The real case against a national director of intelligence.

The conventional wisdom debunked.
Aug. 5 2004 2:30 PM

Decentralized Intelligence

What Toyota can teach the 9/11 commission about intelligence gathering.

Illustration by Mark Alan Stamaty

The most publicized recommendation of the 9/11 commission—and one President Bush and Sen. John Kerry have raced to endorse—is that the United States create a national director of intelligence. Centralizing is an understandable response to the pre-9/11 intelligence fiasco. But as organizational science and history show, it's also a misguided one.

When organizations fail, our first reaction is typically to fall into "control mode": One person, or at most a small, coherent group of people, should decide what the current goals of the organization are, and everyone else should then efficiently and effectively execute those goals. Intuitively, control mode sounds like nothing so much as common sense. It fits perfectly with our deeply rooted notions of cause and effect ("I order, you deliver"), so it feels good philosophically. It also satisfies our desire to have someone made accountable for everything that happens, so it feels good morally as well.

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But when a failure is one of imagination, creativity, or coordination—all major shortcomings of the various intelligence branches in recent years—introducing additional control, whether by tightening protocols or adding new layers of oversight, can serve only to make the problem worse.

To understand this, we need to step outside government bureaucracy for a moment and take a look at the world of industrial organization, which has had some valuable experience in recovering from major mistakes.

In 1997, the Toyota group suffered what seemed like a catastrophic failure in its production system when a key factory—the sole source of a particular kind of valve essential to the braking systems of all Toyota vehicles—burned to the ground overnight. Because of their much-vaunted just-in-time inventory system, the company maintained only three days of stock, while a new factory would take six months to build. In the meantime Toyota's production of over 15,000 cars a day would grind to an absolute halt. This was the kind of disaster with the potential to wreck not just the company itself, but the entire Japanese automotive industry. Clearly, then, Toyota, along with the more than 200 other companies that are members of the extended Toyota group, had ample incentives to find a solution.

The big question was: How? How does one rapidly regenerate large quantities of a complex component, in several different varieties, without any specialized tools, gauges, and manufacturing lines (almost all of which were lost), with barely any relevant experience (the company that made them was highly specialized), with very little direction from the original company (which was quickly overwhelmed), and without compromising any of their other production tasks? Well, actually it's not clear that one could do it at all, nor was it clear at the time to any of the senior managers of the Toyota group. After all, if this was the kind of disaster that their risk management executives had considered, they would never have left themselves vulnerable to it in the first place.

Nevertheless, they succeeded, but not in the way one might have expected. Rather than relying on the guidance and coordination of an inspired leader (control mode), the response was a bewildering display of truly decentralized problem solving: More than 200 companies reorganized themselves and each other to develop at least six entirely different production processes, each using different tools, different engineering approaches, and different organizational arrangements. Virtually every aspect of the recovery effort had to be designed and executed on the fly, with engineers and managers sharing their successes and failures alike across departmental boundaries, and even between firms that in normal times would be direct competitors.

Within three days, production of the critical valves was in full swing, and within a week, production levels had regained their pre-disaster levels. The kind of coordination this activity required had not been consciously designed, nor could it have been developed in the drastically short time frame required. The surprising fact was that it was already there, lying dormant in the network of informal relations that had been built up between the firms through years of cooperation and information sharing over routine problem-solving tasks. No one could have predicted precisely how this network would come in handy for this particular problem, but they didn't need to—by giving individual workers fast access to information and resources as they discovered their need for them, the network did its job anyway.

Much the same kind of recovery happened in lower Manhattan in the days after Sept. 11, 2001. With much of the World Trade Center in rubble and several other nearby buildings closed indefinitely, nearly 100,000 workers had no place to go on Sept. 12. In addition to the unprecedented human tragedy of lost friends and colleagues, dozens of firms had to cope with the sudden disappearance of their offices along with much of their hardware, data, and in some cases, critical members of their leadership teams. Yet somehow they survived. Even more dramatically, almost all of them were back in business within a week—an achievement that even their own risk management executives viewed with amazement.

Once again, the secret to their success was not so much that any individual had anticipated the need to build up emergency problem-solving capacities or was able to design and implement these capacities in response to the particular disaster that struck. Rather, the collective ability of firms and individuals alike to react quickly and flexibly was a result of unintentional capabilities, based on informal and often accidental networks that they had developed over years of socializing together and collaborating on unrelated and routine—even trivial—problems. When talking about their recovery efforts, manager after manager referred, often with puzzlement and no small sense of wonder, to the importance of informal relationships and the personal knowledge and understanding that these relationships had engendered.