Effectively (de)centralising corporate impact

It’s been an interesting —?I say with empathy —?few years for everyone working around corporate sustainability. Major new regulations have individuals and teams working in this space highly focused on measurement and reporting capability. In short, it feels like it’s been the year of compliance; the year of the back-office investment.

This realisation got me reflecting on the wider ebbs and flows shaping corporate impact. One of these is striking the right balance between centralising and decentralising your corporate initiatives for sustainability, social impact and innovation across both those areas.?

Within the boundaries of your organisation, how are you managing and budgeting for the impact work that is rippling from your HQ out to your local teams, and vice versa? This links into your strategy, governance and organisational structure, across sustainability, innovation and impact delivery (which may also include your brand purpose work).

Here, we’ll look at the relative strengths and weaknesses of centralising and decentralising the elements that make up these structures and workflows.?

What to centralise?

Strategy and target-setting

Perhaps most obviously, centralising strategy and target-setting enables alignment, coordination and subject-matter expertise. That does need to combine with regular, detailed inputs from your decentralised or programmatic elements, though. To avoid the “ivory tower” pitfalls, and being disconnected and not fully understanding implementation complexities, structure your impact operations with decentralised and localised elements. You should build in regular “zooming-ins” to evaluate and learn with local initiative and implementation-level teams. Conversely, a central team is best positioned to zoom out and capture portfolio- and system-level impacts, and also to gauge your corporate impact work’s effects on the broader sector and related systems. This enables you to capture any positive impacts that may not have featured in your original KPIs — and also track and mitigate any potential negative system impacts you hadn’t foreseen. So, strategy and targets need to be held centrally, complemented by detailed, regular input from the full extent of your corporate impact ecosystem.?

Compliance & Measurement, Evaluation and Learning (MEL)

So many of us have been consumed by new reporting and compliance requirements recently that this seems obvious. Technical expertise and objectivity are the key reasons to centralise and build a sustainability team at the core of your organisation. This enables a clear overview of your compliance needs, and the ability to measure, evaluate and report on activities and impacts across your corporate structure, from business units to product teams. A central team can also more easily lead process design, tool creation and system management for your compliance and impact evaluation. Less obvious than the compliance and measurement elements, a central team will also be able to spot, distil and share learnings across various teams and partners to maximise impact and minimise risk.

Thought Leadership (TL)

Related to the learning elements mentioned above, a central team can help the whole organisation with three key Thought Leadership benefits: Predict, Prothletise and Promote.

• Predict: look “over the horizon” and scan for sustainability, ESG and impact-related weak signals, trends and developments to spot risks or opportunities.?
• Prothletise: inform, inspire and socialise internally on both new ("predict") issues as well as more established core material topics. This may include building and maintaining a TL "library" of "required reading" for onboarding team members, as well as optional "deep-dive" content to feed the curious and engaged.
• Promote: establish and maintain reputation and leadership by sharing data and learnings internally and externally.

All these Thought Leadership elements can be executed “behind the scenes” or can be done via events and gatherings to deliver other benefits (reputation, system connections, etc.).

Major partnerships

Larger partnerships often suit centralisation, with the rigorous management this enables. Ideally, you’ll also develop your major corporate impact partnerships to a place where you have a strong central element alongside decentralised activities. With that as your end goal, you’ll be able to combine outside-in creativity and innovation with the focus and control that major partnerships need.?

What to decentralise?

For worthwhile impact, systems change is key. That means not just decoupling and doing less bad, but looking at regenerative approaches, and starting to work out how to rebuild the social and natural systems we’ve been deteriorating.?

To deliver this change, organisations need to map out how they’ll innovate, execute and implement programs that are driven by systems-focused strategies. Crucially, this involves mapping out how you’ll adapt a strong centralised strategy to localised execution plans, that are appropriate and customised for their context.?

I’d highlight two key factors in shaping an impactful decentralised approach:?

1. Empower distributed teams with a strategic “fixed, flex and free” approach

Working from this framework, central teams can ensure overall direction of travel and unified focus while decentralised teams can tailor each roll-out to their context. Everyone will pull in the right strategic direction, with enough flexibility to make meaningful changes in each market. With market segmentation on both commercial and impact criteria, a “fixed, flex and free” approach can be tailored to ensure appropriate ambition level and resource allocation, reducing per-market “negotiations”.

2. Use a knowledge management process to capture learnings

When we work with a corporate client’s decentralised teams, we tend to find impact work that’s flown under the centralised team’s radar, usually because there wasn’t a structure in place to let the information trickle through. For large multinational clients, getting the right process in place to capture and build on news and learnings is key to moving all your organisation’s impact work forward, more effectively.?

Context and audience expertise, driving market relevance

Your local teams know their consumers, customers, competitors, products and brands better than your central team — naturally. They can delineate and define impact initiative roll-outs for their markets much more effectively, so it’s wise to hand this over as far as possible.?

Operational realism and scalability

Some elements of your organisation’s impact work may not be feasible in certain geographies, due to interplaying cultural, political, legal, economic and climatic nuances. So, the balance of fixed, flex and free impact objectives we touched on above is key here. Carefully considering and communicating exceptions in particular markets is critical as these can create global reputational risk.?

Distributed budget

How are your impact budgets allocated? And whose budgets are they? In our experience, these are the questions where the rubber really meets the road. You might structure your impact work from a centralised budget, allocated out across your markets and local corporate impact teams or programmes. Or you might combine a smaller centralised budget with separate, pre-defined impact budgets across your markets, business units, brands and product teams. We are seeing a trend towards models where operating units set aside a certain percentage of profits for sustainability, impact or purpose-led activities. This decentralisation is driving further integration but poses risks of dilution and a lack of technical expertise.

Bottom-up creativity and innovation?

Most likely, a segment of the sustainability work you’re already doing has developed bottom-up and organically from across your local teams. Throughout your markets, business units or brand organisations, ideas will have bubbled up and proven their efficacy. They may be driven by passionate individuals: “intrapreneurs”. They might have been shaped by historical market contexts or sprung up in reaction to changing environments, demographics and societal movements. To drive and encourage these decentralised initiatives, create space for your local impact teams to innovate — both independently and through co-creating with your centralised team. We have partnered with the League of Intrapreneurs on various programmes to turbo-charge this sort of impact innovation.

Centralised vs decentralised corporate impact: 3 thoughts to take forward

1. Set periodic strategic reviews?

Make sure you put in place regular moments to take stock and understand everything your organisation is working on in corporate impact, both centralised and decentralised. What does that portfolio look like and how well-suited is it to deliver your strategy? Structure your central strategy and implement the right questions, processes and reviews so that your decentralised teams can identify where and how their existing activities relate to, and help deliver, specific KPIs or strategic elements that you might have centralised (and vice versa).?

2. Look beyond planned KPIs

Maintain diligence and emphasis on evaluating your target KPIs for each local impact initiative, but do also widen the lens to track your corporate impact on the wider sector and relevant systems. Taking the “helicopter view” and doing some “outcome harvesting” are critical to spotting systems-level impacts as well. You’ll notice any positive impacts that weren’t in your original KPIs, as well as flag and counteract unforeseen negative system impacts.

3. Manage knowledge and capture learnings

Design processes that will let you hear about, and build on, the impact work all your decentralised teams are doing. Wondering where to start with that? Send me a DM —?I’ll be happy to hear more.