Poor decision-making costs UK business dear

One in five decisions made by top executives in manufacturing business is wrong, meaning a poor decision every 12 weeks, compared to one in four in government and one in three in the financial sector. The first Business Decisiveness Report, released by consultancy Capgemini last month, reveals the average UK senior exec makes 20 business critical decisions each year, valued at £160,267 each, with a self-reported decision ‘failure rate’ of 24%. The findings, based on a survey of 270 top execs within Britain’s largest organisations (revenues more than £200m) and across manufacturing, retail, financial and government, suggest the annual cost of bad decisions runs at over £800,000 per head. Interestingly, the decision making process is longest for manufacturing, with 80% of business-critical decisions taking 26—52 weeks to resolve, compared to 12% of government decisions take 13 weeks or longer – perhaps putting paid to the popular image of public sector red tape. Also, manufacturing and retail tend to select business advisors on gut feel (52%) more than any other sector, and were least impressed by personal goods or gifts, with just 2% of respondents citing this as an influence. Capgemini points out that the pressure on Britain’s business leaders has never been greater. Its report suggests that 90% are making more or the same number of business critical decisions compared to a year ago, 40% are making decisions faster and a third with greater autonomy. The firm stops short of publicly recommending specific solutions, and makes no mention of IT. However, a straw poll of our own sources suggests that enlightened managers in manufacturing are increasingly seeking to improve information visibility and trend analysis across the board. Greatest spend is in business intelligence systems, linked primarily to financial and market data. But recognition of the importance of other near real-time data, in terms, for example, of production and supplier performance – high level and granular – is increasingly cited. Companies are building on their core ERP systems with data collection and analysis tools that go beyond reports and spreadsheets in terms of both live data sources and analytical intent – for everything from supplier network planning to directing factory maintenance improvements more rigorously. Bill Cook, head of consulting services at Capgemini, says: “The ability to make decisions quickly, efficiently and effectively has always been at the heart of good business. Today we’re all faced with greater choice, more competition and less time to consider our options or seek advice. We hear so much about the negative consequences of ‘choice anxiety’ in our personal lives that it’s little surprise we find parallels in the corporate world.”