CENTRALIZED VERSUS DECENTRALIZED STRUCTURES - THE MANAGEMENT OF THE PANDEMIC AND THE DESIGN OF ORGANIZATIONS
Over the last few decades, there has been an endless amount of analysis, conceptualization and discussion about the errors of federalism. Little has happened, and (almost) nothing has been implemented in terms of improvements.
The way Austria is dealing with the current challenges is therefore a reflection of this state of affairs. Not entirely bad - there are certainly worse things, in many areas even really good - and yet bizarrely inefficient with a lot of room for improvement.
Perhaps it is the most subtle form of economic development to set up 9 systems for vaccination processing, to create 9 priority lists, or perhaps it is simply cowardice.
At the same time, companies are not left out when it comes to the interesting distribution of power (and powerlessness) in the structures. In business, too, there is the match of centralized versus decentralized. And the stakes are not always clear as to which is the better logic.
SO HERE ARE THREE BASIC RULES THAT ALWAYS APPLY:
Central is better where common standards create synergies
That sounds logical, but (often) isn't when it comes to implementation. An IT system, a contract system, a procurement process - all efficient, of course, and yet they regularly fail. The reasons for this?
On the one hand, the most powerful driving force is the deeply rooted human desire for autonomy and individual solutions. Karl Valentin said it very well: "Everything has already been said, except by everyone". Everyone wants to sing their own song, no matter how it sounds in the choir at the end.
A conductor is needed here, someone to take over the governance. On the other hand, "taking over" on the part of the central units is a problem. The more they fail, the more wildly the individual solutions flourish. Central units therefore need to be competent and able to deliver and constantly refresh their skills with new blood - also and especially from the group of operational staff.
Decentralized is better where a variety of complex challenges require rapid solutions
Not many words are lost on the principle, so logical is it at first glance. Practical experience suggests that in sales, it is best for someone close to the customer to decide how best to implement this.
Research suggests that it is the small units that quickly recognize new approaches and are therefore effective.
Nevertheless, there are many companies and consultants who take a different approach. Often with disastrous consequences. The main reason for this is an excessive desire for power and control. This creates self-feeding cycles - we need even MORE centralism, MORE control - whatever the cost. The only thing that often helps here is a change in the people involved.
Both systems require 100% transparency
The last principle is often the most difficult. Consistent benchmarking, control via data with a corresponding open culture in dealing with the same - all this helps enormously to keep systems efficient and alive.
If we can quickly see what the consequences of our decisions are, we can act accordingly. Of course, this is not always fun - who wants to be at the bottom of a top / flop list, but it works.
This applies not only to decentralized solutions, but also to centralized ones. Transparency is not a one-way street. Beneficiaries also have a right to full transparency and benchmarking of the rules under which they live and the services they receive.
Excitingly, the data and transparency culture with the associated management models is still a construction site in many organizations that is worth tackling.
Order needs energy, chaos arises by itself. This is a basic principle of physics that also applies to organizations. Unfortunately, many lack the energy to create the right structures. All those affected would be grateful, even if they can't always put it that way.