Graham Charlton
Startups thrive on speed and autonomy, but as headcount rises, so does complexity.
Suddenly, five people are handling finance differently, every team has its own version of ‘the brand,’ and compliance risks multiply.
The instinctive fix is centralisation: pulling functions together under one roof for consistency.
Done wisely, it cuts chaos, saves money, and builds clarity. However, centralisation can create bottlenecks, bureaucracy, and frustrated teams.
This article explores where centralisation adds real value, the risks of going too far, and practical tips for striking the right balance.
Where centralisation adds value
Some functions simply benefit from tighter control. They’re too important, or too risky, to leave scattered across teams.
- Finance. Having one centralised finance team ensures spending is tracked, budgets align with strategy, and reporting is consistent. This reduces waste and keeps investors confident.
- Compliance. Regulatory mistakes can sink a business. A central function ensures you don’t have different teams interpreting rules differently.
- Brand and communications. A consistent voice and look builds trust externally and prevents teams from reinventing assets internally. Central brand guardianship protects equity in the long run.
The common theme is risk and consistency. In areas where mistakes are expensive, or where coherence is critical, centralisation pays off.
Centralise high-risk, high-visibility functions to reduce cost and protect reputation.
How centralisation improves efficiency
Centralisation isn’t only about control. It also drives efficiency.
A centralised finance or HR team avoids duplication of tools and processes. Instead of each team buying their own software or reinventing reporting templates, everyone uses one shared system.
Centralisation also improves bargaining power. For example, a single HR team negotiating benefits for the whole company is likely to get better rates than fragmented teams striking their own deals.
According to Deloitte, companies that centralise shared services like HR, IT, or finance often reduce operating costs by 20–30%.
Centralisation cuts duplication, reduces cost, and sharpens consistency.
The risk of over-centralising
But there’s a flip side. Overdo centralisation and you risk strangling the very speed and creativity that make startups competitive.
Common problems include:
- Bureaucracy. Every decision has to run through a central function, slowing response times.
- Bottlenecks. A lean central team can’t cope with demand, leaving others waiting.
- Loss of ownership. Teams feel disempowered when decisions are pulled away from them, which hurts motivation.
McKinsey found only 20% of organisations excel at decision making, and many cite slow, bureaucratic processes as the blocker.
Too much centralisation turns efficiency into bureaucracy.
Practical tips for centralising without killing innovation
So how do you reap the benefits of centralisation without sliding into bureaucracy? A few principles help.
- Centralise the what and decentralise the how. Set central standards and guardrails, but let teams decide how to execute. For example, brand guidelines live centrally, but teams can still create localised campaigns within them.
- Invest in tools. Centralisation works when supported by accessible systems such as shared dashboards, finance tools, and brand libraries that teams can use without bottlenecks.
- Review regularly. What made sense at 50 people may not at 200. Check whether your central functions are enabling or slowing progress.
- Protect autonomy where it matters. Keep product innovation, customer experience, and problem-solving close to teams. These are areas where decentralisation fuels speed and creativity.
A helpful mental model is to centralise for risk and efficiency, and decentralise for innovation and responsiveness.
Case study: Atlassian
Atlassian, the company behind tools like Jira and Trello, has grown to over 10,000 employees.
One of the keys to scaling without losing agility has been knowing when to centralise and when to leave teams independent.
- Centralised functions:. Finance, compliance, and brand are tightly managed. This ensures regulatory consistency, protects reputation, and avoids duplication across a global workforce.
- Decentralised functions. Product innovation and customer experience are left to autonomous teams. Atlassian is famous for its Team Playbook, a library of practices that teams can adopt voluntarily rather than being imposed centrally.
This approach allows Atlassian to keep control where mistakes would be costly, while leaving space for creativity and speed where it matters most.
The key is to centralise what protects the company, decentralise what propels it forward.
Summary
It’s not about whether centralisation is right or wrong, but how and when you apply it. Use it wisely, and you reduce chaos, save money, and build clarity. Centralise too much, and you can hamper initiative.
The best leaders know where tighter control adds value, and where autonomy drives speed.
The key is to centralise what protects the business, and decentralise what propels it forward.
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