Synopsis
Contemporary hierarchical organizations have evolutionary opportunities to decentralize command and control by integrating autonomous decision-making into their traditional organizational structures.
I. The Tyranny of Process
If you've worked adjacent to technology for any appreciable amount of time, you've probably come to recognize inefficiencies in systems and organizations. You might wonder why organizations can't be more like computer programs, with their clearly defined functions, return values, and built-in error-checking mechanisms. Organizations of all shapes and sizes craft process today through some mixture of human bureaucracy and technological interface, but often fall short of their aims.
You've probably experienced a bureaucratic constraint originating with some single point of limitation or failure. You've waited in some queue, struggling with the recognition that you're a member of some serial process, when there is clear opportunity for it to be transformed into something synchronous. You reckon with the scope of waste, perhaps even suffering, when you extrapolate at the sheer impact scale of an antiquated process when taken to local, national, and global scales. A eureka moment, one of great clarity, where suddenly it clicks: "Is this really the right way to use human labor?"
Bureaucracy is intended to comprise necessary systems that help to ensure equality and fairness in process. We implement such systems because scalable things require consistency to reliably function, whether they are driven by humans, digital processes, or a combination thereof. Unfortunately, we often sacrifice transparency and efficiency to achieve these aims. Every CXO wants to make data-driven decisions, but they often lack even the most fundamental data regarding their domain responsibilities, at least in part due to self-reinforced informational silos.
We craft business process to distill harmony from chaos. We institute Change Management, Incident Management, etc. to formalize our functional requirements. We form offices, departments, and divisions to compartmentalize, streamline, and simplify. We structure organizations hierarchically so that we can ensure consistent command and control. Depending how these business processes are exposed to the larger organization, and its consumers (be they internal or external), there is a variable cost appended from process discovery/execution latency, process failure, and far more.
In a basic example, we often abstract engineering efforts away from accounting/finance, because their functions are sufficiently delineated to not require any inter-mingling. We physically separate the groups and localize engineers with engineers, and accountants with accountants in hopes that physical closeness can simplify operations and increase effectiveness. Each group develops their own mechanisms for cross-group collaboration, possibly in isolation.
This compartmentalization can create cultural barriers, unnecessary duplication of efforts, process confusion, and insidious silos that become difficult to remove.
II. Change in Our Time
Society and organizations alike are undergoing fundamental transformations, and of course no two are alike, but there are some common themes.
First, it is well recognized at this point that the most valuable assets in the world are now ephemeral. The right Intellectual Property, data, and even culture can be worth more than any oil field or gold mine.
Second, locality is no longer intrinsically meaningful. An engineer in Menlo Park, California is fundamentally no more talented than one in Allentown, Pennsylvania. Locality and physical proximity to aid in coordination is in itself a failing pursuit when you consider that they can be disrupted at any time, and suddenly preferred ways of doing work, and the reliance on proximity, becomes the Achilles heel. An organization that has not adapted itself to remote collaboration and coordination is one that will be out-foxed by its more adaptive competitors.
Third, monolithic systems and organizations are no longer as competitive as they once were. The struggle of the once mighty Boeing to compete with the smaller, more agile SpaceX is a modern-day David and Goliath story, replaying itself across numerous industries. Rapid decision-making coupled with rapid iteration is showing that it can overcome highly resourced but slower response systems. At this point in the age of the Internet, this surprises no one, but strangely, we have yet to truly adapt these practices into organizational structures.
Contemporary organizational structures come naturally as hierarchies for us. We have evolution to thank for that. A hierarchical system is a simple one to organize and operate. It doesn't require consensus, complex decision-making collaboration, or adjudication - it just requires a decision-maker at the top. We forego the complex, collective wisdom of the group in favor of the simple, but expedient decision.
Hierarchical command and control is soon to lose its competitive advantage of simplicity though. There is writing on the wall regarding the strength of decentralized decision-making, and it's complexity will soon be commoditized by advances in organizational technology. If the complexity barriers to group decision-making are sufficiently reduced to the point of it being competitive with single decision-makers, we're truly in for an evolutionary period.
III. Domains
Relevance in decision-making ultimately boils down to expertise. You don't ask an accountant familiar in corporate finance to decide what type of plumbing to install on the second floor. A plumber has more relevant domain expertise, and so they are the best person for the job, but that doesn't necessarily mean the accountant can't contribute some knowledge to the effort - perhaps they have the inside track on an advantageous vendor. Perhaps there is some extrinsic factor that the plumber is not aware of - such a that the organization has committed to explicitly using renewable materials or sustainable practices that include building management and plumbing.
Even if the example is contrived, the point is that decisions effecting the whole shouldn't be made in a vacuum, and can have far-reaching consequences. The accountant and plumber have different domain expertise qualifications that should give their opinion greater weight in various decision points, but we don't want to ignore data points, even if the parties behind them don't directly fall into the area of responsibility. Domain expertise carries with it authority, but that authority shouldn't be absolute.
A critical factor in a system reliant on weighted expertise is being able to quantify expertise. Traditional hierarchical systems typically use organizational seniority (time in role, time employed, etc.) as a factor in the decision-making calculus, and while there is merit in this, it is a fallacy to assume that seniority is a proxy for higher quality decisions.
Expertise in a domain should be weighted by performance relative to the task/decision, using both qualitative and quantitative factors.
IV. The decentralized future
Organizations that transition to a management model leveraging the collective wisdom of their relevant performers en masse will become the apex predators of their industries. Similar to how Agile software teams have revolutionized the production and delivery of software through transparent stakeholder feedback, agile organizations will revolutionize their decision-making through transparent consensus.
There are numerous advantages resulting from decentralization in general that can prove attractive to traditional organizations - be they for-profit, non-profit, or governmental.
Decentralized decision-making reduces or eliminates the influence of single points of failure and latency.
Everyone, at some point, has been held up by a singular decision-making authority constrained by bandwidth. We imbue certain individuals or groups with authority, and they alone are the arbiters of progress. Sometimes such entities can become more of a liability than a solution. At some point we've asked ourselves, "if this person gets hit by a bus, do we actually have any continuity without them?"
Decentralized decision-making by nature requires transparency to multiple parties.
Decentralized decisions enforce transparency, because in order to actually provide decision points, relevant information and options must be presented. It isn't a proof against subversion, but sunlight is the best disinfectant for a reason. Decisions made in the open by groups are more resilient to corruption, and naturally result in more information exposure than decisions made behind closed doors.
Decentralized decision-making reduces or avoids managerial and regulatory capture.
People are naturally protective of themselves. We are all genetically programmed to preserve ourselves, and sometimes those instincts are blended into our actions. Think of the self-serving politician trying to hold onto power. In their selfish hubris, they sacrifice the interests of the greater group in order to ensure they get elected just one more time. Is this so uncommon? Fiefdoms are everywhere. Decentralization provides mechanisms to avoid the issue entirely by ensuring the greater good is the likeliest decision path, rather than the profit or longevity of the individual.
V. The Apex organizations
Decentralized organizations, or at least organizations integrating decentralized decision-making, can out-compete hierarchically centralized organizations in the long term. There are likely to be many variations on the level of decentralization as experimentation and iteration yield results across industries, similar to how we've today numerous management frameworks and models.
I, for one, welcome our many overlords.
