There is evidence that organizations will continue to decentralize beyond multi-disciplinary teams and matrix structures. For it cannot be coincidence that technology continues to find its value in individual empowerment.  When it introduced the personal computer (PC) in the early 1980s, IBM threatened its own existence by subcontracting its birthright to Microsoft and Intel in one of the most spectacularly failed bets against empowerment in the technological age.  It marked one of the only times it did not use its own internally developed hardware and operating systems.  IBM quickly headed towards bankruptcy as the PC and the resulting explosion of technology forced the computer industry into a massive restructuring that left the mini-computer industry in a shambles; companies like DEC, Prime, HP, Control Data, Wang and TI saw their product lines obliterated with their own viability along with them.

IBM under Louis Gerstner saved itself from ruin in one of the most astounding turnaround examples of decentralization ever attempted. It may be that IBM’s present structure now mirrors many organizational fundamentals laid out on this website partly because it at one time so firmly rejected them.  The organization restructured from a hierarchical, unidirectional corporate culture to a broader based, decentralized one in less than 5 years.  They rejected their blue suits, sold buildings and ended up with almost half their workforce working from home in their pajamas.  They re-centered and refocused, and reversed their services and hardware mix of business on services, and sales and profits exploded.

Now IBM has obliterated most of its corporate hierarchy.  It relies on multi-disciplinary teams that reflect combinations of geography, function, customer segment and industry focus, depending on the situation.  They involve themselves in the open source communities which would have been unthinkable in their proprietary days of yesteryear.  But surely none of this expansion of adaptability and profitability and productivity would have occurred if their competitors and the markets had not forced them to react to preserve their viability.

To be fair, who could have predicted the explosion of creativity and innovation of turning millions of PC users into active entrepreneurs? After all, computing economics clearly show that centralized networks with dumb terminals are much less expensive to design and maintain.  That was the overwhelming organization of the computer industry even in the mini-computer world.  That hierarchy looks great on paper and proves more inexpensive to produce, purchase, maintain and deliver computing power.  Those economics remain true to this day.

But one huge factor was left out of the equation.  What was missing was the idea of autonomy. What was missing was the degree that control suppresses creativity. What was missing was an understanding of developmental psychology. What was missing was an in-depth appreciation of just how intrinsic complex systems (in this case free markets) are to innovation.  What was missing was just how incredibly productive users could be if they weren’t sitting around waiting for centralized IT department programmers and instead could themselves develop applications and mash-ups and innovations.

Corporate organizational structure is still hampering productivity, creativity and reliability.  Organizations both in their structure and their strategy often make bets against the individual, and they continue to do so in pendulum like swings in both micro and macro trends. They always eventually lose.  If you don’t believe me, ask IBM.

References

Photo courtesy Wikipedia Commons

The above picture symbolizes both technology and organizational change. Still wet behind the ears, in 1991 I was purchasing used mini-Vax systems as servers for Novell networks. They were faster and more inexpensive than PC’s, and cold room costs were sunk. Those pricing trends foreshadowed mini-computer markets.

If I remember correctly, we were the first in the state to cobble Vax systems together with Novell networks. Back then Peter Norton, not Bill Gates, was a G~d to teenage nerds everywhere, driving Microsoft and Intel innovation, and no self-respecting 80286 PC went without a QEMM-386 to make it effective.

This period also marked the last attempt by IBM’s misguided proprietary corporate policies regarding PS/2, which all nerds knew would inevitably fail.  It signified IBM’s continued denial regarding the structural change PC’s represented for technology.  No programmer I ever knew willingly dealt with it.