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Redefining Corporate Functions to Better Support Strategy and Growth - McKinsey
In the article Redefining Corporate Functions to Better Support Strategy and Growth, published by McKinsey & Company, the challenge of balancing centralized and decentralized functions is explored. Over the past decade, many companies have struggled to find the right organizational design, often influenced more by the perspectives of who is designing it rather than a data-driven, value-maximizing approach. When functional leaders are in charge, the tendency is towards centralization to achieve economies of scale, while business-unit leaders may prefer decentralization for responsiveness and control.
This dynamic, especially in large, global companies, can lead to tensions between functional leaders aiming for standardization and business leaders frustrated by a corporate structure that doesn’t meet their needs. To resolve this, McKinsey suggests three key steps: defining a clear organizational strategy, grounding functional design in business-unit needs, and determining decision rights and responsibilities. By taking a business-unit-first approach, companies can ensure that their functions are designed to better support strategy and drive growth.
Read the full article to learn how to strike the right balance between centralized control and decentralized functions to enhance your organization's strategy and performance.
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