Decentralized decision-making is any process where the decision-making authority is distributed throughout a larger group. It also connotes a higher authority given to lower level functionaries, executives, and workers. This can be in any organization of any size; it may be present in a governmental authority to a corporation. However, the context in which the term is used is generally that of larger organizations. This distribution of power, in effect, has far-reaching implications in the fields of management, organizational behavior, and government.
Decentralization and centralization have been consistent themes throughout history pertaining to governmental authority and political theory. From the rise and fall of the Roman Empire, there have been periods of centralization and decentralization in societies worldwide. Almost any political movement, from the rise of city states in Roman times, to the later rise and downfall of feudal empires during the Middle Ages, to the rise of fascism in Germany prior to World War II, and to the late 20th century formation of the European Economic Union; the history of Europe has been one of cycles of centralization and decentralization.
MIT Professor Thomas W. Malone explains that "decentralization has three general benefits:
encourages motivation and creativity
allows many minds to work simultaneously on the same problem
accommodates flexibility and individualization
Decentralized decision-making, Malone says, tends to create less rigidity and flatter hierarchies in organizations. When upper management delegates decision-making responsibilities, there also exist wider spans of control among managers, creating a more lateral flow of information. Thus, there will be more bottom up directional information flow, allowing for more innovation and efficiency closer to the means of production. This increased flow of information thereby allows for innovation in what is called as Total quality management.
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Cognitive psychology is the scientific study of mental processes such as attention, language use, memory, perception, problem solving, creativity, and reasoning.
A cognitive bias is a systematic pattern of deviation from norm or rationality in judgment. Individuals create their own "subjective reality" from their perception of the input. An individual's construction of reality, not the objective input, may dictate their behavior in the world. Thus, cognitive biases may sometimes lead to perceptual distortion, inaccurate judgment, illogical interpretation, and irrationality.
Decentralization or decentralisation is the process by which the activities of an organization, particularly those regarding planning and decision-making, are distributed or delegated away from a central, authoritative location or group and given to smaller factions within it.
Bounded rationality is the idea that rationality is limited when individuals make decisions, and under these limitations, rational individuals will select a decision that is satisfactory rather than optimal.
In psychology, decision-making is regarded as the cognitive process resulting in the selection of a belief or a course of action among several possible alternative options. It could be either rational or irrational. The decision-making process is a reasoning process based on assumptions of values, preferences and beliefs of the decision-maker. Every decision-making process produces a final choice, which may or may not prompt action.
Centralisation or centralization is the process by which the activities of an entity or organization, particularly those regarding planning, decision-making and control of strategies and policies, become concentrated within a particular group, sector, department or region within that entity or organization. This creates a power structure where the said group, known as head or core group, occupies the highest level of hierarchy and has significantly more authority, prestige and influence over the other groups, who are considered its subordinates.
An organizational structure defines how activities such as task allocation, coordination, and supervision are directed toward the achievement of organizational aims.
Herd mentality is the tendency for people’s behavior or beliefs to conform to those of the group they belong to. The concept of herd mentality has been studied and analyzed from different perspectives, including biology, psychology and sociology. This psychological phenomenon can have profound impacts on human behavior.
The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations, published in 2004, is a book written by James Surowiecki about the aggregation of information in groups, resulting in decisions that, he argues, are often better than could have been made by any single member of the group. The book presents numerous case studies and anecdotes to illustrate its argument, and touches on several fields, primarily economics and psychology.
Thomas W. Malone is an American organizational theorist, management consultant, and the Patrick J. McGovern Professor of Management at the MIT Sloan School of Management.
Lateral communication is "the exchange, imparting or sharing of information, ideas or feelings between people within a community, peer groups, departments or units of an organization who are at or about the same hierarchical level as each other for the purpose of coordinating activities, efforts or fulfilling a common purpose or goal
The following outline is provided as an overview of and topical guide to thought (thinking):
We Are Smarter Than Me is a collaborative-writing project using wiki software, whose initial goal was producing a book about decision making processes that use large numbers of people. The first book was published as a printed book, late in 2007, by the publishing conglomerate Pearson Education. Along with Pearson, the project's four core sponsors include research institutes of the MIT Sloan School of Management and the Wharton School of the University of Pennsylvania.
Collective wisdom, also called group wisdom and co-intelligence, is shared knowledge arrived at by individuals and groups.
The global brain is a neuroscience-inspired and futurological vision of the planetary information and communications technology network that interconnects all humans and their technological artifacts. As this network stores ever more information, takes over ever more functions of coordination and communication from traditional organizations, and becomes increasingly intelligent, it increasingly plays the role of a brain for the planet Earth. In the philosophy of mind, global brain finds an analog in Averroes's theory of the unity of the intellect
Analytical skill is the ability to deconstruct information into smaller categories in order to draw conclusions. Analytical skill consists of categories that include logical reasoning, critical thinking, communication, research, data analysis and creativity. Analytical skill is taught in contemporary education with the intention of fostering the appropriate practises for future professions. The professions that adopt analytical skill include educational institutions, public institutions, community organisations and industry.
Knowledge retrieval seeks to return information in a structured form, consistent with human cognitive processes as opposed to simple lists of data items. It draws on a range of fields including epistemology, cognitive psychology, cognitive neuroscience, logic and inference, machine learning and knowledge discovery, linguistics, and information technology.
The psychology of reasoning is the study of how people reason, often broadly defined as the process of drawing conclusions to inform how people solve problems and make decisions. It overlaps with psychology, philosophy, linguistics, cognitive science, artificial intelligence, logic, and probability theory.
Collective intelligence (CI) is shared or group intelligence (GI) that emerges from the collaboration, collective efforts, and competition of many individuals and appears in consensus decision making. The term appears in sociobiology, political science and in context of mass peer review and crowdsourcing applications. It may involve consensus, social capital and formalisms such as voting systems, social media and other means of quantifying mass activity. Collective IQ is a measure of collective intelligence, although it is often used interchangeably with the term collective intelligence. Collective intelligence has also been attributed to bacteria and animals.
Herd behavior is the behavior of individuals in a group acting collectively without centralized direction. Herd behavior occurs in animals in herds, packs, bird flocks, fish schools and so on, as well as in humans. Voting, demonstrations, riots, general strikes, sporting events, religious gatherings, everyday decision-making, judgement and opinion-forming, are all forms of human-based herd behavior.
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