Leadership in Decentralized Organizations

An interview with undconsorten partner Dr. Axel Sauder

Undconsorten supports many large decentralized organizations in their quest to improve leadership performance. As experts in leadership and organization, we know this is instrumental for greater organizational performance. Effective implementation and mutual alignment are particularly difficult to achieve in large distributed organizations where management must also remain present and provide effective motivation and stimulus for their employees from a distance.

In the interview, undconsorten partner Dr. Axel Sauder talks about the experience gained from major projects to change leadership in decentralized organizations.

What are typically the main motivations for these kinds of projects?

We mostly see two reasons – either the desire for a greater impact in existing structures or the need to respond to significant changes in the company, also from a leadership perspective. Two examples show how varied the starting positions can be: a large client in the public sector had modernized structures and processes in the past –nevertheless, they were finding considerable friction losses being generated across the organization. Another client from the automotive sector had grown over the past two decades from a family-owned company into a global organization, which now had to reinvent itself to some extent – the keywords here being digitalization and e-mobility. In both cases, the answer lies in improved leadership – from the board of directors to the frontline.

 What are the challenges to be overcome when leading in decentralized organizations?

Well, first of all you have to define (or at least point out) what “good leadership” actually is and what it is supposed to do – without this common reference point, you won’t achieve much. We often experience a surprisingly broad consensus across all levels of hierarchy, business units and regions in this regard. In the case of our automotive client, there were weaknesses particularly in soft topics such as feedback, error culture and employee development. Even clearer was the acknowledgement that if you want more innovation, more entrepreneurship, more decentralized responsibility and speed, there needs to be a change from a hierarchical leadership model with a good dose of micro-management.

Especially in decentralized organizations, it is crucial that there is a good balance between centralized leadership and decentralized responsibility. Managers are always in a double role – they have to be able to lead “downwards” with clarity, but they also have to be able to listen; and “upwards” it’s all about having the guts to represent their view on things and their assessment of what is possible. This is a particularly big challenge at the lower levels of management. If this is not working, managers are not leaders but executors.

In retrospect, are there any key insights?

Each project does have its own dynamics, but there are some common themes.

First, it should be said that leadership change always entails a comprehensive change in culture, otherwise you’re doing something wrong… This means that these projects must also be seen as substantial change processes in which a “clean” technical implementation is only half the battle. The bigger challenge is getting people on board and inspiring them. This was particularly clear in the case of a major professional services firm: in a self-confident and successful company, there is a particularly urgent need for an inspiring overall story and, ultimately, a board that makes it clear that there is no going back to the old world.

Are there any specific areas in which adapted leadership in real business situations becomes particularly apparent? 

There are, and they are particularly important in order to quickly clarify where the benefits lie. If the collaboration in a matrix or, for example, the performance discussions suddenly run noticeably better, then this can give an enormous boost. Unfortunately, there is often still the tendency to believe that changes in leadership can take place through appeals and adapted HR instruments alone. Wherever possible, we try to provide managers with on-the-job support for these topics because this is more effective than intermittent trainings. However, this requires a skillful approach focused on the central points in order to keep the effort manageable.

Speaking of which: As a boutique consulting firm, how do you manage to provide decentralized and sustainable support on management issues for decentralized organizations?

This is indeed a challenge, incidentally, even for very large consultancies, because it will probably never be possible to work as consultants across a wide span and with unlimited resources.  Moreover, we don’t think that would make sense anyways because it is important to make the organization itself a player in its own change as early as possible. There are a number of approaches that help with this.

Our standard procedure is to work closely with our clients in mixed, authentic teams and involve management, such as the local HR organization. In large projects in particular, it’s all about using the right amplifiers for your own resources – e.g. to create early lighthouses in relevant parts of the organization and systematically build up multipliers there. It’s also important to call managers to account, so that they see the change in leadership culture in their area of responsibility as part of their leadership tasks.

Looking ahead, how will leadership in decentralized organizations need to evolve in the future in order to be successful in a digital world?   

Everyone is talking about digitalization and the future of work, and rightly so, as we are facing major upheaval. As organizations are increasingly characterized not so much by their organizational structure and standard processes but by agile, collaborative forms of work, and as the boundary between internal and external employees becomes blurred with the human-machine interface becoming ever more important, also leadership must change.

We believe that because of these trends, leading by means of issuing directives will continue to lose importance and the role of managers will become more and more that of an “empowerer” of teams and organizational performance. Presumably, the traditional, unambiguous management relationships between superiors and employees will also become less frequent. We will see more managers who work in several areas and employees who have different superiors depending on the topic – like how matrix organizations already work today.

Leaders have an important role to play in the ongoing change process. Digitalization and the future of work are a major challenge for every organization, and for the public sector, it’s a revolution! In such a context, leaders must perform a difficult balancing act: to provide security and at the same time have the openness required to actively shape new working methods. This calls for both leadership and curiosity.

Axel Sauder
Axel Sauder
Partner, Head of Organizational Practice

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