Strategy & Leadership

Effective strategic decision making

August 06, 2014


August 06, 2014

Patrick Dupuis

Chief financial officer

Chief Financial Officer Patrick Dupuis joined PayPal in 2010 to continue his quest to understand the social and economic imperatives that shape the way people in different cultures shop, save, and spend. At PayPal, Patrick is responsible for overall financial planning and management as well as operational excellence. He is focused on helping people around the globe discover the power and freedom that comes with the ability to conduct financial transactions seamlessly, safely, and simply.

The average human makes about 612 decisions a day and decision making is probably the most risky function undertaken by any executive. So how should executives make decisions strategically? asks Patrick Dupuis, chief financial officer (CFO) of PayPal.

Decision making is a powerful tool that can make or break a company. Some companies are known for their risk taking, others for playing it safe. As a CFO, I always find it challenging to strike the right balance between risk and opportunities, ambition and capabilities. After decades of taking and being on the receiving end of decisions day in and day out, I have gained enormous respect for the “how” of making decisions, especially in large, global organisations like eBay. The “how” of decision making involves sorting out who has a voice in the evaluation of decisions, who has the authority to take the final decision and who is accountable for delivering on the decision.

One of the great challenges for any complex enterprise is the need to involve multiple groups and functions in the decision-making process, mainly so that everyone can benefit from the broad wisdom that exists across the organisation. Equally important is the need for everyone to align behind a decision once it has been made. There is an immense amount of time spent in the business world wavering on decisions or going back on an issue that had already been decided.

Setting goals and assigning responsibility

The first step in any decision-making process is to set clear (preferably externally focused) goals before convictions are formed. Whether it’s growth in volume, customer satisfaction, employee engagement or income, reminding everyone of the end goal helps to keep organisations and individuals aligned throughout the process.

The second component that enables effective decision making is to name one person to be in charge overall of a decision at the outset. Ideally this person should not be a senior executive, but rather an expert within the field where this decision will eventually play out. There may be exceptions, for example initiatives on a more global scale may require broader reach in an organisation, which is more easily managed at a senior level. 

This takes us to the third component, all the more critical when the decisions at hand are complex and highly cross-functional: the decision maker needs to be a leader with broad recognition across the enterprise, both among management and the broader team.

Innovative framework

The framework we use at eBay (PayPal’s parent company) for our most complicated and challenging initiatives is called I/O, or Initiatives and Owners. This process is designed to drive discipline, clarity and accountability around cross-functional business imperatives. The concept of designating an owner who is considered responsible for an initiative isn't new, but the most telling benefit of the I/O process is the increased level of collaboration and engagement that it has created across the enterprise.

Part of the increased collaboration comes from having more transparency in the decision-making process throughout the organisation, supporting a leadership culture that has clear and defined goals with regular reporting. In addition, we provide a forum where it is safe and expected for managers to be honest with senior leaders about progress and concerns. Finally, because we have a monthly review for each I/O in front of the entire leadership team, we have lessened the occurrence of “dissonance” between executives who are not directly involved in the management of the project.

Team effort and delegation

Bringing in decision making across all levels within a company, and not from the top down, requires a leadership shift. Effective decisions are not just made by a one-man team, at the highest levels of the company, but by a team effort with more delegation of authority at the right level, closer to the action.

All of which leads to the fourth component for successful decision making: the need for I/Os to be centered on the customer. Although the end goal should always be used as a guide, the most important measurement should be an evaluation of whether the right thing is being done for the customer.

Not all decisions need an I/O, but every leader can benefit from I/O principles. Every project can yield better results if there is clear alignment and transparency so that leaders are empowered to ask the right questions. By working in this way, companies will not only see better collaboration within their teams, they will also find new ways of engaging with customers to make them part of the decision-making process too.

This article is part of a series managed by The Economist Intelligence Unit for HSBC Commercial Banking.

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The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.

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