I really enjoyed this whole post by Mark Burgess, founder of CFEngine, on the difference between the centralized brain model and the decentralized society model. It articulates a lot of core ideas about complexity theory and emergence by offering the simple brain/society analogy. As the article explains:
A brain model is a signalling model. Signals are transmitted from a common command-and-control centre out to the provinces of an organism, and messages are returned to allow feedback. … The alternative to a brain model is what I’ll call a society model. … There can be cooperation between the parts (often called institutions or departments, communities or towns, depending on whether the clustering is logical or geographical).
As he concludes, “Societies scale better than brain models, because they can form local cells that interact weakly at the edges, trading or exchanging information. If one connection fails, it does not necessarily become cut off from the rest, and it has sufficient autonomy to reconfigure and adapt.”
With all that said, though, what I found most interesting was this point about why big organizations get slower:
Our ability to form and maintain relationships (knowledge) with remote parts depends on them being local. Long distance relationships don’t work as well as short distance ones! Certainly, this depends on the speed of responses. If messages take longer to send and receive, then an organism can react more slowly, so scaling up size means scaling down speed, and vice versa. This certainly fits with our knowledge of the animal kingdom (another centralized management expression!). Large animals like whales and elephants are slower than smaller creatures like insects. The speed of impulses in our bodies is some six orders of magnitude slower than the speed of light, so we could build a very big whale using photonic signalling.
It’s a simple but vivid explanation. The answer, which many have realized, is to attempt to solve this by moving your organizational model closer to that of a society, where decisions can be made independently at the edges. Of course, as the metaphor illustrates, we’re intimately familiar with the centralized (brain) model, so it’s easier said than done.
Yesterday James, my co-founder at Percolate, sent me over a really interesting nugget about how Apple structures its company about 35 minutes into this Critical Path podcast. Essentially Horace (from Asymco) argues that Apple’s non-cross-functional structure actually allows it to innovate and execute far better than a company structured in a more traditional, non-functional, way. As opposed to most other companies where managers are encourages to pick up experience across the enterprise, Apple encourages (or forces), people to stay in their role for the entirety of their career. On top of that, roles are not horizontal by product (head of iPhone) and instead are vertical by discipline (design, operations, technologies) and also quite siloed. He goes on to say that the only parallel he could think of is the military, who basically operates that way. (I know I haven’t done the best job articulating it, that’s because as I listen again I don’t necessarily think the thesis is articulated all that well.)
Below is my response back to James:
While I totally agree with what he says about the structure (that they’re organized functionally and it works for them), I’m not sure you can just conclude that’s ideal or drives innovation. The requirement of an org structure like that is that all vision/innovation comes from the top and moves down through the organization. That’s fine when you have someone like Jobs in charge, but it’s questionable what happens when he leaves (or when this first generation he brought up leaves maybe). Look at what happened when Jobs left the first time as evidence for how they lost their way. Apple is a fairly unique org in that it has a very limited number of SKUs and, from everything we’ve heard, Jobs was the person driving most/all.
My question back to Horace would be what will Apple look like in 20 years. IBM and GE are 3x older than Apple is and part of how they’ve survived, I’d say, is that they’ve built the responsibility of innovation into a bit more of a cross-functional discipline + centralized R&D. I don’t know if it matters, but if I was making a 50 year bet on a company I’d pick GE over Apple and part of it is that org structure and its ability to retain knowledge.
Military is actually a perfect example: Look at the struggles they’ve had over the last 20 years as the enemy stopped being similarly structured organizations and moved to being loosely connected networks. History has shown us over and over centralized organizations struggle with decentralized enemies. Now the good news for Apple is that everyone else is pretty much playing the same highly organized and very predictable game (with the exception of Google, who is in a functionally different business and Samsung, who because of their manufacturing resources and Asian heritage exist in a little bit of a different world).
Again, in a 10 year race Apple wins with a structure like this. But in a 50 year race, in which your visionary leader is unlikely to still be manning the helm, I think it brings up a whole lot of questions.