Last week, we discussed the first of the three accompaniments to leadership and decision compression, perspective compression. Let's take a closer look at the final forms of compression — information compression and authority compression.
When the conductor leaves the front of the orchestra to go work with a particular section – let’s say the violins – then the information he or she is now exposed to is limited to what is happening in and around the violins section. He or she can no longer experience the dynamics or output of the entire orchestra. Once in a while and for short duration, like during a rehearsal, focusing in on one section is fine. As a perpetual habit, it can be quite damaging.
We see this in organizations when senior leaders hold on too tightly to past experiences or knowledge – the marketing director who takes on the role of strategy but fails to expand their thinking beyond what they know, or the new hire from outside who perpetually tries to replicate their past company’s processes and practices regardless of appropriateness or fit with their new organization – are examples.
Another common form of this compression occurs when information is seen as currency within an organization and people hoard it to secure power. This practice hinders the transparency necessary to connect dots and make well-informed decisions. True insight is generally found at the intersection of critical data sets. When everyone holds onto their respective piece of the proverbial pie, those insights are seldom, if ever captured.
Decision compression has a profound impact on leaders’ ability to collect, organize and leverage reliable data to make sound business decisions. In organizations suffering from severe decision compression, the sources of data – finance, HR, line reporting – tend to become unreliable as those responsible for creating it become fearful of it being misinterpreted or punishable.
This is the exact opposite of empowered decision-making. Rather than pushing authority to the level where the best information and insight resides, authority compression forces all decisions up, generally to the very top of the house. In one extreme case we witnessed a CEO, tired of public resource tug-of-wars, who reverted to making all trade-off decisions across his five counter-cyclical business units. While this expedited decision-making, he ultimately was making all decisions related to the deals each business pursued, the pricing strategies for those deals and the marketing and brand spends for each business. It felt to all, and rightly so, that he was single handedly running all five BUs. To make themselves useful, the BU presidents in turn started going on key customer calls, building brand campaigns or doing capacity forecasting for operations. And so on.
In our next blog, we begin to share strategies for combatting these types of compression.
Ron Carucci and Eric Hansen are the co-founders of Navalent, an organizational and leadership consulting firm building executable solutions that result in transformational change in organizations. Their latest book, “Rising to Power: The Journey of Exceptional Executives,” features Carucci and Hansen's 10-year longitudinal study of 2,600 executives from the Fortune 1000 in combination with in-depth surveys of executives who recently transitioned into an executive role.