One of the key factors that determines how far you can scale your business is how effective you are at delegating decisions. The magic lies in figuring out which decisions you need to make, which you can delegate.
The most useful model I’ve encountered is the Tree Model of Decision Making. This is different from a Decision Tree, which you may be familiar with. The Tree Model is in fact an actual tree, while a decision tree is more like a pyramid, and not at all like a tree.
If you think of all the decisions you need to make to run your business, from strategic to tactical to mundane, imagine that they lie somewhere on a tree. For our purposes, we’re going to be even more specific, and imagine that it’s a deciduous tree, else this analogy won’t take root (see what I did there?).
Speaking of roots…
In the roots are the fundamental decisions that decide what shape your company will take. What do we stand for? Who do we want to be? Getting these right makes other decisions easier, plants you on solid footing and gives you a strong foundation on which to grow. These decisions lie with the CEO, the founders, and the board.
In the trunk are the decisions that decide the direction of the company. What products are we developing this year? Who are our customers? What are our key operating priorities? What is our overall operating budget this year? These decisions fundamentally shape the future of the company where it’s headed. Get these wrong, and it takes a long time to right the trunk. These decisions lie with the executive management team, and are typically decided once a year in a strategic offsite (and sometimes revisited every quarter to confirm that that your fundamental assumptions are still correct).
In the branches are the decisions that lie with teams and divisions – marketing, sales, engineering, HR, finance, manufacturing, and so on. Given who we are, and where we are headed, what are the departmental priorities for the year? Where should we focus our marketing spend? What’s our strategy for attracting and retaining key talent? These decisions are typically domain specific, and when they are well executed, contribute to the health of the tree. Unlike a trunk decision, if you get one or two wrong its painful and may require pruning, but the core business remains healthy. Get a lot of them wrong though, and the health of the tree is at stake.
Out in the leaves are the day-to-day decisions, made by individuals, that keep the business healthy and moving in the right direction. If you get a couple of these wrong, the leaf falls off and a new one grows, but you want to have systems in place to make sure, say, half the leaves don’t take leave. Examples of leaf decisions are things like, should we give this customer a refund? What brand of camera should we buy for the social media team? What color should we paint the boardroom? As the CEO, the less involvement you have in these decisions the better, else you quickly become the bottleneck and slow things down. Try to set guidelines and budgets so that individual employees can make smart decisions without having to go through multiple levels of approvals.
I love simple frameworks like these because they give you and your management team a common language. When a decision arises in your weekly management meeting, you can refer to the framework – is this core to the business, and something that needs to be decided by the management team, or can it be delegated to a team or an individual? Straightforward frameworks should help you execute faster and reduce bottlenecks.
Did you find this model useful? Or is there another that your team uses to determine how and when to delegate decisions? Let us know in the comments.