Peter Drucker on decentralization

Yet another post about the third episode in The Handy Guide to the Gurus of Management.

He explained, for the first time, how and why decentralization worked. He calculated that 95 per cent of all decisions in General motors at that time were taken by the divisions, leaving only the really big ones for the centre. Drucker was keen on decentralization because of its impact on what he called Human Effort, the motivation it provided to people to work and to learn. Decentralization created small pools where people felt that their contribution mattered. Those small pools also meant that there was space for young executives to make mistakes without threatening the future of the company. They were, he said, farms for growing talent.