25 July 2014

The Starfish and the Spider -- a (mini) review

Over-controlling CEO or empowering Catalyst?
CH sent me this book by Brafman and Beckstrom, which I started -- and stopped -- this morning.*

I stopped because the prose was far too excited for the authors' point, which is that a starfish has a decentralized "leadership" that allows individual arms (even polyps) to "decide" what to do, without consulting any center. A spider, OTOH, needs to keep the entire web in order if it's going to eat. The obvious figure at right "explains."

This analogy is meant to apply to organizations (hence all the CEO endorsements) that want to balance between centralized and delegated control.

I get it. You get it. The main question, then, is HOW to find that balance.

When it comes to water, for example, we can leave a farmer with a well or reservoir to decide how much of his private water to use. He knows how much there is and how much he wants to use, and his decisions do not affect the water of others.

Change that scenario to a bunch of farmers sharing the same aquifer or reservoir, and there's a need to coordinate their use. This can happen by allowing each the same quantity of water, auctioning rights to the "sustainable" yield, etc. A "spider" needs to keep track of aggregate use, but there's no need to track the "why" of use (trees, row crops, pools, etc.) because we can assume the farmers know what they're doing.

Take it one step further, to water prices in cities. Water managers can try to tell people how much to use, when and for what. Or they can move towards a starfish type of management by setting a price that will keep total consumption within an acceptable range. The managers will not know who uses how much water for what (except when sending bills), but their ignorance does not matter. They don't know who should use how much water, and they should not try to understand. They only need to keep aggregates in balance.

If you like airport business books, then check out Starfish. If you want better perspectives on these ideas, then read Two Cheers for Anarchism or the founding papers on these topics: Hayek's 1945 "Use of Knowledge in Society" [PDF] or Coase's 1937 "Nature of the Firm" [PDF]

Bottom Line: I give this book TWO STARS for lacking anything sticky to hold me.

* This is a mini-review because I didn't read the whole book. I may have missed a masterpiece (correct me, please), but I cannot spend too much time looking when one may not be there.

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