Decentralized Operations

Eric Kish
Eric Kish
Aug 26, 2018 · 9 min read

“You can delegate authority, but you cannot delegate responsibility”
Byron Dorgan — American author, businessman, attorney, and former United States Senator and Congressman

In theory, a decentralized organization is able to make decisions faster without having to wait for them to go up the chain of command. For a business that wants to scale, a decentralized model should allow new units to operate independently, with the advantage of faster adaptation to specific needs of the area. But just deciding to decentralize without providing a framework for aligned decision-making and a supportive culture can achieve the exact opposite.

History proved that the most effective organizations in times of rapid change and uncertainty are those that are aligned to a clear intent and have autonomy of action.

In 1806 the Prussian army suffered a crushing defeat at the hands of a rapidly moving Napoleonic Army. The Prussian Army was organized like a machine, in the 18th century tradition of Frederick the Great, where the soldier was considered an obedient robot.

Helmuth Karl Bernhard Graf von Moltke (1800 - 1891), The chief of staff of the Prussian Army for thirty years

This forced a process of soul-searching that culminated with Moltke the Elder, the Chief of Staff of the Prussian army in the mid to late 1800s, defining and implementing a new philosophy of command and control that empowered junior field commanders to choose the best course of action in line with their commander’s intent.

Moltke realized that, in the fog of war, large armies that move fast can’t be micromanaged. Moltke recognized that the only way to decentralize operations and allow subordinates to exercise initiative was through intent-based orders. Furthermore, Moltke identified that once orders were published and operations were set in motion, it was incumbent upon commanders to allow their subordinates to develop the situation and act decisively.[1]

Truppenfȕhrung, the German Army field manual 1933

The concept was further developed and published in 1933 in Truppenfȕhrung, the German Army field manual, a document of remarkable clarity stating that:

“If an execution of an order was rendered impossible, an officer should seek to act in line with the intention behind it.”[2]

This philosophy is known as Auftragstaktik (mission command in the US and UK). Combined with systematic training and education of an elite officer corps that created shared mental models, this philosophy became the secret weapon of the German army that culminated in their astonishing Blitzkrieg victories in the early stages of WWII.

But let me put this in simple terms. Imagine you’re an allied commander in WWII facing the river Rhine on your way to Berlin. You call a young company commander in your tent and tell him pointing at a map: “John, do you see this bridge? I need you to take this bridge by tomorrow morning 7am. Is that clear?”

“Yes, sir. Absolutely clear”, John answers in disciplined military fashion and gets out of the tent. But then, John hesitates, turns around, gets back in the tent and asks:

“Sir, but why? Why do I need to take that bridge?”

You have here two choices. You can either say, “Because you’re in the military, I am your commander and you need to follow my orders”, or you can take the time to explain why.

Let’s presume that you’re a smart commander and you take the time to explain to John how crucial it is to take that bridge.

“We need to seize this bridge, to push our armor and logistics into Germany, to close into Berlin, and to win the war.”

John now knows exactly what you are asking him to do but also why he has to do it. The How, the plan, is up to him because you trained him well to become a specialist in forward operations.

Next morning, John reaches a point close to the bridge, takes out his binoculars only to see that the bridge was destroyed. It was blown up by the retreating Germans.

So now John is faced with a dilemma. The obvious thing to do would be to call you back to say “Sir, I cannot accomplish the mission to seize the bridge because the bridge is destroyed.”

But instead, John takes out his map, looks for another bridge and finds one 10 miles upstream. Then he calls you and says “Sir, the bridge you wanted is destroyed. I am going to seize another bridge 10 miles up stream by mid day.”

This is the essence of mission command, knowing What to do and Why you need to do it, and keeping speed and momentum in the organization to exploit a temporary advantage.

It is about the What and Why, leaving the How to the individual.[3]

Israeli Paratroopers

Some cultures are favoring mission command. I speak from personal experience in the Israeli Defence Forces. In Israel there is considerable civilian influence on army life. There is no real “barracks sub-culture” and, aside from basic training and certain courses, the atmosphere in the IDF is generally informal. Only the highest officers are referred to as “commander” and everyone else is literally on a first name basis, as in other sectors of Israeli society.

It is still an army, so when orders are given, they are followed. But most orders are given as directions, and disagreement and discussion of such directions are not uncommon and even expected. Soldiers in command are expected to be able to explain their orders. This implies that they have to earn respect. Because not much differentiates them from their subordinates. There are few insignia, battle decorations or medals and military ceremonies are minimal.

The problem with mission command is that allowing subordinates to exercise initiative comes with risks. There’s an itchy feeling with being fully responsible but not being in full control. This is where many leaders, out of fear of failure, become micromanagers. The only way to avoid being controlled by fear is to come to the realization that, even if you want to, you can’t control it. You can only use influence. If you try to exert control you’ll only have the illusion of control because you can’t control the environment or people’s feelings. Once you come to this realization, you’ll understand that the only way to “control” an outcome is to enable your organization to act autonomously in the direction of your intent. You need to understand autonomy not as a risk but as a multiplier of energy and ideas when they are focused by your intent.

This came home to me when I was running a large refinery in 2001. I was in the job for nine months when we had to perform a major revamp to increase capacity. Ten days into the revamp, on a Saturday morning, I received a call that one of our most critical units, the one extracting sulfur out of gasoline, had cracked under water-testing pressure.

We rushed to the refinery to find a huge hole in the 10-story-high tower. This unit was the only one allowing us to produce gasoline on spec, and there were no words to describe the desperation on our technicians’ faces. We learned that a new unit would have taken 12 months to manufacture and another four months to commission. We knew we would have been bankrupt way before that.

Cracked Desufurization tower

On Monday evening, one of our engineers came to me with an unbelievable idea. He told me that on the other side of the country, in a shutdown Petrochemical plant that was being sold for scrap, he found a stainless steel tower that might fit our specifications. He said he took a flight on Sunday morning to inspect the tower and it looked very promising. We could have the tower in our courtyard in four days, he added. The bad news is that we didn’t know if the stainless steel suffered from years of neglect. And he also said, “Boss, the gypsies now own the damn thing, so you will need to negotiate with Bulibasha”.

The Gypsies, also called the Roma or Romani, are a nomadic ethnic group that acts as a tribe. They work under surveillance and supervision from the “Bulibasha”, their head, and under “Stabor” (the gathering of elders) laws. Sometimes, a Bulibasha might call himself a King or an Emperor of t he gypsies.

King of gypsies being crowned

Apart from being amazing musicians, they also happen to control the scrap metal business in South Eastern Europe. They’re a joyful bunch, with a strong appetite for parties and they’re also great entertainers. In South Eastern Europe, if you happen to be at a weeding, there is an 85% chance that the band is a gypsy band. And they also love to bargain. Their negotiating style comes straight from the ways of the Grand Bazaar in Istanbul, in the Middle Eastern tradition of endless bargaining. So, my job now was to negotiate with Bulibasha.

What followed was surreal. We bargained two days for the tower, alternating drinking, leaving the room “offended”, and all the drama of a gypsy negotiation. While at it, our engineers inspected the tower only to find out that it might not work in its current configuration.

In an “all is lost”[4] moment, our engineers spent a frantic day looking for solutions to modify the tower, ultimately coming up with a new welding method that we eventually patented.

As a bonus, the tower, being twice the size of the one we previously had, had the potential to extract twice more sulfur per unit of gasoline. And on top of all this, Bulibasha had two for sale, not just one.

The next day, after a long back and forth on price, we agreed to pay for both towers an amount equivalent to 20% of the price we would have paid for just one new. We commissioned them in three months and ended up with four times more desulfurization capacity than before, allowing us to produce ultralow sulfur gasoline ahead of the market. Two years later we received the award of the best refinery in the region, took the company public and generated more than 400% return on investment for our investors.

Petromidia Refinery at night

All this did not happen by accident. As luck happens, when preparation meets opportunity, for nine months before the incident I was hard at work transforming a top-down dictatorship into an adaptable, decentralized organization. Everybody knew what we needed to do and why, and this allowed the previously inconceivable to happen: an engineer, without asking for permission and on his own initiative to find a stainless-steel tower in a scrap yard, on the other side of the country, and in 48 hours presenting an ambitious (and risky) plan directly to the CEO.

Had we have not decentralized and created the conditions for adaptability, instead of making a lot of money for our investors, I would have presided over a refinery that would have been worth the value of the scrap metal contained in it.

From the book 5 to 50 to 500. Copyright © 2018 by Eric Kish

Eric Kish as an author, speaker and practicing CEO. He is the author of 5 to 50 to 500: How to build and run scalable organizations and Everyday Turnaround: The art and science of daily business transformation

[1]”Mission Command In An Age Of Persistent Conflict…” Bryan J. Bonnema, MAJ, USA

[2]”Understanding Mission Command

[3]Adapted from the TED talk of Jan Ten Hove, commanding officer in the Dutch Marine Corps

[4]In screenplays, the “all is lost” moment is when a central character is as far away as possible from achieving his or her goal.

Intent Driven Management

Intent is what drives highly adaptive organizations

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