This brings us to a central truth about organizations: they are inherently messy. There are no panaceas, no structures that solve all problems. Any attempts to completely eliminate the mess are doomed to failure. Yes, there are costly inefficiencies in decentralization, but the fire of personal ownership—of being our own little business—elevates human motivation and stimulates innovation in powerful, albeit somewhat chaotic, ways.

If you want the lightning bolt of innovation to strike again and again, you have to live with the inefficiencies. You’ve got to make a basic philosophical choice that the inefficiencies and disorder are worth the benefits.

It’s impossible to have an organization with all the fire and zeal of decentralization and the complete efficiency of centralized control. Pick decentralization, fully implement it, and live with its difficulties as best you can. If you try to go halfway, it’ll be like having a country shift from driving on the right side of the road to driving on the left side of the road, but only implementing it part way.

This brings us to the fourth and final precondition for leading with context.

IS YOUR ORGANIZATION HIGHLY ALIGNED?

If loose coupling is to work effectively, with big decisions made at the individual level, then the boss and the employees must be in lockstep agreement on their destination. Loose coupling works only if there is a clear, shared context between the boss and the team. That alignment of context drives employees to make decisions that support the mission and strategy of the overall organization.

In a loosely coupled organization, where talent density is high and innovation is the primary goal, a traditional, control-oriented approach is not the most effective choice. Instead of seeking to minimize error through oversight or process, focus on setting clear context, building alignment of the North Star between boss and team, and giving the informed captain the freedom to decide.

You have to integrate that into the company. The processes that you put in place to do that, they have to be very deliberate. It doesn’t happen by itself. What happens [naturally] is entropy. You have to leverage scale in a way that doesn’t disable entrepreneurialism, business ownership. It’s integrative. It’s not centralized. Centralized is a very different thing. This scale work is bringing the leaders of the businesses to work together towards a plan that not only optimizes the company, but in its best form, optimizes their category as well. As we approach a market, for instance, with multiple categories, the chance for success for each of them increases.” Going into a new emerging market with several complementary categories, rather than just one, for instance, can enable cost sharing and increase local influence, thereby increasing the chance of success in the region.