Only One Big Issue

As I've said in a couple of recent blogs, I'm living in the period 1787-1800 these days. Among other things, it reminds me of the eternal struggle between Centralization and Decentralization. The contentious 1800 election was between the Federalists' "elite" (centralist) philosophy of governing and the Republicans' (no relation to the current party by the same name—quite the contrary) "populist" (decentralized) philosophy. The debate still rages—Big Government v. Small Government, Elitist v. Populist. I am a Libertarian by philosophical bent (though not party registration): Small government populism is my bag. Same in business, where I've championed Radical Decentralization for three decades.

Problem: In truth, you need both! In Child Rearing (the uneasy mix of rules and freedom—is there anything else?); in government; in business. Centralist hierarchies ensure consistency—a virtue of the First Order. (Think TQM!) Decentralist approaches spawn adaptability and innovation—a virtue of the First Order. (Entrepreneurialism of the Silicon Valley flavor.) Alas, the answer is not some mindless plea for "balance." In fact, there is always virulent, irresolvable tension—e.g., the Finance and Manufacturing and Logistics Barons versus the R&D and New Products and Marketing Barons. In fact, successful institutions tend to wobble back and forth over the years between too little centralization and excessive centralization. (One CEO's legacy is "tightening things up," the next stood for "innovation." Both are eventually fired for overdoing it!) Nonetheless, I have a Big & Longstanding Problem: There is an almost inevitable institutional drift toward Centralization & Complex Processes & Hierarchy ... at the expense of Innovation & Adaptation; the "cost" is often the Death Penalty.

Consider these two succinct statements of the problem that I dug out of past works of mine:

"People think the President has to be the main organizer. No, the President is the main dis-organizer. Everybody 'manages' quite well; whenever anything goes wrong, they take immediate action to make sure nothing'll go wrong again. The problem is, nothing new will ever happen, either."—Harry Quadracci, founder, Quad/Graphics (from Liberation Management)

"The IBM 360 is one of the grand product success stories in American business history, yet its development was sloppy. Along the way, Chairman Thomas Watson, Sr., asked then vice-president Frank Cary to 'design a system to ensure us against a repeat of this kind of problem.' Cary did what he was told. Years later, when he became IBM's chairman, one of his first acts was to get rid of the laborious product-development structure that he had created for Watson. 'Mr. Watson was right,' he conceded. 'It [the product development structure] will prevent a repeat of the 360 development turmoil. Unfortunately, it will also ensure that we don't ever invent another product with the impact of the 360.'"—In Search of Excellence

In this brief discourse, or even in one that was ten times longer, I cannot and will not offer any definitive solutions. There are none ... except to be ever attentive to the debate and to beware the ICD/Inexorable Centralist Drift! (Addendum: This idea is as critical to your career path and the leadership of a 6-person project team as it is to the structure of national intelligence assets.)

Tom Peters posted this on August 29, 2004, in Strategies.
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