Monday, October 6, 2014


Management is not one of my favourite subjects; I find it rather simple and preachy. But I read it quite a bit in Stanford. Russell Ackoff was one of the most entertaining writers I read there; I covered him in the Business Standard column of 17 July 2000.


Russell Ackoff is one of my favourite writers on management – clear, rigorous, commonsense, and elegant. In his long life he has collected many lessons, which he illustrated in his Ackoff’s Fables with incidents from his life; some of them are hilarious. For instance, he describes the arrival of pantsuits in America. When he was in Washington in the early 1950s, his friend and he went to a restaurant with their wives; the wives were dressed in pantsuits, the latest fashion. The maitre told them that the restaurant’s dress code prohibited women wearing trousers. The problem was quickly solved. The women went to the restrooms and removed their trousers; their jackets also served as miniskirts.
In Wharton School, where Ackoff taught most of his life, a graduate student had a Labrador called Jessie, who accompanied him to all lectures. Jessie also visited everyone in the department every morning and was suitably rewarded. When he wanted to enter or leave the building, he would go to the lift, and whoever turned up next would escort him up or down. One day he got off at the wrong floor. The professor of that department was outraged. He called up the director of buildings, who posted a notice on every floor saying, “No pets allowed.” But Jessie could not read. So he continued to visit the department with the following notice hung around his neck: “To whom it may or may not concern: Jessie, a black male Labrador retriever who is not my pet but is my friend, and who has been the mascot of the Social System Sciences Unit for the last three years, is hereby authorized to enter and work on the fourth floor of Vance Hall. If anyone has any objections to this authorization, please contact the undersigned.”
Ackoff’s lessons from management consultancy are amongst the most instructive. He used to run a social service project in Mantua, Philadelphia’s black ghetto. In the 1970s, the local school board decided to build a secondary school at the edge of that area. Some residents went to Ackoff and asked for his help to stop the school from coming up. When asked to explain, one of them said that Mantua was divided into seven turfs, each controlled by a different gang; a boy who walked into a turf not his own was liable to be beaten up and even killed. When Ackoff asked her what she proposed, she asked for a Scatter School – a primary school which had classrooms so located that children had to pass through every turf. That way, children would have to visit all the turfs before they reached the age when they had to join a gang; they would develop a sense of neighbourhood which might overcome their need to join gangs later. A Scatter School was built in three locations that made the children pass through the maximum number of turfs, and over the years, the hold of the gangs was destroyed.
And then there was a bus service in a European city that paid drivers a bonus for keeping to the schedule and conductors for not missing out on selling tickets to passengers. When the buses were crowded, the conductors had to make long stops to make sure that no passenger got off without a ticket; the buses got delayed. So there were quarrels between conductors and drivers. The management proposed eliminating the incentive payments, which both the drivers and the conductors opposed. It suggested that the incentive payments should be equally shared between the drivers and the conductors; neither would hear of it. Then it was discovered that the number of buses running at peak time exceeded the number of stops. So conductors were posted at bus stops instead of in the buses; that way, the delays caused by the need to issue tickets were eliminated.
When Busch beer was being introduced, Ackoff was asked to find out how it compared in taste with competing brands. In two separate tests, the Busch beer and four competing brands were selected, the labels were replaced by letters A to E, and tastings were held in hotels where guests were asked to rank them. To Ackoff’s surprise, the rankings from the two tests were quite different. Then he placed similarly lettered five brands into cases and gave them to regular beer drinkers to drink over a month and rank. The rankings were very different from those of the first test, and corresponded to the market shares of the brands.
In the 1970s, Ackoff got a UN assignment to help the government of Iran, which found its cigarette monopoly being subverted by smuggling of American cigarettes from Iraq. He worked out the costs and margins at each stage of import and distribution both for smuggled and legally marketed cigarettes, and not unexpectedly found that even though their prices were lower, smuggling of cigarettes was more profitable. He suggested to the government that it should use the same chain of import and distribution as the smugglers; if it did, its profits would be higher than the smugglers’ because it would not have to bribe policemen and customs officers.
Ackoff describes the corruption in Mexico which suggests that we still have some depths to plumb in India. When he was driving his minibus with American licence plates in Mexico City, two policemen stopped him and said he had exceeded the speed limit. He said there was no sign on the road to indicate the speed limit; the policemen said there was. Then one of the policemen asked him for his wallet, emptied it of all but a few pesos, and gave it back. He went home and warned his wife. Next day she took care to keep below the speed limit when she drove. But the policemen stopped her. When she said she was well below the speed limit, they told her the speed limit had been lowered the night before, and extracted a bribe from her anyway.
But at least one country found him more than it could take. The officials of a small country complained about the constant conflict with its neighbours. He told them they should take their country somewhere else. When they said they could not leave everything behind, he said they could take the buildings with them. They said, what about our land? He told them it would be cheaper to move even if they took six inches of their topsoil. They said even the soil would not be enough; what mattered was their place in the world. He asked them how the place was determined; by its coordinates, they said. So he said a new set of coordinates could be developed which would enable them to move somewhere and keep the same coordinates. They did not think the location would still be the same. So he told them that the one characteristic of their location they were intent on preserving was that of being surrounded by their inimical neighbours; all other properties could be reproduced elsewhere. He notes the “intensity of their response.”