It’s common today for decision-making to be pushed down and out in the organization, toward the people who are closest to the front lines. The theory is that by decentralizing control, you can make your organization faster and nimbler. But you can’t do that with every decision, so how do you decide which decisions to keep centralized? It can be useful to start with four qualities most executives want their organizations to have: responsiveness, reliability, efficiency, and perennity (e.g., the quality of being perennial, or continuing reliably in perpetuity). Think through which of these is most important to each aspect of your business. In units where reliability is the most important, for example, consider keeping power centralized. In teams where responsiveness is everything, decentralize away.
Rare is the business executive who doubts the importance of responsiveness: to be acutely alert to business opportunities and threats, and to be capable of grabbing the opportunity or fending off the threat fast and effectively. Hence, when (re-)designing the organization structure, they tend to decentralize decision-making, so that decision rights are as close as possible to the people who deal with customers, competitors, front-line employees, and other stakeholders. By doing so they avoid the delays associated with information and approvals traveling up and down the management hierarchy.
