The Common Problem
Operating from more than one location is less common than most growing organisations assume. ONS data on UK business activity has repeatedly found that only a small minority of VAT- and PAYE-registered enterprises — historically in the region of 2% — operate from more than a single site. Multi-site operation is the exception nationally, not the norm, which means most of the received wisdom a growing organisation absorbs about “how businesses run” comes from single-site experience, even inside its own leadership team.
Ronald Coase’s foundational analysis of why firms exist offers a useful lens for why this matters. Coase, who studied economics at the London School of Economics, argued that organisations choose to coordinate activity internally rather than through repeated market transactions when doing so is genuinely cheaper — but that internal coordination itself carries a cost, one that rises as the organisation’s activities become more dispersed and harder to oversee directly. A second site does not simply double the coordination the first site required. It introduces an entirely new category of cost: the cost of maintaining consistency and oversight across a distance the organisation’s existing habits were never built to cross.
How It Presents Differently
In professional and knowledge-based multi-site firms. A London organisation running several offices — professional services, financial services, specialist consultancies — typically has the most sophisticated internal systems of the three contexts here, but faces the sharpest version of a specific problem: work quality and client experience depend heavily on individual judgement, which travels between sites far less reliably than a written process does. Two offices can follow identical procedures and still produce visibly different outcomes, because what actually determined quality at the first site was never fully captured in the procedure to begin with.
In multi-location retail, hospitality and service operations. These businesses tend to have the most explicit multi-site infrastructure — standard operating procedures, site-level reporting, defined roles — because consistency across locations is close to the entire value proposition. The pressure here is less about capturing tacit knowledge and more about drift: standards set centrally erode gradually and unevenly across sites as local managers make small, reasonable adjustments to local conditions, none of which look like a problem individually, until performance across the site network becomes visibly inconsistent.
In organisations expanding across London opportunistically. A third pattern is common in businesses that did not set out to become multi-site operators but grew into the position — a second office opened to be near a client, a satellite team added to access a particular talent pool, a site inherited through acquisition. These organisations often have the least multi-site infrastructure of the three, precisely because each site was added as a one-off decision rather than as part of a deliberate operating model. The coordination cost here tends to be invisible for longer, because no single expansion decision looked like the moment multi-site complexity began.
These three contexts are not fixed categories a business belongs to permanently. It is common for an organisation to start in the third pattern — accumulating sites opportunistically — and only later recognise that it has effectively become one of the first two, at which point it also inherits whichever coordination problem is native to that model, several years later than an organisation that planned for it from the outset would have encountered it.
What Actually Explains the Variation
The variation tracks two things: how much of what makes a site perform well is written down versus held informally in people’s heads, and whether the organisation ever made a deliberate decision to become multi-site or simply accumulated sites as a byproduct of other decisions.
Jay Galbraith’s analysis of organisation design, drawing on Herbert Simon’s work on the cognitive limits of decision-makers, frames this as a question of information-processing capacity. Task uncertainty, Galbraith argued, drives organisational form — the more uncertain and variable the work, the more coordination mechanisms an organisation needs to process the information flowing between its parts. A retail or hospitality operation, where the work at each site is relatively standardised, can rely more heavily on written procedure precisely because there is less to coordinate in real time. A professional services firm, where the work at each site depends on judgement calls that vary case by case, needs richer, more expensive coordination mechanisms — direct relationships between site leads, shared decision forums, deliberate knowledge transfer — because a written procedure alone cannot carry what actually needs to travel between locations.
London’s geography adds a variable that does not appear in most of the underlying research, which was rarely designed with a specific city’s internal transport patterns in mind. Two sites in London can be a similar physical distance apart as two sites in a different UK region, yet feel considerably further apart in practice, or considerably closer, depending on which parts of the transport network connect them — a difference that shapes how often people genuinely move between sites, and therefore how much coordination can still happen informally rather than through deliberately built mechanisms. An organisation with sites on the same transport corridor can sustain more informal coordination for longer than an organisation whose sites are a similar distance apart but poorly connected; neither difference shows up in headcount or site-count figures, which is part of why it is easy for a leadership team to underestimate.
There is a related effect worth naming separately: London’s business density means it is unusually easy to add a site without a corresponding deliberate decision about how it will be coordinated with the rest of the organisation, simply because suitable premises, local talent and willing landlords are more readily available here than almost anywhere else in the UK. The ease of the expansion decision and the difficulty of the coordination that follows it are almost entirely unrelated, which is precisely why the two can become mismatched without anyone choosing for that to happen.
Where this shows up
Written for organisations in London. See the London market page for related reading, or browse the other hubs on the Markets page.
Questions worth considering
- How much of what makes the best-performing site actually perform well has ever been made explicit, rather than assumed to be obvious?
- Did the organisation choose to become multi-site, or did it arrive there through a series of individually sensible decisions that were never evaluated together?
- How much of the coordination currently happening between sites depends on specific individuals who happen to move between them, rather than on any mechanism that would survive those individuals leaving?
Your team is facing similar challenges?
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