Some smart people are discussing self-organization on the Lean Software Development yahoo group. You might want to listen or talk there.
Here is what I said today:
First, we must recognize that self-organization happens willy-nilly all the time. The only question is when does it start, and where or why does it stop. (Thanks to Tolstoy and War & Peace for explaining this to me. And I am not just a slow learner; it's a great book in many ways.)
That is to say, whenever a 'boss' gives someone an order (big or small), that person must figure out how to do that (assuming they agree to do it... lots of self-organization very smartly ignores the boss' stupid orders).
At a high level, an 'order' could be an initial vision of a product: "We need a hybrid car pronto...figure it out." I think none of us would call that command-and-control, but it could be called an 'order'.
AND...with a Scrum Team there are rightly times and places for them to say "geez, we don't know what to do next, can someone help, please?!!?" Not exactly classical self-organization.
Yes, self-organization is magical and is changing all the time (to a lessor or greater degree). But it is quite real and indeed happening all the time. And we all have many experiences of it.
Now, when asked, I don't think that a 'capable team' that kinda sorta wants to do the work will ever refuse to self-organize. Assuming they are not dysfunctional also. From their background (company culture), they may at first not believe the request to self-organize (how did the manager allow that to happen??). But after a Sprint or two, I have always seen them self-organize.
And I have seen more than one mediocre team need a manager's 'nudging' (that's the official term) to get them started. This is partly because they are relatively inexperienced, not used to power, and not used to being in the project this early in the process. It feels odd to them so they feel unsure what to do. But, once started, they self-organize pretty well.
Now, one more thing must be said or asked. Will a team of 7 always come up with the best solution on their own?
Asked that way, I think it is clear the answer is No. Even if they give themselves some feedback (eg, the Scrum demo). So, the Team should be encouraged to ask for more feedback and advice. And indeed, there is room for managers to provide leadership. It might be called 'coaching' or something else (so that all of them are less likely to fall into command and control). But,
despite what some agile people say, what I see is that smart and good managers have a real role. (OK, yes, there are fewer of them than we want. Agreed.)
And that these good managers are not contrary to self-organization at all. Once mutual respect is built up (and, as Taiichi Ohno might say, mutual humility: "Half of what I know is wrong" is pretty close to his quote).