Collective Intelligence of the Organization

James Surowiecki has an interesting article in Wired (of all places) about how Companies are structured. Essentially he argues that they value the CEO and his cohorts as a set of annointed saints whereas the rest of the company is made up of autonomous, interchangeable drones (despite what they might say at the company meeting).

while it's clear that some CEOs are excellent leaders and managers, there's little evidence that individual executives are blessed with consistently good strategic foresight. In fact, in an extensive study of intelligent CEOs who made disastrous decisions, Dartmouth's Sydney Finkelstein writes, "CEOs should come with the same disclaimer as mutual funds: Past success is no guarantee of future success."

Surowiecki argues his case from a "perfect markets" point of view - that instead of letting the CEO make the big strategic decisions (where they may not have access to the best information for a variety of reasons), they should surrender to the collective intelligence of the organization. In the same way that the stock market (at least in theory) absorbs information in order to value stocks (in the long term), organizations can use the collective intelligence of their companies to make strategic decisions. He proposes setting up an internal "market" for the opposing positions and let the organization decide.

In the late 1990s, for instance, Hewlett-Packard experimented with artificial markets to forecast sales. Only 20 to 30 percent of employees participated, and each market ran for just a week, with people trading at lunch and in the evening. The market's results outperformed the company 75 percent of the time.

The Wired article seems to be somewhat of an advertisment for Suowiecki's book on the same topic, The Wisdom of Crowds. I've read Suroweicki's column in the New Yorker / Slate for years though and he definitely has interesting ideas.
UPDATE:Tim Bray has picked up on this too.