"What we're going to do is have a small chain of command, and we'll outsource everything." We hear that from virtual organizations looking for a preferred way of running a business. Are they in pursuit of simplicity or avoiding bureaucracy?
According to Gifford Pinchot, centralization and decentralization are just alternative flavors of bureaucracy, and the problem facing organizations today is bureaucracy itself.
The complex adaptive organization of the future, or as Gifford calls it, the intelligent organization, has many small enterprises inside of it. It looks more like a market in a small town where companies compete on price and quality, and if one solution doesn't meet your needs, you move on to the next. That system of free enterprise fuels innovation and has solved many world problems (don't worry, it has created plenty more).
Inside an organization, enabling the equivalent of free enterprise without bureaucracy – we could even call it "free intraprise" – creates an organization that can adapt to the changing needs of stakeholders within a system.
Gifford conveys a simple concept: take the efficiency of free enterprise and put it inside an organization. Respect bureaucracy without favoring it. Enable innovation instead of fearing it.