Decision-Making: The Revolving Door of Organizational Centralization and Decentralization
Issue 202, March 6, 2025
We have been keen observers of an organizational cyclical pattern to solve problems that we call the revolving door of centralization and decentralization. Organizations across many industries experience this recurring pattern, shifting between these two organizational constructs. Counterintuitively, organizations seem to repeat the cycle every few years, often framed as a novel strategic solution to operational challenges. A decentralized approach fails. Centralize. A centralized function becomes bureaucratic and slow. Decentralize.
Two Models
A pivot manifests when a top-down strategic direction seems unworkable. Conversely, it is triggered when collaboration appears to be broken. For example, in a decentralized system when decision-making is isolated, it can trigger consequences for other parts of the system. It gets more complicated when individual team leaders believe decentralization delivers greater efficiency, fewer headaches, greater control or cost savings. And when it doesn’t? Centralize.
Decisions and actions take a lot of organizational energy and give power in a centralized model to one, or many in a decentralized model. Proponents of a centralized approach claim that it prevents chaos and confusion. It also promotes heroes when one talented individual saves the day often self-described as a knight on a white horse. Advocates of a decentralized model believe that it taps into the talents of the workforce who contribute a systems thinking approach to problem-solving; the network of different voices ensures a fair, balanced and inclusive solution.
In either case, the chosen organizational strategy doesn’t guarantee that it addresses the root problem. When an organization shifts one way or the other in a kneejerk reaction in the hope that it will fix the situation, does it? Centralizing or decentralizing appears to be a decisive, strategic move, but without a plan it may not deal with core issues. A pivot merely resets the clock for the next inevitable shift. True progress requires a commitment to operational discipline, cultural alignment, and leadership excellence—beyond the structure of the moment. Operational processes evolve with the organization. When they have reached a plateau and become status quo, changing or transforming can be refreshing.
As we always caution, we habitually play to our human behavior default to rush to conclusions to handle a problem. Once it’s solved, stress levels decrease and we, our teams and the organization feel satisfied that we will live for another day. However, an immediate decision is nearly always short-term in focus. Without foresight, we struggle to see the consequences of the decisions we make today and in the future. Since the future remains uncertain, we tend to shy away from feelings of insecurity. Thus, we look for the shortest, easiest way to the future.
Shifting Sands
A cyclical shift may be a way to solve short-term organizational problems because it seems an easy solution to complex circumstances. But does it really solve the problem? Our battle cry is to deploy your critical thinking tools to determine the real issues. Is the current strategy workable and productive? Is it an organizational issue? Or are we just bored? As we said, our inherent human nature is to take the easiest path, regardless of the outcomes, for a seemingly quick fix.
Our suggestion is that these shifts back and forth are only surface deep, and by the time it takes to reset management and operational systems and transition the workforce into a new working model, it may be time to revert to the former construct. Thus, the revolving door accomplishes little other than making an organization walk in place and ultimately return to the same starting point. In a worst-case scenario, little gets accomplished and progress in the organization simply stops. When a revolving door is the only thing you’ve got as a management and leadership strategy, forward movement is all but impossible. Revolving doors stifle adaptation to market dynamics and risk that the world moves on without the organization.
The Revolving Door Understory
The pivot back and forth between centralized and decentralized strategies is often the outcome of a leadership change. When a new manager arrives (especially from outside the organization), that leader wants to make changes to demonstrate experience, insights and power positioning, regardless of how well a team has been operating.
Another reason for the shift is that results have been diminishing, and management believes the organizational construct is the problem. It blames broken processes, cultural issues, market dynamics, and the like as the problems caused by the existing structure.
Here are cautionary case studies that dramatize the revolving door syndrome for both scenarios.
Centralization Failure #1 – General Electric Under Jeffrey Immelt
During Jeff Immelt’s tenure as CEO of General Electric (2001–2017), GE attempted to centralize its vast, diverse businesses under a unified corporate strategy. Immelt introduced a “One GE” approach, emphasizing top-down management, standardized processes, and cross-business synergies What went wrong? The centralized approach stifled agility, especially in industries requiring fast decision-making (e.g., GE Digital and energy sectors). Bureaucracy increased, slowing down innovation and responsiveness. Business units struggled under corporate mandates that did not align with their specific needs. GE’s stock price plummeted, and the company faced severe financial distress, leading to significant restructuring and asset sales. The Outcome? In response to this mess, GE later pivoted towards decentralization, breaking apart divisions and spinning off businesses (e.g., GE Healthcare), realizing that excessive centralization had created inefficiencies rather than solving them.
Centralization Failure #2 – Gannett
Gannett, the media conglomerate that owns USA Today and several local business publications, attempted a highly centralized corporate structure after a series of mergers and acquisitions. The goal was to streamline operations, reduce costs, and unify editorial strategies across its B2B and regional business media brands. What went wrong? Centralized editorial control removed local autonomy, leading to a disconnect between publications and their niche business audiences. Standardized content meant fewer tailored stories relevant to specific industries, resulting in declining engagement from B2B subscribers. Cost-cutting measures eliminated local editorial staff, leaving content creation to centralized teams unfamiliar with regional B2B markets. The bureaucratic structure slowed down decision-making, making it difficult to respond to industry trends in real time. The outcome? Facing revenue declines and subscriber losses, Gannett was forced to reverse course, allowing local editorial teams greater control and bringing back decentralized decision-making in content production. However, the damage had been done, with lasting declines in credibility and reader trust.
Decentralization Failure #1 – Uber
Uber, under founder and former CEO Travis Kalanick, launched with an aggressively decentralized, chaotic model. Each city had significant autonomy to make operational decisions regarding pricing, driver incentives, and local marketing. What went wrong? Inconsistent policies led to legal and regulatory challenges in multiple markets. Company culture suffered from a lack of oversight, leading to scandals (e.g., toxic work environment, regulatory evasion tactics). Decentralized decision-making created reputational risks, such as drivers engaging in unethical practices without corporate accountability. Investors pressured Uber to centralize its governance and compliance measures. The outcome? After Kalanick’s ousting, Uber shifted towards a more centralized model under Dara Khosrowshahi, implementing standardized corporate policies, compliance frameworks, and risk management strategies to regain stability.
Decentralization Case Study #2: The American Marketing Association
The American Marketing Association (AMA), a professional B2B association for marketers, operated under a highly decentralized model where local chapters had significant autonomy over programming, branding, and membership management. What went wrong? Lack of standardization led to inconsistent branding and member experiences across different chapters. Some local AMA chapters struggled with financial mismanagement, event quality, and declining membership, but there was little oversight from the national organization. Without centralized data-sharing, member engagement insights were fragmented, making it difficult to improve services based on analytics. Sponsors and corporate partners found it difficult to work with AMA due to inconsistent policies across chapters, reducing funding opportunities. The outcome? AMA’s leadership shifted toward a hybrid model, centralizing branding, sponsorship coordination, and data management while still allowing chapters local control over events and membership engagement. This improved financial stability and strengthened AMA’s credibility as a national organization.
The Fallacy of Binary Systems
The endless cycle of centralization and decentralization is an illusion of progress. However, at first glance, these shifts appear logical. A decentralized model may struggle with consistency, efficiency, or accountability, leading to a push for greater central oversight. Conversely, a centralized function may become rigid, out of touch, or suppress innovation, triggering a return to decentralization. Leaders frequently justify these swings with data, case studies, and new strategic visions.
Each shift comes with costs — financial, cultural, and operational. Employees have to adapt to new processes and reporting structures that affect efficiency before any benefits materialize. Yet, organizations continue the cycle, treating structural change as a cure-all instead of addressing the root causes of dysfunction.
The Revolving Door Checklist
All organizations have their own personalities and ecosystems. However dysfunctional organizations share common behaviors. Several factors contribute to cyclical decision-making, often all of them converge simultaneously to create the perfect storm.
Process Breakdowns. Decentralization often highlights inefficiencies or gaps in execution. Instead of fixing processes, organizations may opt to centralize, assuming tighter control will resolve issues.
Cultural Dynamics. Power struggles, misalignment, and resistance to change can make decentralized operations chaotic. Centralization seems like a quick fix to restore order.
Leadership Preferences. New executives often bring different philosophies. A leader with a top-down management style may advocate for centralization, while one favoring agility may push for decentralization.
Incentives and Politics. Decision-making is influenced by internal incentives. Leaders may centralize to consolidate control or decentralize to empower teams, often driven by political positioning rather than operational effectiveness.
The Illusion of Control. Centralization can create a false sense of stability, while decentralization can foster an illusion of autonomy and speed. Neither guarantees success without proper execution.
Breaking the Cycle
Instead of treating centralization and decentralization as an either-or decision, smart organizations dig deeper into the root cause of the problem.
Process Improvement. Fixing broken processes rather than assuming structural shifts will solve the issue.
Leadership and Culture. Invest and equip leaders with the skills to manage complexity within any structure.
Hybrid Model. Some functions thrive with central control while others need local autonomy; it’s not an either/or decision.
Measure Outcomes Success should be based on measurable results, not whether an initiative is centralized or decentralized. Savvy organizations don’t judge the structure, they benchmark key metrics based on results.
A Faustian Choice
Excessive centralization can create inefficiencies and stagnation. It can also alienate audiences and stifle relevance. Uncontrolled decentralization can lead to operational inefficiencies and dilute brand identity. It can also trigger regulatory chaos and reputational damage. Neither centralization nor decentralization is a silver bullet. In a hybrid approach, centralized governance with local flexibility is often the most effective model for sustainable success. Organizations with foresight focus on leadership, process efficiency, and cultural alignment break the revolving door cycle.
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