Thinking Distributed

The best analogy I can think of for how to think about scaling an organization to think distributed is the contrast between communism and capitalism methods of government.  Objectively speaking, one is not necessarily better than the other, but in practice one scales better in our current world.  

Communism is centralized command-and-control, it is a non-distributed organization.  In theory, if you had perfect knowledge and ability to react in real-time, there would be minimal waste and demands would always be met with the right amount of supply.  In practice, it hasn’t played out this way, probably because we don’t live in a world of perfect data and instantenous data processing abilities.  Capitalism in contrast, relies on that invisible hand, it argues that in efficient markets, supply-and-demand will balance itself through price discovery.  There might be some degree of loss in the beginning but it will come to an equilibrium fast and the overall oversupply or undersupply will be minimized.  

In capitalism, when the government wants people to spend money, they lower interest rates.  Instead of directing, they guide.  They create incentives for the market to move in the desired direction but they don’t direct.  In communism, there’s a required a feedback loop to central command so it can process the data and tell each type of producer the next steps.  This often leads to either over-production or under-production because it’s easy to have incomplete information or data processing delay. 

Leading a distributed organization is similar to working with monetary policy.   We want to create the right incentives, we want the default thing to be the obvious thing.  We want to build the necessary tools and safety-nets so that people can focus on their objectives and not worry about duplicating work.  We want teams to operate independently, instead of relying on upper-management (central-command) for next steps. 

Leadership cannot scale to have perfect knowledge of everything teams do, otherwise the leadership team ends up having massive reporting apparatus just to track work output and teams will end up idle waiting for the next instructions. Instead leadership needs to empower teams to want to act in their own best interests because those interests.  Leadership can guide teams by helping them clearly define KPIs, but how they go about achieving those KPIs should be left in their hands, doing anything differently will only disempower.  

Disagree and commit

We live in a world of inter-subjective realities.  Humans created religions, economic models, monetary systems, government, corporations, and moral values.  None of these things exist in nature, they were created from our imagination and we applied human value to them.  

When a person joins a new company, they will often discover that the company has a set of values.  These values were chosen by the leaders of the company because they want these values to guide the company’s actions.  These values are frequently repeated and made highly visible to keep people aligned.  The company’s values might actually differ from an employee’s own personal values, this leads to some degree of cognitive dissonance.  The employee may disagree with some of the values, but the company doesn’t need them to agree but to commit to it.  

Humans are masters of overcoming cognitive dissonance.  When someone converts from one religion to another, seldom do they buy-in 100%.  There are likely beliefs, values, or rituals they don’t agree with or understand, but they still converted to this new religion and go through th rituals because they’ve committed to doing so.  

Imagine someone immigrating to a new country.  This person might immigrate because they like the way of life, the natural landscape, the employment opportunities, the people or the social benefits.  They might not agree with the taxation system and how that money is spent (cognitive dissonance) but the government still expects them to commit to paying their taxes. 

As a leader, it’s important to recognize the difference between personal emotional comfort vs operational need.  We often want people to agree with our values when it is more imperative that we get people to commit and deliver.