Five years ago, a senior executive painted me a nautical picture of her large, established organization’s goal for digital transformation: to operate not like an unwieldly tanker but as a flotilla of sailboats. Via the collective actions of small cross-functional teams, the organization would sense and seize opportunities to continuously transform—just like the nimble start-ups in its exceedingly competitive industry.
Data from a recent MIT CISR survey1 confirmed that it is indeed possible for large, established organizations to operate in an equally agile fashion as their smaller industry peers, particularly if the organizations decentralize their decision-making. To realize this dynamic capability,2 leaders retain strategic decision rights (the authority and accountability for what the organization needs to achieve and why) but distribute operational decision rights (the authority and accountability for how to best achieve strategic goals) to teams that are closest to customers, offerings, technology, and processes. This approach, also referred to as creating autonomous, empowered, or self-managing teams, focuses on teams realizing outcomes—as opposed to leaders dictating processes and required output—through the iterative realization of solutions that are desirable, feasible, and viable.3
Today, the aforementioned organization has made great strides in decentralizing decision-making in its digital and IT teams, but leaders in other parts of the enterprise are slow to give up their operational decision rights. Our recent survey showed this is a common struggle: the leaders in our survey reported that on average 47 percent of the teams in their organization (or the part of the organization they were most familiar with) could make decentralized decisions.4 Yet our survey data showed that granting operational decision rights to only a select few business units or corporate functions hindered an organization’s ability to sense (i.e., identify and analyze) and seize (i.e., decide on and experiment with) opportunities, thereby limiting its innovative capacity and financial performance. This research briefing describes the extent to which decentralized decision-making can help large, established organizations achieve greater organizational agility, and which practices help to turn size into an advantage for improving organizational performance.