Distributed Teams in Industry 5.0: Centralised vs Decentralised Structures — Which Works Best for Innovation? (Augmented with chatgpt)

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By Leke (Lay-k)Industry 5.0 Innovation Specialist | Founder & CEO, Wonda Designs

When we talk about Industry 5.0 in the EU context, we are no longer speaking about technology alone. We are speaking about human-centric innovation. The EU’s vision of Industry 5.0 is not just about efficiency, automation, or scale — it’s about building resilient, sustainable, and human-aligned enterprises that harness technology while keeping people and purpose at the center.

This raises a question I often encounter in boardrooms and executive workshops:

👉 How should we structure our teams for Industry 5.0 innovation?

Specifically, when working with distributed teams — which is now the norm in our interconnected, post-pandemic, AI-enabled world — is it better to run them within a centralised structure, or a decentralised one?

Let’s break it down.

Distributed Teams with a Centralised Structure

Merits

• Clarity and Control: Decision-making is streamlined. Executives and leadership retain strategic control, ensuring alignment with corporate objectives.

• Consistency: Brand, values, and processes remain uniform across geographies. This is attractive in regulated industries (finance, healthcare, energy) where compliance is critical.

• Efficiency in Scaling: When a playbook is created centrally, it can be replicated across teams without reinventing the wheel.

Demerits

• Bottlenecks: Centralisation often slows down innovation. Teams may lack autonomy to experiment, pivot, or adapt to local nuances.

• Fragility in Complexity: In VUCA/FLUX environments (volatile, fast, uncharted, experimental), centralised systems can become rigid and unable to adapt quickly.

• Low Ownership at the Edge: Talent feels less empowered, which can stifle creativity and innovation — especially in knowledge work.

Distributed Teams with a Decentralised Structure

Merits

• Empowered Innovation: Teams have autonomy to adapt and innovate based on context. This fosters creativity and responsiveness.

• Resilience: Decentralisation builds anti-fragility. If one node fails, the system continues to thrive — mirroring the principles of ecosystems and nature.

• Cultural Intelligence: Distributed teams can integrate local perspectives into global innovation, aligning with Industry 5.0’s human-centric ethos.

Demerits

• Risk of Fragmentation: Without strong connective tissue, decentralisation can lead to siloed efforts, duplicated work, and brand inconsistency.

• Complex Governance: Ensuring alignment across geographies and functions requires robust frameworks, shared values, and digital collaboration infrastructure.

• Decision Fatigue: Too much autonomy without clear strategic guardrails can lead to confusion or misalignment.

Which Is Better for Industry 5.0 Innovation?

The honest answer: Neither in its purest form.

Industry 5.0 is not about either/or but about both/and. It demands a hybrid operating system — what I call a "Distributed-Decentralised Core with Centralised Governance."

Here’s why:

• Innovation thrives in decentralised environments — where teams are trusted, empowered, and equipped to act autonomously.

• But vision and purpose must be centralised. Without a unifying North Star, decentralisation risks turning into chaos.

Think of it as a network-of-networks model:

• The core vision (purpose, values, sustainability goals, customer promise) is centralised.

• The execution and innovation (experiments, local adaptations, market responses) are decentralised.

This mirrors how nature works: A tree has a centralised trunk (vision and purpose) but decentralised branches (localised innovation) — each adapting to light, wind, and weather conditions.

Final Thought

If you’re a CEO or senior leader in a Fortune 100 or 500 enterprise today, the question is not should we centralise or decentralise? The real question is:

👉 How do we design an adaptive system that centralises what must be universal, while decentralising what must be contextual?

That balance is the hallmark of Industry 5.0 leadership.

Because the future of work is not about rigid hierarchies or endless autonomy. It’s about designed flexibility — a system that is structured enough to scale, yet fluid enough to innovate.

That’s how you build not just profitable enterprises, but sustainable, resilient, and human-centered ones.

✦ Leke (Lay-k)Industry 5.0 Innovation Specialist | Founder & CEO, Wonda Designs"I’m the O to 1 guy. Outcome-oriented. Industry-agnostic. Driving autonomous, digital, and sustainable futures."