AmericanDiplomacy.org has an interesting article by three students at the Joint Forces Staff College, LTC Shannon Caudill, USAF, MAJ Andrew Leonard, USA, and SgtMaj Richard Thresher (what, nobody from the Navy or a Coastie?), titled Interagency Leadership: The Case for Strengthening the Department of State.
In short, they argue State's geographic focus should drop its early-20th (arguably late-19th) Century European view of the world and adopt the map of the Defense Department's Combatant Commands. The authors argue State "should be the pre-eminent diplomatic and interagency leader abroad, but it must be reorganized to become more relevant, robust, and effective." They also note Congress's reticence to fully fund State... They also note Congress's reticence to fully fund State (no, that's not a typo, that's history repeating itself).
Their recommendation is a smart one. In fact, CSIS would recognize it as a means to implement Smart Power:
DOS should create a Regional Chief of Mission (RCM), responsible for leading and synchronizing interagency capabilities to project the full range of national power elements. This diplomatic post would work in tandem with the geographic combatant commander and ensure a diplomatic face is planted on the region, not just a military one. It would also provide a regional leader for coordinating the non-military elements of national power and take the lead role in integrating interagency approaches to fulfill government objectives.
However, beyond the importance of having leadership that understands the importance and utility of the full range of national power, there are several structural issues at State that must be dealt with, arguably before the reorganization. These include updating the personnel system, including increasing interagency billets, and increasing professional and academic education opportunities. Changes to these would really put State on par with Defense and would facilitate State's New Map (a book idea for somebody... may Tom's fifth). This would really strengthen State and complete the transformation the authors imply is necessary.
I recommend the essay.