Fast Company blogs a talk by Thomas Malone at Supernova:

Decentralization is the next stage in a progression of human organization that’s been going on for thousands of years.

New technologies allow us to have the economic benefits of large organizations as well as the human benefits of small organizations. The reason that’s possible is that technology is reducing the cost of communication to such a level that everyone in even huge organizations can have all the information they need about the big picture to make decisions without waiting for someone above them to tell them what to do. What will change things, though, is not the technology. It’s what people want. We need to think more deeply about what we humans really want.

Let me give you a couple of examples. The first example is the Wikipedia, an open content encyclopedia that anyone in the world can look at for free. But anyone in the world can also change it. How could that possibly work? The way it works is that there’s a list of recent changes, and frequent contributors are always watching that list. If people think a change is wrong or questionable, they immediately flag that page. Over time, it gets better and better. It’s probably not as good as the Encyclopedia Britannica, but it’s very, very good. This illustrates the themes of freedom and scale. Freedom because anyone in the world can contribute, but there’s also global scale in the pool of people contributors can draw upon.

You may be thinking, what does this strange little encyclopedia that’s not a business and doesn’t make money have to do with business? Let’s look at another example: Ebay. What most people don’t know is that 150,000 of its sellers make their full-time living on Ebay. If those people were employees of Ebay, it’d be one of the largest employers and retailers in the world. But they’re not employees. They’re independent store owners, and they have all the freedom independent store owners have. Coupled with that, they also have global scale.

Why do these examples mean this is going to happen in more places? This is the next logical stage in a very common pattern in the evolution of human organizations. This pattern happened first in the ways humans organized their societies. People made their living hunting and gathering, and they lived in small, decentralized, egalitarian groups called bands. Then we saw the rise of larger and larger human societies ruled by centralized leaders called emperors and kings. Then, 200 years ago, with the American Revolution and the French Revolution, we saw the emergence of democracy.

What explains this change? There are lots of factors involved, but surprisingly, a single factor can explain all three stages: the declining cost of communication. When communication was expensive, the only thing you could do was have small, face-to-face decision making groups. With the development of the first information technology, writing, it became possible to organize people in larger groups. It took another information technology, the printing press, to make the third way of organizing societies feasible.

There are three main ways large groups of people can make decentralized decisions: loose hierarchies, democracies, and markets.

Kevin Werbach adds: “We need to get back so people are in the center. The challenge of technology is to get to this end point, where people feel like they’re in the center but they are always connected. Specifically, layers might be a model. They explain the deep structure of the content of this conference. At the bottom, you’ve got the communications infrastructure. Then there’s a logical layer of directories and identity. Above that is software. Then an interface layer, the APIs and semantics. And then there’s the content itself: Media and information. All of these layers are facing decentralization.”

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Rajesh Jain

An Entrepreneur based in Mumbai, India.