Houses, not Tombs

First, if you haven't read the overview of the problem, you can read it in Part 1, here. 

The easiest thing in the world is to diagnose the problem and then offer a "solution" that's really just a vibe, a gesture toward some better world with no mechanism, no pathway, no actual theory for how you get from here to there.

So let me offer something with a mechanism. Three interlocking ideas, all old, all load-bearing:

Subsidiarity: decisions should be made at the lowest level capable of making them effectively. Not "decentralization" in the Silicon Valley sense, which usually means replacing the hierarchy with an algorithm that's even less accountable. Subsidiarity is about knowledge. The person closest to the problem knows something the person farther away doesn't. Every time you move a decision up the chain, you trade context for alignment, local judgment for central policy. Sometimes necessary. But the default should run the other way: don't abstract unless you must, because abstraction destroys information, and the destroyed information is usually the part that mattered.

Distributism: productive property should be widely distributed rather than concentrated. Not socialism (property concentrated in the state). Not capitalism-as-currently-practiced (property concentrated in whoever can leverage capital most effectively). This is a third thing: many owners owning real productive capital. Small businesses, co-ops, employee ownership. The insight is structural: ownership shapes incentives. Concentrate ownership, concentrate incentives. Concentrate incentives, optimize for the owners' interests at everyone else's expense. The tomb-builders aren't evil. They're responding to incentives. Change the ownership structure, change the incentives, change the tombs into houses. So before you take outside capital, ask whose incentives you're installing. If you’re thinking about selling, explore alternatives to the typical, sad PE exit; especially consider employee-ownership ladders and buyouts. Every equity decision is an incentive decision—and unlike strategy, it's nearly irreversible.

Gall's Law: "A complex system that works is invariably found to have evolved from a simple system that worked. A complex system designed from scratch never works and cannot be patched up to make it work." Every failed digital transformation, every PE rollup that destroys value, every consulting engagement that optimizes a company into dysfunction—Gall's Law is the diagnosis. You cannot design your way to competence. Competence evolves through iteration, feedback, and the slow accumulation of tacit knowledge. Blow up a working system to replace it with a designed one, and you destroy the evolutionary substrate. You get a tomb.

These three principles hang together. Subsidiarity preserves local knowledge. Distributism preserves local ownership. Gall's Law tells you the alternative to tomb-building isn't some grand plan for house-building, but the protection of conditions under which houses get built organically.

But here's what Chesterton and Belloc didn't know, because they were writing before the age of software: the bottleneck isn't philosophy. It's transmission.

I've watched dozens of small businesses that believe all the right things about subsidiarity and ownership and organic growth. They still die when the founder exits. Not because they were wrong about the principles, but because they never solved the mechanical problem of getting the illegible stuff out of the founder's head and into a form that survives him.

The craft knowledge. The judgment calls. The "we tried that in '08 and here's why it didn't work." The relationships that took twenty years to build. All of it locked up in one nervous system, and when that nervous system retires or burns out or dies, the business becomes a carcass laid out for the vultures.

The distributists diagnosed the disease correctly: concentrated ownership concentrates incentives toward extraction. But they didn't have a protocol for the cure. They said "distribute ownership" without solving the harder problem: how do you make ownership transferable when the thing being owned is mostly illegible?

This is the actual work. Not arguing for subsidiarity (that argument was won a century ago by anyone paying attention). The work is building the connective tissue that lets a business actually transfer: not just the legal ownership but the operational reality. Making judgment visible. Making relationships institutional. Making the illegible stuff legible to insiders without making it legible to extractors.

That's the missing piece. That's what turns the Chestertonian vision from a nice idea into something that can actually compete. And that—not PE acquisitions—is why I sell process documentation. But more on that later.

The historical proof case is America’s WWII industrial mobilization.

Yes, Washington coordinated. The War Production Board set targets, allocated strategic materials, issued conversion orders. That's the legible part, the part that’s quick to explain and gets remembered. 

But Washington didn't design the shop floor. The WPB told manufacturers what was needed; it couldn't tell them how to make it work with their specific equipment, their specific workers, their specific constraints. It wasn’t able—and didn't try—to figure out how to take a manufacturer that made one thing and have it redesign its systems to make something completely different.

That was adaptation at scale. 

Factories that made refrigerators started making ammunition. Furniture companies made glider fuselages. Typewriter companies made rifle parts. In Waterbury, Connecticut, the Mattatuck Manufacturing Company—which had been making upholstery nails—switched to cartridge clips for the Springfield rifle and was soon turning out three million a week. General Motors alone had nearly 20,000 subcontractors, including a tool company with three employees operating out of the owner's garage. The nose section of a single B-29 bomber required 8,000 different parts from over 1,500 suppliers. None of this was planned in a meaningful sense. It was adaptive—thousands of small actors, each with local knowledge of what their equipment could do, what their workers knew how to make, figuring out how to contribute in ways no central planner could have anticipated.

The swarm of subcontractors is the story. Willow Run gets the headlines because it's legible—one giant factory, impressive photographs, quantifiable output. But Willow Run was the tip of the iceberg. Underneath it, invisible to history, were the ten thousand small shops that made the components, solved the problems, adapted on the fly. Illegible. Unquantifiable. Essential.

And then the war ended, and the tomb-builders moved in. The consolidation that followed—the great merger waves of the '50s and '60s, which were consolidated again in the '80s and '90s—was often driven less by operational efficiency than by financial logic, managerial ideology, and legibility to capital. Big companies are easier to finance, easier to manage, easier to see from a distance. The local knowledge embedded in the small shops wasn't worth anything to the people making capital allocation decisions, because it couldn't be measured. So it got optimized out. And now we're here: an economy that's more efficient by legible metrics, and less capable by the ones that matter. Fragile supply chains. Hollowed-out manufacturing. A workforce that can't build what their grandfathers built, because the knowledge wasn't worth documenting, and what isn't documented doesn't exist.

You want contemporary proofs? Here are businesses that built houses instead of tombs:

WinCo Foods is a $9 billion employee-owned grocery chain competing against Walmart and Kroger in the western U.S. No private equity. No public shareholders. The employees own it through an ESOP, and long-tenured workers retire as millionaires. They've been profitable for decades in an industry that destroys everyone who isn't a giant. How? They're not optimizing for quarterly returns. They're optimizing for "can we still be here in thirty years." Different ownership structure, different incentive, different outcome.

The Mondragon Corporation in the Basque Country is a federation of worker cooperatives with 80,000 employees and €12 billion in revenue across their companies in industries like manufacturing, retail, and finance. They've survived the Spanish Civil War, Franco, EU integration, and the 2008 financial crisis. Their secret isn't magic. It's structure: distributed ownership, subsidiarity in decision-making, and an institutional commitment to keeping the knowledge inside the organization rather than letting it walk out the door.

Semco, the Brazilian industrial conglomerate, is a still more radical case. Ricardo Semler inherited his father's traditional manufacturing company and spent two decades making himself obsolete. Employees set their own salaries, and they're published for everyone to see. Workers choose their own managers. Business units can veto corporate decisions that affect them. The org chart is a set of concentric circles, not a pyramid. Consultants and B-school professors told him it couldn't work. Revenue grew from $4 million to over $200 million. Employee turnover dropped to nearly zero. The company survived Brazil's hyperinflation, multiple recessions, and Semler's own periodic burnouts because it wasn't dependent on Semler. He'd solved the transmission problem by distributing the judgment itself, not just the ownership. The illegible stuff wasn't locked in one head; it was distributed across hundreds of heads, each with genuine authority over their domain. Subsidiarity as operating system, not aspiration.

These aren't hippie experiments. They're hard-nosed businesses competing in brutal markets against conventionally structured competitors. And they're winning—not by being more ruthless but by being more durable.

The pattern: when you solve the ownership problem and the transmission problem, you get something that can outlast the founder, resist the extractors, and actually compound over generations. Houses, not tombs.

I should tell you why I care about this.

I've seen the machine from the inside. I spent years in the consulting-industrial complex, building decks, making things legible, participating in the optimization of illegible value into legible returns. I'm good at it. That's the uncomfortable part. I wasn't a victim of the system; I was a beneficiary. The system rewarded me for doing what it wanted done.

And I've watched, from the inside, what happens to the small businesses that don't have consultants, don't have PE backing, don't have access to the legibility apparatus. They drown. Not because they're bad at what they do—often they're very good at what they do—but because everything they're good at is illegible, and making the leaps required to systematize is hard, and it's harder when you're also the one doing the work. The tribal knowledge. The customer relationships. The craft competence that took decades to develop. None of it shows up on a spreadsheet and none of it will survive the founder's absence.

This is the failure mode I see over and over: a founder who's built something real, something that works, something that creates value for customers and employees and community—and who cannot get that value out of his own head. The business runs on his judgment. The knowledge lives in his relationships. And when he burns out, or gets sick, or just gets old, the whole thing collapses, because there's no mechanism for transmitting the illegible stuff to the next generation.

Capital waits for fatigue. They know the founder is tired. They know he won't last forever. And when he finally sells—cash and calm being two powerful incentives—they move in, they make it legible, and they kill it. Not intentionally. Sometimes not even actually. But what was once a thriving small business with all the relationships and interdependencies that implies is gone. 

Big companies and private equity share this: the system rewards them more for what they can extract than what they can create. That's what finance-first optimization does. It builds businesses that are easier to value, sell, and leverage, often at the expense of the living competence that made them work.

I don't want my kids to inherit that economy. An economy of tombs, beautifully whitewashed, full of dead men's bones. I don't want yours to either.

That's why I converted my experience to a mission that's building up houses, not tombs: I sell business process software and services that work for owners and their employees. When capital (PE, investors, whomever) asks for documentation, it's about making sure the business can survive the people who work there (or who won't work there anymore). But when you, a founder, can proactively tackle the documentation question, it's about giving your team a force multiplier, clear autonomy, a sense of ownership, more job satisfaction, and better margins that allow you to reward them commensurate with their value.

Bottom line, here's the call—and it's not a sales pitch. No ten-point plan—ten-point plans are tomb-building. These are free-of-cost, actionable practices depending on where you are in your organization.

If you're a founder or owner:

The first question isn't "how do I grow" or "how do I exit." The first question is: what happens to this thing if I get hit by a bus?

If the honest answer is "it collapses," you don't have a business. You have a job that employs other people. And every day you run it without solving that problem, you're building a tomb—you just haven't moved in yet.

Start here: pick one decision you make repeatedly that nobody else in the organization could make. Not the big strategic stuff—the small operational judgment calls. "When do we extend credit to a new customer?" "When do we expedite an order versus holding the line?" "When do we fire a client?"

Now make that decision explicit. Not documented—explicit. Write down the factors you actually weigh. The patterns you've learned. The exceptions and why. Then teach it to someone. Watch them make the decision. Correct the errors. Iterate.

That's one decision. You have hundreds. You won't get to all of them. But every one you externalize is one less reason the business dies with you.

If you work inside a large organization:

You already know which processes are theater and which are real. You know where the actual knowledge lives—usually in three or four people who've been there forever and who everyone quietly knows are load-bearing.

Your job is to be a smuggler. Find the real stuff. Learn it. Transmit it to the people who need it. Build the informal networks that actually make things work, parallel to the org chart that doesn't.

This isn't subversion. It's preservation. The org chart is a map; you're maintaining the territory. When the next reorg comes, when the next round of "optimization" hits, the companies that survive are the ones where the real knowledge was distributed widely enough that it couldn't be optimized out.

If you're trying to decide what to build:

Build things that help houses stay houses. The tomb-building apparatus is well-funded and self-perpetuating. The house-building infrastructure barely exists.

We need better tools for making operational knowledge transmissible. Better structures for distributing ownership without creating governance nightmares. Better ways to help small businesses become institutions without becoming corporations.

This is a market gap the size of the economy. The consultants won't fill it—they're optimized for extraction. The software companies won't fill it—they're optimized for scale. It has to be filled by people who understand that the goal isn't making businesses legible to capital, but making them legible to the people who have to run them.

The disposition that matters:

Tolkien's kings loved glory. The Pharisees loved the appearance of righteousness. What do you love?

If you love the company more than your role in it, you'll build for succession. If you love the work more than the credit, you'll teach what you know. If you love your children's future more than your own legacy, you'll build houses they can live in rather than tombs they can admire.

The economy won't fix itself. The incentives point toward extraction. The only counterforce is people who build houses anyway—who protect illegible value, transmit craft knowledge, distribute ownership, and do the slow, patient, unoptimizable work of building something that outlasts them.

Not because it's profitable. Because it's right.

Houses, not tombs.