“This book is about what happens when there’s no one in charge… in many arenas, a lack of traditional leadership is giving rise to powerful groups that are turning industry and society upside down. In short, there’s a revolution raging all around us… The harder you fight this hidden force the stronger it gets. The more chaotic it seems, the more resilient it is. The more you try to control it, the more unpredictable it becomes.”
This book came at the perfect time for an organization that I am helping to build - it gave language and a framework to what was already happening and showed me how to accelerate our decentralized organization faster.
SPOILER ALERT: Here are my key insights. However, what makes this book enjoyable are the stories or case studies that illuminate Brafman's and Beckstrom's points. For those, you'll want to read the whole book.
Spiders can survive if you cut off an arm, though it won’t grow back, but chop off its head and it dies. Starfish have an incredible quality to them: If you cut an arm off, most grow a new arm. And with some varieties, the animal can replicate itself from just a single piece of an arm. They can regenerate because they are a neural network of cells – for the starfish to move one of the arms must convince the other arms that it’s a good idea to do so. The starfish doesn’t have a brain, there is no central command.
Two opposite systems:
1.
Centralized organization types are coercive
– there’s a clear leader in charge and specific places where decisions are made. The leader is assumed to be the most knowledgeable and has the power to make key decisions. They use command-and-control (aka hierarchy) to keep order, make it efficient, and function day to day. In a healthy organization, each part, with a distinct function, is steady and helps to support the weight of the organization. They can monopolize an industry. Rules need to be set and enforced or the system collapses. Example: Spiders. The Aztecs. AT&T. A plane. NCSA browser. The government.
2.
Decentralized organizations are open
– there’s no clear leader, hierarchy (it’s flat), or headquarters. When and if a leader emerges, that person has little power over others so the best they can do is influence by example. That person is a spiritual and cultural leader who people follow because they want to, not because they have to. They’re not in the habit of getting rich or getting power. Everyone is entitled to make their own decisions without approvals, enabling the system to quickly adapt and respond. Anyone can do anything and everything (all the talents or gifts). There are rules and norms but they’re enforced by all the people, creating a sense of trust and community. There’s no application and if you step out, you’re always welcome back to come back. Example: Starfish. The Apaches. Skype. Peer to peer sharing networks like Napster. The Internet (e.g. Apache website software – 67% of websites run on this, Wikipedia, Craigslist). Alcoholics Anonymous.
Two types of hybrid organizations:
To benefit from decentralization a company need not radically change its structure. Appreciative inquiry is a process to decentralize an organization by asking meaningful questions across all levels of an organization, breaking down hierarchical differences. Because everyone feels they have been heard, participants become more likely to support a new plan. GM stopped short while Toyota completely embraced this model, finding the “decentralized sweet spot” – the spot on the continuum that yields the best competitive position. Just because you’re on the sweet spot now doesn’t mean it won’t shift in the future. In any industry based on information the forces of anonymity and free information flow pull the sweet spot toward decentralization. At the same time the more important the forces of security and accountability are (especially if something is unfamiliar), the more likely it is that the sweet spot will tend towards centralization.
1.
Centralized company that decentralizes the customer experience.
This is often necessary for survival. E.g. Ebay user ratings created a network effect (decentral) + PayPal where safety, structure, and accountability are necessary (central). Amazon (central) tapped desire for community and channeled into network of reviewers (decentral). Oprah production co (central) + her book club (decentral circles). Intuit, Google, IBM, Sun.
2.
Centralized company that decentralizes internal parts of the business.
They have a CEO and some hierarchy but also have starfishlike DNA. E.g. GE’s Jack Welch separated company into independent standalone units. Draper Fisher Jurvetson venture capitalist has 42 offices with 71 partners and will look at anything.
How can you tell which system something is?
1. Is there a person in charge?
2. Are there headquarters?
3. If you thump it on the head, will it die?
4. Is there a clear division of roles?
5. If you take out a unit, is the organization harmed?
6. Are knowledge and power concentrated or distributed?
7. Is the organization flexible or rigid?
8. Can you count the employees or participants?
9. Are working groups funded by the organization, or are they self-funding?
10. Do working groups communicate directly or through intermediaries?
Neither is good or bad but when we’re used to seeing something a certain way it’s hard to imagine it being any other way. “Over time industries swing from being decentralized to centralized and back again. In response to overcentralized industries or institutions, people rebel and create open systems. We call this radical swing ‘the accordion principle.’” Example: 19th c individual musicians (decentralized) -> 20th c big 5 music labels (centralized) -> 21st c Napster (decentralized).
“From the user perspective, people don’t notice or care whether they’re interacting with a spider or a starfish. As long as they’re given freedom, as long as they can do what they want to do, they’re happy.”
Principles of Decentralization
1. When attacked, a decentralized organization tends to become even more open and decentralized. Their flexibility, shared power, and ambiguity make decentralized organizations immune to attacks that destroy centralized systems.
2. It’s easy to mistake starfish for spiders. Their power is easy to overlook.
3. An open system doesn’t have central intelligence; the intelligence is spread throughout the system. It’s not that open systems necessarily make better decisions. It’s just that they’re able to respond more quickly because each member has access to knowledge and the ability to make direct use of it. Information and knowledge naturally filter in at the edges, closer to where the action is. E.g. Skype’s users each host a tiny portion of the directory so there is no central user listing.
4. Open systems can easily mutate. They are flexible, equal, and constantly changing – spreading, growing, shrinking, dying, and reemerging. There’s no way to tell how many members there are because there is no central command keeping tabs.
5. The decentralized organization sneaks up on you. It can grow incredibly quickly. Centralized organizations amass resources (costly infrastructure) and grow over long periods of time.
6. As industries become decentralized, overall profits decrease. It’s why you want to be on the lookout for any starfish before they take an industry by storm.
7. Put people into an open system and they’ll automatically want to contribute. Contributions are remarkably accurate. There’s something rewarding about contributing. You will get chaos but also incredible creativity.
8. When attacked centralized organizations tend to become even more centralized.
Five Foundations of a decentralized organization
“A decentralized organization stands on five legs. As with the starfish it can lose a leg or two and still survive. But when you have all the legs working together, a decentralized organization can really take off.”
1.
Circles:
Each group is independent and autonomous. Once you join, you’re an equal.
• “The internet has allowed circles to become virtual. The barrier to forming and joining virtual circles has become dramatically lower… so easy and seamless that most of us are members of a decentralized circle of one kind or another… They are also more amorphous and difficult to identify… Because participants aren’t spending every moment together, their bond isn’t as strong.”
• “Being in the presence of other participants adds a dimension of closeness, and a sense of ownership emerges.”
• “A circle can have a nearly unlimited number of participants… On the one hand it’s easy to join and you get diversity. On the other had when circles take on more than about 14 members the bond breaks down… This opens the door to free-riding or destructive behavior. No longer does everyone have to pull their weight.”
• “Circles aren’t lawless. Instead of rules, they depend on norms… The norms become the backbone of the circle.” Self-enforcement makes the norms even more powerful than rules. You created it. You signed up for it. You begin to trust one another.
2.
The Catalyst:
These people spark a new idea or initiates a circle, then get out of the way, ceding/transferring control and responsibility to the members. This person’s charisma has a subtlety to it. They naturally inspire and connect people. The tools of a catalyst are genuine interest in others, loose connections (they thrive on meeting new people and find these connections meaningful), mapping, desire to help, passion, meet people where they are, EQ (weave emotional connections into fabric of the org), trust (all they can control is whether people have personal relationships based on trust, can’t control outcome), inspiration, tolerance for ambiguity (“I don’t know.”), hands-off approach, receding. They can be useful at times within a central organization when you need agents of change – let them dream and they’ll thrive there. E.g. Granville Sharp in the anti-slavery movement in UK.
• “In chemistry, a catalyst is any element or compound that initiates a reaction without fusing into that reaction.”
• “A catalyst develops an idea, shares it with others, and leads by example.” But they walk a fine line as they don’t want to cheer so much it becomes all about them.
• “When his or her job is done, a catalyst knows it’s time to move on. Once the catalyst leaves, however, his or her presence is still felt. The catalyst is an inspirational figure who spurs others to action. Circles don’t form on their own.”
• “A catalyst’s most important relationships are based on trust and understanding.” They are great listeners, realizing how important it is to understand what people truly want. They’re able to suggest ways to channel your energy into what you’re excited about.
• It takes a specialist to not only map people but use the map to make strategic introductions between the right individuals, navigating their maps with ease and speed to make new connections and form new circles.
• They have a passion for helping people – this fuels their ability to connect people and is essential. Every time they have a conversation with someone they’re actively thinking, How can I help this person? Who can I introduce this person to? I just want to help this person, I just want to make this person better.
• They focus on listening and acknowledging, not telling people what to do but helping them find their own solutions. They assume a peer relationship and listens intently. You follow a catalyst because he understands you. When people feel heard, understood, and supported, they are more likely to change.
• “When the catalyst stays around too long and becomes absorbed into his creation, the whole structure becomes more centralized.”
• Lao-tzu said, “a leader is best when people barely know that he exists; not so good when people obey and acclaim him; worst when they despise him.”
3.
Ideology:
Ideology is the glue that holds decentralized organizations together. Without ideology, people wouldn’t have the motivation to remain decentralized. How strong or powerful the ideology is determines how long it lasts and if it can be replaced by a similar ideology.
• “The way to mobilize people is to share inspirational stories.”
4.
The Preexisting Network:
Almost every decentralized organization that has made it big was launched from a preexisting platform. e.g. Quakers for the anti-slavery movement.
• “Typically, it takes the special skills of a catalyst to enter an existing network of people, gaining their trust… but the internet is a breeding ground and launching pad for new starfish organizations… It is because of the platform it provides that we are seeing a revolution.”
5.
The Champion:
This person is relentless is promoting a new idea, they are the implementer. There is nothing subtle about them - they never let go and don’t do things halfway. They are inherently hyperactive. They tend to be more like salesmen than organizers or connectors. They help form new circles. E.g. Thomas Clarkson in the anti-slavery movement. (note Wilberforce was an ally and politician who got all the credit though it was really Sharp and Clarkson and the Quakers)
Strategies to combat a starfish invasion:
“Starfish are not invincible.” You can change or reduce the power of starfish or combat with another starfish.
1. Changing ideology: It takes at least a month of concerted persuasion to change someone’s ideology which is the basic DNA of an organization. You can have the most success changing the ideology of a decentralized organization if you focus on helping them but the process is subtle and gradual. People become defensive and closed off when someone tries to control or manipulate.
2. Centralize them (the Cow Approach): Give them a scarce resource so that their power shifts from symbolic to material. Once they start concentrating authoritative power over something, they want more control to protect their interests. With power over rights, the catalyst becomes a CEO and the circles become competitive.
3. Decentralize yourself: Decentralized organizations can be so resilient that it’s hard to affect their internal structure. The best opponent for a starfish organization is often another starfish.
Rules of the new world:
1. Diseconomies of scale – being small can provide a fundamental economic advantage as the cost of entering a new market dramatically decreases.
2. The network effect – the overall value of the network increases with the addition of each new member.
3. The power of chaos – in seemingly chaotic systems users are free to do what they want, incubating creative, destructive, innovative ideas. Good ideas attract people and in a circle they’ll execute the plan. Where creativity is valuable, learning to accept chaos is a must.
4. Knowledge at the edge – the best knowledge is often at the fringe of the organization.
5. Everyone wants to contribute – members have a fundamental desire to share.
6. Beware the hydra response – don’t try to cut off its head as it only proliferates.
7. Catalysts rule – they are important because they inspire people to action. At their best they connect people and maintain the drumbeat of the ideology.
8. The values are the organization – ideology is the fuel and most successful starfish organizations were started with what seemed at the time to be radical ideology.
9. Measure, monitor, and manage – when measuring a decentralized network it’s better to be vaguely right than precisely wrong. What matters is looking at circles (growing, active, independent, distributed, interconnected, mutating, more/less decentralized?).
10. Flatten or be flattened – fighting forces of change is at best futile and at worst counterproductive but these same forces can be harnessed for immense power (go hybrid to survive).