Decentralized Decision-making
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{{no footnotes, date=June 2016 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 A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...
. 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 A group is a number of persons or things that are located, gathered, or classed together. Groups of people * Cultural group, a group whose members share the same cultural identity * Ethnic group, a group whose members share the same ethnic ide ...
and
crowd wisdom The wisdom of the crowd is the collective opinion of a diverse independent group of individuals rather than that of a single expert. This process, while not new to the Information Age, has been pushed into the mainstream spotlight by social infor ...
. Decentralized decision-making also contributes to the
core knowledge Core Knowledge (CK) refers to a current textbook series originally written by a collective of former top Year 12 South Australian students of the same name (2003–2008) for South Australian Certificate of Education (SACE) students. The Core Kno ...
of
group intelligence A group is a number of persons or things that are located, gathered, or classed together. Groups of people * Cultural group, a group whose members share the same cultural identity * Ethnic group, a group whose members share the same ethnic ide ...
and
crowd wisdom The wisdom of the crowd is the collective opinion of a diverse independent group of individuals rather than that of a single expert. This process, while not new to the Information Age, has been pushed into the mainstream spotlight by social infor ...
, often in a
subconscious In psychology, the subconscious is the part of the mind that is not currently of focal awareness. Scholarly use of the term The word ''subconscious'' represents an anglicized version of the French ''subconscient'' as coined in 1889 by the psycho ...
way a la
Carl Jung Carl Gustav Jung ( ; ; 26 July 1875 – 6 June 1961) was a Swiss psychiatrist and psychoanalyst who founded analytical psychology. Jung's work has been influential in the fields of psychiatry, anthropology, archaeology, literature, philo ...
's
collective unconscious Collective unconscious (german: kollektives Unbewusstes) refers to the unconscious mind and shared mental concepts. It is generally associated with idealism and was coined by Carl Jung. According to Jung, the human collective unconscious is populat ...
.
Decision theory Decision theory (or the theory of choice; not to be confused with choice theory) is a branch of applied probability theory concerned with the theory of making decisions based on assigning probabilities to various factors and assigning numerical ...
is a method of
deductive reasoning Deductive reasoning is the mental process of drawing deductive inferences. An inference is deductively valid if its conclusion follows logically from its premises, i.e. if it is impossible for the premises to be true and the conclusion to be fals ...
based on formal
probability Probability is the branch of mathematics concerning numerical descriptions of how likely an Event (probability theory), event is to occur, or how likely it is that a proposition is true. The probability of an event is a number between 0 and ...
and
deductive reasoning Deductive reasoning is the mental process of drawing deductive inferences. An inference is deductively valid if its conclusion follows logically from its premises, i.e. if it is impossible for the premises to be true and the conclusion to be fals ...
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 is the study of mathematical models of strategic interactions among rational agents. Myerson, Roger B. (1991). ''Game Theory: Analysis of Conflict,'' Harvard University Press, p.&nbs1 Chapter-preview links, ppvii–xi It has appli ...
,
Uncertainty Uncertainty refers to epistemic situations involving imperfect or unknown information. It applies to predictions of future events, to physical measurements that are already made, or to the unknown. Uncertainty arises in partially observable or ...
, 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 A city-state is an independent sovereign city which serves as the center of political, economic, and cultural life over its contiguous territory. They have existed in many parts of the world since the dawn of history, including cities such as ...
in
Roman Roman or Romans most often refers to: *Rome, the capital city of Italy *Ancient Rome, Roman civilization from 8th century BC to 5th century AD *Roman people, the people of ancient Rome *''Epistle to the Romans'', shortened to ''Romans'', a letter ...
times, to the later rise and downfall of
feudal Feudalism, also known as the feudal system, was the combination of the legal, economic, military, cultural and political customs that flourished in Middle Ages, medieval Europe between the 9th and 15th centuries. Broadly defined, it was a wa ...
empires during the
middle ages In the history of Europe, the Middle Ages or medieval period lasted approximately from the late 5th to the late 15th centuries, similar to the post-classical period of global history. It began with the fall of the Western Roman Empire a ...
, to the rise of
fascism Fascism is a far-right, authoritarian, ultra-nationalist political ideology and movement,: "extreme militaristic nationalism, contempt for electoral democracy and political and cultural liberalism, a belief in natural social hierarchy an ...
in Germany prior to
World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposin ...
, to the late 20th century formation of the
European Economic Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...
, the history of Europe has been one of cycles of centralization and decentralization.
MIT The Massachusetts Institute of Technology (MIT) is a private land-grant research university in Cambridge, Massachusetts. Established in 1861, MIT has played a key role in the development of modern technology and science, and is one of the m ...
Professor
Thomas W. Malone Thomas W. Malone (born 1952) is an American organizational theorist, management consultant, and the Patrick J. McGovern Professor of Management at the MIT Sloan School of Management. Biography Malone received his BA in applied mathematics, gr ...
explains that "decentralization has three general benefits: # encourages motivation and creativity # allows many minds to work simultaneously on the same problem # 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 An early adopter or lighthouse customer is an early customer of a given company, product, or technology. The term originates from Everett M. Rogers' ''Diffusion of Innovations'' (1962). History Typically, early adopters are customers who, in ad ...
*
Opinion leadership Opinion leadership is leadership by an active media user who interprets the meaning of media messages or content for lower-end media users. Typically opinion leaders are held in high esteem by those who accept their opinions. Opinion leadership com ...
*
Social networks A social network is a social structure made up of a set of social actors (such as individuals or organizations), sets of dyadic ties, and other social interactions between actors. The social network perspective provides a set of methods for an ...
*
Collective intelligence Collective intelligence (CI) is shared or group intelligence (GI) that emerges from the collaboration, collective efforts, and competition of many individuals and appears in consensus decision making. The term appears in sociobiology, politic ...
* Cointelligence *
Crowd wisdom The wisdom of the crowd is the collective opinion of a diverse independent group of individuals rather than that of a single expert. This process, while not new to the Information Age, has been pushed into the mainstream spotlight by social infor ...
*
Predictive markets Prediction markets (also known as betting markets, information markets, decision markets, idea futures or event derivatives) are open markets where specific outcomes can be predicted using financial incentives. Essentially, they are exchange-trad ...
*
Information cascade An Information cascade or informational cascade is a phenomenon described in behavioral economics and network theory in which a number of people make the same decision in a sequential fashion. It is similar to, but distinct from herd behavior. ...
*
Herd instinct Herd behavior is the behavior of individuals in a group acting collectively without centralized direction. Herd behavior occurs in animals in herds, packs, bird flocks, fish schools and so on, as well as in humans. Voting, demonstrations, riots ...
*
Groupthink Groupthink is a psychological phenomenon that occurs within a group of people in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome. Cohesiveness, or the desire for cohesiveness ...
*
Group intelligence A group is a number of persons or things that are located, gathered, or classed together. Groups of people * Cultural group, a group whose members share the same cultural identity * Ethnic group, a group whose members share the same ethnic ide ...
*
Crowd psychology Crowd psychology, also known as mob psychology, is a branch of social psychology. Social psychologists have developed several theories for explaining the ways in which the psychology of a crowd differs from and interacts with that of the individ ...
*
Delphi method } The Delphi method or Delphi technique ( ; also known as Estimate-Talk-Estimate or ETE) is a structured communication technique or method, originally developed as a systematic, interactive forecasting method which relies on a panel of experts. The ...
*
Sociocracy Sociocracy is a theory of governance that seeks to create psychologically safe environments and productive organizations. It draws on the use of consent, rather than majority voting, in discussion and decision-making by people who have a shar ...
*
Subsidiarity Subsidiarity is a principle of social organization that holds that social and political issues should be dealt with at the most immediate or local level that is consistent with their resolution. The ''Oxford English Dictionary'' defines subsidi ...


References and further reading

*Drucker, Peter F., ''Post-Capitalist Society''. (1993) HarperBusiness, New York. * Gerstner Jr., Louis V., ''Who Says Elephants Can't Dance? Inside IBM's Historic Turnaround''. (2002) HarperBusiness, New York. *Gladwell, Malcolm, ''The Tipping Point: How Little Things Can Make a Big Difference''. (2002) Little, Brown & Co., Boston. *Kahneman, Daniel, & Tversky, Amos, ''Choices, Values, and Frames'' (2000) Cambridge University Press, Cambridge, United Kingdom. *Malone, Thomas W.,"Is 'Empowerment' Just a Fad? Control, Decision-Making, and Information Technology," ''Sloan Management Review'' 23: 38, no. 2 (1997). *Malone, Thomas W., ''The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style, and Your Life''. (2004) Harvard Business School Press, Cambridge, Massachusetts. *Trotter, Wilfred, ''Instincts of the Herd in Peace and War''. (1915) Macmillan, New York. *Surowiecki, James, ''The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations''. (2004) Little, Brown, Boston. *Sunstein, Cass, ''Infotopia: How Many Minds Produce Knowledge''. (2006) Oxford University Press, Oxford, United Kingdom.


External links

*http://www.npr.org/templates/story/story.php?storyId=3806781 *http://www.randomhouse.com/features/wisdomofcrowds/excerpt.html *https://web.archive.org/web/20070920020436/http://weblamp.princeton.edu/~psych/psychology/research/kahneman/ *https://www.rand.org/pubs/occasional_papers/2005/RAND_OP153.pdf *http://www.infography.com/content/237200278899.html Decentralization Collective intelligence Management Decision-making