Perils of Democratic Decision Making

Enabled by enterprise social software (ESS), online corporate communities are shaking up the management world by revolutionizing many core organizational activities. By creating new channels of interaction among employees, customers and managerial echelons, ESS solutions are democratizing the decision-making process. Many prominent companies see this favourably, which is why they actively use ESS platforms such as Yammer — a private social network that helps employees collaborate across departments, locations and business apps — to transform innovation, talent management, marketing and CSR practices. But democracy in business is a double-edged sword. And when it comes to empowering the corporate masses to heavily influence the decision-making process via ESS, it remains unclear when the C-suite benefits and when it doesn’t.

This article aims to raise awareness of the perils associated with decision democratization and help managers identify the conditions in which ESS platforms complement the decision-making process and those conditions in which online communities fall short in making a true contribution. We provide a framework to discuss the optimum role of ESS platform functionality for three different types of decision making: operational, tactical and strategic. Our research indicates that there is no question that ESS should indeed be exploited for some intra-firm decision making, but that companies need to be very wary of democratizing the strategic decision-making process.