Centralize versus Decentralize

Most organizations struggle with the centralization versus decentralization regularly and make changes frequently.  Often the IT organization is a central part of the discussion, if you pardon the pun.

In several consulting assignments we have worked through this issue with organizations.  We have found that dividing a function into three distinct activities very helpful.  You might use the requisite organization way of thinking about the issue.  Thinking  about the time frame of an activity helps.  In the operational activities, the function deals with day to day issues.  In the project part of the function the time frame is three or six months.  In the planning and strategy part of the function the time frames are usually a year or longer. 

Taking each of these activities and the question of decentralization versus decentralization, the answer is often quite different.  The most likely candidates for decentralization are the operational activities.  The most likely candidate for centralization is strategy and direction setting activities.  The projects can fall in both camps.

Each organization must deal with these question for their unique situation and the current issues the organization is facing.  At different stages in an organizations development the answers can be quite different. 

I am reminded of a characteristic of lasting organizations mentioned in the book "Built to Last".  The book states that one of the characteristics of lasting organizations is the "Genius of the And versus the Tyranny of the Or."  That means that the lasting organizations do not decide on decentralize versus centralize in a simple way but decide that they have some of both.  Using the division of a function the way I described it above, is one way of doing both, some centralization and some decentralization.

How have the functions in your organization been organized?  Are they centralized or decentralized?  Often revisiting this question can be helpful.   

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