Decentralized decision making
Encyclopedia
Decentralized decision making is any process where the decision making authority is distributed throughout a larger group. It also connotes a higher authority given to lower level functionaries, executives, and workers. This can be in any organization of any size, from a governmental authority to a corporation
. However, the context in which the term is used is generally that of larger organizations. This distribution of power, in effect, has far-reaching implications for the fields of management, organizational behavior, and government.
The decisions arising from a process of decentralized decision making are the functional result of group intelligence
and crowd wisdom. Decentralized decision making also contributes to the core knowledge
of group intelligence
and crowd wisdom, often in a subconscious
way a la Carl Jung
's collective unconscious
.
Decision theory
is a method of deductive reasoning
based on formal probability
and deductive reasoning
models. It is also studied in a specialized field of mathematics wherein models are used to help make decisions in all human activities including the sciences and engineering. (See also Game theory
, Uncertainty
, Expectation maximization principle.)
times, to the later rise and downfall of feudal empires during the middle ages
, to the rise of fascism
in Germany prior to World War II
, to the late 20th century formation of the European Economic Union, the history of Europe has been one of cycles of centralization and decentralization.
MIT
Professor Thomas W. Malone
explains that "decentralization has three general benefits:
(1) encourages motivation and creativity;
(2) allows many minds to work simultaneously on the same problem; and
(3) accommodates flexibility and individualization."
Decentralized decision making, Malone says, tends to create less rigidity and flatter hierarchies in organizations. When upper management delegates decision making responsibilities, there also exist wider spans of control among managers, creating a more lateral flow of information. Thus there will be more bottom up directional information flow, allowing for more innovation and efficiency closer to the means of production. This increased flow information thereby allows for innovation in what is called Total Quality Management.
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
. However, the context in which the term is used is generally that of larger organizations. This distribution of power, in effect, has far-reaching implications for the fields of management, organizational behavior, and government.
The decisions arising from a process of decentralized decision making are the functional result of group intelligence
Group intelligence
Group intelligence refers to a process by which large numbers of people simultaneously converge upon the same point of knowledge.Social psychologists study group intelligence and related topics such as decentralized decision making and group wisdom, using demographic information to study the...
and crowd wisdom. Decentralized decision making also contributes to the core knowledge
Core Knowledge
Core Knowledge refers to a current textbook series originally written by a collective of former top Year 12 South Australian students of the same name for South Australian Certificate of Education students...
of group intelligence
Group intelligence
Group intelligence refers to a process by which large numbers of people simultaneously converge upon the same point of knowledge.Social psychologists study group intelligence and related topics such as decentralized decision making and group wisdom, using demographic information to study the...
and crowd wisdom, often in a subconscious
Subconscious
The term subconscious is used in many different contexts and has no single or precise definition. This greatly limits its significance as a definition-bearing concept, and in consequence the word tends to be avoided in academic and scientific settings....
way a la Carl Jung
Carl Jung
Carl Gustav Jung was a Swiss psychiatrist and the founder of Analytical Psychology. Jung is considered the first modern psychiatrist to view the human psyche as "by nature religious" and make it the focus of exploration. Jung is one of the best known researchers in the field of dream analysis and...
's collective unconscious
Collective unconscious
Collective unconscious is a term of analytical psychology, coined by Carl Jung. It is proposed to be a part of the unconscious mind, expressed in humanity and all life forms with nervous systems, and describes how the structure of the psyche autonomously organizes experience...
.
Decision theory
Decision theory
Decision theory in economics, psychology, philosophy, mathematics, and statistics is concerned with identifying the values, uncertainties and other issues relevant in a given decision, its rationality, and the resulting optimal decision...
is a method of deductive reasoning
Deductive reasoning
Deductive reasoning, also called deductive logic, is reasoning which constructs or evaluates deductive arguments. Deductive arguments are attempts to show that a conclusion necessarily follows from a set of premises or hypothesis...
based on formal probability
Probability
Probability is ordinarily used to describe an attitude of mind towards some proposition of whose truth we arenot certain. The proposition of interest is usually of the form "Will a specific event occur?" The attitude of mind is of the form "How certain are we that the event will occur?" The...
and deductive reasoning
Deductive reasoning
Deductive reasoning, also called deductive logic, is reasoning which constructs or evaluates deductive arguments. Deductive arguments are attempts to show that a conclusion necessarily follows from a set of premises or hypothesis...
models. It is also studied in a specialized field of mathematics wherein models are used to help make decisions in all human activities including the sciences and engineering. (See also Game theory
Game theory
Game theory is a mathematical method for analyzing calculated circumstances, such as in games, where a person’s success is based upon the choices of others...
, Uncertainty
Uncertainty
Uncertainty is a term used in subtly different ways in a number of fields, including physics, philosophy, statistics, economics, finance, insurance, psychology, sociology, engineering, and information science...
, Expectation maximization principle.)
History
Decentralization and centralization have been consistent themes throughout history pertaining to governmental authority and political theory. From the rise and fall of the Roman Empire, there have been periods of centralization and decentralization in societies worldwide. Almost any political movement, from the rise of city states in RomanAncient Rome
Ancient Rome was a thriving civilization that grew on the Italian Peninsula as early as the 8th century BC. Located along the Mediterranean Sea and centered on the city of Rome, it expanded to one of the largest empires in the ancient world....
times, to the later rise and downfall of feudal empires during the middle ages
Middle Ages
The Middle Ages is a periodization of European history from the 5th century to the 15th century. The Middle Ages follows the fall of the Western Roman Empire in 476 and precedes the Early Modern Era. It is the middle period of a three-period division of Western history: Classic, Medieval and Modern...
, to the rise of fascism
Fascism
Fascism is a radical authoritarian nationalist political ideology. Fascists seek to rejuvenate their nation based on commitment to the national community as an organic entity, in which individuals are bound together in national identity by suprapersonal connections of ancestry, culture, and blood...
in Germany prior to World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
, to the late 20th century formation of the European Economic Union, the history of Europe has been one of cycles of centralization and decentralization.
MIT
Massachusetts Institute of Technology
The Massachusetts Institute of Technology is a private research university located in Cambridge, Massachusetts. MIT has five schools and one college, containing a total of 32 academic departments, with a strong emphasis on scientific and technological education and research.Founded in 1861 in...
Professor Thomas W. Malone
Thomas W. Malone
Thomas W. Malone is the Patrick J. McGovern Professor of Management at the MIT Sloan School of Management. He is also the founder and director of the MIT Center for Collective Intelligence and was one of the two founding co-directors of the MIT Initiative on "Inventing the Organizations of the...
explains that "decentralization has three general benefits:
(1) encourages motivation and creativity;
(2) allows many minds to work simultaneously on the same problem; and
(3) accommodates flexibility and individualization."
Decentralized decision making, Malone says, tends to create less rigidity and flatter hierarchies in organizations. When upper management delegates decision making responsibilities, there also exist wider spans of control among managers, creating a more lateral flow of information. Thus there will be more bottom up directional information flow, allowing for more innovation and efficiency closer to the means of production. This increased flow information thereby allows for innovation in what is called Total Quality Management.
See also
- Early adopter
- Opinion leadershipOpinion leadershipOpinion leadership is a concept that arises out of the theory of two-step flow of communication propounded by Paul Lazarsfeld and Elihu Katz. This theory is one of several models that try to explain the diffusion of innovations, ideas, or commercial products....
- Social networks
- Collective intelligenceCollective intelligenceCollective intelligence is a shared or group intelligence that emerges from the collaboration and competition of many individuals and appears in consensus decision making in bacteria, animals, humans and computer networks....
- Cointelligence
- Crowd wisdom
- Predictive markets
- Information cascade
- Herd instinct
- GroupthinkGroupthinkGroupthink is a psychological phenomenon that occurs within groups of people. It is the mode of thinking that happens when the desire for harmony in a decision-making group overrides a realistic appraisal of alternatives. Group members try to minimize conflict and reach a consensus decision without...
- Group intelligenceGroup intelligenceGroup intelligence refers to a process by which large numbers of people simultaneously converge upon the same point of knowledge.Social psychologists study group intelligence and related topics such as decentralized decision making and group wisdom, using demographic information to study the...
- Crowd psychologyCrowd psychologyCrowd psychology is a branch of social psychology. Ordinary people can typically gain direct power by acting collectively. Historically, because large groups of people have been able to bring about dramatic and sudden social change in a manner that bypasses established due process, they have also...
- Delphi methodDelphi methodThe Delphi method is a structured communication technique, originally developed as a systematic, interactive forecasting method which relies on a panel of experts.In the standard version, the experts answer questionnaires in two or more rounds...
- SociocracySociocracySociocracy is a system of governance, using consent-based decision making among equivalent individuals and an organizational structure based on cybernetic principles...
External links
- http://www.npr.org/templates/story/story.php?storyId=3806781
- http://www.randomhouse.com/features/wisdomofcrowds/excerpt.html
- https://weblamp.princeton.edu/~psych/psychology/research/kahneman/
- http://www.rand.org/pubs/occasional_papers/2005/RAND_OP153.pdf
- http://www.infography.com/content/237200278899.html