Centralize or Decentralize?

As shown above, Google searches on the topic of “Centralized vs. Decentralized” ramped up in earnest in 2008 during the time of the economic meltdown and have increasingly vacillated since. But it is the wrong question. It shouldn’t be centralize vs. decentralized. It has to be centralized & decentralized.


Over my 37 years of business experience the question of centralization vs. decentralization has resurfaced with the regularity of a clock pendulum. Each change in leadership starts the pendulum heading in the opposite direction. Centralization is chosen because it “gets things under control.” Decentralization is chosen to “eliminate all this bureaucracy.” But framing this question as an “either/or” choice leads to repetitive disruption within your organization.

In reality you must do both. With today’s flatter organizational structures it’s impossible to centralize all decision-making. So the real problem you’re trying to solve is improving the quality, efficiency, and effectiveness of decision-making throughout your organization. To achieve this nirvana you must build a shared understanding of the implications each decision will have on your organization, both intended and unintended. This can only be accomplished if you have a high fidelity picture of needed changes and their interdependencies. Essentially this shared picture centralizes your decision criteria and decentralizes quality decision-making at the same time. So the question of centralizing vs. decentralizing dissolves.

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