Myths of Centralization and Decentralization

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.






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5 thoughts on “Myths of Centralization and Decentralization

  1. Great point Allon, and one of many dilemmas that arise in any organizational setting, where there is not one “right” answer, but rather a dynamic balance between multiple differing needs and requirements. There are several theoretical approaches to manage these type of issues, I’ve found Polarity Management to be of great help when working with clients.

    Hope you’re doing well!

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