ideal hierarchy

All human organizations are hierarchical. Decision-making is concentrated near the top of the hierarchy. One can conceptualize the organization as a complex function whose input is information, which flows upward into the decision-making strata of the hierarchy, and whose output is power, which subsequently flows downward to be implemented by the lower strata. The ideal hierarchy follows a Pareto distribution.

The function is parameterized by several variables, the first of which is steepness. Steepness is determined by the ratio between the width of the base to the distance between the base and the peak. Optimal steepness is dependent on the organization, its mission, the people in it, and other factors. If steepness exceeds optimal, information passes through too many filters before it reaches its necessary destinations, resulting in confirmation bias and poor strategic depth. No middle-manager wants to be the messenger of bad news. Excessive steepness is why dictatorships fail. On the other hand, if steepness is sub-optimal (too flat), information overload can reduce the signal-to-noise ratio beyond the capacity of the decision-making strata's ability to process it. If everybody is in charge, nobody is accountable. Excessive flatness is why communes fail.

High-functioning organizations know how to self-assess and correct for sub-optimal parameters in order to keep the organization on track to pursue its mission. This parameter can be termed elasticity. The market is in a slump; do you lay off 12 middle managers or 80 entry-level workers? The correct decision must consider the effect on steepness as well as budget. Too often organizations base such decisions on irrelevant information such as seniority or nepotism, often severely negatively impacting steepness, elasticity, or both. Lack of elasticity is why ideological organizations fail.