Courtesy Mises Institute / Friedrich Hayek

Spontaneous order is a crucial concept. It’s not original to the Austrians—it’s actually of Scottish origin—but Friedrich Hayek took it forward with dramatic implications for business.

Here’s the idea: we’ve got an economy based on specialization and trade. It’s clearly a human creation, this economy of ours. But it was never designed by a human. Back in the hunter-gatherer days, nobody sketched out how one person would grow grain, another would bake, a third would make it gluten free. But today we have a tremendously complex mechanism for getting me my morning bread, without anyone having planned this system.

It’s not just the economy, though. Language itself, in the words of Adam Ferguson, is “the result of human action, but not the execution of any human design.” There were no cavemen grunting about a language that would include nouns and verbs and prepositions. It just happened, as people tried to make their situations better.

In the business sphere, this is a vital message for senior leadership: your employees do not need everything planned for them. They can figure a lot of stuff out for themselves, developing better methods and systems as they go.

When Hayek looked at the challenge of central planning, he emphasized “dispersed knowledge.” The information needed to make a specific decision is at the local level. Your company has a piece of equipment that is acting up. Not a job for the CEO. The mechanic who has been working on it probably has the best handle on what should be done. A higher-level person might be in a better position to decide whether to fix or replace it. But the best decision for a specific piece of equipment is fairly low down in the organization, not high up in the executive suite. I sometimes here about CEOs approving every expenditure over $50,000 or some amount, and at a larger company that’s nonsense.