Jamshid Gharajedaghi

The underlying assumptions of conventional management philosophy regarding the nature of social systems are at the core of the problems and dilemmas faced by corporations in particular and the human community in general.

By management, I hope it is clear that I do not mean just a set of rules and procedures but a process by which a given society makes productive its limited resources. It incorporates a system of values and beliefs and as such it becomes an integral part of the culture. Therefore its influence extends to all dimensions of social systems, including not only generation and distribution of wealth, but also generation and distribution of power, generation and distribution of knowledge, process of conflict resolution, concept of beauty and therefore whole process of creation/recreation. (Figure 1)

Alienation, indifference, lust for power, bureaucratic attitudes, feeling of incompetence, resistance to change, decreasing quality of life, and countless other negative factors are mere symptoms of a deeply rooted illness for which commonly prescribed remedies are ineffective and may even aggravate the cause. It seems as though we are running on a treadmill and therefore have to keep running faster and faster just to stay at the same place.

The organizational skills which have helped so far to manage "things" so effectively are not much of a help in dealing with current situations which are characterized as "organizational complexities" (Beer, 1972), or as Russ Ackoff puts it "Messes". The increasing number of dilemmas that we are facing is a clear indication that something is definitely wrong with our present set of assumptions.

To elaborate: it has been argued that human beings when faces with a problem situation unconsciously turn to an implicit mental model or an image which is based on previous perceptions and experiences. The model of a system in its simplest form is an orderly related set of assumptions regarding the nature of that system. Further, it has been possible to group most of the models representing different organizational theories and school of thought in three categories conveniently labeled as:

mechanistic
organismic
socio-cultural (or systemic model of social systems)

(See figure 2)

The difficulty at base lies in the fact that current dominant theory and practice of management is based on an implicit model of social systems which is in reality a caricaturistic replica of mechanistic systems. Therefore it is quite inappropriate in dealing with the type of systems represented by the realities of present socio-cultural systems. This is so in spite of our present level of knowledge that socio-cultural systems are structurally and dynamically unique and are not fundamentally comparable to the mechanistic and/or organismic systems (Buckley, 1967).

This point can be demonstrated first by reviewing briefly some of the basic assumptions of the above mentioned models and then by comparing them with the conventional management thinking and actual practice of the art.
The mechanistic models view the social system as a mechanical device that tends toward a predetermined equilibrium point. Given a certain structure, the behavior of the system is thus completely predictable. The machine is the metaphor of such views of social systems.

The organismic models, by contrast, employ the organismic metaphor for the understanding of society. The social system is viewed as a structure-maintaining organism that unfolds according to a genetic "blue print" and moves toward esssentially the same ultimate destination. The principle of equifinality* (Bertalanffy, 1960) is at work here.

* dissimilar initial conditions leading to a similar end state.

Socio-cultural models of social systems emerging out of systems thinking, challenge the assumptions of both the mechanistic and organismic models. Social systems are viewed as information/culture-bonded systems engaging in structure elaboration as well as structure creation. Its developmental path is neither predetermined mechanistically nor is organismically fixed in destination - rather it is multifinal* (Buckley, 1967) and purposeful (Ackoff and Emery, 1972).

* similar initial condition leading to dissimilar end states

The three major areas of differences, namely structure, dynamics and purpose, that exists between mechanical and social systems are so pronounced that the same principles which make the design and control of a mechanical system so successful cannot be used to meet the challenges of managing complex social organizations.

First examine briefly the concept of structure and bond. In order to have a system, some kind of link or bond between the elements is necessary if the aggregate is to be considered as a system. This is of course implicit in the definition of a system. The point of emphasis here is to specify explicitly the assumptions regarding the nature of these bonds and examine their consequences in the design and the management of social systems.

Whereas the elements of mechanical systems are energy-bonded, those of social systems are information/culture-bonded. In energy-bonded systems, laws of classical physics govern the relationship existing between the elements. Therefore passive and predictable function of parts is a must, until the part breaks down. This important characteristic allows for functional division of tasks and makes it possible to reduce each task to its simplest form (Taylor, 1947). IT comes as no surprise to see a complicated mechanical device, a tractor for example, in which each part only performs a simple vertical, horizontal or circular motion.

Further command and control in mechanical systems are "legal rights". The system vis-ý-vis its controller is helpless and cannot exercise a will of its own. An automobile yields to its driver irrespective of his expertise and dexterity. If the driver decides to run the car into a solid wall, the car will hit the wall without an objection, but riding a horse presents a different perspective. It matters to the horse who the rider is, and a proper ride can only be achieved after a series of information exchanges between the horse and the rider. In any event it is not easy to run a horse into a solid wall. Horse and rider form an information-bonded system in which guidance control are achieved by a second degree agreement* preceded by a psychological contract.

* agreement based on a common perception.

It is this simple and elegant characteristic of energy-bonded systems which is responsible for all the glamour of tidiness, efficiency, controllability and predictability that is achieved in the design and control of mechanical systems. It is this type of performance that the classical school of management tries so hard to emulate.

Therefore the principle that the parts should not deviate is at the core of classical management thinking. This demand, in view of the deviant nature of human beings, takes the form of high emphasis on tight supervision and control to ensure conformity, predicatability and reliability of individual behavior within the organization.

The techniques used to secure this requirement, not surprisingly, draw upon what has been called the "machine model" of organization. These techniques include:

1) job description,
2) standard operating procedures,
3) bureaucratic rules, which are supposed to emulate physical laws,
4) subsequent internalization of these rules, which will give them a high positive value independent of organizational objection,
5) depersonalization of relationship as required by bureaucratic principles (Weber, 1947).

These, combined with the adaptive nature of human beings, which is equally capable of maladaptation, successfully create a machine-like behavior. The result is an increased rigidity which satisfies the energy-bonded systems' requirement for no deviation.

The problem was that the much needed rigidity also reduced the creative ability of the organization and its responsiveness to its environment. During the production era, this was of no concern. Because of the limited interaction between organizations and their environment, they could for all practical purposes be treated as closed systems.

It was not until the marketing era that the increased influence of the environment on the behavior of organizations created a threatening dilemma for the classical model. Rigidity of organization and its insensitivity to its environment made it increasingly difficult for organizations to meet the varying demands of clients and customers. Ironically, client dissatisfaction reinforced rigidity by increasing demand for accountability, which in turn resulted in an increased need for defensibility of individual action. This resulted in closer adherence to the rules and more rigidity, thus creating a continuous vicious circle (March and Simon, 1958). (Figure 3)

This is why the basic characteristic of a bureaucratic system is its input orientation. A bureaucratic system cannot survive if survival depends on its output. Input orientation of the bureaucratic system is further reinforced and justified by the machine model assumption that process represents only a simple transformation of inputs to outputs and that output level invariably depends on inputs. So, an input-oriented budgeting system with implicit assumption about output becomes a common characteristic of the bureaucratic system.

It is no surprise to see that job evaluation techniques are also input-oriented, that the pay and the prestige of an office depends on its size (number of people) with no regard to actual output. As a result we see a great tendency for growth and expansion especially when outputs are intangible and not measurable. This tendency is not only confined to the government agencies alone, most of the staff units of large corporations act exactly in the same manner. Enjoying authority with no responsibility they grow at the expense of the operating units. But the problem does not end here. In order to justify their existence, they have to do something even if this something means creation of more and more red tape and bottlenecks and further obstructions to the production process itself. With the increased rate of environmental influence and in response to the above phenomena a need for output orientation resulted in the famous concept of management by objective. The neoclassical school is born with organismic assumptions. Corporations now are considered to be open and in full interaction with their environment. However, this does no represent any discontinuity because organismic models are considered to be energy-bonded as well.

Therefore the basic assumptions of the classical model remains unchallenged, and a subset of organismic concepts which are not fundamentally opposed to the mechanistic principles are selected and superimposed on the mechanistic model. Steady state or dynamic equilibrium replaces the static equilibrium concept, and maintenance of an unstable structure becomes the main preoccupation of the system. Parallel to a biological model, growth is considered to be the only path to survival and viability of the system, and the remedy for all its problems.

Profit as a means for growth becomes the secondary objective, and the finds added instrumental value and further justification for its pursuit. Social value associated with growth leads to an assumption that growth is the single well-defined end for the society to be pursued with full efficiency (Boulding, 1970). Destination is fixed, prediction and preparation become the dominant mode of so-called strategic planning. But as is first anticipated, preoccupation with growth creates its own problems. First, the fact that things can only grow at the expense of their environment, and exponential growth cannot be sustained forever. Second, there seems to be an optimum size for each type of organization beyond which increase in size leads to a decline in efficiency and organizational effectiveness. This might be due to what economists call diminishing return of scale. However, because of an inverse relationship between communication and control with the size of organization, overloading of information forces the organization toward decentralization, which is inconsistent with principles of energy-bonded systems.

No driver in his right mind will drive a car with decentralized front wheels. In a functionally structured organization, which demands a passive functioning of parts with a high degree of compatability and predictability, decentralization leads to chaos and suboptimization.
This is so because the best answer for the production will be in conflict with the best answer for marketing, and does not necessarily agree with the best answer for finance or personnel. This might explain the constant oscillation between centralization and decentralization witnessed in most large organizations.

The Organismic Model: a blueprint for structural conflict

* downward control
* separate functions with potentially conflicting performance / reward structures
* separation of authority and responsibility & planning and implementation
* structured for no deviation
* information passed downward - messages distorted / hiding mistakes


structural conflict:
-amongst different functions
- between management and labor
- between authority and responsibility

Interestingly enough, this phenomenon also serves to demonstrate yet another important source of frustration, which is caused by the implicitness of the basic model and the fact that most of the practitioners of the art are themselves not aware of its underlying assumptions.

The implicitness of the assumptions has created a confusing situation in which a variety of interesting concepts that belong to fundamentally and perhaps conflicting schools of thought are mixed in a single organization, resulting in further confusion and chaos. For example; decentralization belongs to a set of assumptions in which organizations are considered to be purposeful systems with purposeful parts, with choice of ends as well as means. Deviation being the indispensable characteristic of the part, can only be dealt with through a participative process leading to a second degree agreement integrated into a common images and a unified mission. Therefore decentralization cannot be realized in machine-like structure with rigid job description and input orientation. For another example take the fashionable concept of matrix organization, which by sheer misunderstanding has reduced the rich, exciting and powerful concept of multi-dimensional design into a simple, confused two boss system, which not surprisingly resembles the mechanisttic, multi-functional supervision model developed by Taylor.

The basic difficulty of an organismic model is the failure to recognize that a social system exists on a higher and more complex level than an organism. In contrast to an organism, which cannot change its structure beyond a limited margin and survive, this ability to change is one of the distinct characteristics of the social system (Buckley, 1967). By its ability to elaborate and recreate its structure, the social system is capable of redesigning its future. Its development takes the form of a learning process by which the system increases its ability and desire to pursue a future more desirable than that which already exists. Therefore it is purposeful and multifinal, and its planning mode is interactive rather than proactive (Ackoff, 1974)

To clarify the meaning of information/culture-bonded systems requires a definition of culture which will be discussed after considering the still more basic concept of "shared image" (Boulding, 1956).

Image building and abstraction are among the most significant characteristics of human beings, allowing them not only to form and intepret real images of real things, but to employ these to create images of things which do not necessarily exist. Man feels hunger and observes the fleeing prey, and realizes his inability to capture it. After discovering other related objective realities (wood, stones, Ö), he daydreams about and eventually creates a subjective image of a tool, which is yet to exist, to help him in securing his food. Transformation of this subjective image into an objective reality results in the arrow and bow which in turn will be a co-producer of yet another image, and so on. This dialectic interaction between objective and subjective realities lies at the core of a synthesizing process which is responsible for dynamic development of human societies.

As a prerequisite to his survival, man has always been under the necessity to observe and understand the events that constantly occur in his environment in order to be able to utilize favorable opportunities and to be prepared for antagonistic events. But understanding these scattered phenomena in isolation, although necessary, is not sufficient to help man relate himself to his environment, therefore additional struggle to find a logical relationship among these isolated findings forces him to synthesize these scattered bits of information into a unified, meaningful mental image and eventually into a world view.

Being coproduced by the environment and man's unique process of creativity, the image establishes a link between man and his environment. It consists of a system of assumptions (possibly unconscious) regarding the nature of spatio-temporal-causal realities in addition to a concept of values, aesthetics and finally his perceived role in the environment.
A considerable part of this image or mental model of the universe is shared with the others who live in the same social setting. The rest remains private and personal (Boulding, 1956). It is the shared image which constituted the principal bond among the members of a human community and provides the necessary conditions for any meaningful communication amongst them: the extent of which the image of an individual coincides with the "shared image" of a community determines the degree of his membership in that community.

It is this "shared image" that we choose to refer to as the culture of a people. It incorporates the experiences, beliefs, attitudes, and ideals of the people and is the ultimate product and reflection of their history and the manifestation of their identity - man creates his culture and his culture creates him.

It is here that the key obstacles and opportunities for development are found, the collective ability and desire of the people to create the future they want. Therefore human culture with all its complexity, ambiguity, and manifold potentialities stands at the center of a process of change.
While individual action is important and necessary coproducer of change, it cannot be understood except against the background of the culture of which it is a part, which it builds upon and reacts against. So much is this so that the success of individual actions invariably depends on the degree to which they penetrate and modify the "shared image."

The principle of multi-finality and the dynamics of the social system is manifested in the dialectic interaction of a series of opposing processes, which can be paired as:

Integration/differentiation
Entropic/negentropic
Morphostatic/morphogenic
Competition/cooperation
Generation/distribution
Creation/recreation

The key for understanding this concept of social dynamics is the appreciation of the fact that the relationship between opposing processes in each pair is characterized by an "and" rather than "or" Relationship. Conventional thinking usually considers the pair of opposing processes as a dichotomy or a continuum. For example, in which more differentiation necessarily means less integration and vice versa.

But in systemic thinking the same pair will be represented by a two dimensional scheme, using an "and" relationship (Figure 5).

Therefore, increased differentiation would not necessarily imply decreased integration. On the contrary, corresponding to every level of differentiation there exists a minimum of required level of integration below which a system would disintegrate into chaos. Conversely, higher levels of integration require higher degrees of differentiation in order to avoid dogmatism and oppression. As another example, consider the production and distribution. Without an effective production system there can never be a meaningful distribution system. Production and distribution can be viewed and discussed seperately, but they cannot be seperated. To fail to note this important inter-relationship is to leave out the most important challenge of the problem. Therefore, obsession with distribution without a proper concern about production, nowadays a powerful political tool and a fashionable demagoguery, will result in nothing but equitable distribution of poverty and further frustration.

Another important misconception of organismic thinking is that somehow it does not recognize the fact that the kind of relationship that exists between the cell and the body is not the same sort of relationship that exists between an individual and the organization. One's heart cannot decide for itself that it does not want to work for him any longer and would prefer to work for somebody else. The kidneys cannot decide to work twice as hard as they are supposed to , and the stomach is not likely to develop a suspicion that the liver somehow is out to get it. A corporation is a purposeful system with purposeful parts (Ackoff and Emery, 1972) which at the same time is part of a larger purposeful system (the nation for example). This creates a hierarchy of purposeful systems, each one of which has different and possibly conflicting sets of ends. A purposeful system with purposeful parts requires a second degree agreement (agreement based on a common perception) among its purposeful members in order to resolve the conflict and to arrive at a shared image of a desired future.

From this follows the necessity for integration, and therefore participation. A participative process in determining ideals will enhance the creation of a shared image of a desired future, and will result in a sense of belonging and commitment to its pursuit. This collective commitment is required if the hierarchy of multi-level purposeful systems is to function properly. Therefore, participation is not a luxury, but a necessity. Central to his notion of participation is one's ability to influence the system's behavior. There is no real participation if there is no sharing of power, and the key to the sharing of power is decentralization o control over resources. In summary, the tangible meaning and significance of purposeful, information-bonded systems (family, group, organization, nation) lies in the fact that the unit of these systems is not so much the individual but the role imparted to him (Boulding, 1956). Under different sets of circumstances and in different social settings individuals display different behavior. A good friend is not necessarily a good employee, and a successful vice-president might be a lousy president. Therefore, some type of role structuring among purposeful members of a social system is necessary to bring about the desired future. This leads to the necessity of creating proper organization, that is, a social structure and processes which will enable the members to relate their role to the totality of the system of which they are a part, a social structure which will permit and encourage its members to participate and influence the behavior of the whole. The challenge, therefore, is to design an bring about a social structure that would suit the needs of its members as independent, viable purposeful systems with the right of individual choice, while acting at the same time as a member of a coherent whole which in turn has the right of collective choice. In multi-level, purposeful, information-bonded systems this can only be accomplished when fulfilling the needs of a higher system is part and parcel of the goal of the lower system and vice versa (Ackoff, 1974). In that case each level achieves its preferred outcomes when the level above the level below achieve theirs as well. This required the devleopment of a new social calculus and the creation of a win-win environment within which the individual's striving for his own gain will be enhanced by the degree it contributes to the satisfaction of the needs of the higher system and those of his fellow members.

Corporations have to learn and accept the new reality that their function is not only the generation but also distribution of wealth. They have to learn to deal effectively with all dimensions of a social system (See Figure 1). Otherwise the prospect of increasing bureaucratization will lead to nothing but corruption, inefficiency, further frustration, and deterioration of the quality of working life.


REFERENCES

Ackoff, R.L., and Emery, F.E., (1972). On Purposeful Systems, Aldine-Atherton.
Ackoff, R.L., (1974), Redesigning the Future, John Wiley and sons.
Beer, S., (1972), Brain of the Firm, Allen Lane, The Penguin Press.
Bertalamffy, L., (1956), The Image, The University of Michigan Press, Ann Arbor.
Buckley, W., (1967), Sociology and Modern Systems Theory, Prentice-Hall.
March, J.E., and Simon, H.A., (1958), Organizations, John Wiley and Sons.
Taylor, F.W., (1947), The Theory of Social and Economical Organization, Translated and edited by A.M Henderson and T. Parsons.


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