Morten T. Hansen

Collaboration rarely occurs naturally, because leaders, often unintentionally, erect barriers that block people from collaborating. Many people, though not all, of course, have a natural tendency to collaborate, but they are not left to their own devices. And the culprit is modern management.

Managers and management thinkers celebrate decentralization, which works like this: You delegate responsibilities for products, business areas, and geographies to a group of managers. The clearer the lines of responsibility, the better. You then develop objectives and metrics for each manager so that he or she knows what to achieve each quarter and year. To improve the chance of success, you give the managers considerable freedom—they run their own unit. Then you hold them accountable for their results and put in place incentives to motivate them to reach the objectives. Bonuses, salary increases, stock options, and promotions go to those who deliver. Those who do not deliver are coached or let go. Predictably, managers of each unit work hard and focus on reaching their targets. You sit back and marvel at the beauty of the system.

This is the essence of modern management: a decentralized system with clear lines of responsibility, a great deal of accountability, and rewards for those who perform. It’s a beautiful system, and it delivers very good performance—up to a point. The problem is that each manager becomes increasingly independent and tries to maximize his or her unit—after all, that is how the job is defined. Managers care about reaching their goals and have little interest in helping others achieve theirs. Over time, decentralization risks turning a company into a loose collection of units, which become fiefdoms or silos.

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