The Delusion of Centralized Power

Click on the image above to play the video (flip your phone to widescreen if you want image to be bigger)

The Delusion of Centralized Power

For most of my life, I have been interested in leadership and, I guess, the “art of getting things done”.  Leadership is in many ways the most important aspect of all our lives. After all, we are the CEO’s of the life we want to have. Or, as a mentor of mine often said: “Mats, if you are not the lead dog, you won’t like the view.”

We all know leaders when we see them. As a leader myself in many businesses, I have studied all types, witnessed all forms, and have had many opportunities to prototype different ideas and approaches to leadership firsthand.

So, while leadership is the most important ingredient when trying to reach a particular objective, it is also equally true that our ability to diagnose, assess and select leaders for important tasks leaves a lot to be desired. Look at politics, for one. Or look at the average success rate when someone gets recruited for a leadership task (by most meta-analyses likely way lower than 50%). 

I have written before about the different types of leadership needed, particularly as it relates to startups vs existing companies.

Today, I want to double-click on the delusion of centralized power. And by that, I mean the deeply-held belief many people have that someone (a leader or, perhaps, even the divine) can issue edicts and simply “tell” the organization what to do. But anytime we push decisions about choices away from people we end up pushing people away from choices. And it always ends badly.  Hence the delusionary aspect of centralized power.

Growing up in Sweden, I was often confronted by many people to whom centralization of power was always the answer to any problem. Markets, companies, profit motives, etc. could not be trusted with big problems. By centralized solutions, you could ensure equity, equality, and fairness they argued. 

Thankfully, in the past 50 years, we have witnessed the power of a different kind. Distributed power. The power of networks. The value of them grows exponentially with the number of connections in the network. The human progress we have seen as a result is nothing short of sensational. If you don’t believe me read the late Hans Rosling’s book, Factfulness. It cannot be debated. The evidence is simply too compelling.

But did this happen because of or in spite of centralized power? Well, that’s the question, isn’t it? I am leaning more towards the latter, but, of course, there were some important regulatory “enablers”, such as free trade agreements, as well as deregulation and demonopolization of industries. 

Obviously, there are limits to what people can or should make choices about. There are common goods that we all need to live in a thriving society. Like defense, laws, infrastructure, air quality etc. However, the rule of government is less about replacing choice and more about enabling better and more choices. Like in all systems, there is and should be a healthy tension between what is in the best interest of individuals vs the entire population.

I saw this tension when growing up in the McDonald’s system. From both sides as being a franchisee partner far away from headquarters as well as being an executive at the center.
Most people assume McDonald’s is a centralized machine. How else would Golden Arches have achieved the kind of global penetration that they have?

But McDonald’s, like the internet, is not the product of centralization. On the contrary, they are the product of a centralized set of “rules” (like recipes and HTML), and then the network executes the rest. It’s in this dance between tight and loose, between the center and the periphery, where the magic happens. The currency in these systems is a high level of trust buoyed by a shared sense of belonging to both purpose and outcomes. It’s powerful. I guess the same type of trust is also a vital tenant of our liberal democracies. And it’s certainly a key aspect of perhaps the most important document ever written on the boundaries of government and governance: the American Constitution.

Tocqueville, one of the founders of democracy as we know it, noted that “a centralized administration is fit only to enervate”. What we need is radical decentralization.

Nature is filled with powerful “systems” that prosper without any centralized control. Many business ecosystems work in a similar fashion. Think about the Amazon system, the AirBnB system, the Uber system, and the App Store. Yes, there are core “rules” set by a few, but then the marketplace spurs radical innovation based on those rules. And for the most part, it benefits all participants in that system. Yes, for sure, it’s not perfect. There is always tension between the hub and the spokes around what the “tax” to the system should be. But in general, it’s a healthy tension that tends to find equilibrium. 

Most organizations (and certainly politics) are hung up on the problem of “control” and cannot bring themselves to trust that complex systems can administer, optimize, and innovate without a central authority. 

Most ideas that have propelled McDonald’s (and the internet, for sure) came from the network itself, not from the mothership. The Big Mac, the Filet-O-Fish, and the McFlurry (to name a few) were invented by a franchisee eager to improve the business. No edicts. No asks. Just happened. The same is of course true for the Internet where the connection itself spawned millions of ideas and platforms where ideation, exchange, and commerce could take place in new forms. 

I believe in the principles of subsidiarity more than I believe in centralized power. Centralization always ends up suffocating innovation and the centralized powers ultimately will reduce the freedom of the people they claim to serve. We see it today in and around our world. Way too many people are living under authoritarian (and brutal) regimes. Ukraine is such a clear example of this fight and why Ukraine winning is of critical importance for anyone believing in freedom.

I understand and empathize deeply with anyone concerned about our future and who’d like to see the government do more. It’s understandable that people don’t trust the institutions that currently are serving us so poorly. But wishing and believing that a few people that you don’t know far away from you will end up making great decisions for hundreds of millions of people is foolish. It has never worked in the past and will never work in the future. 

Identifying problems is not the same as identifying solutions. This has always been my own personal ideological frustration. I guess one could sloppily say I lean left on problems but right on solutions. That makes me a bit out of balance, I guess.

But there is good news.

Most Americans are actually aligned on what they want more of and what they want out of their lives. However, there is great separation on what we don’t like. That’s where polarization finds its fuel. And sadly, we devote almost all our debates to our differences rather than our commonalities. 

My hope is that we could spend more time on the few things we all want and then set proper rules for the market to deliver against them. Tax bads, not goods. Reward transitions to renewable energy, reductions in obesity, a more dynamic workforce, etc. Today we seem to be arguing about EVERYTHING when, in reality, most Americans agree on most things. And while we are arguing, nothing gets done. Instead, arguments, divisions, and frustrations grow. We can do better than this.

I had some fun and took a quick stab at what I think most Americans would agree on. You can click this link and fill out your response. It will take about 1 minute, I promise. I forced myself to 6 categories. If you think 1 or 2 are missing, please add them. But let's try to capture the top 5 together! I am sure we can demonstrate the idea behind this post. After all, there is more wisdom in crowds and we can articulate them much better than I can alone. If I get sufficient responses, I promise I will report back. So please go here and submit your responses. 

Power to the people! 

Have a great week.