Decentralize or centralize decision making- the ageless battle
Mika Bäckström ja Jouni Soitinaho 17.4.2019

Digital technologies are developing faster than ever before, and they offer loads of new opportunities for companies to operate more efficiently. At the same time, customer behavior and expectations are changing radically making agile and fast decision making a necessity for companies to survey in the competition.

Moreover, banks and financial service companies have been operating under heavy and increasing regulation. Earlier the regulations within Europe were scattered and all countries had their own respective authorities and rules. For an international bank this meant more uncertainty since it had to be prepared for local changes in many countries. However, the evolution of EU has radically unified the regulatory landscape which inevitably affects the industry.

Different organizational models each have their own features that are great for responding to different challenges. To manage uncertainty, companies can apply decentralized organization model. Svenska Handelsbanken did a complete re-organizing into decentralized model lead by Professor Jan Wallander, who was the CEO of Handelsbanken in the 70’s. The transformation raised a lot of doubts inside the bank, and also outside. Handelsbanken Way, as the model is called, still today includes no budgeting and the organizational chart is the phonebook. However, according to financial success compared to other Nordic banks, the decentralization has proven to be good way to tackle the uncertainty.

Mika Bäckström’s thesis study digs deeper into the current environment of the bank operating in Europe and concentrating especially to the effects of decentralization for IT development.

What benefits does decentralization give in cross-border IT development, and on the other hand, what extra challenges does it cause for IT? As the decentralization has been financially successful approach, how to facilitate efficient cross-border IT systems development without impacting the success of the business?

An empirical study was done to find answers to these question by conducting deep interviews of participants from three countries. Read the thesis report to find out how the IT development can take steps towards more centralized decision making model in highly decentralized business environment of the case company. Among the means are agile development methods and supportive cost and benefit allocation.”


The link to the Master Thesis https://www.theseus.fi/handle/10024/165867

 

Authors:

Mika Bäckström, Project Manager and agile team coach at Handelsbanken, MBA student

Jouni Soitinaho, Principal Lecturer and Head of Master’s Degree Programme at Haaga-Helia UAS

Mika Bäckström ja Jouni Soitinaho

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