I saw it myself when I worked for the US Government. Any mid-level guy could say no; to get around the mid-level took a lot of work, non-value work at that.
When I left government for private industry, I was really shocked by the different deciding paradigm: the decider decided, and the decisions actually stayed decided!
Diffusion of responsibility refers to spreading the decision making among so many individuals that really no one is consequentially on the line, except perhaps for the last guy in the line. It's the project equivalent to putting all 'deciders' in parallel so that no single decider is material. Thus, they can all say 'no' and not be accountable for the decision since 'who was last to say no?' is often not reported or known. Generally, the ordering of the naysayers is not material, so anyone can go first or last.
I've gotten to this point in the blog and I realize I have no answer for the issue. Who was responsible for the financial collapse? No one has really paid a price. Who was responsible for Enron: it's a little clearer there. Who's responsible for a lot of what we endure every day? I don't really know.
Diffusion of responsibility!
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