Friday, November 13, 2009

Heady ideas about beer

Russell Ackoff died Oct. 29 at the age of 90.

I've highlighted some of the comments I really liked.

* Management - November 11, 2009

Russell Ackoff: 1919-2009
A Management Philosopher With Heady Ideas About Beer

An evangelist of the big picture, Russell Ackoff was a management theorist who helped U.S. corporations by reimagining their challenges as opportunities to restructure.

Mr. Ackoff, who died Oct. 29 at age 90, was an expert in conceptualizing problems. He liked to say they came in three flavors: problems, messes and puzzles, and each needed its own distinctive toolkit.

Mr. Ackoff was one of a small group of management-studies pioneers who changed the way corporations thought about their businesses. Peter Drucker once wrote to Mr. Ackoff that his early work "saved me -- as it saved countless others -- from descending into mindless 'model building' -- the disease that all but destroyed so many of the business schools."

No fan of most business education himself, Mr. Ackoff nevertheless ran a business graduate center at the Wharton School of the University of Pennsylvania. There, he trained generations of management graduate students in an unconventional program that he said had "no curriculum, no classes, no examinations, no admission requirements -- only exit requirements."

Acerbic and aphoristic, Mr. Ackoff was fond of sayings such as "All of our social problems arise out of doing the wrong thing righter. The more efficient you are at doing the wrong thing, the wronger you become. It is much better to do the right thing wronger than the wrong thing righter! If you do the right thing wrong and correct it, you get better!"

Mr. Ackoff published such sentiments in a series of books. He also wrote about how to manage in the face of extreme uncertainty, such as the crises presented by the oil shocks and inflation of the 1970s.

Mr. Ackoff implemented his ideas through consulting with hundreds of companies, and later in his career, with governments. He helped General Motors create its OnStar navigation system, and had a three-decade association with Anheuser-Busch in which he helped the St. Louis brewer achieve national dominance.

Working with August Busch III, later Anheuser-Busch's chairman, Mr. Ackoff in the early 1960s helped design an expansion strategy that included building new breweries and warehouses, after potential sites were identified via computer modeling, a highly unusual approach at the time.

Mr. Ackoff also studied Anheuser-Busch's marketing strategy, and came to the conclusion that increasing advertising budgets had little effect on sales. (Neither did the taste of the beer, he found through blind taste tests.)

Yet Busch markets very heavily.

"This was incredibly valuable," says Bill Finnie, a former director of strategic planning for Anheuser-Busch who studied for his Ph.D. under Mr. Ackoff. "It gave Anheuser-Busch the confidence to maintain its marketing budget flat from 1961 to 1976. We quadrupled sales."

According to Mr. Finnie, reduced marketing costs were passed on to the consumer, making Budweiser inexpensive compared with local brands that had dominated the market through the 1950s.

In Mr. Ackoff's more than 30 years working with Anheuser-Busch beginning in 1960, the company's national market share grew to more 40% from 7%.

In return for his insights, Anheuser-Busch sponsored Mr. Ackoff's academic pursuits, including Wharton's Ackoff Center for the Advancement of Systems Approaches.

But Mr. Ackoff grew frustrated with management studies, which he felt were too limited in their focus on private industry rather than looking at organizations in the public sector as well.

At the same time, academic departments objected to qualitative approach that lacked statistical backing, and Mr. Ackoff disappeared from reading lists in the 1970s and 1980s. Yet he remained in demand by corporate clients and increasingly by governments, such as Iran, where in the 1970s he helped design a way of clamping down on cigarette smuggling.

Born in Philadelphia, Mr. Ackoff sometimes credited his undergraduate studies in architecture at the University of Pennsylvania with sparking his interest in holistic systems.

After serving in the Army in the Philippines during World War II, he completed a doctorate in the philosophy of science at Penn in 1947, and in 1951 joined with his Ph.D. supervisor, C. West Churchman, to found one of the first schools of operations research, at the Case Institute of Technology in Cleveland, which later became Case Western Reserve University. In 1964, the Wharton School recruited Mr. Ackoff and a handful of colleagues from Case.

In a field he regarded as littered with charlatans, Mr. Ackoff rejected the term "guru," favoring "teacher," in the belief that he was helping his clients design their own solutions. He delighted in crossing discipline boundaries, and his influence sometimes turned up in unexpected places -- Mr. Ackoff was part of a team that redesigned the White House Communications Agency during the administration of President Bill Clinton.

"He is representative of what I fear is a dying breed -- management scholars willing to tackle big and broad business themes," says Roger Martin, dean of the Rotman School of Management at the University of Toronto.

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