Both centralization and decentralization processes have their myths and misunderstandings.
In this short post, I shall share my experience in facilitating hundreds of such transitions.
- It is not either or. When you centralize certain components, others must be decentralized. And the opposite. Example: When you decentralize reimbursement policy, it is wise to centalize control. When you centalize travel policy, you need to decentralize discretion-based exceptions.
- Prolonged centralization does not lead to more control. Eventually, it can lead to lack of control. People will learn the weakness of the centralized system, and eventually beat it.
- Decentralization and centralization are not ideologies. They are the pendulum of a clock that over time go back and forth, to compensate for the weakness that each state creates.
- Centralization and decentralization can co-exist for the same function. You can decentralize Purchasing in some geographies and centralize in others, depending on the amount of corruption.
- You cannot decentralize something that does not exist and hope that things get better. It is best to decentralize things that work well, and hope that they get better.