Digital transformations will likely increase centralization and executive power
A quartet of management academics (Phillip C.Nell, Nicolai J. Foss, Peter G.Klein, and Jan Schmitt) just published an interesting paper suggesting that "digitalization" of business will lead to an expanded role of HQ and more power and involvement by execs, rather than encouraging more decentralized forms of management.
These findings come from a survey of more than 160 executives, who were polled on how digital transformation would impact their ability to oversee and direct the business from the center. Here are a couple of interesting charts from the paper:
Reading the piece reminded me of the misplaced hopes of Chile's Project Cybersyn, which sought to give central planners the data required to manage the economy from the top. The siren song of managing a complex system via tablet is definitely alluring:
The authors end the piece with several recommendations on how to guard against over centralization and micromanagement. My favorite is the the concept of "lateral centralization." Many post-bureaucratic orgs like Haier and Nucor practice this: decentralized operating units coordinate laterally on purchasing, best practice sharing, and multi-product opportunities without the need for large staff functions. They show that you can get the benefits of scale and consistency without the need to centralize and manage top down.