Guest Post: Lean Leaders Conference, Part 2 – To Centralise or De-centralise?
Mark's note: You may recognize the author of this guest post, Andrew Castle, as a previous contributor and frequent commenter on my blog. I was offered a press pass to a lean event in the UK, an invite I was able to pass along to Andrew. Here is his report, the second part of four posts that are running here in August. Read Part 1 here.
To Centralise or De-centralise
This was, to my mind, the most interesting topic of the IQPC two-day event. The fundamental issue that a number of organizations were struggling with or attempting to resolve was whether their organizations improvement resource should be centralized corporately or de-centralised to individual sites / countries/ directorates and the advantages and disadvantages of each.
There were a number of companies that presented their own approaches, Credit Suisse, ABB, Dell and SCA, who each had corporate improvement teams responsible for the implementation of Lean globally across their respective businesses.
One aspect of the centralize / de-centralise issue that was raised was that executives in some organizations wanted responsibility for Lean to be held locally, so that employees, sites etc. would feel responsible for its implementation and rollout whilst the central team felt that this would dilute the quality of the programme as sites locally would not have the time to commit to it in the same way a centralized team does. Equally though, they accepted that by being centralised that Lean was viewed as their job and not wholly owned locally.
This dichotomy represents one of the real challenges of implementing Lean, that changes need to be owned locally and that power to make them is devolved out from corporate headquarters whilst at the same time having oversight and control of the programme and the ability to intervene when things are not progressing as they should.
I think that this discussion was quite indicative of the two days; those that arrived looking for answers were in some ways disappointed that they did not leave with a clear “this is how to do X or Y” prescriptive solution. Others left with more questions than they had upon their arrival and yet I think all probably left with some thoughts about what course of action to take moving forward to solve their own particular problems.
Organisations that were completely de-centralised, where Lean was being undertaken sporadically on local sites, looked to the centralised organisations for guidance on how to persuade their executives to centralise and make Lean a corporate programme. Organisations that had centralised teams wondered how to devolve power and responsibility down through the organisation to make change a local responsibility and others wondered which camp they sat in.
I think that this issue is one of organisational and “Lean” maturity and that depending on where an organisation is in its journey, the need to centralise or de-centralise resource will be determined primarily be that.
What do you think? Please scroll down (or click) to post a comment. Or please share the post with your thoughts on LinkedIn.
Don't want to miss a post or podcast? Subscribe to get notified about posts via email daily or weekly.
Always an interesting one this..
The quick answer is both. It depends purely on where the organisational influence comes from. If it is a very top down initiative then centralisation will always be the preferred vehicle as it allows a standardised approach both down through and across the organisation. The only pitfall is the potential to over standardise and only progress at one speed throughout.
This doesn’t have to be the case though. Clear leadership and understanding of the pace of change should allow the progression of change to set its own level locally. A shrewd organisation will quickly understand that the conundrum will become how to share best practice by adopting improvements whilst not holding back parts of the organisation that are forging ahead.
Getting this balance right will help understand the paradox of allowing empowered change whilst maintaining organisational standardisation.
I’ve seen both both approaches succeed and fail; the common denominator is clear, unwavering leadership from the top or a craving for the latest initiative that just ends in chaos and a demotivated workforce.
“Lean” has little to do with it. Organizations decentralize when overhead costs are perceived as being to high, and the head office out of touch. They centralize when there is a perception of loss of control. Historically it has been cyclical in any one firm. “Lean” is unlikely to change that.