Over the last couple of decades business leaders, researchers, and writers everywhere have been discussing what they see as a positive move in business from a standard top down organizational chart to a more decentralized decision making systems.

The goal stated from the beginning of moving down this path was to replace slow, ineffective bureaucracies with more nimble, versatile companies who can move with the new rate of change.  Thanks to the internet and other advances in sharing human knowledge throughout the world, the pace of change & innovation today is far greater than the pace of innovation a century ago.

As a society though, it seems we have yet to fully adjust.  Using standard logic, allowing decisions to be made at the lowest possible level in a corporation, does allow it to be more efficient and more responsive to their clients.  It allows them to see problems faster to find solutions faster and empower employees with a sense of belonging to a real team.

Continuing that logic however, allows us to look at the potential negative possibilities as well.  Allowing just anyone in a company to make any decision of course would result in complete chaos.  We’ve also seen that  by allowing those with good corporate political abilities to make tough decisions, without questioning their ethics or actual critical decision skills has led us down the wrong road.

The question we must ask ourselves then becomes, should power still be concentrated in the hands of a few, moral citizens, or should we continue on the path of decentralization that helped lead us to our current fiscal crisis?

What we do know, is that businesses and individuals both support more entrepreneurial thinking and training starting at younger ages (Junior Achievement Study here):

Gallup then asked the question, “If entrepreneurship means, ‘Taking the initiative and assuming risk to create value for the company or business, either as an owner of your own business or in your place of work,’ would you consider yourself to be entrepreneurial?”

Using this definition, nearly six in 10 (58%) of the employees surveyed and two-thirds (65%) of those responsible for hiring describe themselves as entrepreneurial….

The vast majority (96%) of employees feel it is important for the American workforce to become more entrepreneurial in order to keep America competitive in the global market…

Going further about education itself:

Finally, nearly half of employees (46%) and four in 10 (41%) of those responsible for hiring believe the best place to learn entrepreneurship is in grades K-12, surpassing all other options.

Along that same trend, Purdue recently decided to change their entrance requirements to allow only students who have taken a full 4 years of math at the high school level (here).  Their decision demonstrates the importance of logic and critical thinking skills that math helps to reinforce:

“We just wanted to make sure Purdue students are ready for the rigors of a Purdue education,” Horne said, noting studies show more math education correlates with college completion rates. “It’s not about getting in. It’s about succeeding once you’re there.”

We also know through the practice of government, the dynamic system of the United States might have felt more pain that other countries during this crisis, but due to the mostly decentralized economic model, we will recover more quickly than most.  As the Economist recently noted (here):

Second, one can look at America’s admirable record of dealing with turmoil. A study by the Ewing Marion Kauffman Foundation, a think-tank that studies entrepreneurialism, found that America’s high rate of economic “churning” boosts productivity and hence material well-being. Between 1977 and 2005 some 15% of all American jobs were destroyed each year as firms closed or cut back. Thanks to the expansion of successful firms and the entry of new ones, however, many more jobs were created than destroyed. Start-ups (ie, firms less than five years old) provided a third of the new jobs during this period.

This “creative destruction” process, both in the macro form of the economy and in the micro form of managing a team involves allowing people to fail.  Only from our failures, do we truly become successful.

So for business leaders, or educators, to honestly pursue this strategy, it means at least two things need to change:

1. People need to be able to let go of control
2. People need to be more tolerant of failure

At this point, it appears businesses are getting this message, however the government seems to be falling back on top down control.

• Enron – bad company, fraudulent business model – went bankrupt, business leaders jailed.
  • Government solution?  Overreaching regulation in SOX.
• GM – bad company, bad decisions – should go bankrupt (it’s a feature not a bug),
  • Government solution – prop up companies who should have failed.
• Economy gets hurt because of loose monetary policy, combined with quasi-government backing of securities and lax business ethics -
  • Government solution:  cheaper money, quasi-government backed institutions deemed “too big to fail”…

So while it might be true that in recent times business leaders have proven themselves to be unworthy of trust and decentralized decision capabilities, I believe fully we must understand that the solution to that problem is not in removing the current structure and go backwards in time.

The solution ultimately comes down to both us an individuals and the incentives of the game.  Are we willing to live with the consequences of our decisions and as a society? Are we willing to live with some level of risk that large companies might “fail”?

Or will our fears keep us locked into a governmental cycle of pushing more top down control, doomed to repeat a past that has failed all societies who have tried it?