Like the famed Murphy's Law and the equally famous Peter
Principle, the Shannon Axiom defines an obvious and
important truth about American institutional life. Named for
an incompetent prison warden, the axiom says: "the quality
of agency personnel steadily declines over time because, fearing
competition, executives regularly promote those who are even less
competent than themselves." In its brief form, the Shannon
Axiom is "bad breeds worse."
Executives in agencies and institutions, especially those in governmental bureaucracies are egotists, but have nothing to be proud of. By nature they are frightened insignificant persons. If they weren't, they would be in different occupations. These executives don't want new people to out-shine them or to do better than they are doing. As a result, they promote those who are less competent than themselves. At each stage, the quality of the agency's staff declines until it's down to the Shannon Level. The Shannon Level is the second prong of the Shannon Axiom. It is the verge of collapse. The Shannon Level is that place in an institution's existence where it's on the brink of collapse due to the incompetence of its management. Governmental agencies are seldom allowed to actually collapse. With government institutions, the Shannon Level is the place where the institution is no longer relevant and must be replaced by a new, less decayed bureaucracy. The process is typically called "reorganization."
The third prong of the Shannon Axiom is Pizza Night. It is a strategy of agency executives to identify subordinates who should not be promoted. By mingling with subordinates on a supposed social level an executive hopes to ferret-out those subordinates who display a glimmer of being able to out-shine or out-perform the executive. Pizza Night is not a friendly social interaction. It's an executive's reconnaissance against potential rivals for esteem and accomplishment. By its very nature, Pizza Night helps an executive identify those who can/should be promoted. Subordinates who are incompetent enough or who seem incompetent enough to be bated into Pizza Night are, by definition, ripe for promotion. An obvious consequence of the Shannon Axiom is that some of the best persons are excluded from top management in business and government. They are simply too dangerous to the egos of the executives. Business schools might want to expand education on the Shannon Axiom. Younger persons may learn how to fake being dumb enough to be promoted.
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Aspects of the Shannon Axiom apply to private industry. It accounts for the decline of many great businesses. Over time the management becomes less and less able to cope with the changing demands of reality.