I have been asked this question a few times, and more so recently. With the current economical changes (the ones we don’t talk about), companies that run multiple businesses, are starting to look into restructuring, possibly downsizing, or figuring out ways to get the most out of their teams.
Here’s what I think. We need rules. We need to make the rules. Share the rules. Make sure everyone understands the rules. Then allow them to be broken.
A little background
Centralization allocates a a team to strategize, manage and implement the marcom plans for all the businesses and brands. Decentralization allows for the work to be implemented by several individuals or teams at the business unit levels focusing on each business or brand separately.
What’s good and what’s bad
Both setups have characteristics that make them worth exploring. Decentralization considers industry experts on the ground, trusting them with the day to day decision making. Centralization offers upper management more visibility and control, ensuring a more active role in the decision making process.
They both come with their set of issues too. With decentralization, if the teams are not equipped to make the right decisions, problems can occur. In some cases, decentralized teams at the businesses end up doing their own thing, which dilutes the efforts of a “one” organization. With centralization comes the issue of over control, and the requirements for upper management to approve everything. This could result in delays and possible loss of opportunities. Also, when upper management takes over, employees end up just following orders rather than contributing to the business.
Ask the right questions
Here are some questions that should help you figure out what is best for you.
How big and diversified is the business? Is it heavily diversified or consists of one or two industries? How many brands do you manage? Are you targeting different markets?
Do you have the budgets for bigger and multiple teams to focus on each of the businesses or are the budgets restricted?
Do you have the right talent within the department or do you need to hire and train?
What is the company culture like? Are you a small — medium size company that wants to function as a family? Or do you prefer a hierarchical organization?
I used to work for Rocket Internet in the Middle East. I handled their communications for their Middle East companies. They were diverse. Foods, automobiles, cleaning services, real estate, beauty, and so on. I managed to implement a process that helped me manage the work regardless of the industry. I was given free rein to decide what is best. We did well. Similarly, I once worked for a heavily diversified conglomerate. I was placed at the head office and due to the nature of the businesses, I needed industry experts on the ground. The leadership team was heavily involved in decision making. In some cases that was great, but in others, not so much.
Consider measuring employee capacity and productivity. The last thing you want is to overwork your employees and compromise results. Align expectations and be realistic. This article suggests a few tools on calculating productivity.
It is important to understand what is best for your company, remain lean and open to exploring options. Invest in the right people. Evaluate and measure the output continuously to ensure you have the right setup in place.
Find Your Success Factors
Whatever approach you decide on, find your key success factors. Here are a few to consider:
Involve upper management. Regardless where your marketing team is stationed, there should be constant communications with the management. This avoids miscommunications and diversion of the core company goals.
Invest in people. Invest time in ensuring you have the right people in your team who share your values. In his remarkable book, Principles, Ray Dalio emphasises the importance of people. Hiring right, recognizing differences, ensuring transparency, guiding evolution and so on. Business Insider elaborates on some of those principles here. I highly recommend you read his book and pay special attention to Work Principles. It’s incredible!
Empower employees. Involve employees and allow them to be part of the success. Dan Heath talks about creating powerful employee moments that result in higher productivity, and ultimately, (wait for it…) more profit! In his book The Power Of Moments he shares the story of Southwest Airlines. You probably have seen the YouTube videos. Southwest Airlines enables their frontline to act on the spur of the moment, delivering unique customer experiences. Happy customers came back. Dan estimated (with the Southwest Airlines research team) that funny flight safety announcements are worth $140 million a year of incremental revenue. This is a great example of a company that increased profits by allowing employees to go outside the “guidelines”.
There is no one size fits all approach. Companies need rules to remain on the mission, but they would benefit from offering their people some leeway to bend the rules and achieve the best collaborative results.