TCL, Decentralization or Centralization

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Editor's note: In order to achieve a full turnaround, TCL Group has been adjusting its organizational structure since 2005. Now, the power of TCL's major business segments has begun to be further controlled by their respective heads.

This decentralized management is the most direct manifestation of TCL's feudal culture. Under the banner of Li Dongsheng, chairman of TCL Group, Hu Qiusheng of TCL Multimedia, Liu Fei of TCL Communication, Yang Weiqiang of TCL Computer and Wang Kangping of TCL Home Appliances are known as the four princes of TCL.

Some people think that decentralization is a good move for TCL to get out of the predicament. Because decentralization can reduce decision-making risks and give full play to individual wisdom.

Some people also believe that this authorization method has a strong personal color of Li Dongsheng, is too arbitrary, and lacks systematic thinking. Moreover, personnel adjustments are based on performance considerations, rather than proactively making strategic arrangements. TCL is now facing a huge lack of core values and external competitive pressure. It only emphasizes the authorization of performance and cannot solve the problems at the corporate strategic level.

Faced with the dual pressures of short-term performance and long-term strategic development, should TCL implement decentralized management? If decentralization is necessary, how can decentralization solve the contradiction between short-term performance pressure and long-term strategic development? How can these princes form a joint force?

In terms of TCL's organizational structure, there are two opposing views: one is that TCL's decentralized management model brings decision-making risks. Another point of view is that, as a company of the size of TCL, it should implement decentralized management.

Opponents believe that centralized management is more important, because major decisions can be brainstormed to avoid one-sided decision-making; resources can be concentrated to avoid waste; individual business development can be avoided to deviate from the main line;

Supporters believe that decentralization facilitates the exertion of individual wisdom and creativity, so that individual management and implementation capabilities can be fully reflected; it can respond to the market more quickly; Instead of getting caught in specific affairs; it is conducive to the cultivation of talents. Decentralization and centralization have their own drawbacks, and no one would agree with absolute decentralization and centralization, and no single leadership style can be applied to different companies. We can only make specific analysis for the different situations of enterprises.

Centralization VS Decentralization

From the perspective of enterprise development strategy, the situations suitable for centralization include: integrated enterprise group; single-brand group; enterprise main business; business sector that contributes more to enterprise profits; business scale A small, but strategic business; a business in a time of change.

Suitable for decentralization: diversified enterprise groups; multi-brand groups; surviving businesses that do not contribute much to the business of the enterprise; businesses that are in a stable period.

From the perspective of organizational structure, those suitable for centralization are: strategic management headquarters; operational management headquarters; business divisions; sole proprietorship or holding enterprises; small and medium-sized enterprises.

Suitable for decentralization: financial headquarters; subsidiaries; shareholding companies. Of course, the capital management rights and the appointment and dismissal rights of important personnel of the financial headquarters are concentrated in the headquarters, but the specific operation rights are decentralized.

From the perspective of human resources management, situations suitable for centralization include: enterprises with unsound human resource management systems and no basic institutional system; business of newly recruited managers.

Situations suitable for decentralization include: an enterprise with a relatively sound human resources management system; a business for which the leader of the business sector has been working in the enterprise for a long time and the group has a better understanding of it; the person in charge of the business sector has a comprehensive and comprehensive ability.

From the perspective of corporate culture, the situations suitable for centralization include: enterprises without clear development goals and core concepts; enterprises with lax thoughts of cadres and employees.

Suitable for decentralization: companies with a unified understanding of corporate strategy; companies with a sound corporate culture system.

TCL should implement centralized management

In the case of TCL, all indications show that TCL should implement centralized management. First of all, with the integration of 3C, the types of TCL products are gradually concentrated, all use the common brand of TCL, and face the same opponent in many fields. Therefore, TCL should realize centralized management, and the major strategic decisions of each industry group should be discussed collectively and achieve strategic synergy.

TCL is different from Lenovo. Lenovo's business scope covers computers, IT distribution, real estate, glass, medicine, auto parts and other fields. Therefore, Lenovo is a typical decentralized management. Its business is mainly managed by five leaders, Yang Yuanqing, Guo Wei, Zhu Linan, Chen Guodong and Zhao Linghuan. Liu Chuanzhi only focuses on individual business areas.

Secondly, in general, TCL belongs to a strategic management headquarters, rather than a financial enterprise that pursues short-term returns. Therefore, it is necessary to implement collective decision-making on strategic management. Subordinate business groups are not allowed to develop unrelated businesses independently, nor are they allowed to make major decisions of subordinate businesses in stages without the approval of the headquarters. Therefore, if Wan Mingjian takes the road of independent research and development, TCL headquarters needs to discuss it together. The two sides may agree or disagree. If there is any disagreement, it should be decided and responsible by TCL headquarters. If so, Wan Mingjian would not have left. Today's Liu Fei will inevitably face the same problem as Wan Mingjian.

Third, from the perspective of human resources, the authorization of Wu Shihong is not appropriate. As a new recruit of TCL, she should implement centralized management of the business she is in charge of. But because Li Dongsheng trusted her too much, TCL lost a lot of profits. It is one of the typical problems that Chinese enterprises are currently facing. Therefore, decentralization and centralization often become a problem of two people. Is it blind trust? Or betrayal? Or are the two powerhouses competing (it is rumored that Wan Ming’s steadfast meritorious deeds are the best)?

Li Dongsheng's personal color is two-sided, there is a bright side, and there is a dark side. However, the development of TCL cannot be determined by Li Dongsheng's personal color to determine the development of the business group. If you like a person you will authorize him even if his performance is not good (a problem with many state-owned enterprises). If you don't trust a person, you may not be at ease no matter how good his performance is (a problem that occurs in many private enterprises). In short, to judge a person, it is necessary to establish a strategically oriented human resources performance system, and to organically combine personal problems with the human resources system, in order to achieve the best effect of centralization and decentralization.

Fourth, corporate culture is a specific problem for many companies implementing internationalization strategies, including companies like TCL. Only when employees from different countries, different beliefs, and different cultural backgrounds are unified into one cultural system can we talk about authorized management. However, it is difficult for Chinese companies and acquired foreign companies, including branches established abroad, to have common goals and communication mechanisms. If centralized management is adopted, the acquiree may not actively cooperate, and even cause brain drain. If decentralization is adopted, it is very likely that the goals of the headquarters will not be achieved, and decrees will not be issued, resulting in loss of control. Therefore, cross-cultural research and integration is a key success factor for the development of an international enterprise, and it also directly determines the profit and loss of the enterprise.

To talk about centralization and decentralization from the perspective of management has no specific guiding significance for enterprises. It is still necessary to consider the scale, development stage, development strategy, organizational level, basic management system, corporate culture, leadership style and other aspects of the enterprise, and decide on the basis of low management costs, low transaction costs, and the ability to reduce risks. Decentralization or centralization.

Enterprises should avoid two tendencies that often appear in the management of parent and subsidiary companies in the real economy: excessive centralization and excessive decentralization. As for TCL, centralized management should be adopted in strategic management and major resource allocation, and decentralized management may be adopted in specific operations. Of course, rationalizing the centralization and decentralization cannot solve the long-term profit problem of TCL. Enterprises still have to take independent research and development, take the road of innovation, and take the improvement of competitiveness as the most important means.

The author is an expert partner of Peking University Zongheng Management Consulting Company.