Russell Ackoff – U.S. Navy two-day training in Thinking… — Transcript

I want to look at two concepts with you first that I introduced at the end of the last discussion: the concept of automation and the concept of development. Let me take automation first. Recall that I said that the industrial revolution was the technological manifestation of the machine age view of the world. I took you through the development of the systems view of the world, but we didn't discuss its technological development, its corresponding technological development. So let's take a quick look at that. It's a fascinating history which we can only look at fairly briefly, but nevertheless, I think I can give you the core idea.

revolution was the technological manifestation of the machine age view of the world i took you through the development of the systems view of the world but we didn't discuss its technological development it's corresponding technological development so let's take

Back about the middle of the last century, for the first time, we began to use electricity as a source of energy. It had been around for about a hundred years, but it was a phenomenon of interest primarily to scientists. It wasn't looked at seriously until about the middle of the last century when we began to use electricity as a source of power. Some problems arose because you couldn't see it, so you didn't know how much of it was going through a wire, how much of it was being put out by a generator, what resistance it was meeting, or what pressure it was moving under.

electricity as a source of energy it had been around for about a hundred years but it was a phenomenon of interest primarily to scientists it wasn't looked at seriously until about the middle of the last century when we began to use electricity as a

It turned out that although you couldn't see it, you could feel it, but that turned out to be a very dangerous way of trying to determine how much there was. So we developed devices to do that for us: all meters, ammeters, and voltmeters, and so on. This was a new technology that we called instrumentation. Now, there's a very interesting thing about this instrumentation. These were devices, artifacts, which did not do any work. They were not machines. See, a machine was defined, remember, as an object which is used to apply energy to matter in order to transform the matter. But that's not what an ohmmeter or an ammeter does. It doesn't apply energy to matter.

pressure it was moving under it turned out that although you couldn't see it you could feel it but that turned out to be a very dangerous way of trying to determine how much there was so we developed devices

What it does is generate symbols. If you look at the dashboard of your automobile, you've got all sorts of instruments. Take the gas gauge. What does it do? It doesn't do any work. It generates a symbol. The symbol is the location of that little arm against the backdrop. Now, that symbol represents a property of a certain object or an event. That kind of symbol is called a datum. Therefore, instruments are data-generating machines, if we want to call them a machine.

they were not machines see a machine was defined remember as an object which is used to apply energy to matter in order to transform the matter but that's not what an ohmmeter in an ammeter does it doesn't apply energy to matter

Now, when a human being generates data, what's the name of the process by which he does that? What's he doing when he's generating data? I'm sorry, no, not thoughts. He's observing. That's observation. See, what the gasoline gauge does for you is look inside your tank and tell you what's there. When I was a kid, we didn't have gasoline gauges. My job when I was driving with my father was to jump out of the car and get that wooden stick and put it down the tank to see where the wet line came and tell him how much gas was in.

location of that little arm against the backdrop now that symbol represents a property of a certain object or an event that kind of a symbol is called a datum therefore instruments are data generating machines if we want to call them a

He used to tell me that before they got the idea of the stick, you used to have to take the top off and look down, and it was a little dangerous to light a match to see what was in there, but that's the way they used to do it. The instrument replaced the need for a person to make the observation. Okay, so these were observing devices. They were not machines in the sense of applying energy to matter.

is looking inside your tank and telling you what's there when i was a kid we didn't have gasoline gauges my job when i was driving with my father was to jump out of the car and get that wooden stick and put it down

Now, a little later, but very close in time, there was another invention called the telegraph, followed shortly thereafter by the telephone, then later by the wireless, eventually radio, television, and now we have a laser and a whole new technology. But if you look at that technology, it also has a characteristic: it does no work. It is not mechanization. What does that technology do? What it does is transmit symbols. It's a symbol-transmitting technology.

and it was a little dangerous to light a match to see what was in there but that's the way they used to do it the instrument replaced the need for a person to make the observation okay so these were observing

Now, when we transmit symbols, when people do that, we have a name for it. What do we call it? Communication. Exactly right. These were artifacts that communicated. They didn't do work. They transmitted symbols.

eventually radio television and now we have a laser and a whole new technology but if you look at that technology it also has a characteristic it does no work it is not mechanization what does that technology do what it does is transmit

Now, we sat around for a hundred years with these two technologies without any recognition of the fact that they were fundamentally different from mechanization. And the reason is fascinating. What was happening was that we were building a new technological base for culture that was going to rest on an arch, and the arch had three stones in it. We put the first one in; that was instrumentation. We put the second one in, and that was communication. But we had to wait a hundred years before the third one was dropped in, and that didn't occur—there's some debate about this.

now we sat around for a hundred years with these two technologies without any recognition of the fact that they were fundamentally different from mechanization and the reason is fascinating what was happening was that we were building a new technological base for culture

There are some people who mistakenly believe that occurred at Harvard University in 1944. That's wrong. It occurred at the University of Pennsylvania in 1946. The thing that was dropped in there was something called the ENIAC, developed for the Navy, by the way. What was the ENIAC? The first electronic digital computer. Now, what in the world was the computer? It didn't do work. It doesn't apply energy to matter. What it is is a machine which manipulates symbols. It's a symbol-manipulating machine.

before the third one was dropped in and that didn't occur and there's some debate about this uh there are some people who mistakenly believe that occurred at harvard university in 1944 that's wrong it occurred at the university of

Now, when a human being manipulates symbols in accordance with rule—because a computer doesn't manipulate them arbitrarily or randomly—it manipulates them given a program or a logic. So it's manipulating them logically. That's what we call thought. That's why it came to be called a thinking machine. John Dewey wrote a book called How We Think, and it was all about the logical manipulation.

to matter what it is is a machine which manipulates symbols it's a symbol manipulating machine now when a human being manipulates symbols in accordance with role because a computer doesn't manipulate them arbitrarily or randomly it manipulates them given a program or a

Now, several interesting things began to happen as soon as the computer emerged. It was a brilliant young woman who was a professor of philosophy at one of the colleges in the Northeast who wrote a book. Her name, by the way, was Suzanne Langer. It was called Philosophy in a New Key, in which she was the first one I'm aware of that observed that the new technological developments had a property in common. Obviously, they all deal with symbols. And her argument was that the symbol is replacing the atom as the basic element, which leads to our understanding of nature.

now several interesting things began to happen as soon as the computer emerged it was a brilliant young woman who was a professor of philosophy at one of the colleges in the northeast who wrote a book her name by the way was suzanne langer

She hadn't correctly perceived the system movement, but what she did perceive is that we were developing a new technology which had to do with symbols rather than with matter. That led to people, now as synthetic thinking emerged, doing a curious thing. Instead of taking these things apart by analysis, they said there's something in common with the three of them. Suppose we put the three of them together.

is replacing the atom as the basic element which leads to our understanding of nature she hadn't correctly perceived the system movement but what she did perceived is that we were developing a new technology which had to do with symbols rather than with matter

Now you have the capacity to observe, to transmit your observations from one place to another, and to process them, data process, and transmit the results from one place to another. What kind of activity is that? We recognize we created a technology to replace the brain of man. That these three combined are mind. We had a technology to replace the mind of man as opposed to his muscle, and that's what automation is. It is not a mere extension of mechanization.

now you have the capacity to observe to transmit your observations from one place to another and to process them data process and transmit the results from one place to another what kind of activity is that we recognize we created a technology

It is fundamentally different in character. It is directed at performing mental functions, not muscular functions. Mechanization is directed at the muscle of man, replacing man as a force of energy. Automation is directed at replacing man as a sword, which is to the systems age exactly what the industrial revolution was in the beginning, and it will produce a major transformation in the technological base of society, not merely production but of the military as well.

it is fundamentally different in character it is directed at performing mental functions not muscular functions mechanization is directed at the muscle of man replacing man as a force of energy automation is directed at replacing man as a sword

As you are well aware, we are approaching a stage where people are even talking about conflict in which there will be no people. We already have tangents in development which are unmanned aircraft, which are unmanned and sold automated warfare. Okay, now let's develop.

well aware we are approaching a stage where people are even talking about conflict in which there will be no people we already have tangents in development which are unmanned aircraft which are unmanned and sold automated warfare okay now let's develop

Well, I said development is not the same as growth. It is very important to be aware of that too. I found out what development was in the army, actually during World War II, as a result of a very curious circumstance.

uh i was a part of the corps of engineers in 10th corps headquarters and i was a sergeant at the time involved in engineering intelligence so i landed on a day and the island of lady in the philippines

I was a part of the Corps of Engineers in 10th Corps Headquarters, and I was a sergeant at the time involved in engineering intelligence. So I landed on a day on the island of Leyte in the Philippines.

headquarters every day by one of these crank phones and one morning after we've been on the island about three months and by that time the combat had wound down we were involved in kind of mopping up operations i was told to come back to headquarters

My job was to find materials that could be used for building roads and other structures that we...

i got back to headquarters cleaned up and went to the general's office and i came in and had a stack of papers in front of him and he said sergeant he said i understand you were trained as an

architect is that correct i said yes sir he said where were we in trade so i told him he said you ever practiced architecture before you got in the army i said yes sir how long i told him where

what kind of things did you do i had no idea what he was driving then he said did you ever do any architecture in the military i said yes i spent a year and a half in the desert

training center what did you build there i told him what i built there he said good he said i need an architect he said we're winding down here now and we had a lot of tired troops so i want

to know the recreation center to accommodate from four to six hundred men in the crime so i can rotate through the troops on the island for periods of two to four days where they can completely relax and have

some fun he says i think i have an ideal sight for it i'd like to take you there and show it to you so this was a tachylogen a little town on the north uh east side of the island

and we walked out of the shed in which the headquarters was located down to the beach and got in a little lci little infantry landing craft we came around the head of the island the island was kind of a kidney bean

shaped island with a river running down it called the varugo river we were over here we took this little craft and came around into the mouth of the river and came down about a mile and a half or two

pulled ashore and on the east side of that river was a large open field completely surrounded by farms it was a beautiful flat site right over the edge of the river and he showed it to me and he said what

do you think i said looks great i think it's a marvelous site he said good he said this is where we want to build it and he said are you interested i said yeah i'd love to do it you know anything

to get out of the family with that infantry unit on the other hand he said go ahead he said can you start tomorrow i said sure i can't if you say so he said okay we'll start tomorrow i said fine i said now

uh how many engineers you're going to give me to work with oh he said don't be silly i can't afford anything i said well how am i going to be i can't build this thing alone he said oh no no

no he said i'll give you enough money to hire 250 natives i said i don't even know the language he said that's all right i'll give you an interpreter i said but it's going to be very difficult how am i going to work with a

group of 250 people with no knowledge of them at all and they don't know our construction methods or anything he said i thought you said you were an architect i said yeah he said well then work it out

i said all right what materials are you going to give me oh he said i can't afford to give you any materials now i didn't quite say it but what i meant was how the hell do you expect me

to build this thing without any materials he said how do the negatives build things go find out how they do it well when i expressed some hesitancy he asked me again if i was an architect he said i thought you knew how to build

buildings well i didn't think it could be done but anything to get out of what i had been doing was acceptable so i agree now the next morning equipped with one interpreter and two mps i came around the island to a little

town that was right over here called borugo thing name is the river through the interpreter i asked them i said who are the best builders in this town now the only buildings they have are shacks up on stilts

uh built out of native materials it was really primitive and they told me there were a pair of men brothers who were the best builders in town i said where were they they said what do you want them for i told them

and they disappeared a little while later these two men came around and said what do you want i said i want you to build me a house i'll pay you for it he said what do you want a house for

and i explained that i wanted to see how they built a house [Music] well they said what are you going to do with the house when we're done building and i said you could keep it so they signed on immediately

the next week i lived with them together with my interpreter intuitive at peace and watched everything they did in building a shack now they used only three materials they used the trunks of coconut palms is the posts they use bamboo for what we would call

beans and girders and columns and they use the long grass called deepa which they wove into mass and those were the only three materials they built they used in building a shack and i watched this very carefully and when they were done i had two

problems as far as materials were concerned first thing i noticed is that every shot could have been up for a while lean and i wanted to find out why they told me why the joints when they put two pieces of

bamboo together were tied by this grass the grass expanded when it was moist it loosened and so things under a little wing would leave so i decided we couldn't tolerate that in a big construction job but we didn't have to it turned out all

over the island with signal core wire so we did a little experimentation using wire to make the joints and we found that we could produce absolutely rigid joints by tying them properly the other problem i had is i wanted to

put a dock on the river from which people could dive into the river and swim well that's not particularly difficult except the river rose and fell nine feet a day so i needed a dock that would go up and

down with the tide with a rag going down to it now the big problem is how am i going to get a dock that will hold 200 people to float well the answer to that turned out to be

easy there were 55 gallon drums all over the island so by building a cage and incorporating them into the cage i could float that dock it would go up and down all i had to do was anchor it

so there went up and down on holes and it would move with the tie now having solved those two problems i went back to headquarters and spent about a week designing a facility this was sleeping facilities dormitories play rooms

the big problem i ran into is that the main room had to be 40 by 60 feet the indoor area the outdoor stuff baseball fields and that kind of thing was relatively easy but the largest piece of bamboo you can get is about 20

feet the average is about 16. how the hell do you cover a 40-foot span with pieces of bamboo that are only this big well the answer you know was to build the trucks so i designed bamboo trusses and when i got all this done we went out

to the area hired 150 men and 100 women the men went out to cut the token of palms and the bamboo and the women were set up in the field to weave the mats which were used for the wall coverings

roof and the other solid fillers between the structural members and we began to build this recreation center as we did we developed an audience by the time we were finished we had an audience of one to two thousand natives

every day standing there watching they just couldn't believe what they were seeing because when we built the trust they had never seen a trust before and we put the walls up for this building 40 feet apart they were all

standing here shaking your head there was no way to put a roof on it and when they finally saw the trusses go up on the roof and then the roofing tower they were absolutely amazed at the end of that project the thing

when it was open the natives went back to their village tore it down and rebuilt it for what they had learned from us i learned what development meant in that experience why i was more developed than they were

what did development be that i had more than they had no development is not a matter of how much you have it's a matter of how much you can do with whatever you have if i have two people with the same

amount of resources the one that can do the most with them is the more developed if i have a person with a lot of resources who can't do anything with them and another one with very little resources you can do a lot with them

who's the more developed the one with fewer resources and the greater ability to use them the paradigm of development is not john paul getty or rockefeller or morgan it's robinson crusoe because he had nothing but his capability to use the resources that were available

to him and to create a high quality of life for the swiss family robinson development is the ability and desire to satisfy your own needs and desires and those of others development is a capacity it is confidence now

that means the process by which people develop is education development is a matter of learning not a matter of earning standard of living is not an indicator of development quality of life is you can have a very high standard of

living and be very poorly developed and vice versa for example suppose we take an aboriginal group in the wilds of australia having selected them from the beneficiaries we load up a bunch of planes and move down there a bunch of automobiles

refrigerators dishwashers television sets vcrs and all the rest of it and give it to the community have we developed them and not one damn that were developed they have a higher standard of living when we leave but they're not more developed

on the other hand when a peace corps goes in the poor community with nothing and raises the capacity of that community to serve its own purposes a peace corps member is developing the community without any resources the more developed you are the less

dependent you are in resources the more you can create resources out of whatever you have now the interesting thing about development is because it's a learning process nobody can develop somebody else uh i wish our governments around the

world realize that no government can develop its population the only way it can develop the population is the population development has to be self-development what an organization or a government can do is encourage and facilitate the development of the individual but it

can't do it for them anymore they can learn for you a teacher cannot learn the subject for you you have to learn it for yourself but what the teacher can do is encourage and facilitate your learning therefore when we look at an

organization as a social system and say its primary objective is to is developing what we need is to encourage and facilitate the development of its parts and to encourage us facilitate the development of the larger system of which it is part

then what does the development of the organization itself be of two questions if the purpose of an organization is to serve the purposes of others does it have the purpose of its own of course it does does the doctor have purposes of its own

his own doctor's purpose is to serve the purposes of others that is his purpose and that's the purpose of an organization and what does the development of an organization mean it means an increase in the capacity and desire of the organization

to encourage and facilitate the development of others it is an instrument of its parts and the thing of which it is apart it has no independent purpose it is dependent in both directions now given that concept we begin to view organizations in an

entirely different way what i want to do is look at an organization with you from the point of view of society from the outside in and see how that transforms that view and then look at it from the inside out

and see how that becomes transformed and what the implications are for management they are considerable before i do that let me just check you got me question about what i mean by development and what i mean by automation

okay the view of an organization from without has become a very important idea and it has a name uh this point of view is going to be called the stakeholder theory of the organization stakeholder not stockholder the stakeholder is any person who is

directly affected by what the organization does inside or out now to get an idea of what the stakeholder theory is all about i want to ask you to engage a little bit of a match in the imagination with me how do

you recall the television series mark and mindy mark as you know was a visitor from another climate and i want you to imagine a visitor from another planet but unlike mork he is unable to communicate with anybody on this planet

he can communicate has no common language but he has a task he was sent down here by his boss to find out in our case let's take the corporation for the moment he has to report back and tell him what

a corporation is i can't read any books you can't ask people what do you do the only thing you can do is observe now if you only observe a corporation how would he be likely to describe it to the man he's reporting to up there

well this is one way he might do you say the corporation is an enemy which is engaged in a series of exchanges he says for example there is one group of people that engage in the following exchange with the corporation they put work in

and take money out the transformation of work in the mind do you recognize those people you talking about what would you call them their employees in one form or another they don't have to be people on the payroll they can be consultants or

advisors but it's anybody who puts effort into the organization and gets compensation in return so let me call them employees plus he says now there's another group that has a very different kind of an interchange they put goods

and services in and take money out who's he talking about suppliers right and he says to his boss interestingly says boss there's another group that does exactly the opposite he says they take goods and services out and put money in

buddy says these goods and services and these are different because in here something has been done to them which increases their value he says this thing is adding values now who's he talking about over here or other consumers

now he says to his boss these are the easy ones he says it starts to get a little harder from here on he said there's a move who put money in and take money out he said no i don't understand this

but what i observe is first of all they don't take it out at the same time they put it in that comes later and the quantity that they take out is different from the quantity that they put in

usually larger who's he talking about investors all the creditors of a corporation that left the money the investment houses in general these are all the people who provide credit or cash in one form or another the principal grouping and the investors

now he said believe it or not there's another group that does exactly the opposite they take money out and then later put it in who's he talking about well it's interesting that most people in business have difficulty recognizing that

what's the opposite of a creditor and better well who's the debtors of a corporation there's one huge one the banks where do you keep your money in the bank you give your money to the master to hold for you

you take it out later right and they're supposed to pay you an interest on you're essentially investing in the bank so a bank is a debtor but what does a corporation normally do with its excess cash you know

short-term assets to buy stock in other companies duplicates mostly general motors that's a common practice so you have a lot of debtors up here which are other organizations in which the corporation invests it's now the investor in them these are the investors

in it now says our bid for mars i come to the really tough one he said i'll try to make sense out of it so here's a group that puts goods and services in and takes money out he said why do i distinguish them from

the suppliers he said well for two reasons he said first of all the goods and services which come in do not become the property of this thing they get the use of them but not the ownership of and secondly whereas these people have

no control over what that does these people do what's he talking about management management leases provides goods and services and controls or regulates government exactly what are the business services they put in fire protection police protection water supply streets and highways etc

but you don't get to own them you get to use them and of course you're regulated so from his point of view government's a form of regulating supplier taking money out in the form of taxation rather than compensation for services

provided in most cases i'm putting these inputs in now this is called the state stakeholder view of the firm the point of it is not a particular circle so man from venus might see it differently it's not what the circles are or how

many it's looking at the firm as a set of transactions with various groups that have a common characteristic so somebody else might have different stakeholders doesn't make any difference but once you have this you can begin to do certain things with it

first of all there are 12 transactions going on here right i got six groups and a flow in it'll flow out if you look at those twelve things that are occurring you can identify the fact that a corporation does only two things because

all those flows are one of two things either they are consumption that's one thing a corporation does it consumes resources it consumes labor it consumes money it consumes raw material it consumes energy and that's shown here it's consuming

what's the other thing that it does produces it makes consumption possible right how does it do that two ways and what are the two ways it makes it possible well one thing it does is produce it produces things to be consumed that's

this output so it produces but it also makes consumption possible another way which is not widely recognized huh it distributes money it's a system for distributing money which is makes it possible for those who receive it to consume

so it's a distributor [Music] okay corporation then does in this view only two things suppose we take the consumption made possible by a corporation and subtract from it its own consumption this difference we have a word for can

you guess what it is that's what wealth is this is wealth it's the excess of the consumption made possible over the consumption engaged therefore from society's point of view corporations have two fundamental functions so yeah i'm now explaining the

corporation because i'm showing its function in the larger system of which it's apart first to produce wealth business is an institution of society created and maintained for the purpose of producing wealth that's one of its purposes this has been long recognized before the

stakeholder theory of the firm what this did was reveal the second function which was not appreciated before and that is to distribute wealth and what is the principle form by which it does so how does it primarily engage in the

distribution of wealth you want to guess salaries salaries compensation for work therefore from society's point of view i'm going to show you one of the primary functions of a corporation is to produce employment employment is the only way known to

society by which you can simultaneously produce and distribute wealth there are lots of ways of distributing wealth but the only way we know of doing it which simultaneously produces wells to be distributed is through employment we can begin to understand a crisis

occurring in a number of countries today and even occurring in the highly developed western world unemployment is going up and we've got it wasn't very long ago that three percent is considered to be intolerable in this country we're seven and a half

now and trying to say it think of it as a permanent state but all the forecast show is going to increase by the end of the century for a number of reasons it's considerably higher in europe and the official forecast of the eec in

europe is it will be 20 by the end of this century now there is nothing as destabilizing to a society as unemployment you can't tolerate high rates of unemployment in a developed society there's enough trouble in an undeveloped

society it will overthrow a government therefore governments must intervene when unemployment reaches a critical level and they must do it by creating employment and what's the principal instrument by which governments create employment nationalization of industry because they will keep companies going

in order to create employment in order to distribute wealth the problem is they don't know how the hell they're producing and therefore they become wealth-consuming organizations rather than net wealth producers but the important point that emerges from all this is the

recognition that the socialization of an economy is a direct consequence of a failure of a free economy to produce employment to the extent that corporations fail to produce sufficient employment government is forced to take over the production function in order to maintain

employment it's the failure of capitalism that produces communism and socialism so that we have today a growing focus on the problem of unemployment and the need to create employment under conditions which are very very difficult uh it would take a long time to go into

them but let me just mention a few of the trends that currently exist in order for businesses to survive in an internationally competitive market they have to be cost competitive we have the highest cost labor in the world

right therefore labor intensive industries are doing what moving to less developed countries where they get cheaper labor that destroys jobs those companies that remain and want to compete can only do it in one way that's by automation and automation does what it reduces the

number of jobs we're in an era in which women are increasingly entering the workforce today about 54 of women adult women are employed and about 50 percent of the total employed are women and that's increasing it will continue to go up

we are increasing the length of life and decreasing morbidity so that time away from work due to illness or death is reducing all these factors are coming together to grow the workforce at precisely the time that employment is decreasing

because of migration of industry out and automation and that's one of the central problems of our society today and if we don't solve it one way or the other there will be major social transformations that occur you can begin to see the recurring in

england which is further along that path than we are there are people now who said that england is beyond the hunt it can no longer revitalize and come back into a highly developed growing economy it has entered the decline

of that part of the west okay so that's one way of looking at an organization you look at the military in the same way i've only done it in a superficial way but you can begin to look at it by

identifying the various stakeholders they'll be different looking at the transformations that occur and then be able to descriptively identify the function that it performs for example these are not proclaimed functions i was working with the minister of education in mexico

and he was trying to formulate the function of his ministry right and we're working on the higher educational system the intermediate and the elementary we're talking about the higher educational system and he said the principal function of the higher educational system is to

prepare people for professional activity i said that's the principal function from whose point of view he said well from society's point of view i said oh hell no that's not the primary function of a university from society's point of view

that's a myth he said what do you mean i said all right let me explain what i mean suppose you shut all the universities in mexico tomorrow what would happen the answer was one word want to guess what the word was

revolution why because suddenly there would be millions of unemployed people in mexico the principal function of the universities in mexico are to reduce the unemployed workforce and particularly among the educated because they're the most dangerous from society's point of view that's what

the function is secondarily is the training of preparedness believe me that same function is critical in this company and with the contraction of federal support for higher institutions that worry you're going to be worried about unemployed professors that's trivial the

real worry is the increased number of unemployed young people where the unemployment rates are already close to 20 and close to 40 percent among the young minority people the population we're developing a whole new social phenomena called the

underclass unemployables and that's really going to be a problem going out so these are among the problems we have to face which are being generated by the system's age which we are still trying to solve by using the methodologies

of the machine age no wonder we're the hell of a mess our survival and development depends on our ability to begin to approach problems generated by this age with methods made available to us by this stage we're going to look at some

of those methods as we go on through today okay any questions about that how about you consider services we have been center i understand that you said that our country is serving you know we have transformed to serving each other

more than we are you know producing if you consider service of production very good point right on the key question uh 1926 was the year in which the largest percentage of the american workforce that was employed in production

occurred the number has increased since 1926 but the percentage of people employed in production has decreased continually since 1926.

today it's only about 19 percent who are engaged in productive activities where we meet our production and production of material things unless other people are involved in services the demand for services is unlimited the desire i'm sorry i want to be very

careful the desire for services is unlimited the demand is very limited the main reason is that the cost of services far exceeds their value in general therefore the key to creating employment in a developed society is to increase the productivity with

which services are provided so that the demand for them becomes commensurate with the desire and there's an unlimited amount of employment available if we could reduce the cost of services let me just mention a few okay the city from which i come today

the cost of a public school education which produces more than half of its output as functional alerts is higher than the cost of sending a kid to the best private school in the area that's unproductive no wonder we get proposition 13.

the community in which i live just outside of philadelphia until i moved into the city a while ago had a three-month strike in the trash collectors people got fed up and they demanded the community go out and get bids from

private contractors the highest bid submitted was less than half the cost to the community of collecting its own trash there's a book which appeared recently by the former deputy secretary of housing and urban development d s savis it's called privatizing the public

sector in which he collects cases from all over the countries in every public service to show how outrageously expensive they are and says unless those costs are brought down we will contract the amount of service provided that's what's happening right

now this whole budgetary issue we're cutting back on services provided because people aren't willing to pay their current costs therefore the future economic health of this country rests on our ability to increase the productivity of the provision of services

now that's a big thing how do you do that that's not easy but it's doable you know my comment and maybe you would like to comment was a standard of living it seems that since world war ii uh embedded

in a precepts has been everybody's going to look forward to an increased standard of living but it just seems in the last three to five years we've finally turned around and have agreed in certain segments of society to

accept a lesser standard of living in order to have the jobs do you see that well in order for something else you're absolutely right your observation when we were looking at organizations as organisms student living was the critical variable

it was the measure of progress we look at them as social systems and development is their objective standard living is no longer the measure of progress quality of life is what we have started to do is sacrifice student living for improved quality of

life when we say we're going to clean up the environment clean up the waterways we're paying for all that paying for it is reducing our standard of living but what we're getting in return we say is worth it okay there's an unlimited

amount of improvement in the quality of life out there for which we're willing to sacrifice standard living if we get it at a reasonable cost and we're not getting it at the reasonable cost as we start to become productive we will

spend more and more of our resources in improving the quality of life any other points you want to raise okay now what i'm going to do is reverse the picture and start to look at the organization from the inside

there's a fascinating evolution we can spend a week on this subject easily tracing through the conceptual evolution of the attitude towards the employee by management i want to take you through it quickly in order to get to some central points that

we're going to explore in some deck uh after world war ii it began to be increasingly apparent to managers that they were going to have to treat workers as human beings they were reluctant to do so so the initial

efforts were what's the least we can do to make them think we think you're human the most significant first step which i'm aware actually occurred in holland not here and it occurred in the phillips corporation in their lamp factory and i told him

their management had a very radical idea they said we control the word but what is it that we control he said we control two things the work he does and the environment within which he does it now they said you know we ought to

reconsider suppose we let the worker control the environment in which he works and we just control the work i mean after all as long as he gives us the output we want we don't give a damn whether the walls are painted blue or

red whether there's music playing or not whether he comes in at 9 or 9 30 and leads at 4 or 4 30 those are irrelevant as long as we get the output so they developed a concept in which the worker would have complete

control over everything in work that wasn't directly affected with the product and that was called work structuring now when folks introduced work structuring where the workers had given control over the environment they very carefully kept a record of

what happened and what happened was this they plotted productivity against time when they first turned this power over to the employee nothing happened pretty much but they didn't believe it and they started gradually to begin to test them like let's repaint the walls

of the locker room kind of thing let's change the menu in the the dining room so productivity came out rather slowly until the workers discovered that company really means that we can do whatever the hell we want to with all

this stuff around here the parking lot the dining rooms the locker room the showers and so on and then productivity began to store it came up almost linearly they had a dramatic increase in output now eventually of course after they

finish painting out repainting everything and putting on the music and changing the work hours and relocating the clocks and so on it leveled off into a plateau now they're on this plateau for a while and several things are happening the

workers who had engaged in this can't think of anything else to do a lot of them are retiring and new workers are coming in and they're coming into a an environment which there's nothing left for them to do

so what do you think happened started to decline like that now phillips was very very alert picked up this decline and at the point long before it got down to where it had started they called it off they had an international event

in which they put to rest the work structuring effort it was a very dramatic uh conference and symposium elton holland i have to be there to observe the weight of weight work structure they came to the conclusion that if

you're going to increase productivity no single thing will do it you're going to have to do a sequence of things and that was a very acute observation because the next thing that happened was this observers of the workers said the real

trouble with work structuring is it never affected work it affected everything around work but not work itself the trouble is work is boring why is it boring because we have designed work for machines and given it to human beings to do

whenever we can't get a machine to do it the average work cycle was 20 seconds that means you do the same thing three times every minute sixty times every hour eight times sixty times three every day for a day after

day after day and people get bored stiff we design the work which dehumanizes it we treat the employee as though we were a machine as he gets more and more educated he protests more and more and he protests

by reducing his productivity alienation from work so he said the real problem is to get rid of border the first idea that emerged out of this is the way to get rid of boredom is to rotate the work job rotation

in the late 40s i used to work while i was a student at the university of the summers in the factory that produced electric cords there are eight steps in the production of the electric cord we had a production

line and each summer i'd come in they put me in one position on the line i spend the rest of the summer doing that it might be putting the plug at the end of the wire and i put plugs over the end of the

wire you know minute after minute day after day hour after hour week after week but it paid well so i didn't mind too much and it was only a short time that i had to do it i came back one summer and they said

we've reorganized the plan now you will start at the first operation one day tomorrow you'll move to the second one and so on on eight consecutive days you'll do a different job each day job rotation i've gotten the signal that the tape is

about to run out so we're going to take a stretch not a break okay stretch