In promoting his book, Big Business: A Love Letter to an American Anti-Hero, Tyler Cowen makes the point on the Not Unreasonable podcast that a decentralized command structure tends to work better.
“Trust and ability to delegate in a decentralized fashion and having subordinates who have the ability to make decisions without always getting permission is a common feature of high productivity firms and you find it much less so in low trust environments.”
How much more effective? Up to twice on certain metrics.
Ray Kroc of McDonalds thought the person best suited to solving a problem is the person closest to it. Harry Snyder of In-N-Out was noted for his extensive training on the In-N-Out way. Both burger boys knew they couldn’t be everywhere always, and they had to have staff capable of making good choices.
Cowen adds a level of nuance that takes this idea from a quip to an action. We can talk about the what but get stuck in the how. Look at the apps on your smartphone as an example. How many trackers, timers, and data collectors are on there? You decided on the what and the technology helps with the how. The how for decentralized command isn’t an app, but trust.
It’s one thing to say you trust someone and another thing to trust them. This week we’ll look at examples about when and how this might work.