"Interaction Among Departments is Crucial"

For 60 years, Russell Ackoff has taught business classes and counseled corporations. The professor emeritus of management science at the University of Pennsylvania's Wharton School of Business is an internationally recognized expert on systems—on how the parts relate to the whole. At a recent Institute for Management Studies seminar in Kansas City, Ackoff rued the "silo thinking" and the specialty training that has shaped American organizations.

Business schools, he contended, spend too much time teaching separate disciplines, such as marketing and finance and human resources, and not enough time teaching about the necessary communication among those departments. That compartmentalized thinking carries over into business operations. Thus, he said, finance managers tend to see everything as a financial problem, marketing managers tend to see everything as marketing issues, and so forth.

Sometimes, only an outsider can come into an organization and see solutions that should have been obvious had department leaders been thinking about interaction rather than turf protection. That's big-vision thinking that may seem out of individual reach, but Ackoff had a message for business leaders at any level: "Remember: Having the best parts isn't the key to having a successful business," he said. "The key is having the best parts that fit together. The best management is over the interaction of parts—not managing the parts themselves." Ackoff said too many managers spend too much time micromanaging their subordinates—who don't need their close supervision anyway. He related a human resource study that found that the percentage of what employees know about their jobs that they're actually allowed to use on the job is 23 percent. "If we used any other corporate resource as poorly as that, everybody would be out of business," he said.

Ackoff also criticized business-improvement programs such as process re-engineering and benchmarking on the grounds that they focus on improving parts of the system rather than the organization as a whole. "You can't take a collection of best parts and expect it to work best," he said. "You have to have a collection of the best parts that work together. There's a big difference."

Ackoff said the Japanese and the Scandinavians have been better "systems thinkers" in designing organizations. Meanwhile, most U.S. organizations dissemble their systems into parts. The blame, he said, may lie with the ancient Greeks. The Greeks, he said, analyzed life into four separate aspects: work, play, learning, and inspiration. The Western world has designed organizations to address those aspects separately. Yet, Ackoff said, they can't be separated. "They're intertwined like four horses pulling a cart. The speed of the cart depends on the slowest horse."