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Re-Creating the Corporation: A Design of Organizations for the 21st Century

by Russell L. Ackoff

1999, Oxford University Press, NY and Oxford, 336 p., hardcover, US$30.00
ISBN 0-19-512387-5.

Russell Ackoff is well known and respected in management science circles. I have The Art of Problem-Solving (1977) in my library, and I've also read his book, Ackoff's Fables in which he says "the (apparent) objective of a university is to provide the faculty with the lifestyle they desire." He carries this wit and insight into his latest book. Ackoff is professor emeritus of the Wharton School at the University of Pennsylvania. I learned about his new book because a client company has hired Ackoff, now a consultant, to help reengineer their company. [Perhaps "reengineer" is no longer the preferred word, though that's what I call it.]

If you work in management -- getting work done through other people -- this book will be worthwhile reading for you. I was primarily interested in how Ackoff's consulting might affect my client's decision making. He offers some important perspectives, though not quite aligned with my thinking.

Some of Ackoff views on corporations:

• The corporation is an entity, and the first priority of an animate system is survival. Corporations have shown a high mortality rate, and correcting this is the first order of business.
• Important functions include, but are not limited to, creating and distributing wealth and creating productive employment.
• There is a community of stakeholders that "own" the corporation (p. 204). This is my main point of disagreement; I'm with economist Milton Friedman (p. 30, 132) in thinking that the legitimate owners are stockholders, and maximizing value for them is the legitimate objective of the company.
• Business units should be able to retain some profits (p. 217), perhaps paying the parent corporation interest on their funds or assets.

The most interesting idea is the installing a hierarchy of boards. He recommends that managers spend 1/4 of their time in board meetings ... as a productive way of getting work done. A board would consist of the manager, his reports, his boss, perhaps his boss's boss. This might work.

Ackoff was initially studying to become an architect, and then switched to psychology. He describes himself as a designer and not a scholar. Despite the pretense, this book is a scholarly work though easy to read. He sprinkles the discussion with lots of real world examples. He describes problems as "messes," systems of interacting problems. Effective management is about dissolving these messes.

This is an entertaining and interesting book, one that will be especially valuable to managers, executives, system dynamics practitioners, and people working in change mangement.

—John Schuyler, August 2000.

Copyright © 2000 by John R. Schuyler. All rights reserved. Permission to copy with reproduction of this notice.