Summary of the presentation “Leading Leaders towards Innovation and Change” by Dr. Ichak Adizes at the CEEMAN convention that was held in September 2005 in Kiev, Ukraine
Let’s see what Britannica says about management. What is management? I realized that the word management has no translation in any other language. Even the French people who are meticulous about using their words, use the word “management”. In Spanish for instance word management is used only for horses. So, what is management?
In 1969 I started the first program in the world on how to manage artistic organizations: opera, dance, ballet, symphonic orchestras. And I realized that you cannot manage artists as you manage workers. I was totally confused. What was going on? What is management?
And I started from scratch, from zero. What is management? Maybe it doesn’t exist. If management doesn’t exist, then organizations will be badly managed. Let’s find out what a manager is supposed to do.
He or she is supposed to have a very well managed organization but what does it mean to have a well-managed organization?
Do you agree with me that the organization is very well-managed if it is effective and efficient in the short run and effective and efficient in the long run? Basically I am defining the role by the output it is supposed to produce. Management is what it is supposed to do – and please realize that this model is value-free. Whether you are managing a prison or Mother Theresa’s order the definition holds – although what it means to be effective or efficient is different. This definition is also free of cultural bias. It applies to any country. I lectured in 51 countries on purpose to see whether it is culturally biased – and it is not. It is also free of any industry bias. It is universal, and, furthermore, it applies from micro – to macro – organizations. And not only to organizations, but to countries as well. Now some people use it for family therapy as well.
It is still not that easy and simple, because many languages do not have both words: effective and efficient.
Many years ago I was lucky. Maybe I was also smart enough to realize that I was lucky. I was like that British doctor who was put on a ship for a long time and deprived of vitamin C. He discovered the relationship between vitamin C deficiency and scurvy. I discovered 4 “vitamins” which I called management roles:
“Vitamin” P makes the organization effective.
“Vitamin” A makes the organization efficient.
“Vitamin” E makes the organization effective in the long run.
“Vitamin” I makes the organizations efficient in the long run.
So if a certain role of management is not performed, I can see the illness that will develop. If I see that the sales are going down, clients are not coming and the company is not effective, I then know that P is missing. If I see that it is not profitable, it is losing money, expenses are wasteful – vitamin A is needed. The organization is not effective in the long run, it is not adapting, it is not changing, not flexible, if it comes to the market too late with new products, if it loses its window of opportunity – we need vitamin E.
And if I see that the organization is vulnerable, that if some key people leave it, which happens in many businesses – vitamin I is missing.
So basically I have now a diagnostic. If we know how to “inject “ the missing or weak vitamin or managerial role, we also have a therapeutic methodology.
What I have developed for 40 years, what my books are covering and what I am still writing about is how to inject the missing role so that I can make the organization healthy: to be effective and efficient in the long and in the short run. And this methodology is being tested. Look at the web site www.adizes.com and see testimonials from companies that have grown from 12 million dollars in sales to 1.5 billion in revenues without any dilution to ownership – and they give credit to the Adizes methodology. So this works…
What does it mean for management education?
What is a P role? Let us define our terms now.
Organization needs to be effective? What does it mean? Let’s look at an example. Is this pen effective? It is effective if it writes. If this pen is dry and cannot write, and I can scratch my head with it is it effective now? No! Because it was not designed as a head scratcher. It was designed to write. Which means, it has a purpose.
Every organization has its purpose: why does it exist. The typical answer to the question why does a business organization exist is – its profits. And this is not right. Profit – is what you get if you are effective and efficient. It is a result of something. To me profit is like the score board in a tennis match. Many players play but they are not watching the ball. They are watching the score. They can ruin the company. You have to hit the ball correctly over the net to the opponent’s quarters if you do it – you were effective.
I am against managing by profit. I am for managing for profit. Major difference. Many managers climb to top executive positions learning finance, accounting, knowing nothing of management. It is very dangerous for management when leaders work watching only numbers.
What is the purpose of an organization than, if it not profit? Look at this pen – it is supposed to write. The purpose of everything in order to be functional is to serve somebody or something else. The only entity that does not serve anything but itself is cancer. Some governments, companies, people can be cancerous. So the first role of management in order for the organization to be effective is to answer the question:” why do we exist?” And this is not an easy question. And since everything functional exists to serve something else, the question “why we exist?” should be exchanged with the question:” for whom we exist?” “Who will cry if we die?” If nobody cries, then you are cancerous, why exist and waste energy? For whom do you exist? For our customers? I do not use the word customer; I use the word client on purpose. Because when I use the word customer, only sales department wakes up, accounting says: “Thanks God he’s not talking to me!”
Every manager, no matter what you manage, must ask himself for whom he exists. Like the sales department doing research to find out what do their customers want, accounting department, production department should do the same and ask clients inside the company what do they need in order for them to be effective.
By the way it could be measured. How do you measure the effectiveness of the organization? Many people say that it is sales. Not true. The measurement is “are they coming back”. It applies to anything. It even refers to monopolistic organizations where people do not have a choice. The question should be: if they had a choice would they come back? If they would not – then you are not effective. People are like animals, like intelligent animals who know where the water hole is. They are not coming back to a dry water hole.
Now what does it mean to be efficient? That means not to waste energy. It means to systematize the process into a manual. Learning what is success and to systematize it. Like supply chain management, inventory management, production management. You don’t reinvent a wheel each time you have to wheel something. This role is called (A)dministration. The role of administration is to systematize, to organize so that we do not waste energy.
Please realize that if you are effective and efficient, you can be profitable in the short run. Why? Because every need has its price. People are willing to pay a price to satisfy their need. And if you can satisfy this need at a lower cost, you make profit which means you are adding value. For me profit is adding value. If you are willing to pay 10 USD and I can satisfy you
r need at 8 USD then I am making a profit and both of us are happy.
Can an organization be effective and not efficient? Sure. They do the job but not very efficient. They run around. Can it be efficient and not effective? Sure. I can hit the ball – I am effective. To be efficient means to systematize, to train till my movements are perfect. Now I am so perfect, I tell the opponent: “Send me the ball here!” they hit only those ball that come to their racket and if they are not there they are missed. This is called bureaucracies. Bureaucracies are so efficient that they cannot be effective. Such organizations say that it would be a wonderful business to manage if it were not for changing clients needs. So what I say to many bureaucracies is: ”if you want to be more effective you are to be less efficient.”
What do you need to do to be effective in the long run. Let’s play tennis again. Hitting the ball over the net does not make you win the game. To win the game, to be profitable in the long run, what do you need to do? When you are hitting the ball you need to think where the next ball is going to come You have to position yourself in the market so when the ball arrives you are ready to hit it. This is called planning. Please realize: planning is not deciding what you are going to be doing tomorrow. Planning is what you should do today in the light of what you are expecting to happen tomorrow. How do we do that? We need to be creative because no one knows for sure what is going to happen tomorrow. We need to imagine where the next ball (future client needs) is going to land. And then what else do I need to do? I have to take risks because if I have to act today in preparing for the unknown tomorrow I can make a mistake and what I anticipated did not happen and all that preparation was a waste. A creative person who is a risk taker is called an entrepreneur. An entrepreneur is someone who visualizes future needs and makes the steps to satisfy his future needs today, taking risks. This is the (E) role or “vitamin”
What makes the organization efficient in the long run? It is difficult to explain but what I learned in 30 years is that it is the most important. What you need to do to be efficient in the long run? You need to have an organic organizational consciousness which is different from mechanistic.
Look at this chair. I can sit on it. It is perfect, no waste of material. What will happen to it if one leg brakes down? Broken chair. Somebody from outside must come and fix it. Look at my hand? Five fingers. Even when 3 are broken it still is a hand – there is interdependency. What makes a hand a hand is not just 5 fingers. There is interdependency between the components. When I go to a company which is loosing sales and production department says that it is not their problem, it is sales department problem and that department points to the other as if the left leg of a chair says that it is the right leg problem. Why don’t the left leg move into the center of the chair and create a tripod. Because there is no interdependency. The role that creates this consciousness of being organically interdependent is called (I)tegration.
So, if I am efficient and effective organization now and forever I need to do the P A E I roles: Satisfy clients needs efficiently, change and proact to the changing needs and make no one indispensable.
Not so because the roles are incompatible. If I do too much of one, it will threaten the other. Example: How many of you would say: I am working so hard, I do not have time to get organized. That means (P) role is threatening the (A) role. Or I am so organized, I have no time to change. That is (A) threatening (E) Or, I have to change so much that I do not have time to get the job done: (E) undermines (P). Or entrepreneurs do not like integration, they like to be independent. Integration suffocate them. They like to be out of the box. In communist regime, which was the strongest role? (A). Now for market economy? (E). In the (A) system everything is forbidden unless specifically permitted. In an (E) system – everything is permitted unless specifically forbidden. Now this requires a major cultural change. So who is the one who is fastest to make the change? The one who knows how to work in the black market those who know how to take risks. NO – strange that in countries in transition the mafias took over ….
The (P) (A) (E) (I) code so called the Adizes code has many applications. Many. Application for analyzing life circles of organizations, which problems are normal which pathological … For analyzing decision making, for analyzing the functionality of organizational structures etc.
Let us get introduced to those that impact management education.
I am going now to create what psychologists call archetypes. Imagine such extreme situations.
Extreme archetypes. When one performs only one role with the exclusion of all others. For example big P, zero E, A, I.
How will this person manage? The best engineer you have. Productive, hard working, so good that we promote him to be a manager. But there is no A – administration paperwork, control, no E, no new ideas, no (I), no teamwork. It is like: show me the tracks give me the train and do not bother me. This person is a doer. How does he manage? He works hard: comes to work first and leaves last. He hates meetings as he has too much to do and no time for meetings. Does he delegate? No, “they are not ready yet.” How long do they work for you? 20 years. Why don’t you train them? Because I do not have time? Why? Because there is nobody to delegate to. This is the “lonely wolf.” H might have people working for him but they are only errand boys running around and delivering his messages. He is working like crazy. This guy is most interested in what we do, never mind how. Do! Shot first, ask questions later. The next archetype style, the exclusive (A) , no (P) , no (E) no (I) is not interested in what – he is interested in How. He and his subordinates come on time and leave on time. What do they do in-between is not important as far as they come on time and live on time. The company is going bankrupt but on time. This is the type that would be rather precisely wrong than approximately right. He gives you a precise budget but in the wrong direction. Does he have meetings? Every Monday, Tuesday, Friday, 9:00. With the detailed agenda. Everybody say that the company is going bankrupt but on time … this is the bureaucrat. How does ha manage? By the manual.
Third guy is interested in IDEAS – vision guy. He is most interested in why not? Why not do this and that? He is most dangerous Monday morning after the weekend after the vacation and after flying three hours in the airplane. Because this is the time when he accumulates new ideas, new possibilities. Does he have meetings? Yes but no one knows when they are. This guy does the talking and others shout bravo! This is called an arsonist. He likes to start fires.
Four people in a room with a window.
One is looking through the window and sees sky, birds, mountains and clouds. Another one only sees the dirty window frame. Who sees the whole world? – E
Who sees the frame is dirty? – A
That’s why E and A do not like each other. E has ideas and plans and A says that he has mistakes: there is a coma missing somewhere and the A thinks that E is full of hot air and is going to bring the company down because he is not paying attention to the details.. And the e thinks that A is stupid. And the (P) style sees no dirty frame, nor the cluds, he wonders how do they open this window and does it serve the room well. And the (I) is not looking at the window. He is looking at the first three guys: ”what are you looking at?”
These are all bad managers because we need all roles to be
performed if the organization is going to be effective and efficient in the short and long run which means , be well managed. Our ideal manager than should be result oriented. Client oriented, and at the same time organized and efficient and also creative and risk taker and at the same time people-oriented, team-builder making himself or herself dispensable. Where is the problem?
Not too many like us left around!!!! Right?
We have thousands of books on management and in business education we are trying to create something which cannot be created. You are trying to create an animal that cannot be created. Why? Because we are all human beings. We have our strengths and weaknesses. There is a joke. A priest in the church tries to explain what sin is and says: Have you ever met a perfect human being? Have you ever known a perfect human being? And somebody at the end of the congregation said:” I have known a perfect human being; My wife’s late husband.”
Look at the books on management. Managers should do this and that.
This ideal executive does not exist in reality. It is a collage. All business books describing effective executives make this collage. They take ideal characteristics of different people and create something that does not exist.
If this cannot happen, does it mean that all organizations must be badly managed, by definition? No? What do we need? A complimentary team with a leader. Look at a hand. Which one is the most important finger. The Thumb. Because it works with all other 4 fingers. Without it there is no hand.
Many people believe that to be a leader one has to be the pointing finger: do this, do that etc. directing. True fro a young start up, but as the company grows one must move from the pointing finger to the thumb and those that can not change their style usually have to be replaced.
I am teaching nothing that you do not know. Look at whom you married. It is your complimentary team. If you are creative and bursting with ideas you are probably married to a person who pours cold water on your head every morning and calms you down. Why do we marry our complimentary teams? Because children need both parents to grow up healthy and happy. Raising a child is like raising a company. And for that you need a complimentary team.
A Mama Papa store . Papa usually does the PE role and Mama the AI role.
If you know the history of management theory, how it was developed you know why only papa gets the credit for success.
1940’s the grandpapa of management theory was Taylor. Efficiency and productivity. PA. Than Fayol with the theory on organizational structure and Urwick on staff line relationships. That is A for you. Then strategic planning planning and the role of the CEO took central stage in management theory. That is (E). Now it is I – people relations, conflict resolutions is the rage That is (I) . Then came Peter Drucker who said that a manager should do all of it and he personified it in one person. Why? Because of the American culture which is very individualistic which worships the individual entrepreneur. So they personify the whole process of management in a single human being. It is wrong. You need to go to the next stage to realize that the managerial process is too complex, far too complicated for a single manager to do. As it is not easy to raise a child alone. The same in organization. We need a complimentary team.
What will happen when you have a complimentary team? Conflict. Thus please realize that conflict is necessary for good management. If I got a company and ask how is it going and hear only “Fine we never disagree” – the place is dead. Conflict is necessary but it can be dangerous because it can be destructive. Differences can destroy- they destroy companies, marriages and countries. Because it has a destructive force people are afraid of conflicts and try to avoid them. They believe that to work well together they should have the same style, think the same, and they hire the same people. And that is death.
What should we do? The trick is to convert conflict and to make it constructive. And that’s a major role of management: How to build a complimentary team and create the environment where the conflict is legitimate and constructive. A good manager is someone who disagrees but he knows how to disagree. He disagrees without being disagreeable. Some people agree in such a disagreeable way that you do not want to have anything in common with them
How do you do that? Let me tell you. I discovered the secret of success of any system. It allows to predict whether a marriage, a country, a manager is going to succeed.
I do not care how you define success. Whether it is to be billionaire or to lie on the beach and do nothing. Success is a function of one variable . But please realize that it is a tip of the iceberg. This variable is impacted by other 4, other 4 by 18 and at the bottom there might be millions of variables. I dedicated my professional life to study these variables. What impacts what and how are they related.
What is the essence? I am going to use business words. It is a relationship between external marketing and internal marketing. Let me explain these words to you. What is external marketing? If You take the books on marketing and summarize them and You summarize the summery until you have got the essence it is how to match changing opportunities in the market place to your organizational changing capabilities. Basically it is how we integrate externally so we are integrated with the market. So I call it external integration. What is internal marketing? It is negative. It is all the energy we spend convincing people. It is called internal politics. We can call it internal disintegration.
Success (f) : External integration
Why will this predict success? Because we know from the physics that every system at a point in time has fixed energy. What I discovered is that this fixed energy is allocated in a predictable way. First it goes to deal with internal disintegration, and only the surplus goes to external integration. Example: Somebody is very sick. you go to visit him in the hospital. What does the doctor say? He allows only five minutes for a visit? Why? Because the patient has no energy. Where does the energy go? The energy is used to heal the sick organism.
Internal disintegration is a function of mutual trust and respect. The words have to be explained. It took me many years to understand what it means so let me share with you. Mutual respect is not how nicely you talk. Respect is when you recognize the other party has the undeniable right to think differently. It is the essence of democracy. When do people feel disrespected – not when we disagree with them, when we do not let them even express the disagreement. That’s why the word respect is not a good word. We have two different words for respect. One is – to show respect, the other is to value somebody. I value you, your difference. When I am talking about mutual respect, I mean we value each others opinion although we do not agree with each other.
What is trust? Many people believe that trust and respect are synonymous words. They are not. There is a good joke to explain this word. A chicken and a pig are very good friends. The chicken goes to the pig and says that he has got a great idea to make a lot of money to start business together. That he studied the market and saw that there is room for possibilities and their capabilities are symbiotically complimentary. When the pig asked the chicken about the idea the later answered that they should start a restaurant to sell American breakfast of ham and eggs. The pig says: “Wait a minute. What is a mere contribution for you is a sacrifice for me. I do not like the idea!” I am trying to tell yo
u that trust exists when there is common interest. Why do we say “I can trust this person and can turn my back on him” – because we understand that if he stabs me – he stabs himself. We are together, we are friends and not only colleagues. When there is mutual trust and respect, there is very little internal marketing. I can use an analogy. You can tell if organization has mutual trust and respect by the body language. If there is respect, to make a decision we talk to each other ,we face each other. To implement the decision if there is mutual trust we turn our back to each other and go to implement the decision – because there is trust. If there is no respect, in making a decision we turn our back to each other and when the time comes to implement because there is no trust we face each other. Tell me where is your face and where is your back when you make an d implement decisions and I’ll tell you how good is your company. When there is no trust and no respect there is lots of wasted energy. Do you know when the marriage is over? Not when the divorce papers are signed. It is over when there is no trust and respect. The same true with countries. Which countries are considered to be successful? Japan for instance used to be . Have you ever seen a sign of disagreement in Japanese people? They disagree with you and you do not even know it. J They don’t do business with you until they trust you. Tremendous internal integration! So they do not waste energy inside, all the energy goes outside.
So what makes a system successful? Show me a system with trust and respect and I’ll show you a successful system. What is the most important asset for an organization? It is not money. If there is market the money will come. It is not market. If you have a technology you will find the market. It is not technology. If you have the time you will find technology. The most important asset that a company might have is its culture. It is like a person. Imagine a young man who has money, has the looks and premium education. He has all the factors to be successful but he has no self-trust and self-respect. “What am I, what am I doing, what do people think about me???” He cannot be successful. All the money is a waste. The energy is wasted
What is the role of management? To build a complimentary team and to create the climate of mutual trust and respect. What makes a good manager is not what you know. It is what you are.
It is easier to hire somebody who IS and teach him to know than to hire somebody who knows and teach him to be.
What is management education? To me it is to teach people humility, to work as a team, to work with respect, to trust, to make conflict to be constructive. That is the necessary platform. The rest can come and go and changes . We are teaching too much to know. We are not teaching to be.
Another application of the PAEI code that has implications for management education.
Having many consulting practices with different organizations I started to see that the cases are similar. It is like a parent to many children. With the first child each problem is a crisis; the fifth child grows by himself. Working with many companies I’ve started to feel that I have seen this before. I started to think that there is a certain pattern and what I discovered is that these four PAEI roles develop in a predictable sequence. No company is born with all of them developed in full. Life is a university: you live and you learn. Organizations develop these roles in a sequence and when it gets stuck, and a role can not be developed , I know that the company has abnormal problems.
The sequence creates the lifecycle of the organization.
The organization develops first the (E) role: “I have an idea; I know the business we should develop…” It is still a conception era, you are dreaming to start something. What normal at this stage is a lot of noise in the system. If you look at the founder of the company he is constantly telling everyone how great it is going to be. He is excited, a lot of passion. The founder tries to convince his team most of all because what he needs at this stage is commitment – this is the key word. Once the company is born – there is lots of work. Many people launch big ships in shallow waters. The commitment should be institutionalize because when the founder dies without the commitment the company dies too. The company is as viable as the commitment of the people who work in the company. Take any system. During the communist era to get into USSR was very easy – to get out, very difficult. To get into the USA is very difficult – but to get out very easy. Which system is more successful?
How can we built the commitment. Sometimes it can be too rosy too unrealistic. It will die the moment the risk arises. That is why a business plan is necessary because it is reality testing of the dream.
The company is born when the first risk is taken. At this point the P role is born. Now comes the time to do, not to dream. The time to talking is over – it the time to do. Time for doers. Good founders of the company are E and P – have ideas and know how work hard. Then comes the go-go stage of the company when E and P should be equally strong. The go-go company is arrogant: it is active, it is growing in many directions: “we did it, we succeeded, everything is interesting.” Here the company can get into trouble. It is arrogant and running in all directions. It can ran out of cash, make mistakes, introduce wrong product into a wrong market. At this stage the next role has to develop – A. Company needs some order to avoid mistakes. And when A goes up, E goes down. This is when the fight starts in the company between the professional managers and the start up entrepreneurs. Between the bureaucrats and the partisans who made the revolution….Usually the A’s win and squeeze the E’s out but when you kill E – the company suffers. The company remains profitable but it doesn’t go anywhere. This is what happened to Apple computers. What you want is not E and A fighting. What you want is A and E together. And it is very difficult to do.
If you survive this transition – you are in Prime of the lifecycle. Prime is when you are still growing, not when you are at the top of the lifecycle curve.
When you are green – you are growing, when you are ripe – you are rotening.
When the company starts aging – the role E is dyeing. The next thing to go down is P. the previous decline in (E) eventually causes the decline in (P). E – is a long term P and P is a short term E. They are related. When A and I are high and E and P low – it means aristocracy: Don’t make waves, do not take risks and you will be a president. No market orientation, loosing market share. Eventually since the company is not adapting and proacting to change, it gets to be with obsolete products and the day of reckoning arrives: profit are down or looses are in and the company starts to look for culprits: doing organizational liposuction firing people, putting the company on the scale and deciding how much is it overweight then cutting one leg off. Now the numbers are good but the company has no leg. It is easy to predict whom the company is going to fire – the Es. They are the sacrificial lambs. And when a country is in trouble economically the ethnic (E) s suffer whether it is the Jews, or the Indians, or the Chinese….. Eventually what happens is bureaucracy where there is not external political support – the organization is dead.
Why do organizations die? The style of management has to change and it whether it is functional depends on where the organizational is on the life cycle. It is like parenting children. When it is a little baby – you have to be very strict. When it is thirty years old you can not treat it like a child. And not only the managerial, or leadership style has t
o change. The organizational structure, the reward system, the strategy, the reward system, and many more variables need to be changed depending on where the organization is on the life cycle. You should not manage all organizations as if they are all already in Prime. That was the mistake of the best seller: ”In search of excellence.”
You need to built your culture recognizing differences, respecting them, training for humility, knowing that what you need to do needs to change: what is right at one time can be absolutely the wrong thing to do at another time.
This is I believe the new paradigm of management.
And I invite you to learn more.
The books( all by Ichak Kalderon Adizes, Ph.D) that cover this material are :
The Ideal Executive : Why you can not be one and what to do about it
Management /Mismanagement Styles
Leading the Leaders : How to manage with people whose style is different than yours
Managing Corporate Lifecycles: Why and how organizations grow age and die and what to do about it
Pursuit of Prime
How to solve the mismanagement crisis
All published and available in different languages from Adizes Institute at: www.adizes.com