Knowledge workers themselves are best placed to make decisions about how to perform their work.
—Peter F. Drucker
Principle #9 – Decentralize decision-making
Delivering value in the shortest sustainable lead time requires decentralized decision-making, which is a critical tenet of Lean thinking. Any decision that must be escalated to higher levels of authority introduces a delay. Also, escalated decisions can decrease quality due to the lack of local context, plus changes to the facts that occur during the waiting period.
Conversely, decentralizing decision-making reduces delays, improves product development flow and throughput, and facilitates faster feedback and more innovative solutions. Higher levels of empowerment are an additional, tangible benefit.
Centralize Strategic Decisions
Of course, not all decisions should be decentralized. Some strategic decisions have far-reaching impacts and are outside the teams’ scope, knowledge, or responsibilities. In addition, leaders are still accountable for outcomes. They also have the market knowledge, longer-range perspectives, and understanding of the business and financial landscape necessary to steer the enterprise.
Some decisions, then, should be centralized. Generally, they share the following characteristics:
- Infrequent – Made infrequently, these decisions typically are not urgent, and deeper consideration is appropriate (ex., product strategy, international expansion).
- Long-lasting – Once made, these decisions are unlikely to change, at least in the short term (for example, commitment to a standard technology platform, commitment to organizational realignment around Value Streams).
- Provide significant economies of scale – These choices deliver large and broad economic benefits (for example, a common way of working and standard development platforms, languages, and tooling).
Leadership is responsible for making these types of decisions, supported by the input of stakeholders affected by the results.
Decentralize Everything Else
The vast majority of decisions do not reach the threshold of strategic importance. All other decisions should be decentralized. Characteristics of these types of decisions include:
- Frequent – The problems addressed by decentralized decisions are recurrent and common (for example, Team and ART Backlog prioritization, real-time Agile Release Train [ART] scoping, response to defects and emerging issues).
- Time-critical – Delaying these types of decisions comes with a high cost of delay (for example, point releases, customer emergencies, and dependencies with other teams).
- Require local information – Some decisions need local context, whether technology, organization, or knowledge of a particular customer impact. Examples include: shipping a release to a specific customer, resolving a significant design problem, or self-organizing to address an emerging challenge.
Workers with local context and detailed knowledge of the technical complexities of the current situation should make these decisions.
A Lightweight Thinking Tool for Decision-Making
Understanding how decisions are made helps knowledge workers approach decision-making more confidently. Leadership’s responsibility is to establish the rules for decision-making (including, for example, the Economic Framework) and then empower others to make them. Figure 1 illustrates a simple tool or exercise for deciding whether decisions should be centralized or decentralized.
Leaders can practice with this tool and understand better what types of decisions they need to make and what decisions are better left to those they lead.
Last update: 6 March 2023
