The Tasks of Management

Let us try to understand the role of management by the function it performs: Why do we need it? The function should be value-free, without any sociopolitical or cultural biases. Whether we speak of managing, parenting, or governing – whether we are managing ourselves, a family, a business, a non-profit organization, or a society – it should be one and the same process conceptually. The only difference is the size and nature of the unit being managed.

Let us start with a basic hypothesis: The purpose of the managerial process is to make an organization effective and efficient in the short and long run – nothing more, nothing less. If we can achieve effectiveness and efficiency, in the short run and in the long run, that will be sufficient to maintain a healthy and successful organization, whether it is a marriage, a government, a multinational corporation or a candy store.

How an organization measures its success is secondary: If the organization is a for-profit company, it will measure success by profits. If it is a political party in power, success might be measured by whether its candidates are elected or re-elected. If it is a research Chapter 2 40 Ichak Adizes, The Ideal Executive institution, the honors and prizes won by its scientists might be its measure of success.

The origins of the theory

What makes an organization effective and efficient in the short and long run?

Some 40 years ago, I discovered that there are four roles that are essential to make an organization effective and efficient in both the short and long run. Each role is necessary and the four together are sufficient for good management. By “necessary” I mean that if any one role is not performed, a certain pattern of mismanagement can be identified.

I made this discovery while preparing my doctoral dissertation on the Yugoslav system of self-management.

The Yugoslavs’ system was alien to Western minds and experience. Nobody owned capital. Owning capital was like owning air; the whole society had access to it. The Yugoslavs called it “social ownership.”

Capital was the society’s heritage. It could not be owned, nor could it be depleted. Thus, organizational profits before depreciation had to be at least equal depreciation. Instead of salaries, people received allowances based on a system similar to surplus sharing among the partners of a law firm. Employees elected representatives to a workers’ council, and the council interviewed candidates for the job of managing director. Each of the candidates presented a business plan – very much like a political candidate’s platform in a democratic country. The managing director served a four-year term, but could be impeached if he acted illegally: Acting without the authorization of the workers’ council, for example.

Yugoslavs applied political democracy to both their industrial and non-industrial organizations; the system was called industrial democracy or the self-management system. Workers’ councils functioned as its legislative branch, deciding everything from salaries to budgets to investments. Its executive branch, headed by the managing director, was management, which made recommendations to the workers’ councils and implemented whatever plan the workers chose.

But the system had an enormous weakness: It discouraged – often even destroyed – the (E)ntrepreneurial spirit. In fact, for all practical purposes, (E)ntrepreneurship was illegal. The goal was to create a “new human being,” whose motivations, according to Karl Marx, would be very different from the exclusively materialistic motivations of “old humans.”2 The system mandated group (E)ntrepreneurship or bust. And bust it went. Because (E)ntrepreneurs are by nature individualistic, few were willing to serve as managing directors under circumstances that limited their freedom to take risks and make decisions independently. 3

Observing organizational behavior in Yugoslavia, I was able to make certain connections, like Dr. Linde, the British physician in the mid-18th century who found himself aboard a ship with no available sources of vitamin C and recognized the connection between that deficiency and scurvy, a common disease among sailors. I discovered that if a certain role of management – say, Entrepreneurship – is suppressed, organizations will develop certain predictable managerial “diseases.” Over the course of thirty years I studied the relationship between each role and specific types of organizational behavior. I analyzed which role combinations would result in which managerial style, and how a deficiency in any particular role would lead to a predictable mismanagement style. This insight led naturally to a diagnostic and therapeutic methodology that I tested successfully at hundreds of organizations worldwide.