The Chaordic Way of Organization

A Concept Paper - Harlan Cleveland (Draft)

In order to think through what it will mean to organize human activity "chaordically," which is to say in an uncentralized fashion, we will need to consider:

• How we got here -- the shift from hierarchical to uncentralized

organizations;

• The role of information, now the world's dominant resource, in speeding and facilitating that shift;

• The central role of standards in making uncentralization work; and

• The evident steps along the path to chaordic organization.

I.

The Passing of Pyramids

Opting for pyramids as the “natural” form of organization may have seemed natural in some European, Japanese, and other cultures long submissive to monarchs or emperors governing by a mixture of divine right and military readiness.

But the founding fathers of the United States of America had something very different in mind.

They were themselves undeniably upperclass, some even slaveholders.

But the rhetoric of their Revolution had broken loose from hierarchies of right and might; it was full of inalienable rights and populist righteousness.

These leaders of an “underdeveloped” colony declared our eighteenthcentury independence in human-rights language that much of the world caught up with only in the twentieth -- under the leadership of that woman-of-the-century, Eleanor Roosevelt – and leaders in some parts of the world haven’t yet understood.

The founders then drafted a Constitution that departed dramatically from the oppressive pyramids the colonists had fled and learned to despise.

Indeed, without ever quite saying so, they created the basis for a nobody-incharge society -- quite literally a first-time experiment in uncentralized governance.

The “separation of powers” with its “checks and balances” was explicitly designed to deny any part of our Federal government the chance to make too much yardage at the expense of the other parts – and of the people it was supposed to serve.

The Federal system itself was designed to create a continuous tussle between the states and the central government. The tussle was intended to be permanent; no part of the Federal system was supposed to “win it all,” not ever.

It is not just the durability of their extraordinary invention that testifies to the founders’ wisdom.

It is clear from the record they left that they – at least, the deepest thinkers among them, James Madison and Thomas Jefferson -- knew just how unprecedented was the system they were launching.

The people were really supposed to be sovereign. Jefferson still believed this, even after his eight years of trying, as President (1801-09), to be their “servant leader.”

“I know of no safe depository of the ultimate powers of the society but the people themselves,” Thomas Jefferson wrote to a friend in 1820, “and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion.”

Think of it this way: Pyramid-building was always, and is even more today, essentially unAmerican.

The authentic American tradition calls for the invention of systems in which nobody is in general charge -- and, in consequence, each citizen is partly in charge.

That authentic tradition began to take hold of our destiny in the second half of the twentieth century.

Just below the surface in every kind of organization, something important was happening, something very different from the vertical practice – recommendations up, orders down -- of both public administration and business management.

The “bright future for complexity,” foretold in a 1927 New Yorker story by E. B. White, was coming to pass in the U.S.A. – prodded and speeded by the modern miracles of information technology.

The sheer complexity of what had to get done – by governments and corporations, but also by their myriad contractors and subcontractors and their nonprofit critics and cheerleaders – required huge numbers of people to exercise independent judgment, think for themselves, and consult with each other, not just “do as you’re told.”

There were still, to be sure, distinctions between organizations where the style of management is looser and more collegial and others where recommendations mostly go up and orders mostly come down. But by the end of the 20th century, all kinds of organizations – from Marine platoons to urban hospitals -- were moving away from vertical administration toward more consultative styles of operation.

The century just past thus opened a widening contrast between how organizations were described and how they really worked. So naturally, the search has been on for alternatives to centralization as an organizing concept.

The first and seemingly obvious candidate was decentralization.

It turned out that most of the central administrators who opted to decentralize found, to their satisfaction, that this was a new way to preserve hierarchy.

If things were becoming so complicated that grandpa could no longer understand it all, he could still subdivide and parcel out the work to be done – while hanging onto central control with more and more creative accounting systems. Decentralization thus became an aspect, indeed a subhead, of centralization.

The real opposite of centralization is of course uncentralization.

Mao Tse-tung played with this idea for a time; he called it “many flowers blooming.”

Then he pulled back when it became clear that if China really permitted people’s free exercise of opinion and initiative, the Communist Party’s central control would be the first casualty.

Meanwhile, the underlying American bias favoring looser systems – featuring personal initiative, voluntary cooperation, joint ventures, committee work, and “networking” – was being reinforced by the dazzling progress of information technology and its impact on everything from elementary education to the understanding of our universe.

II.

The Information Imperative

The rapid drift toward uncentralized systems is not a temporary aberration from some centralized norm.

It is happening because information has recently become the world’s dominant resource – and because information is fundamentally different from land, minerals, energy, and other physical resources that have heretofore played the starring role in world history.

The marriage of computers and telecommunications multiplied the speed and extended to global range financial speculation, business transactions, military operations, political dissidence, and humanitarian activity.

And the widening access to information about what’s happening, about who is doing what to whom and when and where, brought into financial markets and business decisions and military strategy and political protest and even humanitarian relief a host of kibitzers, lobbyists, and second-guessers who knew so much – or could readily discover it on the Internet -- that they had to be taken into account.

Centralized hierarchies were in the nature of things.

But information is symbols, not things.

Uncentralized networks are the appropriate technology for management in a symbols environment.

The direction of this change was already becoming obvious during the latter part of the twentieth century. Everywhere, we saw a shift from topdown “vertical” relationships toward more “horizontal,” consensual, collaborative modes of organizing.

The most effective leaders in this new century will be those who learn, early and often, how to fuse chaos and order in uncentralized systems.

It was in the nature of things that the few had access to key resources and the many did not: there never seemed to be enough to go around.

The inherent characteristics of physical resources (the natural ones and those created by human ingenuity) made possible – perhaps even necessary -- the development of hierarchies of five kinds: hierarchies of power based on control (of new weapons, of transport vehicles, of trade routes, or markets, and even of knowledge back when secrets could be secure), hierarchies of influence based on secrecy, hierarchies of class based on ownership, hierarchies of privilege based on early access to particular pieces of land or especially valuable resources, and hierarchies of politics based on geography.

Each of these five bases for hierarchy and discrimination was crumbling in the waning years of the twentieth century.

The old means of control were of dwindling efficacy. Secrets were harder and harder to keep (as the CIA and the White House seemed to have to relearn every few weeks).

And ownership, early arrival, and geography were of declining importance in accessing, remembering, analyzing, and using the knowledge and wisdom that are the really valuable legal tender of our time.

The complexities of modern life, and the interconnectedness of everything to everything else, mean that in our communities, our nations, and our world, nobody can possibly know enough to be in general charge of anything important or interesting.

This state of affairs is becoming more apparent with each passing year.

The passing of pyramids opens up a fast-growing requirement for people who can and will take the lead -- and requires very different attitudes and strategies for those who opt to point the way.

In modern societies many organizations still look like pyramids from a distance; but both their internal processes and their external relations feature much less order-giving, much more consultation and consensus.

In systems where nobody can be in general charge, everybody has a chance to be partly in charge.

Most people will not, for one reason or another, reach for that brass ring.

Those who do, whatever their nominal "positions" in the loose-fitting knowledge environment, will be our leaders.

With every generation of information technology – that is, every two or three years – our future becomes more uncentralized.

That has to be good news – for individual creativity and invention, for personal freedom, for human choice.

III.

The Need for Standards

The paradoxical key to a genuinely uncentralized system is mutually agreed standards on whatever is central to the system and thus cannot be left to individual choices or market outcomes.

The largest uncentralized systems, and perhaps the most obvious, are the international monetary system and the Internet. The comparative values of each nation's currency depend so much on decisions that national governments and large aggregations of wealth make from day to day that none of them can possibly control the millions of transactions that, for some years now, have amounted to more than a trillion dollars a day.

Even when the governments of the biggest countries intervene in efforts to influence the price of a particular money, they mostly manage to demonstrate only how ineffectual those interventions are.

There are, of course rigid standards to which all participants in the international money market have to adhere.

So far, these are essentially technical standards.

What enables large uncentralized systems to work at all is mutual adjustment.

A wide availability of relevant information enables each participant to figure out what the others might do under varied conditions, and give forth useful signals for them to use in turn.

Perhaps the best current example of mutual adjustment at work is the Internet -- at least on a good day.

People all over the world are exchanging information, images, music, and voice messages, with so little regulation that their "commerce" is often noncommercial, in effect a multilateral barter system.

Many of their transactions are essentially not exchange, but sharing, arrangements.

Where there are rules of behavior, they are increasingly arrived at by consensus among the participants, or at least are ratified in action by those who will be guided by them.

That doesn’t mean the rule-abiding citizens are serfs, doing some lord’s bidding.

If the rules work, it’s because nearly all those who need to abide by them are motivated to comply because the rules make sense to them.

In the developing culture of the World Wide Web, there are more and more examples of enforcement by peer-pressure.

Large numbers of people exercise their privilege of excluding messages from ill-mannered participants or refusing to do business with individuals or Web sites they regard as untrustworthy -- and tell each other when they make such decisions.

In some ways the most dramatic, and least remarked, nobody-in charge system is the way international standards are already set for many thousands of products and services.

It started in 1906, with engineers trying to make sure that “electrotechnical” gadgets would fit together and work the way they were supposed to work, anywhere in the world. Other engineers picked up the idea in some other fields. But it wasn’t until after World War II, in 1947, that an International Organization for Standardization was formed.

The organization is called ISO.

That’s not an acronym, which wouldn’t work for a multilingual club anyway.

Derived from the Greek isos, meaning “equal,” it’s the root of the prefix “iso-” that occurs in many words such as “isometric” (of equal measure or dimensions), “isodynamic” (having the same strength or intensity), and “isonomy” (equality of political rights).

As ISO’s website puts it: “From ‘equal’ to ‘standard’, the line of thinking that led to the choice of ‘ISO’ as the name of the organization is easy to follow.”

The first ISO standard, a “reference temperature for industrial length measurement,” was published in 1951.

Half a century later, there are now more than 13,544 International Standards, recorded on 403,608 pages.

This standard-setting, coordinated by a nongovernment from a headquarters in Switzerland, costs less than $90,000,000 a year and engages the efforts of some 30,000 “experts on loan,” working as equal partners in 2,885 committees and working groups, in a wide variety of technical fields.

Their commonsense approach has been summed up this way: “Do it once, do it right, do it internationally.”

ISO standards are voluntary – that is, enforced in the market-place: if you produce something fastened by screws that aren’t standard, the word will get around fast and customers will shun you.

They are industry-wide, designed to provide global solutions to satisfy suppliers and consumers worldwide.

And they are developed by consensus.

Consensus doesn’t mean unanimous consent.

An ISO standard can be adopted if it is approved by two-thirds of those actively involved and is blessed by three-quarters of the ISO members – national standard-setting bodies -- that vote.

Maybe they don't even need voting rules, just a commonsense definition of consensus: “. . . the acquiescence of those who care about each particular decision, supported by the apathy of those who don’t.”

Once international standards are set -- for metric screw threads, for bolts, for welding, for electronic data processing, for paper sizes, for automobile control symbols, for the safety of wire ropes, for film speed codes, for freight containers, and even for country names, currencies, and languages -- a genuinely free market is possible.

Competition within the rules of the game can be free and fair – and markets that are both free and fair are likely to grow faster than others.

If you carry three credit cards in your wallet, they will look very much alike – the magnetic code is in a predictable place on each card – because they adhere to an ISO standard.

The three financial institutions that issued them cooperated on that, but now they happily compete for your custom – happily, because each is operating in a much larger market than any of them could reach if they hadn’t first cooperated with each other.

Hints on How to Organize

How to conceive, plan, organize, and lead human institutions in ways that best release human ingenuity and maximize human choice is one of the great conundrums of the century now ahead of us.

The long-ago philosophy and recent history of the U.S.A. provide useful hints for people who bring other people together in organizations to make something different happen. This is a game anyone can play. Here, for starters, are some hints from my own experience.

No individual can be truly “in general charge” of anything interesting or important.

That means everyone involved is partly in charge.

How big a part each participant plays will much depend on how responsible he or she feels for the general outcome of the collective effort.

Broader is better.

The more people affected by a decision feel they were consulted about it, the more likely it is that the decision will stick.

Looser is also better. The fewer and narrower are the “rules” that everyone involved must follow, the more room there is for individual discretion and initiative, small-group insights and inventions, regional adaptations, functional variations.

Flexibility and informality are good for co-workers’ morale, constituency support, investor enthusiasm, customer satisfaction.

Planning is not “architecture,” it’s more like fluid drive.

Real-life planning is improvisation on a general sense of direction – announced by the few perhaps, but only after genuine consultation with the many who will need to improvise on it.

Information is for sharing, not hoarding.

Planning staffs, systems analysis units, and others whose fulltime assignment is to think, shouldn’t report only in secret to some “boss.”

Their relevant knowledge has to be shared, sooner rather than later, with all those who might be able to use it to advance the organization’s purpose.

(Some years ago Japanese auto companies – advised by a genius engineer from Michigan – started sharing much more information on productivity with workers on the assembly lines.

Small groups of workers on the factory floor, reacting to that information, were able to think up countless little changes that increased speed, cut costs, improved quality, enhanced productivity.

Quite suddenly, Japanese autos became globally supercompetitive.)

Add your own hints-from-experience, to taste.

• * *

It may be helpful to sum up – and thus oversimplify – the rationale for the uncentralized systems that seem likely to be more and more characteristic of the post-post-modern era now ahead of us:

• In order for any complex activity to run in an uncentralized manner, there have to be some rules of the game (like the ISO standards).

• The rules need to be adopted by a sufficiently participatory, or representative, process, to persuade nearly all the “followers” they have been part of the “leadership.”

• Until the rules are truly acceptable shared doctrine, there needs to be some interim authority (the policeman at an urban intersection, the foreman in a company, the guru in an ashram, a parent in a family) to remind everybody about the agreed rules.

• In time, the “rules” become internalized standards of behaviour – and the resulting community doesn’t need anybody to be “in charge.”

• The “rules” are then learned at a parent’s knee or at school, by adult training and experience, and by informal (but effective) peer pressure.

Procedural reminders and requisite services can mostly be automated – as with signal lights for automobile traffic, and ATMs for routine banking.

In every well-functioning market, most of those involved in the myriad transactions are able to buy when they want to buy and sell when they want to sell, precisely because no one is in charge, telling them what to do.

The discipline is instead provided by wide and instant knowledge of the prevailing price of whatever is sought or offered. Modern information technologies have made this knowledge spread possible on a global scale.

The uncentralized way of thinking and working naturally becomes more complicated as “civilization” moves from the small homogeneous village to large multicultural societies, and beyond that to the governance of “communities” in cyberspace.

But there is evidently a path from (a) the need for standards, through (b) the practice of consensus and (c) the constituting of interim authorities (whose mandate is to work themselves out of their interim jobs), to (d) patterns of naturally cooperative behavior. It's a path that may become universally valid for organized human effort however complex it has to be.

Once upon a time, it seems to have required centuries and even millennia for human societies to find their way along a path without precedent.

But everything else is speeded up these days.

Maybe, once we can trace the path, our capacity to build uncentralized organizations will also be greatly accelerated.

NOTE: This paper draws from writings in a book, Nobody in Charge: Essays on the Future of Leadership, by Harlan Cleveland, published in May 2002 by Jossey-Bass, San Francisco, CA. For the background on chaordic organization, it assumes the reader's familiarity with Dee Hock's Birth of the Chaordic Age (San Francisco, CA: Barrett-Koehler, 1999). Harlan Cleveland, 46891 Grissom St., Sterling, VA 20165 , harlancleve@cs.com