The 1% Problem Versus the Iron Institutional Rule

The odds are that you will find a solution to a problem faster if you have more people working on it. That makes sense and it is the thinking behind competitions like the X Prize.

Of course, it also requires a coherent platform for the larger number of people to do meaningful stuff at the same time. This is a “scaling problem” that Sutton and Rau talk about in their book “Scaling for Excellence“. But assuming that you can get the scaling right, you should be able to harness the power of the masses within and between institutions.

As Greg Satell writes, some folks are doing this. And they get great results. Amazon, for example, scales the product review process and the product recommendation process which opens the door to better and more fun buying.

So why can’t we do this more broadly? Why can’t institutions automatically re-formulate themselves to scale problem solving? One of the reasons is the so called “Iron Law of Institutions“. That law goes like this

“the people who control institutions care first and foremost about their power within the institution rather than the power of the institution itself. Thus, they would rather the institution ‘fail’ while they remain in power within the institution than for the institution to “succeed” if that requires them to lose power within the institution.”

In other words, institutional arrangements that offer power positions do not necessarily maximize how people working with those institutions can be organized to work together. Power can corrupt the process.

I will be meeting with some business leaders this afternoon to discuss this problem in the context of a single firm and see if we can generate some ideas to test out.

BTW, a se cond problem is that our networking platforms are just starting to format messaging in ways that facilitate cross-discipline discussion. We are still stuck in knowledge silos, but less so than we used to be.

Stay tuned!

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