Leaders take action to solve problem in their organizations. They might send out a directive, announce a new policy, or re-organize the department. But, every solutions has the seed for another set of problems. When those problems show up, they reverse course. Policy swings, just like a pendulum. Of course, over time, a new set of problems emerge with the new policy. So that’s cancelled, too. The replacement is often the opposite.

I’ve seen this pattern with vacation policies, work-from-home policies, decision-making, budgeting processes. To the people affected by these policies, it feels like whiplash. But from a distance, it looks like a classic oscillating system.

So let’s look at how the pattern plays out. I’ll choose an example I’ve seen many times: Centralized vs. de-centralized decision-making.

Action to Correct a Problem

In our example company, as in many companies, decisions have to go up the chain. That includes spending decisions, project variances, hiring decisions, approvals, and more. All of this takes time. It can take months to hire someone. Project variance committees meet monthly, and may not take up a request for several cycles.

Slow decisions lead to delays. Delays impact customer satisfaction and financial performance. As local discretion decreases, so does creativity. People lose their sense of ownership and engagement. It takes so long to change plans that the business misses opportunities.

Senior management notices. They want what most leaders want:

• faster decisions
• front-line people who are responsive to customers
• creativity & innovation
• the ability to adjust to seize new opportunities
• the ability respond nimbly to change
• financial results

 Who wouldn’t want all those things?  So they decentralize decision-making.

System Response

Things start happening faster! But they’re not always sure exactly what is happening. Visibility decreases. Decision making and spending feel out of control. Some managers make inappropriate decisions. Other optimize their department’s performance, forgetting the overall goal of the organization. Some managers strike out in directions that make no sense for the overall company strategy. Financial results dip.

The leaders want a return to clear lines of communication and authority. They want:

• visibility
• coordinated action
• predictability
• consistency

Who wouldn’t want those things? So they pull decision-making back to the center.

Sooner or later, the downsides of centralized control re-emerge. So, they decentralize.

Their solutions swing from one extreme to the other. Tight central control OR distributed decision-making. Meanwhile, the organization and the people in it experience an oscillating effect.

In most cases don’t want either extreme. They want the upside of both centralized control and local control. They want enough control to effectively coordinate. And they want enough autonomy so that all parts of the system can flourish and respond to opportunities and change.

Oscillating Systems

Why do systems oscillate?  Delayed feedback and an over-vigorous correction.  This happens on the organizational level. However, it can also happen on a smaller scale anywhere in the system where feedback is slow. Especially when well-intentioned people over-correct when they do get feedback on system performance.

An effective hierarchy provides enough central control for coordinated action. At the same time, there must be enough autonomy for subsystems to function and flourish. Too much control and the subsystem can’t respond well to novel situations. On the other hand, too little control leads to flailing. People may work at cross purposes. Or make decisions contrary to larger organizational goals.

In order to achieve the upsides, organizations need to manage the downsides. However, that requires faster and more robust feedback. Feedback loops and steering signals provide information about system behavior. Which allows smaller more nuanced adjustments. And that prevents oscillation.