What is the difference between delegation and decentralization?
Unless we know the difference, we can make some major mistakes in how we lead companies.
In delegation, you tell people what to do, how to do it, when to do it, and who should do it—so they are very clear on what is expected of them.
In de-centralization, it’s the opposite, it’s “upside down.” You don't tell people what to do. You ask them, “What are they going to do for you to approve?” In other words, the initiative, the thinking, the creativity, the problem solving, etc., is not on your shoulders—it is on their shoulders.
Let me give you an example of how the president of Applied Materials, a $15 billion company that I served as a consultant, has been doing it. When one of the heads of a division would come to him and say, “We have a problem. What do you think we should do?” He would get upset and say, “Wait, wait, wait, wait. The difference between a manager and an employee is an employee has problems and management has solutions. Are you an employee or a manager? What is your solution?” Then he would send the division head away, saying, “Come back with a solution.” When the guy came back with a solution, if it was a good solution—acceptable—then the president would say, “How great! Go ahead. Do it. Wonderful!” If not, he would not say, “No. That's the wrong solution. What you should do . . .” Because the moment he did that it would turn into delegation; he would be telling his division head what to do.
Instead, he would say, “No, no, no, no, no. Have you thought about this? Have you thought about this? Have you thought about this?” He would pose questions to the division head to show him the problem with his solution. (To guide the division head into seeing his own problem.) And then the president would send him back to redo it until it was done (acceptable). Then he would say, “Great. Do it.”
Now look at what's happening here. Several things are happening:
First of all, the manager or division head who is bringing back solutions to his problems is learning. He is growing—to be a CEO, to be somebody who thinks of what to do rather than executes or delegates what needs to be done.
Number two, the president (the CEO) had an empty calendar, he had all the time in the world. Why? Because his job was not to tell people what to do. His job was to tell people what not to do. That is called “decentralization.” For that, you need to have people working for you that can think, that can solve problems, and have initiative. They're not just the “waterboys” who do whatever you tell them to do and then say, “Done. What else do you want me to do?” Errand boys, messenger boys. You need people with capability, that are good at finding solutions, so that all you need to do is to approve what they are doing. If you have that, then the company is going to mushroom.
Applied Materials, during this time that I was serving the company as a consultant, went from $400 million to $15 billion. And they give a lot of credit to the Adizes methodology. And this is the major distinction between decentralization and delegation.