Katrina and the 'local vs. central' challenge.

• Author: Hall, Robert
• Position: Marketing Solutions

In the aftermath of Hurricane Katrina, we have seen the life and death challenges of coordinating the Federal Emergency Management Agency with the U.S. military, state national guards, international relief organizations like the Red Cross, state agencies, local county/parish and city government units. Once again we are confronted with the difficult dance between local--small, intimate, nimble, highly committed capabilities and central--large, trained, distant, bureaucratic, highly structured capabilities. The collapse of Enron, the death (or collapse) of Arthur Andersen, the intelligence failure regarding weapons of mass destruction in Iraq, the burst of the technology bubble, and now the chaos of Katrina are causing some to suggest a significant erosion of public confidence in institutions.

This is not a new challenge. The last few years have seen a growing trend to "scale up"--to take advantage of economies of scale and specialization. Conventional wisdom has held that consolidation and increased size would yield greater capabilities and greater efficiency. Yet too often, we see that scale has outstripped skill; growing larger puts a greater strain on skills, processes and leadership. Accordingly, in a number of industries we have seen organic growth stagnate at large, consolidated organizations. Consolidated financial reporting often obscures the market-by-market battles that drive success: The Harvard Business Review ("All Strategy Is Local," September 2005) reports, "A systematic analysis of particular sectors shows a close connection between local or regional market share and profitability." Whether it is hurricane victims in New Orleans or bank customers in Oshkosh, receiving value is still a very personal and often local affair.

As organizations grow larger and more global, the consequences of missing the local mark will not go away. Perhaps there has never been a better time to revisit the question: What is required to enable large central organization units to work effectively with smaller, local units to deliver value? In the private sector this means how do central marketing, information technology, product development, research and development work effectively with local branches or sales/ service delivery organizations?

In working with over 100 organizations on this challenge, I have found there are five components that serve as enablers to the central/local challenge:

1. Shared mission and vision: Perhaps the words are...