About 20 years ago, I was part of an committee that put on summer academies. It was great fun! We asked experts to submit proposals, and then the membership decides which proposals to fund.
What sounds like a wonderful process if you read it, democractic and all, was gut-wrenching in reality. I hated it.
Why was it so unappealing? The voting mechanism – based on a title and one short paragraph – was skewed towards the sexy-sounding titles, not the content. Exceptional proposals were not understood or accepted. We had wanted participation, and what we got was a popularity contest. I felt embarrassed.
This experience showed me the difficulty of balancing participation with informed decision-making around budgeting. Even now, working with self-organized organizations, I continue to see these budgeting dilemmas. And it’s not just budgeting but three interconnected issues:
Of these, budgeting feels like the thornie*st problem. We need money, and we need to decide how to spend it. Where we spend it affects what we can do and how much of it.
Shared budgets tie us together because the dollar we spend in Department A cannot be spent in Department B. So we better figure this out together.
There are two basic approaches: a decentralized approach - where all the parts decide what they want to spend - and a centralized approach - where one central body decides who can spend what.
I see pros and cons with both approaches:
Centralized budgeting:
Decentralized budgeting:
Recommended by LinkedIn
That same pattern shows up across the board, beyond budgeting: Pure decentralization risks fragmentation. But top-down control loses agility and human connection.
Yet, there are good news! The truth is that hardly any organizations operate with a “pure” approach. In most organizations, some decisions can be made on the lowest level – like if I use a pen, I don’t have to apply for funds in the central location.
But even organizations that say they are `completely decentralized’ (like DAOs) often have infrastructure costs that need to be centralized.
That means most - or all - organizations are actually hybrids. That changes the question into a more interesting one: instead of asking what’s better, decentralization or centralization, the question becomes how much centralization and how much decentralization is good for us, and how can it be best implemented?
Implementation isn’t cut and dry either, as “decentralization” can mean a lot of things.
Some of the key questions are:
There’s a ton to consider, and my upcoming book, Collective Power, is outlining some of those topics, with real-life examples. For example, it describes two very distinct grantmaking processes – one with a lot of alignment, another that’s very decentralized.
Yet, the most humbling aspect for me is how much the questions that get stirred up come down to information flow again and again. I might design the perfect budgeting system with lots of participation and involvement; but if people don’t understand what they’re deciding because they don’t have enough information on the projects they approve, then how is that better? How can I truly empower people to make decisions if I don’t design systems where people can have access to understandable information?
To me, that’s a challenge I feel called to understand. And I don’t think that there is one easy answer. Instead, there are many, sometimes complex answers. I hope to contribute to a world where more people understand their options so they can intentionally choose what they want.
My belief in Collective Power is that collective agency requires an integrated understanding of decision making, structure, prioritization and strategies, and information flow to design systems that support collective agency. And only if we have collective agency based on power-with can we truly govern our teams and organziations in a way that leads into a thrivable future.
