Strategy & Decision-making

Intelligent centralization is collaborative and negotiated

…… Part of The Basics series. First published in August 2011 ……

Centralization is not easy. It is often a question of degree. It is always a question of how.

In intranet and digital workplace matters, it will only work if you approach it in a collaborative and negotiated way.

There are many aspects of intranets and digital workplaces where you need to make decisions about centralization. To name a few:

  • Choice of technologies
  • Publishing news
  • Policies
  • Entry page strategies
  • Content quality controls

How far down should you push responsibility for decision-making?

When it comes to content governance and policies, people will argue that without centralized control there is a risk of sub-standard quality. Silos will be reinforced. The enterprise will be unable to operate as “one global company”.

Others will say that too much centralized control stifles creativity and turns the intranet into a platform for polished messages. That’s about the last thing organizations should be aiming for today!

When it comes to technology platforms, it is easier to find cost justification for making centralized decisions, but even then, it can be tricky to get figures from all parts of the organization, therefore hard to build an air tight business case.

In our current social era, many technology choices are being made by both business and IT managers in different parts of the organization. This decentralized behavior raises questions about scalability and support.

The first question: centralize or not?

A recent article “To centralize or not to centralize” in the McKinsey Quarterly of June 2011 (Andrew Campbell, Sven Kunisch and Günter Müller-Stewens)  provides some good guidance. (Note: in 2017, article no longer online.)

The authors say you must answer yes to at least one of these 3 questions before you decide to centralize:

1. Is centralization mandated?

Are there legal or other requirements that mean you have no choice?

2. Does centralization add significant value?

Difficult as this is to calculate, the authors recommend at least a 10% addition to the market capitalization or profits of the organization before deciding to centralize something that is currently decentralized.

3. Are the risks low?

Risks cited in the article include business rigidity, reduced motivation,  bureaucracy and distraction.

The McKinsey article hit home for me.

Over the last 14 years, I have observed many ambitious intranet programs carried out by headquarter teams that never worked. I have concluded that when centralization is necessary, and it often is, it must be handled intelligently.

Intelligent centralization is collaborative and negotiated

Before you decide to centralize, ask yourself: Do we have a problem? Are there ways it can be solved without centralization?

If you do need to centralize, then  do it in intelligently. People in the center and in the outlying entities (e.g. business units, countries) need to work together to decide what should be centralized and how.

Ideally, solutions can be found that are in everyone’s interest. For example:

  • Agreeing on the categories for global navigation together, then sharing templates. This can generate cost-savings for everyone.
  • Defining quality control standards only for common content (needed by all people in the organization) and making local publishers responsible for standards in their own scope. This gives everyone a sense of control and accountability.
  • Mandating a shared technology for the cross-organizational common areas of the digital workplace, then proposing a portfolio of choices for specific parts.

Have you had issues in your organization about centralization and decentralization?

How have you handled them?