May 22-25, 2018

Managing in Complex Times: Centralization and Decentralization

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Julia writes…..As a fan of complex adaptive system theory, I was intrigued by the discussion of centralization versus decentralization in a recent book “The Wisdom of Crowds”, by Jim Surowiecki. Jim points out that in the past 15 years, increasing attention has been given to self-organizing and decentralized systems – systems without central control that connect, adapt and learn. He then discusses the failure of the American intelligence community to predict any of the 4 major terrorist attacks, from 1993 to 2001 and asks what went wrong. Surely these were independent, intelligent individuals and groups, working on roughly the same problem? Was decentralization the problem? Will the creation of a super centralized security agency solve the problem? According to Jim, decentralization’s great strength is that it encourages independence and specialization on the one hand while still allowing people to coordinate their activities and solve difficult problems on the other. It’s great weakness is that there is no guarantee that valuable information which is uncovered in one part of the system will find its way to others who require it. What is needed are systems where local knowledge and specialization are supported but there are tools or mechanisms to aggregate local knowledge and private information into a collective whole.

So, we can have decentralized staffing in hospitals, as long as there are processes to share information (and staff) across units. We can have central intake systems, as long as there are mechanisms to share information with local branches or units. Fascinating!