I just listened to the November 21st episode of the Freakonomics podcast , on what economists call ”spontaneous order .” It’s an interesting phenomenon – essentially, it’s self-organization. Daniel Klein (an economics professor at George Mason) describes it through the metaphor of a skating rink : imagine a hundred people all skating at once. There’s no dictatorial authority telling one person to speed up or a couple to move to the outside – there are minimal imposed rules (just the skating direction, say), and beyond that pure self-interest keeps the whole thing from devolving into chaos.
Klein explains this by appeal to mutuality; I have an interest in not colliding with another skater, but that skater has the same interest in not colliding with me. That shared interest – when expanded to the full set of skaters – explains the order that arises spontaneously. Slower, less experienced skaters move to the outside, etc.
It’s a great phenomenon to study, and if it were universally generalizable it’d be a great argument for libertarianism, or as support to the manager-free cultures some companies have adopted, or probably a great many other situations. I’m not convinced about how far we can take it, though, for two reasons.
First, the skaters have very simple goals – mostly just to stay upright and to have fun. Everyone understands that, and it’s incredibly easy to see how your actions directly contribute to the achievement of those goals. Given the relatively small number of skaters, it’s even easy to see how others’ actions contribute.
If we complicate the goals, dramatically increase the number of people involved, or add steps that turn actions’ direct contributions into massively-indirected influences, this all becomes much less convincing. Nation-states meet all three such criteria – can you even identify your country’s goals? Certainly not in a blog post, and probably not at all without grossly oversimplifying and leaving out important bits. The US has nearly 314 million residents, which is a far cry from a hundred skaters. And beyond all that: how can any (not-the-President) citizen figure out the impact of his or her actions on the goals of the nation? There are just too many steps between here and there, all with innumerable external factors interfering. We’re talking Laplacian-level calculations to self-organize at the national level.
So what about companies? Small-to-mid-size businesses may avoid the population size issue, especially since we’re not talking about a basically-random sample of people. Similarly, companies of this size may be focused enough to make their goals comprehensible, and with (sometimes significant) effort may be able to show how a single employee’s actions affect those goals. In that situation, I think self-organization may be a workable approach – but it’s going to fail spectacularly if those conditions cease.
Save the ref
Second… well, to address the second problem I need to go back to the podcast briefly. Besides the interview with Klein, Steven Dubner (the host) also talked to athletes. It turns out that almost all games of Ultimate (Frisbee) are self-policed, with no referees. As Dubner talked to devotees of other sports (basketball and soccer, for instance), he asked them how orderly their games might be without referees.
In all of these talks, however, I think he missed a few more interesting opportunities. Take the plate umpire in baseball – (almost always) he is necessary because he’s watching things that no player is able to watch. The catcher and batter can’t afford to look at the plate to see if the 96mph fastball falls off the corner, so the only option is to install another set of eyes. Spontaneous order can only succeed when the individuals are able to gather all necessary information.
The analogue in a company would be a project manager – someone who looks at the whole picture. This doesn’t mean that PMs have to end up as dictators, however. As Rands discusses, good PMs see the things that the boots on the ground don’t … and then communicate those insights back to the rest of the team.
You can still be manager-free like this. I’d argue that this no longer quite counts as self-organization, however, as the need for a particular role is mandated by the nature of the effort.
All in all, I think spontaneous order / self-organization has a lot of promise (as the success of famously self-organized companies like Gore, Valve, and GitHub imply), but I think that it’s far from a universally-applicable strategy. It pays to understand its limits, just like any approach.