Principles

Many leaders see their value in making decisions.

Important clients, pricing, recruitment, project priorities, investments and problems all come to them.

The leader listens, analyses and decides.

The more the company grows, the more decisions reach them. The leader's calendar fills up, and their working day becomes one long sequence of questions and approvals.

From the outside, this may look like strong leadership.

In reality, the company may be built around one person's decision-making capacity.

If a leader must make every important decision personally, they have not built a strong organisation.

They have built a system whose maximum speed is limited by their own time, attention and information.

A good leader does not make the most decisions in the company.

They create the conditions in which the right people can make good decisions even when the leader is not in the room.

The number of decisions does not show a leader's impact

A leader can make dozens of decisions a day and still be the company's greatest bottleneck.

They approve prices, review proposals, resolve issues between employees, set priorities and intervene in client problems.

Everything moves.

But only when the leader is available.

When they are on holiday, decisions begin to pile up. People defer responsibility or send the leader messages. Some decisions are made, only to be reversed later.

The organisation quickly learns that waiting is the safest option.

The leader may think that people are not independent.

In reality, the company has taught them that independent decision-making is not truly part of their role.

A leader's value therefore does not lie in the volume of decisions they make.

Their impact depends on whether the company's decision-making capacity grows with its headcount or remains contained within one person.

When every decision reaches the leader, clarity is usually missing

People do not always ask the leader because they are unable to decide.

They may ask because the company has not made it clear:

• which outcome matters most;
• which priorities apply;
• what level of risk is acceptable;
• who is accountable;
• which decisions a person may make independently;
• when others need to be involved;
• which client is right for the company;
• when an exception to the standard may be made.

When these answers are missing, asking the leader is rational.

The leader holds context that the organisation does not.

They know the client's history, the financial position, previous agreements, strategic plans and the owners' expectations.

The employee sees only a small part of the whole.

The problem is not that the leader knows too much.

The problem is that the knowledge required to run the company properly is not available to the rest of the organisation.

Delegating activities is not delegating decisions

Many leaders say that they delegate.

In reality, they hand off activities but keep every choice for themselves.

An employee may prepare a proposal, but the leader approves the price.

A project manager may prepare a plan, but the leader decides the priorities.

A functional leader may run the recruitment process, but the chief executive must approve every candidate.

Marketing may create a campaign, but every message requires the leader's review.

In such a system, a person cannot truly be accountable for the outcome.

They are responsible for preparing the work.

The final decision and its consequences remain with the leader.

The more activities are delegated, the more decisions reach the leader's desk.

The leader may become even more overloaded than before they began delegating.

True delegation means that the authority to make decisions within agreed boundaries moves with the work.

A good decision requires context

A leader cannot simply say, “Decide for yourselves.”

If people do not understand the company's objective, constraints and decision-making logic, they will naturally make different decisions.

Sales prioritises winning the deal.

Finance prioritises margin.

Product development prioritises technical quality.

Operations prioritises standardisation.

Customer support prioritises reassuring the client quickly.

Each may be right from their own perspective.

A good leader makes visible the context that allows people to choose between them:

• Which client is right for the company?
• Which outcome matters most right now?
• What risk are we prepared to take?
• What is the minimum acceptable level of quality?
• When is speed more important than perfection?
• At what price does a deal stop making sense?
• What are we consciously choosing to give up?

The clearer the context, the fewer subsequent decisions the leader must make personally.

Decision-making authority must be close to the information

The best decision is not always made at the highest level of the organisation.

Often, the person dealing with the client, the specialist doing the work or the manager seeing the problem first-hand has the best information.

When a decision travels up through several levels, some of the context is lost.

The employee prepares a summary.

The manager interprets it.

The chief executive sees only a small part of the original situation.

Meanwhile, time passes.

The client waits.

The project stands still.

Decision-making authority should sit as close as possible to where the necessary knowledge resides and where the impact of the decision becomes visible first.

This does not mean abandoning control altogether.

The company must define:

• what size or risk of decision a person may handle independently;
• when input from another function is required;
• when a decision must move to the next level;
• which decisions must be documented;
• which outcome will show whether the choice worked.

A good organisation does not push every decision down.

It puts each decision at the right level.

A leader should not delegate everything

A strong decision-making system does not mean that the chief executive gives up their responsibility.

Some decisions must remain with the leader.

For example:

• the company's strategic direction;
• fundamental choices and trade-offs;
• the allocation of capital and critical resources;
• key members of the leadership team;
• the boundaries of the company's culture;
• the acceptable level of risk;
• decisions that could threaten the company's existence.

These decisions can be prepared with others.

The chief executive cannot hand off ultimate accountability.

But if every operational and reversible decision also reaches them, they will have no time left for their actual job.

The leader then makes many decisions, but not enough of the few decisions on which the direction of the whole company depends.

A leader should not retain reversible decisions

Not every decision carries the same risk.

The consequences of one decision may be minor and easily corrected.

Another may be expensive, irreversible or damaging to the company's reputation.

If the leader requires the same level of approval for both, the organisation becomes slow.

A reversible decision might include:

• the message for a small campaign;
• a limited client exception;
• the allocation of work within a team;
• a minor tool configuration;
• a trial of a new process;
• the use of a limited budget.

People learn to decide through decisions like these.

If the leader also makes these decisions personally, the organisation's decision-making capability will never develop.

In the short term, the leader may get the outcome they prefer.

In the long term, everyone else remains dependent.

For each decision, a good leader does not ask only whether they could make it better themselves.

They also ask where the company's decision-making capability needs to be in six months.

People learn to decide only by deciding

A leader may expect someone to prove their decision-making ability before granting them decision-making authority.

But without real decisions, a person cannot acquire the necessary experience.

Responsibility needs to grow gradually.

At first, an employee may:

• gather information and present options;
• recommend a decision with supporting reasons;
• make the decision subject to the leader's prior approval;
• decide independently within agreed boundaries;
• inform the leader after the decision;
• ultimately assume full accountability for the outcome.

The leader's job is not to supervise someone indefinitely.

They must see what support the person needs to handle the next level of decision-making.

Decision-making is a capability.

It can develop only when the system allows people to make genuine choices and learn from their consequences.

A leader must tolerate a good decision that is different

One of the greatest barriers to delegation is not a lack of competence among employees.

It is the leader's difficulty in accepting a solution they would not have chosen themselves.

Someone may achieve a good outcome using a different method, communication style or sequence of work.

If the leader changes every different decision to match their own preference, the team learns that its decision-making authority was only an illusion.

People stop looking for the best solution.

They start looking for the solution the leader will like.

A good leader must distinguish between:

• a decision that is genuinely bad;
• a decision that breaches agreed boundaries;
• a decision whose risk is too high;
• a decision that is simply different from the choice they would have made.

If the outcome meets the objective and the risk remains within acceptable limits, the leader should not intervene merely because the method differs.

Otherwise, they delegate the work but not the trust.

Every overridden decision must become a learning opportunity

Sometimes a leader must override an employee's decision.

The situation may involve information the employee did not have. The risk may be greater than it first appeared. The decision may conflict with the strategy or an agreement.

But changing the decision alone is not enough.

The leader must explain:

• what information was missing;
• which principle influenced the decision;
• which risk the employee failed to consider;
• in what circumstances their choice might have been right;
• how to make a similar decision independently next time.

If the leader simply fixes the outcome, the organisation's capability does not grow.

The same question will reach them again next time.

The leader resolves the work quickly but creates another future task for themselves.

Good decisions require good information

Granting decision-making authority is no use if the necessary information remains with leaders or other departments.

A person cannot make a good pricing decision if they do not know the true cost of serving the client.

They cannot deliver a project on time if resource changes reach them too late.

They cannot be accountable for the customer experience if recurring problems are not visible.

They cannot choose the right client if the company does not know profitability by client segment.

Scaling decision-making capability requires scaling information.

That means:

• shared definitions;
• reliable data;
• visible objectives;
• metrics suited to decisions;
• rapid feedback;
• information reaching the right person at the right time.

If all important information goes first into the leader's report, decision-making will naturally remain with the leader as well.

Responsibility and decision-making authority must move together

Companies often give people responsibility while leaving decisions to leaders.

They then become frustrated that people do not take enough responsibility.

Accountability for an outcome requires at least four things:

1. A clear outcome.

1. The authority to make the decisions required to achieve it.

1. Access to information and resources.

1. The ability to influence the people and processes on which the outcome depends.

If someone controls none of the important levers, they do not own the outcome.

They are simply the person the leader can ask for an explanation when the outcome is not achieved.

A good leader does not merely distribute tasks.

They build coherent areas of responsibility within which people can genuinely succeed.

Company culture determines whether people dare to decide

Decision-making authority may have been formally granted, yet people do not use it.

The reason may lie in past experience.

If someone who makes a mistake is punished publicly, waiting becomes safer than deciding.

If the bearer of bad news is blamed, people begin to hide problems.

If the leader later reverses every decision, people learn to ask for approval.

If successful independent decisions go unnoticed while every mistake receives great attention, the organisation gets a clear message: do not take risks.

A sound decision-making culture does not mean mistakes have no consequences.

It means a reversible mistake is used for learning, while carelessness, repeated breaches of agreements and unacceptable risk-taking are treated differently.

People must know which errors the company tolerates as part of learning and where the real boundary lies.

How can you tell that the leader has become a decision-making bottleneck?

Warning signs include:

• people wait for the leader's approval even on small decisions;
• work slows or stops when the leader is away;
• the same questions repeatedly reach the leader's desk;
• leaders are overloaded, but teams do not act independently;
• the company has many managers but little genuine decision-making authority;
• people prepare more decisions than they make themselves;
• the leader attends almost every important client and project meeting;
• the rationale behind decisions resides in the leader's head rather than shared principles;
• people focus on guessing the leader's preference;
• problems accumulate faster than the leader can resolve them;
• hiring a new manager increases the chief executive's workload;
• employees say, “Let's wait and see what the leader thinks.”

These signs do not automatically mean that the leader is too controlling.

They show that decision-making capability has not yet been built into the organisation.

How do you build a company that makes good decisions without the leader?

1. Make the company's direction unambiguous

People must know which client, value and outcome their decisions serve.

2. Assign decision owners

Every important recurring decision must belong to a specific role, not vaguely to management.

3. Establish decision boundaries

What amount, risk, client impact or degree of irreversibility requires involvement from the next level?

4. Give decision-makers the information they need

Responsibility without context produces arbitrary choices.

5. Distinguish between reversible and irreversible decisions

The former should move closer to the work. The latter require more scrutiny.

6. Discuss the logic of the decision, not only the outcome

A good outcome can result from a bad decision, and a bad outcome from a good decision. The organisation must learn from both.

7. Do not take responsibility back after the first mistake

Otherwise, you teach people that decision-making authority lasts only until they first get something wrong.

8. Measure the speed and quality of decisions

How long does a decision wait? How often must it be reversed? Does the same problem recur?

9. Turn recurring questions for the leader into a system

If the same decision reaches the leader for the third time, the company probably needs a principle, boundary or clearer responsibility.

A good leader makes their daily intervention less necessary

This does not make the leader less important.

It makes their impact greater.

Instead of resolving more and more individual cases, they build a system in which thousands of future decisions are made better.

They create:

• a clearer strategy;
• better decision-making principles;
• more coherent areas of responsibility;
• faster flows of information;
• stronger leaders;
• a feedback system that learns.

The leader's job is not to be the smartest person in the company in every situation.

Their job is to ensure that the company's collective intelligence informs the right decision at the right time.

The ultimate outcome of leadership is an organisation's independent capability

If the company works well only when the leader is constantly present, the leader has not built a strong organisation.

They have built a system that depends on them.

In a strong company, employees do not have to ask the leader what to do every day.

They understand the objective, their responsibility and the boundaries of their decisions. The necessary information is available. Problems move quickly to the right place, and the impact of a decision feeds back into the system as learning.

The leader remains accountable for the company's direction, key choices and critical risks.

But their value no longer comes from every decision passing through them.

Their value comes from the organisation's ability to make an increasing number of good decisions without them.

The quality of leadership is not shown by how many problems the leader personally solves.

It is shown by how rarely the company needs their intervention in problems it should already have the capability to solve.

Mikk Orglaan

Challeng.ist