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Chapter 1 Zen & Creative Management

Page 10

If a shareholder holds a million shares while another shareholder holds but ten, then it is more important to have the assent of the first than of the second.  Likewise, if one customer purchases a thousand items and another customer but one, it is more important to have the assent of the first customer than of the second.  Differences of magnitude can occur along a given dimension and give rise to different consequences.  However, it is pointless to ask which of the three elements is the most important one.  Each has its own legitimate expectation.  Each strives to maximize the return that it gets from the company in which its commitment is invested.  Each, therefore, strives to be the one of which the other two are expressions.  This is the essence of the company system.  To put the shareholder in a permanently dominating situation is to turn the system into an exploitive rather than an economic system.

March 3rd, 2020 ~

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Chapter 1 Zen & Creative Management

Page 9

It is through the shareholder that society sanctions what the company wishes to do.  Society says, “Yes, you may do that,” when money is invested in a company.  Perhaps the principal difference between a free and socialist economy is the mechanism by which this social assent or commitment is made.  In a controlled economy, a central authority says, “Yes, you may come into business, you may start production on that.”  But in a free economy there is a much more sensitive, a much more subtle medium by which society gives its consent.  The stock exchange is an extremely sensitive instrument by which society is constantly making judgments on what is occurring in the industrial and commercial world.  Wall Street may not be a very good judge if “good” means having high ethical standards, but it is an extremely sensitive judge.  It is very quick to register approval or disapproval for changes within a company and within society at large. 

The market, through the purchase of products, also gives assent to a company.  The assent of a shareholder is, “Yes, you may do that.”  The assent that the market gives is, “Yes you may do that, and with this result, or for this reason.”  The employee also gives assent when he says, “Yes, you may do this, and this is how it will be done.  This is the quality it will be given.”

It can be seen, therefore, that the market answers “why” in a company.  The organizational structure of a company must conform to the market it has to serve–that is, to the product it has to produce.  The employees answer the “how” in a company.  The organizational process of a company must conform to the abilities of the employees.  The shareholders say that a company will be.  The interaction of these three gives rise to a system, as set of independent but mutually related terms.  The shareholder, the market, and the employee are independent role systems, but they are mutually related.  They exist as independent elements of a single unified will that emerges from the common will to be.  A company is therefore a unity, a whole; but it is a composite and multidimensional whole being the interaction of three forces.

March 2nd, 2020 ~The second paragraph lays out what is known as the triangle.  In the model laid out by the author, each side of the triangle is equally important: shareholder, employee and market.  Each has their say.  Obviously, in today’s market, the shareholder usually has most of the power.  Profit is king.  Once in a while, the employee has increased say.  The customer sometimes has some say.  But it is money that has an elevated influence, and those with it yield that power.  We will learn more as the book progresses.

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Chapter 1 Zen & Creative Management

Page 8

The market will also balance short-term against long-term considerations in the same way that the employees and shareholders make such considerations.  If the market does not get its needs satisfied in one way, it will seek alternative ways.  This is the same as saying that the market invests or commits its need to a particular company in anticipation that this need will be satisfied.  If the company fails to provide that satisfaction, then commitment is withdrawn.  there is a certain amount of inertia or inelasticity within the market, as there is among shareholders and employees, when it comes to change.  The man who has bought some equipment that requires specialized parts is, in a way, a captive market for the company selling the equipment.  But the market does have flexibility and can change its commitment, and this change in itself can be, of course, an important cause for the decline of a company.

The market is also becoming an increasingly “professional” one.  In place of the corner store manager, chain stores have developed that are professional buyers of the goods, wielding considerable purchasing power.  The automobile industry sells much of its products to fleet owners and to people operating specialized equipment-once again a professional market.  In addition to this, with the rise of consumerism and the various government bureaus dedicated to ensuring that the customer’s rights are protected, the private market itself is becoming professionalized. 

Each of these three-shareholder, employee, and market-makes a particular type of commitment.  The shareholder commits money, which is the symbol of the social will; the employee commits his skills and know-how; the market commits need.  What is important, therefore, is that in the first place a commitment is of  particular kind. 

Commitment is an act of Will, and the company arises out of this act.  Will is the urge to self-realization, and therefore companies arise out of theurge to self-realization of the market, employees, and shareholders.  This is tantamount to saying that a company arises out of the urge to self-realization of the society of which that company is a part.  Thus, the fundamental reason for a company being a company is to be found in Will.

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Page 7

So much so is this the case that financial analysts, who are the counterpart of employment placement centers, are sometimes called upon for assistance to make the move easier.  Management is passing into the hands of professional managers; likewise financial investment is passing to an increasing degree into the hands of professional investors, and a professional investor must find an outlet for his investment.

An employee invests his capacity and ability in a company.  he also has his expectations, which include a fair return for the work that he does, as well as a contintually developing career.  Once again, he may elect at some time to receive lower wages in order to acquire growth over the long term.  He, like the investor in shares, is capable of moving his commitment.  This movement may be made by changing jobs, but it also may be made by reducing his commitment to the work that he is required to do and increasing his commitment to some activity outside the company, such as service clubs, further study, local politics, and so on.  Much of the work that is done in a company, particularly at the higher levels, requires fairly intense and continuous commitment.  Without this, little can be accomplished.  Unless the employee sees some satisfaction in what he is doing, this intense application and commitment will not be made.  Yet it is out of just this application and commitment that the company grows in such a way that it is able to satisfy the needs of the shareholder.

If, therefore, we are to say that a company is in business to make a profit for the shareholder’s because otherwise the shareholders will withdraw their support and therefore cause the company to decline, we should likewise say that a company is in business for the well-being of the employees, and unless this need is met the employees will withdraw their commitment and the company will decline. 

However, a third force must be reckoned  with–that of the market.  The market represents the need that society has for the continued existence of the company.  The expectations of the market are for a quality product at a price that is reasonable.

March 18th, 2020 ~ If there is ever a time to see that profit is not the main goal of a business, it is now.  Given the world situation with the Corona Virus or Covid-19, where the stock market has lost 1/3 of its value in 10 days or so, countless businesses won’t survive.  This is not unusual as most businesses fail.  But this is dramatic and swift.  Very few of us could see this coming.  And talk about out of one’s control.  So, no, the main goal is not to make money, or to serve one of the three triad entities: Shareholders, Employees and Market.  It is to become whole.  All entities to become whole.  You can still strive to become whole even if the business is failing.

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Page 6

Wilfred Brown, chairman of a large industry in Britain, who has written quite extensively on management and organization from the point of view of a practicing manager, has said:

 

"One of the features of each of these role systems that they possess very considerable power, vis-a-vis the company. The . . . systems are as follows: A group of shareholders, who elect directors to represent them, who in turn appoint the chief executive and set policies withinwhich he can operate the company."
"A group of customers--it may seem far-fetched to refer to them as a role system, but I think an analyst will show that it is justified. Individually they certainly possess considerable power vis-a-vis the company. They can, in fact, close it down if they dislike, say, its products, prices, delievery dates, by withdrawing their custom."
"The representative system (i.e., the emplyees" comprising everybody in the company . . . They possess great power and can in extremis close the company down by going on strike."

These forces, although quite different from one another, have an equality of status within an organization.  All three are investors.

A shareholder invests money because he has money to invest, and seeks for the highest return with the lowest risk possible.  The shareholder also wishes to see his investment grown over the years and will sometimes be prepared to receive a relatively low immediate return from the investment in the form of dividends, if he feels confident that it will be balanced by a fairly high growth.  It may be true that a shareholder is able to remove his investment at will at will, but when this investment represents very large sums of money, it can often mean movement at a loss, and it is movement that would require a considerable amount of  study and application.

February 26th, 2020 ~

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Chapter 1 Zen & Creative Management

Page 5

Will is the urge in everything toward self-actualization.  Everything is pressing out toward being itself to the fullest.  Everything seeks to express itself.  This self-expression rises through interaction of what we shall call structure and process.  It also arises through two trends: one toward the center and the other toward the periphery; one toward greater depth, greater meaning, the other toward greater scope and more influence.  The four interacting conditions (structure/process, center/periphery) give rise to being.  As we shall show later, there is an inner contradiction among these four, and it is this very self-contradiction that gives rise to the permanency and stability of being.  Being is the inner-togetherness of forces that manifest in opposiition.  Function is the outcome of these forcess striving to become one in the urge toward self-realization.  In Will, the how and the why are unified in understanding and growth.  In growth, the three find fulfillment of their possibilities.

This is true also of a company.  There are three forces at work within a company: the forces known as “shareholder,” “market,” and “employee.”  An organization is a truly wonderful express of these three interacting forces within a unity or whole that find expression and realization in growth.  Growth, not profit, is the real significance of corporate life.

We cannot view a company simply as an instrument by which profit (that is, return to the shareholder) is maximized.  This univalent view does not agree with the facts.  Those who defend the profit concept rightly point out that if a company does not make a profit–that is, if it does not satisfy the needs of the shareholder–then the shareholder will withdraw his support and the company will decline.  However, the power to withdraw support also rests with the employee and with the customer.  Should the support of either of these be withdrawn, the results would be as serious as should the shareholder withdraw his support.  There is, therefore, a triad of forces or role systems.

February 23rd, 2020 ~

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Page 4

In industry, “growth” commonly means but one things: to get bigger.  Success is equated with size, rationalized as economy of scale, and projected as a national faith through the G.N.P. index.  Hollywood, Broadway, General Motors, and more recently the conglomerates are the result.  A balloon, as it is blown up, gets bigger–but this is not growth.  It is simply expansion.  As many a breathless and startled reveler has discovered, bigger is not always better.  The capacity of the balloon does not grow, but the capacity is subjected to more and more demands.  Expansion could therefore be seen as using more and more of a given capacity.  Growth, on the other hand, means increasing the capacity of the system as well as the demands that are made upon it.  Partial reorganization of a company would bring about expansion or integration.  Expansion occurs when the reorganization causes those parts of the organization that are addressed to increase their demands upon the rest of the system (for example, a work simplification program).  Only total reorganization can bring about growth.  Only total reorganization can bring about growth.  Without growth the forces of differentiation and integration–process and structure–become unresolved conflict, causing fragmentation, empire building, and eventually the decline of the company.

We can therefore differentiate three forms of “orderly” change that can occur within a company:

  1.  The change of integration, which we shall call self-regulation.
  2. The change of expansion.
  3. The change of growth.

Philosophers have long been aware that our experience of the world is not simple but complex.  A few moments’ reflection will show most people that what we experience, how we experience it, why we experience it, and that we experience at all are different sides or dimension of experience.  What we experience gives rise to facts.  How we experience gives rise to functions.  Why we experience this rather than that gives rise to structure.  That we experience at all gives rise to a mystery, related in some way to Will.

February 21st, 2020 ~

Expansion vs. Growth: I have talked with small business owners, mainly in the food industry.  Recently, an owner of a beloved bakery told me she has been repeatedly invited to expand her business.  She has owned the business for several decades.  Early on, it was in the background of her mind to expand.  Now, she can’t imagine it.  Her footprint is all over the bakery and it just wouldn’t be feasible to replicate this at another location without losing quality.  Not to say others haven’t done it.  The same goes for pizza making.  An owner I know has said the quality of the dough goes down if you can’t thrown the pizzas by hand.  When you use machines, it is evident in the quality of the pies.  So, maybe many businesses expand when they franchise.  But are they really growing their business.  What do you think?

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Page 3

Classical organization theory suggests that there is “the company” and that there is “change,” and these two are in some way in opposition.  Monolithic organizations have been set up with the view that the company acquires significance through its stability.  Emphasis has been put on the hierarchical structuring, and a tendency toward “power structuring” has enabled the company to acquire inertia, or resistance to change.  this inertia has a positive side in so far as it assists the company to face the forces of degeneration and deterioration.  On the other hand, the emphasis on the hierarchic structuring of the company has inhibited the generation of ideas.  It would be nearer the truth to say that an organization should be the orderly expression of change.

An organization changes along three “spatial” dimensions: lateral, horizontal , and vertical.  Its functions become increasingly more differentiated and complex (the lateral dimension).  New systems, procedures, and understandings bring about new integrations or new orientation, and there is a tendency toward different and new wholes to be created within a company (the horizontal dimension).  The organization also changes in another dimension.  As the company grows, higher level ideas are introduced, enabling it to encompass an increasing field of phenomena (the vertical dimension).

Change can occur at many different points within the system.  The emphasis on the vertical dimension or the hierarchic structure tends to resist the influence of many of these changes.  This results in the “cataclysmic” approach to reorganization according to which a company is organized at a given time and then, through a continuing failure to adapt, it reaches a crisis, at which point a new reorganization becomes necessary and the cycle is repeated.  By regarding a company as a system open to its environment, having many dimensions, each of which is inducing change, the cataclysmic approach can be replaced by a more dynamic approach based on growth.

February 20th, 2020 ~

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Chapter 1 Zen & Creative Management

Chapter 1–Page 2

Page 2 ~ In addition to job description and organization charts in a company, there are other elements such as budgets, forms, appraisal systems, systems for introducing new products to the company, salary-administration systems, long-range forecasts, management-development systems, goal-setting systems, data-processing systems, and management-information systems.  All are developed independently with very little integration and frequently with an increasing despair on the part of those who are called upon to develop the systems, through the recognition of how little relevance or connection there is between what they are doing and what the rest of the company is doing. 

The framework within which reorganization is at present undertaken is one in which analysis, or reduction, alone is known and recognized.  This inadequate framework brings about a violation of harmony, of structure.  “Everyone knows” that to solve a problem one must start by breaking the problem down into smaller problems and, where necessary, these into yet smaller problems.  One then goes about solving each of these simple problems and then synthesizes or integrates the solutions in a steadily ascending hierarchy.  However, to break a problems down is to reduce the level of the problem, and by changing its level one changes the problem entirely.

To organize but part of the company is like trying to bake half a cake.  Often a manager will say, “Well, first let us set up this and that department, or this and that role within the department, or perhaps this and that systems.  let us get those working, and then later on we can turn our attention to the rest of the organization.”  This is something like a housewife saying, “Let us first of all put in the flour and water and perhaps some currants, and later on we will get around to the eggs and sugar and the rest of the ingredients, when we have cooked the first part of the cake.”

February 17th, 2020 ~

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Chapter 1 Zen & Creative Management

Shareholder, Employee, Customer: The Basic Triad

A company is a multidimensional system capable of growth, expansion, and self-regulation.  It is, therefore, not a thing, but a set of interacting forces.  Any theory of organiztion must be capable of reflecting a company’s many facets, its dynamism, and its basic orderliness.  When a company organization is reviewed, or when reorganizing a company, it must be looked upon as a whole, as a total system. 

A system can be defined as a set of independent but mutally related elements.  The different jobs or functions in a company are the “independent elements”; each has its own reason for being; each isdone by a different manager, each of whom is expected to act to some extent as an autonomous and independent whole.  This, after all, is what we mean by responsibility.  But the mutual relatedness of the job with other jobs in the company is as important a feature of the organization as the content of the job itself.

This mutual relationship corresponds to the structure of the whole, and it must be emphasized because it is frequently ignored when organizations are reviewed.  When managers reorganize they often do not give very much attention to how parts of the system are related in time or structure.  Furthermore, this relatedness is something that is poorly understood.  For example, managers frequently write job descriptions in complete isolation from what the company as a whole is trying to do.  Although organization charts are drawn, they often ignore the content of job descriptions.  A gesture is sometimes made in the direction of relatedness and structure by putting dotted lines on the organization chart, but these frequently serve to confuse rather than to clarify the issue.