What did Peter Drucker mean by "decentralization" in organizations?

Peter Drucker's concept of "decentralization" refers to the strategic approach where organizations focus on their core competencies and delegate or outsource other functions or areas where they may not have a competitive advantage. This decentralization allows organizations to harness the expertise of specialized providers for non-core tasks, thereby enhancing efficiency and effectiveness. By concentrating on what they do best, organizations can allocate resources more judiciously and improve overall performance.

This perspective contrasts with the idea of removing all central control or solely relying on technology for management, which wouldn't align with Drucker's views on maintaining a balance between centralized and decentralized functions. Additionally, centralizing decision-making is contrary to what Drucker advocated since he supported empowering various levels of the organization to make decisions that drive innovation and responsiveness. Thus, the selection emphasizing the outsourcing of less critical areas while focusing on core strengths is a true reflection of Drucker's principles on organizational structure.