Re-Creating the Corporation

Recreating the Corporation is Ackoff's best work on utilizing the use of systems thinking to understand how to make not only pieces of companies better, but how optimizing the entire company can lead to dramatic improvements. Those who know Ackoff's work will appreciate his freshening of material contained elsewhere and the addition of new concepts to make the framework wholistic.

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 s

"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 do

I enjoyed this book very much, particulary the introduction with its synopsis of systems theories and management applications. Recommended for managers in organization redesign roles in business and government