchez-Reina, a Gartner vice president and analyst. “CIOs tend to delegate only technical things,” he says. "Financial issues are a hot topic for most CIOs." During the pandemic, the delegation of decision-making authority has increased in many organizations, but in most cases, final approvals for financial decisions have remained centralized. This hesitancy to delegate, combined with complex and multifaceted approval processes, slows down organizations, frustrates employees, and creates approval bottlenecks.
That's a problem when you're digitizing the business, says Joe Atkinson, PwC's director of product and technology. “There is a greater reliance on IT organizations to achieve digital transformation and an expectation of speed,” he says.
The CIO's hesitancy to delegate, especially when it comes to financial decisions, often stems from a fear of failure due to poor decisions and loss of control. But Sanchez-Reina says, "The CIO doesn't have to make all the financial decisions, especially if they're not critical things that make a sustained difference down the road." They just need visibility.
Giving up control: the rewards outweigh the risks
The benefits of more delegation include faster decision-making speed and a greater sense of ownership and responsibility, says Cisco Sanchez, Qualcomm's senior vice president and CIO, who has increased the pace of delegation. “The quality of work has improved and the culture of our teams is stronger,” he says, adding that delegating more decision-making authority gives potential leaders in the organization the opportunity to demonstrate their skills and rise through the ranks. . “When you let go of control, you get more back,” he says.
As for fall risk, he says, "I'd rather have a decision made and it be the wrong one than not make a decision at all because it reduces our speed and agility."
CIOs can take steps to minimize the risks of delegated decisions resulting in bad decisions by ensuring that the people to whom the IT organization delegates have the correct skills and knowledge, as well as an understanding of the overall business objectives and frameworks. architectural frameworks within which their decisions are made. should fit
Perhaps the biggest concern is cybersecurity, Atkinson says. “When you distribute decision making for the release of technology environments, you run the risk of having environments that are not well managed for cybersecurity purposes,” she says. CIOs can address this by setting standards and encouraging more collaborative decision making.
Royal Caribbean's Poulter believes teamwork is an essential component of risk reduction. The security team is just one participant in a decision-making team that should include application, architecture, infrastructure and other experts, she says. It is extremely important to empower teams to come together and make decisions across domains.
There's also the risk that the person you're replacing makes a decision for the wrong reasons, since knowing a technology means they can move faster, Atkinson says. “But they don't appreciate the later impact of that decision,” she says. “That understanding of the end-to-end experience is why CIOs tend to retain decision-making power.” While the risks are worth it when it comes to delegating such authority, you need to prepare managers and staff before proceeding. “Don't switch to a distributed decision-making model without providing proper guidance for your team or you'll be at greater risk,” she says.
Ultimately, says Gartner's Sánchez-Reina, the benefits of more delegation outweigh the risks because it allows CIOs to focus on more strategic business objectives. "You have to allow people to fail at the risk of the CIO's reputation, because the risk of not meeting the CEO's expectations is always greater."
Poulter adds that it's not about having a risk-free environment. “It's about clarifying our risk appetite and getting our leaders and individuals to understand their decision rights,” she says.
Execute: define decision structures and policies
To support distributed decision making, most CIOs have a framework or set of guardrails to help subordinates make good decisions. Qualcomm's Sanchez sets spending limits for financial decisions at different levels of management, for example.
“We also do tons of training,” she says, as well as supporting people so that if they're not sure, they can “pull the rope” for help. But the need to do so occurs less frequently as empowered decision-makers become more comfortable, she says. “We make sure people understand the guidelines, where the bumpers are, and when to ask for help,” she adds. “We want them to feel confident that they can make decisions, and we support them.”
Poulter also places barriers to decision making based on the size of spending at Royal Caribbean and differentiates between "micro-decisions" that are easier to delegate, such as deciding on product features, versus "macro-decisions," where the impact is on a larger scale. or less. it has a broader impact on the business. He also considers the long-term ramifications of the decision for the organization. “Are there architectural issues, what is the technical impact, are we creating efficiencies?” she says. “These are the areas where we have leadership eyes.”
Royal Caribbean Cruises
Within its structure, Royal Caribbean does not try to micromanage. “Instead of creating politics around decision making, we try to build visibility,” he says. The leadership team evaluates at the beginning of a project, but in many situations, they are not usually involved in subsequent approvals. “After that initial conversation, we established whether there needed to be a cadence of additional registrations in the future,” she adds. "How far down the track can they go before we check again." If it's a high-stakes project, they can double check, Poulter says, but in many cases, they trust teams to move forward on their own.
Schneider Electric has a firmer structure, and Hackenson has laid out decision paths that everyone must follow. “We have clear rules about architecture, vendors, and strategic partners,” he says. "We try to set expectations and options, and as long as they stay within the options, I don't get involved." Schneider also placed more authority on what Hackenson calls "power couples," when an IT specialist is paired with someone from business operations or another business function.
Initially, Hackenson and other executives kept constant oversight of major decisions on these projects. But because they weren't involved in the day-to-day details, most of the time in these monthly or quarterly meetings was spent updating leadership rather than making decisions.
“We were holding them back,” he says, so the executives decided to trust the power couple's team to make those decisions. “It was the first time in my career with such a big program that I decided to take a step back, but it was the right decision,” she says. "People are happier, it's about empowerment for them and they feel more responsible because it's their decision."
Delegate more, but be smart
Most CIOs expect to see continued growth in their budgets as digital transformations unfold, says PwC's Atkinson. “They will have to delegate more because their scope and span of control continues to expand.” The question is how to reap the benefits of more distributed delegation of technical and financial decisions, including faster decision making, more agile and engaged teams, and a greater sense of responsibility and accountability while minimizing and accepting risk.
“The hardest thing for a CIO is learning to let go and let people do their jobs,” says Hackenson. "You feel like you have to control every decision, but it gets to the point where you can't."
Reducing downside risk means having a clear decision framework, setting technical and financial decision limits, and maintaining visibility into the technical and financial impacts of delegated decisions. “Create a decision-making chart not only for technical issues, but also for financial decisions,” says Gartner's Sanchez-Reina. "If you have five, six levels of management, each level should have its own policy." But it's not just leadership that you should focus on when delegating decision-making authority, says Qualcomm's Sanchez. “It starts at the top, but you have to push it to the bottom if you want to go full speed ahead,” he says, adding that just make sure the people you empower understand the mission and communicate effectively with others. your team and “Identify the risks you don't want anyone else to take,” he says. "Focus on what you need to boost the business and delegate the rest because they will make the best decisions."