An excellent (and relatively low cost) rail system in the United States made nation-wide distribution feasible. Low cost telephone and postal systems made communication between these distributed centers also economically viable. A hub-and-spoke model of organizational operations flourished in this setting of low transportation and communication costs. Managers were taught how to predict and control their operations, even when operations were far-flung. Even when the costs of prediction and control were high, any concerns about costs were mitigated by an abiding sense that American industry was invincible, especially if lower cost foreign products were kept out or heavily taxed. This was certainly the case for many years in resource-intensive industries such as automobile manufacturing and the production of military weapons.
In the postmodern world this form of distributive production and centralized control has become prohibitively expensive, as well as ecologically unsound. Smaller organizations that produce goods using local resources are much more likely to survive this turbulent, energy-conscious era than are hub-and-spoke organizations—unless the organization is producing something that requires very few physical materials (such as software manufacturers or service providers).
Ironically, it is precisely those resource-intensive organizations that thrived as hub-and-spoke organizations during the Twentieth Century—such as automobile and appliance manufacturing—that have most needed to adjust to the changing realities of cost-containment. The new postmodern organizations that produce information and services need not worry about shipment costs or monitoring of production quality from a remote location—yet these organizations are less inclined than their modern-day counterparts to rely on control-based management or to establish hub-and-wheel operations.
