Ten questions differentiate centralized and decentralized systems

Decentralized systems are easily mistaken for centralized systems, but the answer to these questions helps differentiate them:^[1]

Is there a person in charge? “A coercive system depends on order and hierarchy. There’s always a pyramid, and there’s always someone in charge. In short, if you see a CEO, chances are you’re looking at a spider. An open system, on the other hand, is flat. There’s no pyramid for anyone to sit on top of.”
Are there headquarters? “Every spider organization has a physical headquarters. A headquarters is so integral that if we don’t know whether a company is for real or not, we often check whether it has a physical address. … A starfish organization doesn’t depend on a permanent location or a central headquarters. [it] is found wherever a group of members chooses to meet.”
If you thump it on the head, will it die? “If you chop off a spider’s head, it dies. If you take out the corporate headquarters, chances are you’ll kill a spider organization. … Starfish often don’t have a head to chop off.”
Is there a clear division of roles? “Most centralized organizations are divided into departments, and the divisions between departments are rather firm. … In decentralized organizations, anyone can do anything. A part of a decentralized organization is akin to a starfish arm: it doesn’t have to report to any head of the company and is responsible only for itself.”
If you take out a unit, is the organization harmed? “Units of a decentralized organization are by definition completely autonomous. Cut off a unit and, like a starfish, the organization generally does just fine. In fact, the severed arm might grow an entirely new organization.”
Are knowledge and power concentrated or distributed? “In spider companies, power and knowledge are concentrated at the top. The person in charge is assumed to be the most knowledgeable and has the power to make key decisions. … In starfish organizations, power is spread throughout. Each member is assumed to be equally knowledgeable and has power equal to that of any other member.”
Is the organization flexible or rigid? “Decentralized organizations are very amorphous and fluid. Because power and knowledge are distributed, individual units quickly respond to a multitude of internal and external forces—they are constantly spreading, growing, shrinking, mutating, dying off, and reemerging. This quality makes them very flexible. … Centralized organizations depend more on structure, and that tends to make them more rigid.”
Can you count the employees or participants? “It is possible to count the members of any spider organization; Must check the payroll, membership rosters, or other records. … Counting the members of starfish organizations, though, is usually an impossible task. It’s not only that no one’s keeping track, but also that anyone can become a member of an open organization—or likewise withdraw their membership—at any time.”
Are working groups funded by the organization, or are they self-funding? “Because they are autonomous, the units of a decentralized organization are almost always self-funding. In open organizations, there is often no central well of money. Individual units might receive funding from outside sources, but they are largely responsible for acquiring and managing those funds. Things are different on the centralized end of the spectrum. While some departments produce profits, others traditionally incur costs. Headquarters redistributes revenues, ensuring that each department is adequately funded. Without central funding, departments cannot survive.”
Do working groups communicate directly or through intermediaries? “Typically, important information in centralized organizations is processed through headquarters. … In open systems, on the other hand, communication occurs directly between members.”

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