11 Feb 2007: The Observer - Page 8 - (782 words)
Business & Media: Business: Cool judgment on the f-Law of the business jungle
READING Russell Ackoff's slim new volume, Management f-Laws (with Herbert Addison and Sally Bibb, Triarchy Press), is like being pricked by a series of delayed electric shocks. At first glance and on their own, the book's 81 short aphorisms, paradoxes and put-downs seems nothing special. The first shock comes as the implication sinks in, followed by a chain-reaction of secondary ones as the first implication interacts with subsequent ones, until shocks are going off all over and you are left in no doubt that you are in the presence of one of the profoundest and wittiest brains ever to engage with the bizarre human activity called management.
This, although unconventional, turns out to be an entirely logical way of laying out a management book. Not for nothing is Ackoff, now 87 and as busy and iconoclastic as ever, known as the dean of systems thinking, and as he explains, the new book - subtitled 'how organisations really work' (f+laws = flaws, geddit?) - is the result of a lifetime of observing and identifying the regularities in managers' behaviour that explain why so much of their activity is ineffective. The result is a kind of exhilaratingly contrarian com mon sense that is the exact opposite of conventional wisdom.
Take the apparently gnomic 'A corporation's [external] boundaries are generally much more penetrable than its internal ones'. He means that, because of rigid, ring-fenced internal functions, competition between rival departments is often fiercer than with nominal commercial rivals. Because their pay depends on the outcome of this warfare, managers are often less free with information to their peers than to outside counterparts. So they often know more about their rivals than about their own company.
The usual remedy for these 'silo mentalities' is to force people to share information, but that only makes the internecine warfare more deadly. Instead, the only way out of the mess is to change the underlying incentives: recognise that you can't improve the performance of the whole by optimising one or even each of its parts, and, rather than rewarding people on the performance of their own department, reward them on what they contribute to the performance of others.
Or take 'The less managers understand about their business, the more variables they require to explain it'. Yes, that figures. But the deeper point is that it explains why companies are unable to act: not understanding what's relevant, managers demand all the information they can get, and a massive oversupply of irrelevant information becomes a much worse management problem than a shortage of the relevant.
In turn, this serves as illustration to f-Law 73, addressing the difference between wisdom, understanding, knowledge, information and data: 'To managers an ounce of wisdom is worth a pound of understanding'. Unfortunately, managers pay far more attention to knowledge, information and data - the least important content of their minds - because they are 'hard facts', and almost none to wisdom - the most important.
And from there: 'Information, knowledge and understanding enable us to do things right, to be efficient, but wisdom enables us to do the right things, to be effective. Science pursues data, information, knowledge and understanding: what is truth but the humanities pursue wisdom: what is right.'
Leadership versus management, development versus growth, 'power over' versus 'power to', what and what not to measure, the importance of mistakes, the disastrous results of teleconferencing and audio-visual aids ('PowerPoint projectors are not visual aids to managers. They transform managers into auditory aids to the visuals'), conversations in the lavatory, jargon, men's handwriting and many other manifestations are squeezed for comparable insights under the pressure of Ackoff's implacable scrutiny.
Plenty will cause offence rather than thought (there's an f-Law for that, too). He shows that the more directors are paid, the less likely they are to contribute to their company. He argues that 'business schools are as difficult to change as cemeteries, and for the same reasons', and notes the paradox that most companies are centrally planned, command-and-control organisations that would not have looked out of place in the Soviet Union. (Although I think he is wrong to say the answer is to bring the market into the company in the larger system of the economy, markets and organisations have different functions and logic.)
Ackoff makes management a pleasure to read about, even when it's plain that 90 per cent of it has been diverted into doing the wrong thing righter, in his phrase (this paradox thing is catching). It's no disrespect to Bibb, who takes on the impossible job of commenting on Ackoff's sallies, to say that her responses function mainly as a foil to his densely packed wisdom and wit. Ackoff is unique - more's the pity for the rest of us.
The Observer, 11 February 2007