Experimenting with Hierarchy: Bringing the virtues of the free market inside the company

Speakers:

Jules Goddard, CEDEP Faculty, Fellow of London Business School, Member of the Council of the Royal Institute of Philosophy and author of recently published books on both philosophy and business experimentation.

Kate Chauviré, Director, Academic Planning and Coordination, CEDEP

Very few people would say that competition in the open marketplace is a bad thing. On the contrary, it is the foundation of the world’s wealth. No other system has been invented that comes anywhere near it.

But strangely, we do not believe in friendly rivalry when it comes to the internal culture of an organisation. Here we prefer cooperation, not competition. We place our faith in planning, not experimentation. We give job holders monopoly rights over their area of expertise. Each person, each team, and each department operates more like a closed shop. There are penalties for rivalry.

We accept the notion of internal socialism where the word of a small and powerful cadre (or politburo) is law, planning is top-down, targets are endless, opinion is unanimous, and a great show of solidarity is the norm.

Why do we not trust the collective intelligence of the whole organisation more than the expert knowledge of a minority? We need to rethink organisational design that does not rely on a great leader for its success.

A well-designed organisation or business should freely and quickly adapt to changing opportunities and threats by drawing upon collective wisdom— one where a change in CEO, CFO or CMO has little impact. Change should be natural, continuous, and market-inspired and is more likely to occur if the organisation is designed as a horizontal value chain of internal suppliers and customers who face outward.

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