Leading in Challenging Times ....

A big dilemma in challenging times is where to put the locus of control: in the centre or at the unit level? In "normal" times this is also a choice but in economically challenging times the strategic considerations are different. Putting the locus of control at the centre may force more aggressive cost cutting. In some circumstances short-term fiat is the most desirable lever for change available to senior executives. Leadership from the centre with close involvement of units on key areas for improvement may lead to more sustainable efficiencies. On the other hand, in recessions different markets enter and emerge from the recession at different speeds. So if units or geographies are dispersed then central management of costs may overshoot control one way or the other. Perhaps, an alternative organisational strategy needs to be put in place. This would be to devolve as much of the P/L to the smallest possible unit and cut coordination (aka headquarter) costs. This model was once quite popular ... It has a critical downside in that after a while it is hard to obtain significant revenue growth unless the unit is in a truly spectacular market or is fantastically innovative. In better times, revenue growth comes at the edges between units. In hard times, just focusing accountability for P/L to smaller units make cost adjustments possible in turbulent markets.