28 of 30 people found the following review helpful:
5.0 out of 5 stars
Organizational Design to Apply The Fifth Discipline, September 25, 2000
This review is from: Re-Creating the Corporation: A Design of Organizations for the 21st Century (Hardcover)
Since Peter Senge eloquently introduced business readers to the importance of systems thinking in The Fifth Discipline, companies have been grappling with how to apply that aspect of the learning organization. In Re-Creating the Corporation, Russell Ackoff has written the most complete description of how such an organization can be created.
A system is any grouping of parts that is influenced by its parts and requires their coordination to create the best result. A car is an example. You can take the best transmission from one type of car, the best engine from another, and the best brakes from a third, and they will not work together. This is a typical quality of systems: If you optimize any part of the system, you reduce the effectiveness of the whole. But most organizations are set up to seek optimization of the part rather than the system, creating disasters like the car example I just used.
Although he makes only limited reference to it, Professor Ackoff is clearly influenced by complexity science. He has created fractals (small versions of the whole that scale up and down) in his organization, and is trying to expose the widest number of people to the widest possible perspectives on the systems issues of an organization.
The book is designed as a series of essays to explain what systems are and how they operate; processes for planning, design, implementation and learning; organizational designs that apply the concepts of democracy, economy and flexibility; and an overview of the weaknesses of management fads and panaceas, and the benefits of working on organizational and transformational leadership instead. His goal is to create an organization that is as stable as possible in order to create an organization that is as flexible as possible. Let me explain. He wants to avoid reorganizations of roles and jobs, but he wants the organization as a system to evolve rapidly and easily in serving stakeholders.
I found the concepts to be quite consistent with the realities of a wired world, by putting a structure and a thought process together that will provide a context for gaining benefits from enhanced communication. Basically, the structure relies on creating a three dimensional organization -- one that relies on input (functional) units like purchasing, finance, and legal that are primarily used internally, output (product or service creating) units such as the manufacturing activities, and market or user defined (customer or geography) units. Most organizations emphasize one of these three dimensions or the other. By keeping them in place in a balanced way, the idea is to avoid needing to make adjustments to create or abolish any of these types of units.
A second major innovation to aid this organizational structure is the idea of using interacting boards to supervise each unit. This creates more participation, more democracy, and more interconnection across the organization.
To this, Ackoff combines a common process for systems solution creation and implementation that all would learn in the organization.
With organization, thinking, and doing processes in place, he then proposes that organizations go for transformational change rather than incremental change.
I found the book to be full of fresh thinking and interesting examples of how this can be applied based on Mr. Ackoff's consulting experiences with his well-known, long-term clients like DuPont and Anheuser-Busch.
For those who want to learn more about systems thinking at the micro level, I suggest reading the sections on that in The Fifth Discipline Field Guide. That will help you understand the concepts much better than the material in this book.
While I agree with the concept of keeping the organization as stable as possible, I found the proposals here to be a pretty ponderous way to accomplish that end. I suspect that simpler versions of this concept could work almost as well in coordinating systems thinking, and might work much more rapidly. For a newer, smaller organization, the structure would be overly complicated.
My own idea is that companies should move beyond organizational design and problem-solving structures as their focus to concentrate instead on creating an overriding mission, vision, strategy, tactics, and means of implementation (with employees and stakeholders who are energized by this diretion) that are all-encompassing in perspective and in providing direction, and perpetual in appropriateness. Then, by focusing on the key points of potential progress, the organization should constantly make large improvements in its business model that are more adaptable to the changing business environment. I think this concept of the organization that I have just described is easier to understand and apply once it is formulated in an organization than the ideas described here from Re-Creating the Corporation.
Even though I disagree with the proposed solutions in this very interesting book, I gave the book five stars for raising most of the right questions. We learn more from good questions than from the first sets of proposed solutions, and I hope that others will take these questions seriously and pursue them as well.
After you have read this book, ask yourself where in your organization you are pursuing optimization of an area or a part of the organization's activities. When will that optimization be harmful? How can you prevent that harm? What means of coordination could create a better combined result for your organization?
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22 of 23 people found the following review helpful:
5.0 out of 5 stars
"There are no simple solutions to complex problems"., August 21, 2000
This review is from: Re-Creating the Corporation: A Design of Organizations for the 21st Century (Hardcover)
"This book is a product of applying systems thinking to the management and organization of enterprises". Russel L. Ackoff writes, "therefore, an understanding of the nature of systems and systems thinking is essential for understanding what this book is about. Although most people can identify many different systems, few know precisely what a system is. Without such knowledge, one cannot understand them, and without such an understanding, one cannot be aware of their implications for their management and organization and for treatment of the most important problems that currently face them" (p.5).
Thus, he firstly argues that a system is a whole consisting of two or more parts that satisfies the following five conditions:
(1). The whole has one or more defining properties or functions.
(2). Each part in the set can affect the behavior or properties of the whole.
(3). There is a subset of parts that is sufficient in one or more environments for carrying out the defining function of the whole; each of these parts is necessary but insufficient for carrying out this defining function.
(4). The way that each essential part of a system affects its behavior or properties depends on (the behavior or properties of) at least one other essential part of the system.
(5). The effect of any subset of essential parts on the system as a whole depends on the behavior of at least one other such subset.
Hence, Ackoff summarizes his argument that a system is a whole that cannot be divided into independent parts without loss of its essential properties or functions, and additionally argues that when the performances of the parts of a system, considered separately, are improved, the performance of the whole may not be (and usually is not) improved.
Within this general framework, he:
* defines four different types of systems, and shows their effects on organizations and the way they are managed (more detailed discussion see Chapter 2):
(1). 'Deterministic', systems and models in which neither the parts nor the whole are purposeful.
(2). 'Animated', systems and models in which the whole is purposeful but the parts are not.
(3). 'Social', systems and models in which both the parts and the whole are purposeful.
(4). 'Ecological', systems and models in which some parts are purposeful but as a whole have no purposes of their own.
* by considering three primary forms of traditional management and planning (reactive, inactive, and preactive) and their deficiencies, discusses systems-oriented/interactive form of management and planning.
* discusses five aspects of interactive planning in separate chapters as follows:
- preparing the state of the organization or a situational analysis (more detailed discussion see Chapter 4).
- determining ideals, objectives, and goals or ends planning of the organization (more detailed discussion see Chapter 5).
- identifying the gaps between what the organization is and is now doing and where it wants to be and to be doing (more detailed discussion see Chapter 6).
- considering resources such as money, plant and equipment (capital goods), people, consumables (materials, supplies, energy, and services), data, information, knowledge, understanding, and wisdom, and asking and answering following questions:
i. How much will be required, where, and when?
ii. How much will be available at the required time and place?
iii. How should each shortage or excess be treated? (more detailed discussion see Chapter 7).
- implementing and controlling with learning and adaptation (more detailed discussion see Chapter 8).
* describes and explaines circular type of organization as a democratic hierarchy.
* discusses internal market economies as substitution of the centrally planned and controlled economies within the organizations.
* discusses the multidimensional design and organization that eliminates the need to restructure when internal or external changes require adaptation, and argues that "the circular organization, the internal market economy, and multidimensional design can all be combined in one organization. The power of each is significantly enhanced by its interactions with the others".
* examines currently popular panaceas such as downsizing, TQM, continuous improvement, benchmarking, and process reengineering and the reasons they fail, and argues that "there are no simple solutions to complex problems. Furthermore, since problems are interdependent, their solutions should be. Interdependent problems constitute messes, systems of problems. Therefore, their solutions must also form a system. A system of solutions is a plan, and plans are complicated, not simple. It is not possible in a few minutes to find behavior that will resolve, solve, or dissolve a set of problems that took years to cultivate".
Strongly recommended.
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