Decentralization enable companies to grow and survive!

People tend to shy away from decentralization although it is one of the best ways to support growing organizations while keeping their agility.

Why Decentralization is a need now

When we see a framework that is working for a specific size of an organization, we tend to stick with this model. Even when the organization is growing significantly bigger, and all the facts are red blinking that the used framework is not a fit anymore. Creativity and thinking out of the box are topics that most of us enjoy talking about a lot, but few of us are really doing it. If you are looking for a prof, studies organizations management system.

In our most rooted mental models, there is an assumption that if we want a group of people to achieve any goal we need to use central control, otherwise chaos will take place. Let’s start with the fact that central control is one of the foundations of most of the companies that started or existing today. Yet, the majority of the companies started didn’t reach any maturity, and the lifespan of those who reached maturity shrank from 60 years to 15 years in the last 100 years.

If you watch the embedded experiment done by Loren Carpenter, you’ll be amazed to see that 200 people can reach common goals, without any central control.

Well, the critic will say, this is a short experiment for just 200 people. So, let me give you another example. Every year an experiment with 70,000 people is taking place for one week. In this experiment, 70K people are building a temporary city (system) and running it for a week, without central control. To be honest as a participant of this experiment, I can testify that the level of service you are getting there is ten times better from what I’m getting from the average city. This experiment is running for more than 40 years.

A week-long experiment is not a long term prove; you might think to yourself. There are more than one successful big companies such as the refrigerator manufacture Haier, the biggest tomato past producer Morning Star, Gore-tex or Zappos that are running without central control in a variety of industries.

We all know that big organizations eventually become too big, and then they fall apart. However, we genuinely believe that with more and more control in place, we can run bigger and bigger organizations. I believe that this mental model was accurate in the past, but it’s a death kiss for organizations today.

When literacy was 21.4% and people hands used as machines to mass produce goods for other people, central control was necessary to organize people easily. In those days, people were part of a big machine that was new and needed to be controlled to ensure the efficiency of the system. This approach (that was the flagship of Ford) changed by GM with the introduction of divisions and then changed again by Toyota. Those changes were more focus on autonomy than decentralization.

In a world with 86.2% literacy where people heads are used to create a system that utilized robots to produce goods, or where people create virtual commodities, centralization is not a fit anymore. When people are part of a system, it means that they are operating in an environment with unpredictable behavior. In this environment, that ability to respond fast depends on the ability to make decisions, without central control.

The current control mechanism is still based on an implicit and explicit fear system. Not a fear that impacts your ability to live, but still a fear to lose your source of income. One way or another, this implicit or explicit fear is enough to “motivate” people to follow central control.

Decentralization requires purpose

The new way to keep any size of organizations working toward the same goals is a clearly defined purpose. There is a good reason why you hear so much about purpose. “Purpose” is the best source of energy that can attract many people to reach the same goals. As the purpose is more appealing, it can attract more people and for a longer time.

It might sound controversial for many, but once a definite purpose in place, central control is preventing a company from reaching its purpose.

A purpose can guide people, many people! With a clear purpose, you can give any size or number of a group (or people) the authority to make decisions and manage themselves. Without central control, people will come with incredibly creative ideas to reach the purpose. Many people creative ideas will beat any CEO idea; no matter how smart he is. Yes, some of those creative ideas will fail miserably (people can learn from mistakes), but some of them will provide a significant short cut to reach the company purpose. Achieving our purpose is what we all after one way or another.

Fractals are an example of decentralization

The biggest structures (that are all around us for a long time) are fractals, not hierarchies. Fractals are simple structures that by following simple rules, create very complex structures. While bigger elements of a fractal containing smaller elements, there isn’t any control involved in the system.

Any element in this structure control itself and work together with other elements to perform the same or different function that will enable the whole system to reach its purpose.

Elements that contain other elements might perform functions of coordination or some balancing of included elements, but they will never control other elements. The best example is your brain! It is paradoxical that the organs that contain our mental models about control don’t have any cell that controls its amazing behavior.

Contrary to what most of us believe a purpose and decentralization can maintain very successful organizations for a long time. The prove is all around us.

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