Regardless of what a corporate hierarchy looks like internally, there are only four major systems of organization, according to Gulick & Urwick. These systems of organization are: Organization by Major Purpose, Organization by Major Process, Organization by Clientele or Material, and Organization by Place.

They state: “Each of the four basic systems of organization is intimately related with the other three, because in any enterprise all four elements are present in the doing of the work and are embodied in every individual workman. Each member of the enterprise is working for some major purpose, uses some process, deals with some persons, and serves or works at some place. If an organization is erected about any one of these four characteristics of work, it becomes immediately necessary to recognize the other characteristics in constructing the secondary and tertiary divisions of the work.”

Organization By Place

Gulick & Urwick further define three types of Organization by Place. These are: (1) no geographical subdivisions, (2) centralized geographical subdivisions, and (3) decentralized geographical subdivisions. Considering our Web3 studies, our interest lies primarily in decentralized coordination and organization.

Decentralized Geographical Organization

According to Gulick & Urwick, decentralization of geographical divisions serves to: “reduce travel costs, short circuit adjustment problems, cut red tape, and speed up all joint activities and administrative decisions. It increases not only the awareness of the officials to local needs and to the interrelation of service and planning problems, but develops a new sensitivity to the process of democratic control through intimate association of the officials with the people served.”

Benefits Of Decentralized Geographical Organization

In addition, decentralization of geographical divisions strengthens these tendencies:

• Greater ease of coordination of services rendered and controls exercised within a given areas
• Greater tendency to adapt the total program to the needs of the areas served, not alone because of the discretion resting within the divisions, but also because the news and differences of the areas will be more vigorously represented at headquarters in the general consideration of broad policy
• Greater ease with which co-operative relations may be established with subordinate governmental units, which are of necessity first of all geographically defined units.

Visualizing Decentralized Geographical Organization

See Gulick & Urwick’s three types of Organization by Place, or geographical divisions, in the image below. That Gulick & Urwick suggest that a decentralized system of organization should have “long arms and short fingers” makes sense, intuitively, even if oversimplified.

Final Thoughts

The enduring relevance of Gulick & Urwick’s organizational framework becomes particularly striking when viewed through the lens of Web3 and decentralized systems. Written decades before the advent of blockchain technology, their analysis of decentralized geographical organization reads like a prescient blueprint for the coordination challenges we face in distributed networks today.

Their principle of “long arms and short fingers” elegantly captures a fundamental tension in decentralized systems: the need for broad reach and connectivity while maintaining local autonomy and decision-making power. This metaphor translates remarkably well to Web3 governance structures, where protocols must balance global coordination with local node independence, and DAOs must navigate between unified vision and member sovereignty.

What’s most compelling is how their benefits of decentralization—reduced bureaucracy, increased local responsiveness, and enhanced democratic participation—mirror precisely the promises of Web3 technologies. The “intimate association of officials with the people served” they describe could easily characterize the direct stakeholder governance models emerging in decentralized protocols.

Yet their framework also reveals enduring challenges. The necessity to “recognize the other characteristics” when organizing around any single principle reminds us that even in decentralized systems, we cannot escape the fundamental realities of purpose, process, clientele, and place. Web3 projects that focus solely on decentralization while ignoring these other organizational dimensions often struggle with coordination, efficiency, and user adoption.

As we continue building decentralized systems, Gulick & Urwick’s work serves as both validation and warning: validation that the benefits of decentralization have been recognized for generations, and warning that successful organization requires thoughtful balance across multiple dimensions, not just geographic or technological distribution. Their insights suggest that the most successful Web3 projects will be those that achieve decentralization not as an end in itself, but as one component of a holistic organizational design that serves human needs and purposes.

Thanks for reading!