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Agile Leadership: The Rule of 5 for Decision-Making

In the dynamic world of business, small companies often have an advantage in agility and quick decision-making. With a small team, decisions can be made swiftly, and often the owner is actively involved in every aspect. However, as these companies grow and achieve success, they face new challenges. Decision-making becomes more complex, and the absence of formalized frameworks leads to inefficiencies and bottlenecks. 

In small teams everybody is responsible for everything.  Everybody can role their sleeves up and turn their hand to anything. Everybody has ownership. Then the company grows…without ownership frameworks all of a sudden nobody has ownership for anything and the decisions and responsibility for direction stay at the top. 

I’m going to explore the concept of Agile Leadership and introduce the "Rule of 5" as a guideline for delegation and empowerment within an expanding organization.

The Challenge of Decision-Making at Scale

When a company starts to scale, decision-making becomes increasingly difficult. The absence of formalized frameworks means that seemingly inconsequential decisions end up on the desks of senior leaders, wasting valuable time and resources. For example, signing off on a stationary order worth less than €200 should not require involvement from the CEO or CFO but you would be surprised how much time they spend on such tasks. This lack of defined approval levels and authorization schedules hampers the ability of junior team members to take appropriate action and make decisions in the best interest of the company.

Larger companies often have these frameworks bedded in but scaling companies have a time lag between needing it and implementing it for several reasons. 

  • The fear of giving up control: Leadership worry that they might lose the pulse of what is going on or that decisions won’t be made in line with company objectives or culture.

  • Formalisation= red tape: The nimble small business didn’t need it, they worry the structure will introduce too much red tape.

The Fear of Personal Exposure

One might wonder why junior team members don't take the initiative to make decisions independently. The fear of personal exposure plays a significant role here. If a decision made by a junior team member turns out to be incorrect, they may face personal consequences, such as blame or reprimand. Without a framework in place, the responsibility for the decision falls solely on the individual, discouraging them from taking calculated risks.

The Need for a Decision-Making Framework

To address these challenges and foster a culture of agile leadership, implementing a decision-making framework is essential. A well-designed framework empowers team members, establishes clear lines of authority, and encourages calculated risk-taking. It allows decisions to be made at the appropriate level, based on the impact they may have on the company.


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