Alessandro Pluchino and colleagues from Universita di Catania used an agent-based simulation approach to try to figure out how incompetence happens in organizations, and how to avoid it. This replays the Peter Principle -- "All new members in a hierarchical organization climb the hierarchy until they reach their level of maximum incompetence." -- and suggests that there really is something wrong with always selecting the best at level N in an organization and promoting them to level N+1:
[via Technology Review: Blogs: arXiv blog: Why Incompetence Spreads through Big Organizations]
But is there a better way of choosing individuals for promotion? It turns out that there is, say Pluchino and co. Their model shows that two other strategies outperform the conventional method of promotion.
The first is to alternately promote first the most competent and then the least competent individuals. And the second is to promote individuals at random. Both of these methods improve, or at least do not diminish, the efficiency of an organization.
Interesting idea that would be fascinating to see in action. What would be a suitable prize for the first CEO to implement such a policy?
The promotion at random idea is so wonderfully oblique: it sounds like Borges "Lottery In Babylon", where each year the station of all people in some fantastic country was decided by lottery.