1. Chandran Nair
Managing Director National Instruments ‐ South East Asia

2. What is driving the hub or decentralization
Strategy?
Finance – cost, tax rebates
Manufacturing – cost, competence, geography
Sales/Marketing – closeness to customer, geography
R&D – competency, cost
Corporate Structures – Central/decentralized
▪ Control, comfort, familiarity,….
Align the agenda drivers – with the company
goal.

3. Finance
Constancy of metrics and accounting principles
until project completed and results analyzed
Manufacturing
Customer expectation metrics, quality metrics,…
R&D
EROI, on‐time schedules of products,…
Sales/Marketing
Revenue, P&L,…

4. Centralized Hubs
▪ Low margin , often high volume product
▪ Undifferentiated products
▪ Low value add to customer interfacing roles
▪ Franchise model requiring consistency
Centralized control
▪ Policed innovation
▪ Limited growth of leadership except at the centre
▪ Distanced from customers
▪ Controls in the hands of fewer GMs leads to
Increased risk of “critical exposure” – Study Enron

5. Decentralized
▪ Higher margin products
▪ Value added customer interfacing roles,
▪ Differentiated products/systems/business
models
Decentralized control
▪ Open to customer centric innovation
▪ Closer understanding of customer needs
▪ More GMs leads to decreased risk of “critical
exposure”

6. Sony's Newest Display Is a Culture Shift
▪ May 8, 2008; Page B1 Wall Street Journal
Decentralized Management is the crucial
cultural shift that is helping Sony
TV Designed and built in the Americas for the
American market is a increasing Sony’s market
share tremendously.
Traditionally products were specified and
designed in Japan for the American market with
no input from the American BU.

7. Small Highly Independent Business Cells
Independent GMs and P&L
▪ geographic ‐regional, country and sub country
▪ Revenue growth and profitability far exceeded parts of the
business that was not atomized
CAGR over 5 years for centralized part : 7%,
decentralized part : 20%
Extension of this idea used in manufacturing
with the work cell concept.
▪ Multi‐skilled group in a cell vs. highly specialized worker on a
line
▪ Increased Yield by 27%

8. Increase control of operations
Increase efficiency of certain functions
Less investments on sharing best practices
Open loop decision making
Impact of decision may not be seen immediately
Build bureaucracy – often forgetting their job is to
service the business
Skill of negotiating the company labyrinth gets
rewarded

9. High customer contact and market
understanding
The cell can be replaced with minimum pain!
Higher investment in sharing best practices
Closed loop decision making and control
Immediate effect, high accountability
Cannot hide behind the bureaucracy
Skills of negotiating the market and customer
expectation gets rewarded