We asked business leaders from around the world for their perspectives on the decision-making challenges they face and how their organisations are rising to these challenges to improve their competitive advantage.
As the CFO of diversified technology company Philips in Africa, Alexander Visser speaks of how they address the challenge of ensuring the right information is gathered and communicated to the relevant people in the organisation.
When you look at the management information you are receiving to base strategic decisions upon, do you feel you are always getting the most relevant information for the decision you are making?
This is definitely a challenge. Information that is available publicly is not always enough to give us the in-depth, strategic insight that we need to make the right decisions. In some markets, for example, such as Angola or Ethiopia, there is a lack of transparency in the legal framework.
To manage this, we have set up a very structured approach in assessing elements that we want to understand before we make the strategic decision. Typically, this is organised around risk - operational and strategic risk. So, we carry out a functional assessment looking at legal, finance, fiscal and treasury issues. We also start identifying what kind of partners we could work with and do background checks.
Then we actually go to the country and we talk with a whole suite of consultants, accountants, lawyers, banks and even the embassy. We simply test all the assumptions that we have made in the desk research.
How do you get information to the relevant people in different functions and locations across the organisation when you're making decisions?
One of the issues that many companies, including Phillips, have is that their system landscape is fragmented. We have introduced a standardised system - the Philips Integrated Landscape - that allows us to connect information from various functions and make it available at the fingertips of people across the whole organisation.
How would you characterise your style of decision making?
This is an area in which we have made some dramatic changes over the past couple of years. We are a multinational, for Africa headquartered in Johannesburg. Typically, we do centralise decision making.
However, we are scaling down the headquarters and investing more heavily in highly skilled people on the ground, in our frontier markets. We’re moving more towards local, on-the-ground decision making. So, the ‘districts’ are empowered to make any decision that is needed to drive their top and bottom line, subject to clear limits.
What would you say have been the key benefits since you made these quite significant changes?
The most outstanding change is accountability - we can hold them accountable, because they are responsible for every decision that is made in the district.
High quality decision making has never been more important — or more difficult. Learn more about what leading organisations are doing to overcome these challenges at cgma.org/joiningthedots.