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Organized Disorganization

How should companies be structured in order to deal with the on-going transformations? Maybe like a starfish—not the shape, but the organism.

Can companies large or small learn something from the Apache Indians in terms of organizational structure? Ori Brafman thinks so. He and a colleague, Rod A. Beckstrom, have written a just-released book titled The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations (Portfolio), in which they hold forth on not only the model of the Apache tribes ("The Apaches persevered because they were decentralized") to, yes, echinoderms and arachnids. So we ask Brafman about the relevance to organization within the auto industry, and he immediately responds from his office in San Francisco by pointing out that "the auto industry is undergoing a huge transition," and that "We found that decentralization is often very useful when trying to go through a transition." That's because, he says, there tends to be more creativity, more ideas than is the case when there is a centralized structure. "Decentralization is good for intrinsic motivation." And if there's anything that many people in the auto industry need right now, it's motivation, and if there's anything that the organizations need, it's ideas and creativity.

He actually provides an example of a very successful automotive company that prospered by being comparatively decentralized: General Motors during the period when Alfred Sloan was running the corporation, when there were individual divisions with their own P&L. He cites Peter Drucker, author of the Concept of the Corporation (1946), no less, in making the argument about the benefits of decentralization for GM. Of course, while there is something to be said for the centralization of some aspects of an organization, decentralization is helpful, as well. He has still another specific automotive example of how centralization is helpful: the line workers at Toyota, who work toward continuous improvement in their jobs. While he acknowledges that Toyota Motor Corp. is centralized, he maintains that at least there are the smaller elements that are helpful as regards competitiveness. (He and Beckstrom write in the book: "Toyota occupied the sweet spot in the automotive industry. Had it centralized its assembly line to mirror GM's it would have taken power away from employees and reduced vehicle quality. But on the other hand, had Toyota decentralized too far—doing away with structure and controls and, say, letting each circle work on whatever car it felt like—the company would have had a mess on its hands.")

The circles mentioned in the previous quotation are groups of people all of whom are equal within the group. There is no leader. This gets to the point of the Apache Indians, who were organized in such a way that there was no one pivotal person because if the "leader" was killed, someone else would simply take over. The benefit of a circle of equals, he explains, is that there is the ability to acquire divergent opinions; people aren't likely to hold back because of some concern with "what the boss will think."

Brafman says that if you look at technology shifts over time, while there might not be direct parallels, there are at least some lessons that can be derived from them. He cites IBM. Fifty years it was the number-one mainframe manufacturer. The thinking was, back then, he says, "All smart people work at IBM central." But fast forward in time and you get to Silicon Valley—which he amusingly calls "The Hollywood of Technology"—to say nothing of the hardware and developments that are coming out of India and China. And he references the poster child for an industry that didn't get it, the railroads, which lost dominance to challengers.

He suggests that the same sort of forces are at play in the auto industry. He thinks that the next 50 years may see a huge shift in the way the industry is organized, with smaller players coming from developing nations having a greater effect on the market. "When there are $5,000 cars coming out of China, and the knowledge is no longer based in Germany and Detroit, you're going to start having all these small competitors who are going to end up being a huge rival to the centralized players like Toyota and Ford."

He acknowledges, "I think a lot is riding on the auto industry." He's not insensitive to the importance, but also thinks that it is important for the leaders to start working toward generating lots of ideas: When going through a major shift, you want the crazy ideas." So an organization needs to be organized—but to harness these ideas.

"It's hard to imagine an entire industry getting turned on its head," Brafman muses, then adds, "Maybe the last time was the railroads."