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Thoughts from the Field - Issue #18 - Organizational Health Drives Decision-Making

By Jeff Gibson - January 2014

Organizational Health Drives Decision-Making

One of the many benefits of having a healthy organization is that decision-making becomes more focused as leaders are able to use the elements of organizational clarity to guide their discussions and, ultimately, their decisions.

An executive team creates organizational clarity by answering the six critical questions (hopefully, you’ve had a chance to read about them in Pat’s latest book, The Advantage):

  1. Why do we exist?
  2. How do we behave?
  3. What do we do?
  4. How will we succeed?
  5. What is most important, right now?
  6. Who must do what?

Once a team has clarified and committed to the answers to those questions, the process of decision-making becomes a straightforward exercise within the context of that clarity.

Southwest Airlines is a case in point.

When Southwest Airlines’ executives decided to acquire AirTran a few years ago, they certainly evaluated how the combination would help them achieve their revenue growth goals while offering quicker entry into new markets. Even more importantly, their discussions likely included crucial debate about how the two airlines would fit culturally. At the end of the day, they were able to determine exactly why the acquisition was the right move for their business, their customers and their employees. Without clarity across those six critical questions, this decision would have been an exercise in painful politics that likely would have resulted in inconsistent commitment from leaders.

Let’s assume that your team is faced with a decision of significance, just as Southwest was (but it doesn’t have to be as huge of a decision as theirs, of course). Here is a simple four-step process that will ensure decisions are consistent with your organization’s clarity.

Step 1: Evaluate fit with your organization’s core principles

Consider the decision in light of the answers to the questions “Why do we exist?” and “How do we behave?” Any decision must fit with an organization’s over-arching purpose and values. The answers to “Why do we exist?” and “How do we behave?” never change, and should be used to assess whether the decision violates the core tenets of the organization. If there is a mismatch with your purpose or values, then you have your answer.

If AirTran could not help Southwest “To connect People to what’s important in their lives,” the discussion should have ended right then.

Step 2: Evaluate consistency with your fundamental business definition

Consider the decision in light of the answer to the question “What do we do?” The decision must fit with the organization’s business definition. If it does not, the team must be willing to change what they do.

If Southwest were evaluating the purchase of Greyhound, this would have been a much different conversation than with AirTran who was essentially in the same business.

Step 3: Evaluate overlap with your core strategy

Consider the decision in light of the answer to the question “How will we succeed?” The decision must fit with an organization’s strategy: the set of intentional decisions that distinguish the organization from its competitors and gives it the best chance at success. An organization’s three strategic anchors provide a useful litmus test for whether a given decision is strategically aligned with the current plan of record. Before proceeding, ask yourself if this decision is consistent with, or counter to, those anchors.

If the acquisition of AirTran would not have helped, or worse yet, hindered SWA’s ability to offer friendly, reliable, and low-cost air travel, this deal would not have happened.

In an interview with The Dallas Morning News, Southwest CEO Gary Kelly said that the company will continue to keep prices down. “We are a low-fare carrier. That is who we are. That is how we’ve established trust of 40 years,” Kelly told the newspaper, noting that the carrier did not raise prices following past mergers. “We’re not going to change who we are. We’re expanding who we are. We’re taking low fares farther.”

Step 4: Evaluate alignment with your current priorities

Consider the decision in light of the answer to the question “What is most important, right now?” Finally, it is important to think about how the decision fits into the current over-riding priority–or thematic goal–of the organization. Most leaders can generally convince themselves of the value of any decision. To maintain focus in your organization, be sure that decisions are consistent with what you have already identified as the most critical objective.

Because AirTran was able to quickly expand the routes that SWA offered into key markets, and provide an entry into specific international destinations, this decision fit squarely within Southwest’s key priorities.

Clarity is your guide

The best decisions are those that are consistent with the organization’s unchanging principles, fall within the parameters of your fundamental business, are consistent with your strategy and support your current over-arching priority.

By taking time as a leadership team to follow the four simple steps described above, the pain and confusion that comes when decisions are made without context can be avoided and alignment will remain intact. And, alignment is what organizational health is all about.