The second concept, in terms of formal structure that I wanna talk with you about, is called centralization. And again, the concept's pretty simple to grasp. It's simply the distribution of decision making authority. Will the decision making authority in your team be allocated to a single team member? Whether that team member is you or someone else. Or, will that decision making authority be shared among multiple team members, or the entire team all together? This concept, if you wanna think about the team structure that we talked about a little bit earlier. The most common centralized team structure, would be the one where the formal team leader is often the one who has that final authority on making decisions. But we've actually been doing a lot of research recently on the decentralized structure in teams. And what we're finding in a lot of organizations is that team leaders are pushing that decision making authority down further into the team. Whether in this case, that be at the module leader level. Or even down to those individual team members, and decentralizing that authority. And some of the benefits that come with that. But there are trade-offs, and that's what I wanna talk with you about in this session. Is some of those trade-offs between centralized and decentralized decision making authority. So that you can make the best choice for your team. So let's start with one of my favorite studies, in regards to centralization within teams. And that is this study here. This study looked at teams that were engaged in both creative tasks. And then what they called execution-focused tasks. So the creative tasks are really problem-solving, requires a lot of flexibility, a lot of adaptability. The execution focus tasks, those are again, some of those routine tasks. Where efficiency and execution are the key to success. And what you're gonna see here is simply the concept that, depending on your task environment. Certain decision making structures are gonna work better than others. In a creative focused task, we find that pushing decision making authority down to the team. And really creating a decentralized team structure. Actually results in higher team performance. But the opposite is true when your task environment requires execution and efficiency. Then, a more centralized decision making team structure, tends to result in the better team performance. So again, the conclusion being, benefits of centralized versus decentralized, it's not that one is better than the other. It really depends on the task that your team is engaged in. So you want to think carefully. Is my team in a task environment that requires adaptability and flexibility? If so, decentralize. Is my team generally in an execution-focused task, where efficiency is the name of the game? If that's the case, then maybe a more centralized structure would help drive that efficiency. Some things to think about for your team. I'll share with you some data that we've been collecting over years now. That speaks to this centralization, decentralization dynamic in teams. At Michigan Ross, in our MBA program. Both our full-time MBA program, our executive MBA program, our weekend MBA program. Even now with our undergraduates, we have what we call MAP projects. These are largely consulting projects. We've done almost 2,000 of them, with over 1,200 different organizations over the years, in 90 different countries. And they're typically five to six person teams. And I've been studying now for a few years, why is it that some of these teams excel? Absolutely deliver really high quality work to the sponsoring organizations, some of which you see here on the slide. In other cases, some of the teams struggle. And so, why is that? And is it possible that this centralization, decentralization concept can help us understand that question? And it, in fact, we find that it can. So for example, I've plotted a random sample, if you will, of map teams. The vertical axis here, is really about the leadership behaviors and the leadership roles that emerge in the teams. And on the y-axis, what you see is simply a metric for how much leadership behavior is exhibited in the team. In some teams, you see what we call a Leadership Void. There's just not a lot of leadership going on in the team, in terms of goal setting, managing conflict, developing trust, cohesion. Those sorts of leadership acts that we would want to see in teams. You just don't see a lot of it. But then in other teams, higher up on that y-axis, you do see quite a bit of leadership behavior being exhibited across team members. An important note, there's no formal authority structure in these teams. So it's all informally emergence of these different roles. The x-axis you see here, is a metric for how centralized is that team's leadership. If it's low in terms of centralization. What you have, is an environment where team members are sharing whatever leadership is exhibited in the team. So, in the upper left-hand corner, you've got lots of leadership happening and it shared. Thus, we call it Shared Leadership. On the right side of this graph, you have what we call Centralized Leadership. Where one, or a few individuals, are really fulfilling that leadership role within the team. And others are looking to that person for guidance, in terms of those key leadership behaviours.. So, we can see differences in terms of, is it decentralized and shared in terms of that leadership function? Or is it more centralized in these teams? And then what we've been looking at is, depending on what leadership structure is created in the team. Does that predict team performance? And we actually find that it does. So what you see here, is a set of results from a study that myself and some of my colleagues published recently. Looking at this exact concept. And we controlled for things like gender and age and experience. How familiar the team members were with each other, and how big the teams were. And how interdependent their work was, and those sorts of things. And then you'll see here two concepts. One's called Leadership density. Density is simply the fancy term for how much leadership is being exhibited in the team. And that .18, what that means is, a significant effect on team performance. As rated by the sponsoring client organization for this consulting project. In the team, the more leadership we see, the more satisfied that client or that sponsoring client organization is. And the higher they rate the performance of their team. But importantly, when we take into account the centralization, decentralization data. What we find, is that team performance is less about how much leadership is happening in the team. But actually, how those leadership roles and behaviors are distributed amongst team members. And what we find, is that the shared decision making, the shared leadership structures. Tend to result in higher team performance. Or alternatively, the more centralized that decision making and leadership structure behavior is. The worse on average, these teams perform. Really important, for you to think about your own teams, and how decentralized, how centralized are you. And how that's affecting your team's performance, in light of some of these data that I'm sharing with you. But again, remember, it's not always as simple to go from decentralized to centralized and vice versa. And so you've got to be very thoughtful, proactive, about do I want more decentralization? Do I want more centralized decision making structures in my team? So when do you want each of these? Centralized authority, typically when team members are less interdependent. More focused on execution, less complex tasks. And what we find in some of our more recent research, is when you have a lot of diversity in experience. You have some team members that are very experienced and some team members are much less experienced. Often that centralized decision making structure can help that team pull out the insights from both the more experienced and less experienced folks. And make better decisions as a group. When do you want decentralized or shared authority, those shared leadership structures? Well, the opposite in a lot of cases. The more interdependent your team, the more your task environment is focused on creativity. The more complex tasks are, and then the opposite on diversity. What we find is that, when you have people of equal standing, in terms of key attributes like experience. You want more decentralized, more shared authority. So that those peers who are more similar to each other. You're not allowing the formal authority structure to get in the way of those similarities. And the shared authority is creating a collective responsibility to draw out those collective experiences of the group. Really pull those together, so that the team can make the best possible decision. So this gives you at least some parameters on choosing, again, centralized versus decentralized. But for many of you, you're already in teams, you're probably all ready leading teams. And so it's important to think about switching these structures, and how difficult that is is some cases. And so I want you to remember, there's a big but to this. And that but is, it's not as simple when you think about switching. Switching, again, is pretty complex, and so here's a study that my colleagues recently published. Where again, they're looking at team performance. They're looking at the impact of centralized versus decentralized structures on that performance. And they had some teams that were centralized and some teams that were decentralized. And then some teams switched. And what happened is, the teams who switched from decentralized to centralized. Which what you will see on the left side of this graph in that blue bar. Meaning, the teams switched from decentralized, to what I've labeled here as centralized. That decentralized to centralized switch, really got in the way of the team's performance. That is a really hard switch to make. Versus, the teams who switched from centralized to decentralized, they still didn't perform as well as the teams who stayed in their original structure. We find that when you change structures, you're going to see performance drop. The question is, is how far? And what we find is, teams that switch from centralized to decentralized experience less of a negative impact from that switch. Than teams who start off decentralized, and move to centralized. So if you're one of these teams that is centralized, and today, and you want to move to decentralized. You're probably gonna experience some performance challenges along the way. But nothing like if your team is decentralized today, and you switch to centralized. So conclusion, switching has cost. If you can afford to stay in your current structure, your team's gonna perform better on average. If you are gonna switch, be careful which direction you're gonna switch. Because the norms that are created from the original structure, those norms do not disappear. Even though you change the structure, those norms often persist. We're human beings, we develop these norms, they carry forward. Even though on paper we've changed the structure of the team. Those norms carry over, and often times, those norms will be a misfit with the new structure. Something to keep in mind for you, as you assess the structure of your team. And consider the possibility of staying or switching.
