The Democratic Corporation: A Radical Prescription for Recreating Corporate America and Rediscovering Success

262 Pages·1994·11.02 MB·English

by  Russell L. Ackoff

h
This page intentionally left blank
Russell L. Ackoff
The Democratic
Corporation
A Radical Prescription
for Recreating Corporate America
and Rediscovering Success
New York Oxford
OXFORD UNIVERSITY PRESS
1994
Oxford University Press
Oxford New York Toronto
Delhi Bombay Calcutta Madras Karachi
Kuala Lumpur Singapore Hong Kong Tokyo
Nairobi Dar es Salaam Cape Town
Melbourne Auckland Madrid
and associated companies in
Berlin Ibadan
Copyright © 1994 by Oxford University Press, Inc.
Published by Oxford University Press, Inc.
200 Madison Avenue, New York, New York 10016
Oxford is a registered trademark of Oxford University Press
All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise,
without the prior permission of Oxford University Press.
Library of Congress Cataloging-in-Publication Data
Ackoff, Russell Lincoln, 1919-
The democratic corporation : a radical prescription
for recreating corporate America
and rediscovering success /
Russell L. Ackoff. p. cm.
Includes bibliographical references and index.
ISBN 0-19-508727-5
1. Industrial management. I. Title.
HC38.A27 1994
658—dc20 93-35403
987654321
Printed in the United States of America
on acid-free paper
To my very good friend
Leon Pritzker
who has been telling me
what's wrong since 1946—
and
has almost always been right.
This page intentionally left blank
Preface
The deterioration of the American economy in general and
many American enterprises in particular is now widely recog-
nized and discussed. More frequently than not, this situation is
approached with what appears to be a tendency to oversimplify
the problem—hence its solution. Most of those who manage
our society and enterprises within it are panacea-prone. Rather
than meditate, they recite such mantras as total quality manage-
ment, continuous improvement, and right-sizing.
"Right-sizing"—eliminating unnecessary infrastructure and re-
ducing management layers—is becoming the most common tac-
tic of most corporations. h... In most cases, right-sizing isn't
part of a thoughtful strategy to redesign the whole corporate
management structure and culture. Instead, it's an almost pan-
icked reaction to pressures and problems, administered with the
sheeplike justification that everyone else is doing the same thing.
[Emshoff, p. x]
In addition, managers are preoccupied with core competence,
process engineering, strategic alliances, and competitive strate-
gies; and not too long ago there was a rush to practice value
analysis, maximizing shareholder value, and sensitivity training,
among many other things.
viii Preface
The deterioration of the American economy and its enter-
prises is not a problem but a complex system of interrelated
problems. I call such systems messes. A mess cannot be han-
dled effectively by breaking it down into its constituent parts
and solving each part separately. As we will see, the way prob-
lems and their solutions interact is much more important than
how they act independently of each other. The current mess is
so deeply rooted in our society that nothing short of a radical
transformation of our economy and its institutions will reverse
their deteriorating trend.
This book is an attempt to chart a way out of our current
mess, an effort to mobilize change by developing an under-
standing of the mess we are in (Part I) and what can be done
about it (Part II). I believe strongly that the ideas advocated in
this book can change failure to success. But there may be other
ways that will work as well. The important thing is to begin the
process of reforming organizations now, and I hope these ideas
will stimulate that beginning.
As Peter Drucker (1968), Alvin Toffler (1971), Donald
Schon (1971), and John Naisbitt (1982), among many others,
have shown, the changes we are experiencing are profound.
Therefore, they require profound changes if they are to be
converted from threats to opportunities.
Unprecedented social, political, and technological changes have
occurred during this century. More profound changes he ahead.
To make the decisions that will be required, we must understand
the nature of change itself—its causes and effects—its dangers
and possibilities. How to create a more desirable and humane
future is of urgent and vital concern. [Cooper-Hewitt Museum,
The Phenomenon of Change (1984), cover]
In Chapter 1 I show how the concept of an enterprise has
evolved since the Renaissance—from its being thought of first
as a machine, then as an organism, and now as a social system.
I argue that this evolution mirrors that of the worldview which
Preface ix
prevailed in the West, its concept of the nature of reality. The
central role of the concept "system" in this story is critical, and
therefore its meaning and its relevance to the emerging concept
of an enterprise are explored in depth.
In Chapter 2 I explore three different views of an enter-
prise that are revealed by looking at it sociosystemically: from
the inside out, from the outside in, and from the inside in.
These views are based on recognition of the importance to an
enterprise of all its stakeholders—those who are directly af-
fected by what it does. In addition, I consider the appropriate
objective of an enterprise conceptualized as a social system—
development—and how it differs from growth. Then I explore
the "dimensions" of development and its counterpart, effec-
tiveness: science, economics, ethics, and aesthetics.
In Chapter 3 I argue for a new approach to the way we
pursue the elusive matter of quality. The current preoccupa-
tion with quality derives from a transformation of focus from
growth and its measure, standard of living, to development and
its measure, quality of life. I explore the meaning of quality of
life in general, and quality of work life in particular, and show
the futility of efforts to measure them. However, I also show
that the need to do so can be removed by a participative activity
I call "idealized design." I diagnose the frequent failure of
quality-of-work-life programs and prescribe corrective actions.
Then I discuss TQM's preoccupation with the quality of prod-
ucts and services from the consumer's point of view. First, I
consider how one can determine what consumers actually
want, which is by no means easy to do. Then the shortcomings
of continuous improvement from a systemic point of view are
revealed, and an antidote—planning backward from an
ideal—is described.
In chapters 4 through 6 I present three compatible designs
of enterprises that can be used separately or in combination to
transform them from ones that may have been well equipped to
survive in an era that is rapidly drawing to a close, to an