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Last Updated: Wednesday, 7 February 2007, 23:57 GMT
How to avoid the fatal F-Laws
Peter Day
By Peter Day
Presenter, BBC Radio 4 and BBC World Service

It is always exciting to meet a real subversive, especially when he (or she) is old and wise.

Henry Ford in one of his cars in the early 1900s
Henry Ford's business model still influences our thinking unduly

Russell Ackoff was in London the other day to launch a new book and he fits all the categories.

He is 88 and simply bubbles with ideas about what's wrong with the way business works.

His new book is all about the F-Laws, uncomfortable truths about the (mistaken) way most organisations are run.

The flaws come from decades of repeated management mistakes and conventional business teaching.

When I met him just before a packed session at the London School of Economics, Russell Ackoff told me how he came by his unorthodox approach to management and how much most organisations still have to learn.

"Companies and organisations get things wrong most of the time," he said.

"The average life of a US corporation is only 11-and-a-half years, the rate of bankruptcy is increasing very year. There's a great deal of evidence that we don't know how to manage organisations very effectively.

"The F-Laws are simply based on observations over the year about regularities which are destructive to organisations."

Parts and wholes

As that word "regularities" might suggest, Russell Ackoff started academic life as a specialist in operational research.

The important switch in his own life occurred with the rise of systems thinking in the 1970s.

Russ Akoff
Meet the business subversive

As he puts it, corporate problems were arising that could not be solved by simply taking care of the parts, the obsession of operational research.

"We found that we could improve part of a corporation and destroy the whole by improving the part."

From this emerged Russell Ackoff's obsession with seeing the system as a whole - a personal change which coincided with the rise of system dynamics as a brand new way of looking at organisations, in the round.

He was a friend and associate of the still-influential management expert W Edwards Deming, the man who took quality to Japan and then saw it bounce back to his native US.

Russell Ackoff thinks that, imprisoned in centuries of Western education which values only analytic thought, most people cannot do the "synthetic" thinking that sees an organisation as an intermoving whole.

Analytic thinking uses research and experimentation. Design is the way that synthetic thinking operates, putting things together rather than taking them apart.

Changing times

This enthusiasm may spring from his upbringing. Russell Ackoff trained as an architect, not at a business school.

"Architects have to start with the concept of the buildings as a whole - they don't start with the details," he says.

London's landmark Gherkin building
Russell Ackoff's insights come from his background in architecture

"Complexity is not a problem to the architect, but it is to the analyst. The architect puts things together into wholes, as opposed to what business people do, putting parts together to make wholes."

Business people still inspired by Henry Ford are told to "Keep It Simple, Stupid", to create chains of processes that cannot go wrong.

But they can and they do go wrong - and so do the businesses they run in that Fordist way.

Henry Ford arranged his production lines around untrained workers who were pouring off the boats seeking jobs in Detroit, dividing tasks up into tiny pieces which an unskilled and illiterate worker could perform.

But things were changing fast, says Russell Ackoff.

"At the beginning of the 1900s in the US, the average educational level of the worker was barely above literacy.

"By World War II, it had risen to eight years of schooling.

"During WWII, we started to employ women who were not working primarily for money.

"When the men returned, fed up with military discipline, we had a conversion from the mechanistic to the biological concept of the corporation - corpus means body, after all.

"The CEO was called the head of the corporation - machines didn't have heads. Ford had been called the 'controller' of Ford Motor Company," Russell Ackoff points out.

Interactivity

"Since then, there's been a third change, seeing the corporation as a social organisation. Now we must treat the parts as having purposes of their own, which must be served if the corporation is to be served.

Mini production line at the Cowley car plant, Oxford
Car production lines now are not the same as in Henry Ford's day

"Charles Handy is one of the principal prophets of this, looking at companies as communities."

Management is now about managing interactivity. An educated workforce is full of people who know more about their jobs than their supervisors. On the Ford production line, the supervisor was the man who knew the job best.

Ford's organisation was almost autonomous, making everything it needed. Now many companies, such as Dell Computers, merely assemble things made by others.

The interaction of independent parts has become the critical thing in organisations. And few, says Professor Ackoff, have much idea how to do it.

Russell Ackoff's book, Management F-Laws: How Organisations Really Work (with Herbert Addison and Sally Bibb), is published by Triarchy Press. In the next Work in Progress, more from the Professor: the truth about business schools.

Work in Progress is the title of this exploration of the big trends reshaping the world of work as we steam further into the 21st Century; and it is a work in progress, influenced and defined by my encounters as I report on trends in business and organisations all over the world.


PETER DAY: WORK IN PROGRESS

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