To be centralised or not to be centralised.

Watching governmental responses to the pandemic we have seen a debate played out. Is it better to have centralised or decentralised systems when dealing with a crisis?

Watching governmental responses to the pandemic we have seen a debate played out. Is it better to have centralised or decentralised systems when dealing with a crisis?

Within the UK, this debate has surfaced particularly in the spheres of testing, the provision of Personal Protective Equipment and "test and trace".

In response to a crisis it's a very human instinct to want to take charge. If I'm going to be held accountable, then I want to have direct control of what happens. Direct control enables me to set objectives, align an organisation around the achievement of these, and measure and track performance against them. Decision making becomes, at least in theory, rapid.

As beguiling as central control may seem, a crisis also exposes its downsides. The system may be slow to react to issues as these have to work their way up the chain of command. The ability to make decisions is limited by the capacity of those at the top of the organisation and decisions made on averages may not be optimal when applied to particular local situations.

In military thinking, the constraints of central command and control are well understood.

Back in the 19th century, the Prussian Field Marshall Helmuth von Moltke wrote:

"No plan of operations extends with certainty beyond the first encounter with the enemy's main strength"

In George Paton's words:

"Never tell people how to do things...Tell them what to do, and they will surprise you with their ingenuity."

Central direction and local empowerment are one of the founding principles on which the ActiveOps business has been built.

We also see the centralized/decentralized debate in our own world of service operations with two rival organizational structures seemingly in constant competition.

In the first model, operations are consolidated into a central function providing a service for the organization.

In the alternative model, operations become part of the business line that they serve. There is no central operations function.

Proponents of the central operations model would argue that operations are a profession and centralization provides the scale you need to create a professional operations function. Through this, you enable best practice to be adopted and implemented across all areas of an organization. Investment is directed to where it is needed (increasing shareholder value) most and capacity can be smoothed across a large pool of people leading to efficiency and service improvement.

Detractors would suggest that central operations are too distant from the clients that they serve, that they react too slowly to business change, are too bureaucratic and a jack of all trades but master of none. Moving to the decentralized model allows complete alignment of objectives between the needs of the business and the operations teams fulfilling them.

We see both models within our client base.

The more cynical part of me believes that the continuing existence of both models is a perpetual money generating scheme for consultancies. Implement one model and diarise for 3 years to go back and change to the other.

Which has worked best during the crisis?

At this stage, I need to admit some bias. My career has been in central operations. I have built them, changed them, run them. I believe the upsides are really valuable and the downsides can be mitigated with a bit of common sense and an underlying uniting value that everyone in an organization is there to serve the customer.

I was, therefore, expecting to see centralized operations outperform decentralized.

Imagine a drum roll.

We actually saw that both models worked well.

In the decentralized model, people started working together across organisational boundaries to solve organization-wide issues. In response to the crisis, the natural tribal instinct was put to one side and we started helping each other.

In the centralized model, traditional approval processes were put to one side, and decisions made rapidly. Meeting the needs of the customer was the unifying cry and imaginative solutions found to issues.

As an operations community, the crisis has brought out the best in us. We've worked within, across, and outside of our organizational structures to do what's right for our clients, our customers, and societies.

We should take just a few minutes to reflect with some pride in what we've done and the difference it has made.

“Stuart has over 28 years of experience of leading change in service operations. His career has spanned project and programme management, strategy, consulting and leading operations divisions and functions. After 17 years with HSBC working in the UK and India, he moved to Abu Dhabi heading operations for ADCB.

Stuart joined ActiveOps in 2016 and leads its Customer Success function.”

Stuart Pugh, Chief Customer Officer, ActiveOps