Our first article this week, IT governance, Stop the Pendulum!, is about companies’ tendencies to sway back and forth between a centralized and decentralized IT structure. The reality is that having a purely centralized or decentralized structure only works if a company is an ideal fit for such a structure. Centralized IT is viewed as too bureaucratic, resistant to change, and expensive. Company divisions, whether by geography or function tend to prefer a decentralized IT team, which is more responsive to local needs and whose costs are hidden within the department. In reality, costs are typically greater in a decentralized system because of redundancies and a lack of process parity with other departments. The solution for most companies is a hybrid system, which centralizes functions that enjoy economies of scale and do not require agility and decentralizing functions close to the customer that require responsiveness. The challenge for the hybrid system is the interface among functional unit IT and corporate IT. To mitigate the risks associated with this interface, an IT governance policy must clearly identify roles and responsibilities.
It governance ties into our second article this week, The Next Industrial Revolution, Atoms Are the New Bits, which refers to IT governance documents as a “secret sauce.” This article illustrates the disruptive innovation of crowd-sourcing with a story about Local Motors’ Rally Fighter vehicle. Local Motors has been successful by adopting a hybrid structure of crowd sourcing, which centralized functions such as performance and safety to professionals, while decentralizing shape and style by delegating those tasks to the community. This was a logical step as many of the country’s automotive design experts are underemployed, leaving a supply glut of talent. The result is a vehicle that will fill niche-sized voids in a market dominated by large centralized companies.
We have already seen the internet democratize publishing, broadcasting, and communication, now we are seeing the same thing with manufacturing. With this democratization, the range of participation and participants has increased. Crowd-sourcing differs from large companies not just by target market, but also by purpose. A company’s sole purpose is its fiduciary duty, to return profits for its shareholders, while an online crowd-source community exists solely for a project. Now the smartest people in the world can help with a variety of societal problems rather than be controlled for a company’s best interests. Of course, this assumes the intrinsic value of helping the online community is enough incentive to lure them away.