LONDON, ENGLAND - DECEMBER 05: An NHS pharmacy technician at the Royal Free Hospital, London, ... [+]
This month the UK became one of the first countries in the world to administer a new COVID-19 vaccine to the public. The arrival of ‘V Day’ marked a turning point in the fight against the coronavirus, but questions remain about the UK government’s strategy for rolling out the vaccine. In particular, what aspects of the vaccination programme will be managed by central government (i.e. centralized) and what aspects outsourced to the regions to manage (i.e decentralized)?
While a roll-out of the vaccine to 60 million people could all be controlled by central government, this isn’t a model that reflects the complexities of rolling out vaccinations across the UK. The answer is probably a combination of the two.
Central government is likely to determine the purchasing, logistics and order of priority for the roll-out while local government is best placed to understand the needs in their region and the local mobilisation of resources to make it happen eg. through the 7000 GP surgeries across England. But where to draw the line in terms of who makes what decisions remains a challenge.
This problem of centralization versus decentralization is, of course, an old one. As Henry Mintzberg wrote in The Structuring of Organizations, “the words centralization and decentralization have been bandied about for as long as anyone has cared to write about organizations”. Despite this, the decision-making process for leaders on which responsibilities should be held centrally and which should be distributed has never been easy, and remains a source of significant problems today.
This is no more evident than when looking at the handling of the coronavirus pandemic by the UK Government so far.
The vast majority of healthcare in the UK is delivered by the state via the National Health Service (NHS) at both hospital and community-level. Public health, as is common around the world, is also government funded and delivered.
The organization of these functions has been sorely tested during the pandemic. Two examples shine a glaring spotlight on the consequences of making the wrong decision between centralization and decentralization, as their implementation has hindered the UK’s ability to get COVID-19 under control.
The first example can be found in the approach taken to tracking the spread of the virus.
In theory, the responsibility for maintaining public health, including dealing with infectious diseases, is overseen by Public Health England (an arm of the Department of Health) but delivered in conjunction with local government. However, rather than using this devolved system to monitor the spread of the virus, the British government instead chose to implement a highly centralized national Test and Trace system.
While allowing for physical testing to be done at a local level, this removed control of the information gathering and dissemination from local authorities – arguably the best placed to make effective use of the information.
Furthermore, to get a centralized system up and running, the government put out contracts with a large range of private contractors, few of whom had any local networks or any experience in public health. As a result, monitoring was slow to take off and there remains on-going difficulties in tracing infected individuals and the local knowledge and actions necessary to make the service truly effective have been by-passed.
As a comparison, the decentralized test, track and trace system implemented in Germany has become the poster child for success, and lauded as one key reason why the German fatality rate has been so low.
The second example of a poorly made centralization vs decentralization choice can be found in the organisation of procurement.
While procurement has recently been made a centralized function in the NHS, when the pandemic hit the UK, responsibility for procurement of Personal Protective Equipment (PPE) ended up on the desks of local NHS providers. This meant additional strain was placed on already stretched services as clinicians had to take time away from delivering care to source PPE for their hospitals. They also ended up competing against each other and lacked the critical mass to get the best deals. As a result, many staff ended up working without the necessary equipment, endangering their lives and those of their patients. Had the responsibility for procurement been discharged centrally, there would have been fewer negative consequences.
So what can be learned from this? Making the wrong choice between taking a centralized or decentralized approach to a business function could result in putting unnecessary, avoidable strains upon an organisation that ultimately, could lead to failure. In a recent webinar, hosted by Imperial College Business School’s Executive Education department, we invited an audience of business professionals to consider these challenges.
It’s true that an unavoidable tension exists between the efficiency and reliability of centralization versus the responsiveness and flexibility of decentralization. Ideally business leaders want their organizations to be efficient and reliable, yet also responsive and flexible. But in attempting to avoid this tension, leaders either routinely switch between centralized and decentralized approaches to capture the best of both worlds, or find themselves repeatedly facing the problems created by their choice without recognizing why.
How do we move forward? Again, we can look towards the NHS.
Leaders must avoid trying to solve the wrong problem. While firefighting is sometimes necessary in any organization, particularly in unprecedented and uncertain circumstances, leaders need to step back and consider why the fire started in the first place.
When the root problem is one of centralization versus decentralization, they must decide what is most important. Above all, they must choose and live with the choice.
This article was authored by Professor Carol Propper, Chair in Economics and Professor Nelson Phillips, Professor of Innovation and Strategy from Imperial College Business School
