Digital Governance: The Temporary Decentralization Model

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FIR On Strategy with Andrea VascellariThis is part of a series of posts that explores the “Adaptive Digital Strategy Framework” , an operative guide that I created to plan, execute and manage online strategy programs more effectively and efficiently. Each of post of this series comes with an audio podcast in which you will find the audio version of the post with additional audio commentary about the discussed topics. The name of the podcast is “FIR On Strategy with Andrea Vascellari”.

The governance models adopted to decentralize strategic digital responsibilities play an essential role in how an organization performs. Especially for large organizations, decentralization is what guarantees to the management the flexibility required to conduct projects successfully in today’s ever changing environment.

In this post we will explore existing digital governance models and I will introduce you to a new model that helps you analyze and solve specific strategic issues that can’t be solved by a single unit, by the top management or by the center of excellence alone. This is what I called the “Temporary Decentralization Model”.

What are Governance Models?

Governance models are adopted to decentralize strategic responsibilities and they play an essential role in how an organization performs. Especially for large organizations, decentralization is what guarantees to the management the flexibility required to conduct projects successfully in today’s ever changing environment.

In our specific case we will look at governance models adopted to decentralize digital responsibilities.

Existing Governance Models

There are different kind of decentralization models. In the ”Career Path of the Corporate Social Media Strategist” report, Jeremiah Owyang illustrates five models that describe how organizations are internally structured to embrace new media and emerging communication technologies.

Governance Models - Jeremiah Owyang

Credit: Jeremiah Owyang – Altimeter Group
(described in the cast)

Something else we should keep in mind is also what Brian Solis defined in this post as Center of Excellence.

Center of Excellence - Brian Solis

Credit: Brian Solis

The “center of excellence” (COE) empowers the existing management and execution roles within each division to introduce social elements as they apply to each unique circumstance while still centralizing the resources and intelligence necessary to guide stakeholders. The executive management team responsible for the direction of the brand though, remains at the center. The COE is a centralized hub for social excellence between executive layers and business units – we’ll explore more the “center of excellence” in another post.

Total and Partial Decentralization Models

I shared these models, described by Jeremiah and Brian, because I think they are solid and I still like to use them in my analysis. Having said that, I’ve noticed that organizations are not always defined 100% by one specific model. In some cases they are transitioning, other times you might find something completely different or unexpected. So I generally tend to divide them in two main categories:

  1. Total decentralization: There is a total decentralization to the single divisions so that the overall strategy of the organization consists of a grouping of partial but specific sub-strategies. What I have noticed though, is that a high level of decentralization of digital responsibilities is not always adequate to face strategic issues because the management structure is less flexible and it neglects the synergies between the different divisions. A lot of responsibility is left on the shoulders and to the initiative of who’s leading each division. These managers don’t always have the resources and the motivation necessary to capture, understand and respond well enough to the various inputs that come from the external environment. This leads inevitably to a reduced optimization of the performance of the organization.
  2. Partial decentralization: There is a partial decentralization to the single division but with a main control and coordination at organizational level. In these models exists a level of connection between what’s delegated to the different divisions and the core management structure. The top management defines the main strategic lines, distributes the resources, coordinates the strategic problems coming from the peripheral units and eventually re-directs them to more specialized units that are capable of solving them. In this case the units are more involved and motivated because they are not only dealing with their strategic responsibilities but they are also involved in capturing signals from the external environment and in the solving of strategic issues given by the top management. They role is more dynamic.

All the models described by Jeremiah and Brian fall in these two categories, but what happens when the mutable nature of the digital environment in which organizations operate generates specific problems that, to be solved, require us to step out of these pre-defined ways of organizing internal strategic responsibilities?

With some of the organizations I’ve helped, I faced this situation and I decided to take a different direction creating what I called the “Temporary Decentralization Model”.

The Temporary Decentralization Model

Governance: The Temporary Model

To describe and help you understand the way such model functions I will use the same approach adopted by Jeremiah to analyze the pros and cons of each social business model.

  • Name: Temporary Decentralization Model.
  • Description: Temporary teams of managers from different units, with different knowledge and expertise but with specific skills that are relevant to analyze and solve determined strategic issues that can’t be solved by a single unit, by the top management or by the center of excellence alone.
  • Advantages: It helps finding alternative and more effective solutions to very specific problems in less time. It makes pre-defined models more flexible. Since this is a temporary optimization of internal resources, the organization is not forced to support additional “on-going” investments. Eventually, based on the results, the organization can then evaluate if creating a new dedicated unit or not.
  • Drawbacks: To implement temporary models it must be present, across the entire organization, a strong orientation towards strategic organizational culture and innovation.
  • What No One Tells You: The decision to adopt a temporary model depends on the nature of the strategic problems that actually require a specific mix of skills to be solved. Abusing or exclusively relying on this model won’t help solving all of the issues that an organization has to deal with.

Example: Regional development project – local government. A region I worked with needed to stimulate the local business growth. This was a project that essentially required the cooperation between marketing and business R&D. It wasn’t something that could have been coordinated individually by these two divisions, neither by the central regional management or by the center of excellence alone. A temporary governance model is what helped to manage this situation. We decided to create an “idea lab”, a local physical and digital space for collaboration to address this regional need and support the local business growth throughout this initiative. This temporary team was composed by selected representatives of the local government, marketing, R&D and innovation departments. So Under the direction of the central regional management, the center of excellence wasn’t separately empowering each division. Instead, it was introducing and implementing digital to this new temporary unit, that we named “idea lab”.

“Ok, cool. But it’s not easy to understand which model we actually have, or should aim at, in our organization. How can we do it?”

This is a good and very common question that people ask me. What I’ve noticed is that even if the characteristics of each model are clear to internal teams it’s often difficult for them to vote or decide on which model they think they are or want to be in. In my next post I will share with you a specific methodology that will help you define more efficiently, and accurately, your digital governance model. Stay tuned…

Over to you

This is based on my experience. I tested this model primarily in the public sector, how would you see this working in the private sector? What would you add? What have I missed?

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