Centralize vs Distribute Decision
When making specific decisions about whether to centralize or distribute a particular organizational function or decision type.
A decision matrix synthesizing key factors determining whether centralization or distribution creates more value across seven dimensions: coordination needs, local knowledge, environmental stability, economies of scale, speed requirements, failure costs, and innovation needs.
When to Use Centralize vs Distribute Decision
When making specific decisions about whether to centralize or distribute a particular organizational function or decision type.
How to Apply
Coordination Needs Assessment
Centralize when high interdependence across units; distribute when decisions affect only local context.
Local Knowledge Assessment
Centralize when conditions are uniform and explicit knowledge dominates; distribute when high local variation and tacit knowledge are critical.
Environmental Stability Assessment
Centralize in stable, predictable conditions; distribute in fast-changing, volatile conditions.
Scale Economics Assessment
Centralize when significant scale advantages from aggregation; distribute when local optimization yields better results.
Speed Requirements Assessment
Centralize when deliberation quality matters more than speed; distribute when rapid response is critical.
Failure Costs Assessment
Centralize when high failure costs and catastrophic risk potential; distribute when failures are local and manageable.
Innovation Needs Assessment
Centralize when standardization creates value; distribute when experimentation and parallel learning are needed.