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Centralized And Decentralized Business Models

h1 Centralized And Decentralized Business ModelsSome business models lend themselves to Knowledge Management more than others. For example, in a leader’s experience with Medical Multimedia, the centralized business model with strong, centralized leadership facilitates the implementation of Knowledge Management (KM) practices in the company. In the centralized business model, there is a high degree of corporate level control because revenue, reporting, and employee reward are funneled through the corporate management. With a centralized approach, clear lines of communication can result, enabling economies of scale and the ability to standardize the use of knowledge management technologies throughout the organization. Management can send a clear, unambiguous message to employees that investing time and personal resources in the corporate-wide KM effort will be rewarded when it’s time for annual reviews and bonuses. However, management doesn’t necessarily have to buy in to the concept of Knowledge Management.

If senior management is divided over fully backing a KM initiative, including the sharing of information, then the initiative is likely to fail. If the Medical Multimedia had been based on a decentralized model in which information is controlled largely by department leadership, The leader would likely have failed at implementing a KM program. In the decentralized business model, there is no central locus of information control and the local department or company division typically handles reporting and reward for employee performance. The decentralized model provides flexibility at the cost of redundancy throughout the organization and poor integration. When work is outsourced, there is a loss of control from a process perspective, in exchange for short-term price savings. Business functions are delegated to an outside vendor that serves a number of other clients.

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