VUCA, which stands for Volatility, Uncertainty, Complexity, and Ambiguity, is a term that has been frequently used to describe today's business world. In this context, what should organizations do to make more effective decisions?
A survey conducted by CIMA (the Chartered Institute of Management Accountants) and AICPA (the American Institute of Certified Public Accountants), with 300 senior leaders at large organizations from 16 countries around the world, identified the biggest barriers to making faster and more accurate decisions.
Bureaucracy
According to the majority of survey respondents (29%), the biggest barrier to more effective decision-making is bureaucracy and silos. The structure of many large companies hinders their ability to coordinate and make decisions quickly enough. 42% said their company loses a competitive advantage because it makes decisions more slowly than its competitors.
Lack of trust and cooperation
Senior leaders recognise the need to give subordinates more input into decision-making, but making this happen is not easy. Surprisingly, there is also a disconnect between leaders – 43% felt that the level of trust between senior management positions needed to be improved.
Balancing short, medium and long term benefits
39% of the leaders surveyed believe their compensation structure helps them maintain a balance between short-, medium- and long-term benefits. 34% said they have difficulty choosing metrics to measure business performance over different time periods.
Harness the power of data
As many as 80% respondents admitted that their organization used the wrong information to make strategic decisions at least once in the past three years. One-third (32%) of respondents said big data has made decision-making worse, not better, while only 37% said big data has helped. Additionally, 36% said their organization cannot handle information overload.
Advanced decision making skills
Business leaders see their limited skills as one of the two biggest obstacles to making better decisions, with 28% admitting they need new skills to meet the demands they face today. They see the need for more innovation and support in four key areas: interpreting new data sources; learning from past results; challenging traditional thinking; and ensuring deeper collaboration with their employees.
Only a small number of organizations can simultaneously address all of the above challenges, known as 'Integrated Thinking Organizations'.
