Table Of Contenth
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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
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Copyright © 1994 by Oxford University Press, Inc.
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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.
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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
Description:We all know that American business needs fixing, and there is no shortage of prescriptions: imitate the Japanese, or follow the example of successful firms, or practice right-sizing. But these approaches do not work very well, says Russell Ackoff, because they only attack the problem piecemeal--and