Where Are You On The Centralization/Decentralization Pendulum?

It's a constant tradeoff for B2B CMOs, who want their marketing people to be totally in tune with the customers and markets they serve: "How much should I decentralize by aligning people closely with business units, industries, or regions" versus "How much do I centralize to maximize quality and minimize redundancy?"

I know as a marketing leader that I was constantly trying to figure out the right balance, and it seems like a pendulum. I would hire or assign a few marketing specialists to work with dotted-line reporting to line-of-business heads and then realize that each of them were using their own tools and struggling with the same issues, so I would look for work functions that I could bring back into a centralized role.

To help marketers manage the pendulum, I recently interviewed a dozen CMOs and organizational consultants to gain insights on this. There's no single best org structure that works for all companies, so don't ask me for one, but there are a set of drivers that can help you figure out where on the centralization/decentralization spectrum you should be for the different work streams or functions you need to perform. There are market factors, functional factors, and business factors.

For example, here are some market factors:

  • Breadth and diversity of product lines. Companies with narrow or closely-related product lines can centralize more functions, whereas companies with diversified product lines will find it necessary to move people closer to each product line.
  • Similarity of market segments. Companies that serve many different markets that have distinct problems and buying behaviors need to have people on the ground in each region or industry who have specialized knowledge of that market, so there's a greater need for decentralized resources than there is in companies that have a similar go-to-market strategy for every segment.
  • Maturity of markets. In early-stage markets, companies need to get their sales reps in front of prospects, and this requires a high level of lead generation activity in collaboration with the sales team, so a decentralized approach makes sense. As markets mature, there is greater need to create broad awareness of what the company does, which requires more centralized marketing efforts like branding and awareness.

Another big issue is how to best support the decentralized resources. Companies have for a long time been setting up shared services to consolidate functions that don't need to be done remotely and/or are best done centrally. A new trend we're seeing is that companies are morphing these shared services into centers of excellence to provide best practices and standard technology infrastructures that the decentralized folks can use to make them more productive and to keep all of them from having to be experts in every marketing discipline.

Read more about this in my latest report, "Drivers Of B2B Marketing Organizational Design."

Comments

Build once...Use Many

Great comments Jeff. I like the concept of building once - using many on the centralization/de-centralization. The corp side needs to be the "Center of Excellence" with the methods/tools/support and the Field needs to deliver. Check out my related blogs at http://blog.geehangroup.com/blog/customer-relationship-strategy

- Rob

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