The Power of Leaderless Organizations: How Decentralized Groups are Changing the World (#238)

Summary

Podcast Summary: "The Power of Leaderless Organizations: How Decentralized Groups are Changing the World" (#238)

Host: Lynne Thoman
Guest: Ori Brofman, Distinguished Teaching Fellow at UC Berkeley's Haas School of Business and New York Times bestselling author
Release Date: February 25, 2025

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Introduction

In episode #238 of 3 Takeaways, host Lynne Thoman delves into the transformative world of leaderless organizations with esteemed guest Ori Brofman. Ori, renowned for his insightful books The Starfish and the Spider and Sway, explores how decentralized groups are reshaping industries and societies globally. Throughout the conversation, Ori elucidates the mechanics, strengths, and future prospects of these network-driven entities, providing listeners with a comprehensive understanding of their profound impact.

Understanding Leaderless Organizations

Ori Brofman introduces the concept of leaderless organizations by comparing them to biological entities. He states:

“You take a spider and you cut off its head and obviously the spider dies. But what happens when you cut off the arm of a starfish? It grows one back.” (02:00)

Using the metaphor of a starfish versus a spider, Ori explains that unlike centralized entities with a single point of failure, leaderless organizations possess a decentralized structure that allows them to thrive even when parts are disrupted. Examples he cites include Alcoholics Anonymous, Wikipedia, and, unfortunately, Al Qaeda. These organizations leverage the power of networks and decentralization, enabling them to operate without traditional hierarchies.

The Role of the Internet in Decentralization

When discussing the catalyst for the rise of leaderless organizations, Ori emphasizes the Internet's pivotal role:

“The Internet has definitely unleashed this force because it allows people to contribute in ways without needing central coordination.” (02:44)

The digital age has empowered individuals to collaborate and contribute flexibly, fostering environments where collective efforts can flourish without centralized oversight. Platforms like Wikipedia exemplify this phenomenon, where numerous contributors collaboratively build and maintain content without a single authoritative figure.

Centralized vs. Leaderless Organizations

Lynne probes the strengths and vulnerabilities of both organizational structures. Ori responds by highlighting the adaptability of decentralized groups:

"Because these organizations don't have central power, they're much more flexible, they're much more able to respond to changes in the environment." (03:40)

He contrasts the resilience of leaderless organizations with traditional hierarchical ones by referencing the ongoing war on terror. While the removal of leaders in terrorist groups doesn't dismantle them, it often leads to greater decentralization and increased difficulty in controlling the organization.

A contemporary example Ori provides is the Reddit-driven manipulation of Gamestop's stock price:

“They were able to just, you know, people who are owning a couple hundred dollars worth of stock, how are they able to have such incredible power to manipulate the price versus a traditional bank, a traditional hedge fund?” (05:32)

Here, a dispersed group of small investors collectively wield significant influence, challenging established financial institutions through unified action without central leadership.

Cohesion in Leaderless Organizations

Lynne inquires about the binding forces within decentralized groups. Ori identifies three key elements:

1. Shared Values: Members are united by common beliefs and goals rather than directives from a central authority.
2. Catalysts: Instead of traditional leaders, these organizations rely on catalysts who initiate networks and then allow them to self-organize.
3. Equal Partnerships: Responsibility and decision-making are distributed among all members, fostering a sense of ownership and collective accountability.

He illustrates this with the Home Church Movement, where gatherings occur in personal residences, forming expanding circles without a centralized leadership structure. Ori notes:

“When you get beyond that circle, they create another circle, and they create another circle. And you'd ask, who's in charge of the Home Church Movement? Well, no one's necessarily in charge.” (07:00)

Resilience and Adaptability

The conversation shifts to the robustness of leaderless organizations when faced with external threats. Ori explains that such groups are inherently resilient:

“When a leader is taken out, a new leader would oftentimes take their place because of the structure. And that actually enables the organization to become even more decentralized and even more difficult to control.” (07:21)

This decentralized resilience makes them adaptable and persistent, as illustrated by the Apache’s resistance against Spanish, Mexican, and American forces. Unlike the Spanish, who targeted leaders to dismantle groups, the Apaches’ lack of centralized power allowed them to regenerate leadership seamlessly, enhancing their endurance and influence.

Impact of Centralized Assets on Decentralization

Ori discusses how introducing centralized assets like money or land can undermine the decentralized nature of an organization. Using the Apache example, he explains:

“When the Americans came and gave the Apaches the leaders cows. And now that they had cows to give out within the tribe, all of a sudden the Apache’s power became much more centralized.” (08:23)

Centralized assets can create dependencies that necessitate hierarchical structures, thereby diminishing the group’s inherent flexibility and resilience.

Further Examples of Leaderless Organizations

Beyond Wikipedia, Ori points to Bitcoin as a prime example of a leaderless organization in the financial sector:

“Bitcoin is essentially a decentralized ledger. [...] We keep on dismissing them because they don't have central power, because they don't have the institutions, the hierarchies. And by the time we recognize the power, they're huge.” (11:18)

Bitcoin’s decentralized nature challenges traditional financial systems, demonstrating the disruptive potential of leaderless networks.

The Future and Potential of Leaderless Organizations

Looking ahead, Ori is optimistic about the trajectory of decentralized groups:

“The future is definitely decentralized, and the potential is that it's a more economically efficient way of organizing people around a shared cause.” (12:12)

He warns industries to recognize and adapt to the rising influence of decentralized opponents, regardless of their current dominance. Ori envisions a landscape where decentralization is pervasive across sectors, driven by the efficiency and adaptability these networks offer.

Leaderless Organizations in Education and Virtual Spaces

Ori touches upon the implications of decentralization in education, advocating for more interactive and network-based learning environments:

“We are starting to look at how the future is going to be in a virtual space, in either the metaverse or in virtual reality. And training is going to look much more decentralized into the future.” (13:26)

He envisions gamified, multiplayer virtual environments that simulate real-world leadership challenges, enhancing collaborative learning and adaptability.

Three Key Takeaways

As the episode concludes, Ori Brofman presents three essential takeaways for the audience:

1. Network Model Perspective:
   “Look at organizations through a network model, and you look at the specific nodes of the network and how they contribute.” (14:48)

2. Internal Locus of Control:
   “Focus on internal locus of control—what can you do to affect the actions of your life as opposed to what is happening to you? And how do you feel most empowered? And the question is also how do you get people around you in your network to feel most empowered.” (14:48)

3. Future of Virtual Training:
   “The future of organizations and of interacting with each other in a training environment is going to be in a virtual environment that is gamified, that is multiplayer.” (14:48)

These insights encourage listeners to adopt a network-centric view of organizations, prioritize personal and collective empowerment, and embrace emerging virtual platforms for learning and collaboration.

Conclusion

Lynne Thoman wraps up the episode by expressing her appreciation for Ori’s enlightening perspectives and his influential work, particularly The Starfish and the Spider. Listeners are encouraged to further explore the concepts discussed by engaging with Ori’s books and the broader 3 Takeaways content available through various platforms.

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Notable Quotes:

• “You’d think there would be disorder, even chaos. But in many arenas, a lack of traditional leadership is giving rise to powerful groups that are turning industry and society upside down.” – Ori Brofman (00:08)

• “When a leader is taken out, a new leader would oftentimes take their place because of the structure.” – Ori Brofman (07:21)

• “Bitcoin is essentially a decentralized ledger. [...] by the time we recognize the power, they're huge.” – Ori Brofman (11:18)

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Resources:

• Podcast: 3 Takeaways
• Books by Ori Brofman:
  • The Starfish and the Spider
  • Sway

Follow 3 Takeaways on LinkedIn, X (Twitter), Instagram, and Facebook for more insightful episodes.

Transcript

[Lynne Thoman]

I'm going to start this episode by asking my guest today to read an excerpt from his book.

[Ori Brofman]

Our natural reaction is to ask who's in charge? What happens when there's no one in charge, when there's no hierarchy? You'd think there would be disorder, even chaos. But in many arenas, a lack of traditional leadership is giving rise to to powerful groups that are turning industry and society upside down. In short, there's a revolution ranging all around us.

[Lynne Thoman]

What are these leaderless organizations and how powerful are they? Hi everyone, I'm Lynne Thoman and this is three Takeaways. On three Takeaways, I talk with some of the world's best thinkers, business leaders, writers, politicians, newsmakers and scientists. Each episode ends with three key takeaways to help us understand the world and maybe even ourselves a little better. Today I'm excited to be with Ori Brofman. Ori is a distinguished teaching fellow at UC Berkeley's Haas School of Business and a New York Times bestselling author. His most recent books include the Starfish and the Spider, which is about leaderless organizations, and Sway, which is about the irresistible pull of irrational behavior. Today I'm excited to learn about leaderless organizations and find out how powerful they really are. Welcome, Ori, and thanks so much for joining three Takeaways today.

[Ori Brofman]

Hi Lynn, good to be here. Thank you.

[Lynne Thoman]

Thank you. So, Ori, what is a leaderless organization and can you give some examples?

[Ori Brofman]

Sure. So you think about the metaphor of a starfish and a spider. You take a spider and you cut off its head and obviously the spider dies. But what happens when you cut off the armor of a starfish? It grows one back. Because unlike the spider, the starfish doesn't have a central brain. Think about that as a metaphor for business and society organizations that don't necessarily have top down leadership. Everything from Alcoholics Anonymous to Wikipedia to unfortunately Al Qaeda are organizations that don't have command control. They don't abide by the same rules that traditional organizations do because they're able to capture the power of networks and of decentralization.

[Lynne Thoman]

Has the Internet unleashed this force?

[Ori Brofman]

The Internet has definitely unleashed this force because it allows people to contribute in ways without needing central coordination. And the second force that has happened is that people can also contribute very little. But in aggregate, the organization grows. So you think, for example, contributors to a Wikipedia page, you don't need to have one expert on a topic, you can have a bunch of people who have some knowledge about it all come together.

[Lynne Thoman]

So you really have the power of.

[Ori Brofman]

The Crowd, you have the power of the crowd. And you also have the ability to coordinate either for positive or for negative means. But it enables people to be able to work towards a shared value, a shared goal without essential coordination.

[Lynne Thoman]

Most people would assume that the absence of structure of leadership and formal organization is a weakness. Is it?

[Ori Brofman]

That's where it gets super interesting. In a way, yes, it might be harder to make a very concrete decision, but in another way, because these organizations don't have central power, they're much more flexible, they're much more able to respond to changes in the environment. And what's also interesting about these organizations is that the harder that you fight them, the stronger they become because they become more and more decentralized.

[Lynne Thoman]

Can you compare both centralized and leaderless organizations and give some examples?

[Ori Brofman]

So you think about our war on terror for the last 20 years plus and you ask who's really in charge of these terror organizations? And we fought them, we've been fighting them. And you take out leaders and you hear about that in the news once in a while, right? This leader was taken out, this leader was taken out. But what happens to the overall organization? It tends to actually keep on going and it tends to actually maintain its power because it doesn't have the centralized power. You think about the ability of a bunch of small investors to come together through Reddit and all of a sudden manipulate the stock price of Gamestop and you think about them versus the hedge funds and how were they able to just, you know, people who are owning a couple hundred dollars worth of stock, how are they able to have such incredible power to manipulate the price versus a traditional bank, a traditional hedge fund? It's because you have a whole lot of folks you don't know necessarily who's in charge of them, but you have them working on a similar cause, similar ideology, and able to enact quite a bit of change in the financial markets.

[Lynne Thoman]

And what holds these leaderless organizations together?

[Ori Brofman]

The three things that hold them together that are most important are first and foremost shared values that you're going to be contributing to this organization. Not because someone's telling you, not because of top down hierarchy, but because you believe in the shared values of the organization. The second is instead of CEOs, instead of bosses, top down bosses, you have what we call catalysts, people who start a network and then get out of the way. And the third element is the power of the circle that everyone joins as equal partners, that the responsibility is shared amongst all the members and that the formation is in that circle. One of the super interesting organizations that I've learned about since the book came out, it's called the Home Church Movement. As the name suggests, rather than meeting inside churches, physical buildings, they mean people's homes. And once you get, I don't know, beyond how many people fit in someone's living room, 15 people, 20 people. Once you get beyond that circle, they create another circle, and they create another circle, and they create another circle. And you'd ask, who's in charge of the Home Church Movement? Well, no one's necessarily in charge. Well, how many members do they have? And when I ask this to people, I get, I don't know, maybe they have a thousand members, 2,000 members. The conservative estimate. The conservative estimate is 200 million worldwide.

[Lynne Thoman]

Wow.

[Ori Brofman]

This is one of the huge religious movements that so many people are not aware of because they don't have the structures, because they don't have the buildings, but they're having power in terms of people.

[Lynne Thoman]

So interesting what happens when a decentralized organization is attacked, when it gets attacked.

[Ori Brofman]

When a leader is taken out, a new leader would oftentimes take their place because of the structure. And that actually enables the organization to become even more decentralized and even more difficult to control. So I've been doing quite a bit of work with the US military and they talk about that the fight on terror is oftentimes a whack, a mole kind of scenario. And the reason for that is that you take down one leader and then a new leader comes. The network becomes more and more resilient as you attack it.

[Lynne Thoman]

So these networks are incredibly resilient. Do they easily mutate?

[Ori Brofman]

They constantly mutate and that's why they're so resilient, because they're able to constantly mutate, because they're able to constantly adapt.

[Lynne Thoman]

So you've talked so far about groups that don't have any assets, if you will, the terrorist groups, the home church groups. What happens when there's an asset or a right to land or money or some other asset? What happens?

[Ori Brofman]

This is super interesting. So giving these organizations assets actually centralizes them and actually has the ability to actually destroy the organization. So one of the examples we looked at in the book was the Apaches, and specifically the Spanish, who fought so strongly against first the Aztecs and the Incas. And they had the playbook down. They said, hey, give us your leaders, talk to leaders, kill the leaders, took over the societies and had effective control over the entire south continent. And it's with the winds of victory in their backs that they showed up to the Southwest and encountered the Apache. And they had the same playbook. Show us your leaders and kill them and try to take over the society. But the Apaches didn't have centralized power. The leaders were catalysts. They were called non taunts. The phrase you should does not exist in the Apache language. So the moment that the Spanish took out a leader, a new one would just come and replace them. And the Apache became more and more decentralized, more difficult to control, and their area of influence actually increased as they fought the Spanish, Spanish, the Mexicans, eventually the Americans. What did change, however, is when the Americans came and gave the Nantans the leaders cows. And now that they had cows to give out within the tribe, all of a sudden the Nanton's power became much more centralized. And when it became much more centralized, they also became much easier to control.

[Lynne Thoman]

So, interesting, you mentioned Wikipedia, the online encyclopedia, as a leaderless organization where unpaid volunteers curate entries. What happens if the contributions were highly paid? Is it going to be similar to the Apaches?

[Ori Brofman]

Yes. So a few things would happen, right? One is that the editor would start having a whole lot more power to decide who gets to edit an article, who doesn't, whose voice gets heard. But you also have the interesting contribution question. If you know that one person is earning a lot of money to write articles, would you be willing to spend your free time to write articles as well? And once you lose that economic benefit of the distributed network, you're not able to quite effectively be as agile and gain from the mass amounts of people who want to contribute. So people want to contribute, they want to be engaged. The question is how did they feel that their contribution was worthwhile?

[Lynne Thoman]

Can you give some more examples of the largest leaderless organizations?

[Ori Brofman]

Sure, you have everything from Wikipedia that we talked about, but you also have in finance, bitcoin. And one could argue that bitcoin is essentially a decentralized ledger. And I remember when bitcoin came out and I started using it as an example of, hey, look at this thing that is maybe about to have some impact on the world. And people are like, no, this is just a, this is just a trend. What would anyone ever use for blockchain? There's no use cases and is symbolic of us not seeing the power of these networks until it's too late. We keep on dismissing them because they don't have central power, because they don't have the institutions, the hierarchies. And by the time we recognize the power, they're huge.

[Lynne Thoman]

What is the potential and what is the future of leaderless organizations.

[Ori Brofman]

The future is definitely decentralized, and the potential is that it's a more economically efficient way of organizing people around a shared cause. I like to say that if you're in any industry and you don't know who your decentralized opponent is, you're like the poker player who doesn't know who the weakest players in the table. You need to know, regardless of the industry, even if it's a traditional industry, even if you've had historical dominance in that industry, you need to know that decentralization is coming and that it is going to be affecting the industry.

[Lynne Thoman]

And how powerful do you think that leaderless organizations can become?

[Ori Brofman]

Leaderless organizations are becoming incredibly powerful, and they're out to eat our lunch. Regardless whether you're in finance, whether you're in construction, whether you're in technology, decentralization is the future, and we're marching to it in an incredibly fast space.

[Lynne Thoman]

Before I ask for the three takeaways you'd like to leave the audience with today, is there anything else you'd like to mention that you have not already talked about?

[Ori Brofman]

So I'm in education, and I've started looking about how decentralization is going to be affecting education. And I think this is where it gets really interesting, is I think that the future is not only going to be decentralized, we're going to be learning much more from each other, but we are starting to look at how the future is going to be in a virtual space, in either the metaverse or in virtual reality. And training is going to look much more decentralized into the future. So you think about industries where lives are on the matter, whether it's defense, medicine, aviation. The trainings are incredibly lifelike, and you learn from each other. You think about a pilot coming on the cockpit and saying, hey, ladies and gentlemen, good news. I've never been inside a cockpit, but I've read every book there is to read about aviation. Would you stay on that plane? But when it comes to business education, what do we do? We give people case studies, we give them some books, but we don't actually put them inside situations. And I think that that is where the future is heading in terms of gamified multiplayer environments that replicate leadership challenges.

[Lynne Thoman]

Interesting. Ori, what are the three takeaways you'd like to leave the audience with today?

[Ori Brofman]

The first takeaway is to look at at organizations through a network model, and you look at the specific nodes of the network and how they contribute. The second takeaway is as you think about each node and as you think about your own performance within that network, how do you focus on internal locus of control? That is, what can you do to affect the actions of your life as opposed to what is happening to you? And how do you feel most empowered? And the question is also how do you get people around you in your network to feel most empowered? The third element is that the future of organizations and of interacting with each other in a training environment is going to be in a virtual environment that is gamified, that is multiplayer.

[Lynne Thoman]

Thank you, Orey. This has been fascinating. I really enjoyed your book, the Starfish and the Spider.

[Ori Brofman]

Thank you, Len. It's been a pleasure.

[Lynne Thoman]

If you're enjoying the podcast, and I really hope you are, please review us on Apple Podcasts or Spotify or wherever you get your podcasts. It really helps get the word out. If you're interested, you can also sign up for the Three Takeaways newsletter at 3takeaways.com, where you can also listen to previous episodes. You can also follow us on LinkedIn, X Instagram, and Facebook. I'm Lynn Thoman and this is three Takeaways. Thanks for listening.