The evolution and influence of thinking in management

First Draft (October 2006)ChapterThe evolution and influence ofthinking in managementAt this point early in this book it is well worth the exercise of undertaking a review of theevolution of management research, thinking, philosophy and action that forms the currentbasis of knowledge we have today. This review is far from exhaustive and includes only thosethinkers and practitioners that have had either a profound influence on the practice ofmanagement, lay some basis to the formation of the body of entrepreneurship ‘theory”, or inthe opinion of the author have been underestimated in their importance or have a potentiallygreat future importance. One will also see that many created fads, which appear to follow acycle, starting with an academic discovery that is developed into a technique or principal andpublished as a journal article or academic book. These ideas are picked up and then widelypromoted as a means to improve the organisation through increasing productivity, reducingcosts or promoting excellence, etc. After being promoted as a universal cure for all corporateproblems, the results fail to deliver the promises and the fad disappears with those realisingthat it is difficult to convert ideas into new practices. These fads are included because theyhave greatly influenced management thinking.The body of research papers on entrepreneurship have been left out completely in this time-paradigm chronology, as it is too early to determine their real influence on the body ofknowledge on entrepreneurship, and in particular relevance to the Malaysian scenario. A littleof this research, where the author believes is relevant will be referred to during the rest ofthis book. Currently there are more than 105 journals relevant to entrepreneurship beingpublished around the world, generating more than 1,000 papers per annum (probably agross underestimation), which is not including the number of new books being publishedeach year.Economic ThoughtEarly economic thought was very limited on the concept of entrepreneurship, as classicaleconomic assumptions deemed everybody had free access to information about themarketplace for making decisions1. Theories recognised collective (aggregate) behaviour,thus making it impossible to distinguish individual behaviour in economic theory. Althoughneo-classical micro-economic theory recognised the importance of entrepreneurship onmarket dynamics, it had little to say on the subject. Economic theory was dominated byAdam Smith’s ‘invisible hand’ in the marketplace, which could not explain barriers to entry,innovation and the competitive process in the marketplace.The term entrepreneur was most probably introduced by Richard Cantillon in the 1700’s,who recognised the importance of the self employed and uncertainty in the marketplace. Thiswas accorded prominence by another economist Say and adopted by James Stuart Mill inEngland, where in English translation the word entrepreneur took on the meaning assomeone who was a merchant, adventurer, employer and undertaker of a new project. Thisgave the term entrepreneur a functional meaning in economics, although it was onlydescriptive at the time.

During the 19th Century, Vilfredo Pareto a political economist at the University of Lausannein France recognised that in a market 80% of the activity was usually controlled by 20% ofthe players. Pareto applied this principal to income distribution and found that in mostcountries 20% of the population derived 80% of the income. This became known as the80/20 principal (or 80/20 rule).Pareto’s thinking had a profound influence on economic thinking at the time and also variousaspects of management in the 70’s and 80’s. In his study of income distribution in Worldeconomies at the time, Pareto found that new entrants into a market producing the sameproduct or substitutes would grow the market until a point of saturation, where new firmswould not produce new income from the economy, but take income away from existingproducers. Pareto’s principal indicated that innovation was necessary by producers toincrease the size of aggregate income in any economy and thus produce new wealth.This is a basic principal behind many books on innovation today.Pareto’s principal also found its way into marketing, sales, financial and operationsmanagement in the second half of last century. A small group of sales people would usuallyproduce the majority of sales, a small group of customers would produce the majority ofrevenue (this is an area where firms try to diversify away from to reduce risk and has a costbearing on customer service), 20% of the fishermen would catch 80% of the fish, and so on2.The 80/20 rule was utilised in inventory control mechanisms in the use of materialsrequirement planning (MRP) systems popular in the United States in the late 1970’s and 80’s3,and also had some basis in the development of Japanese just in time and kanban systems,primarily utilised by car makers in Japan and adopted by US car makers, made popular withnumerous books on the subject in the 1980’s4.It was not until the early 20th Century that the role and environment of the entrepreneur wasmore closely examined. Knight in the early 1920’s saw the understanding of entrepreneursrequired an interdisciplinary perspective, utilising psychology and sociology, as well aseconomics to provide a deeper understanding, something which the business schools oftoday are adopting. Knight believed that the correctness of an entrepreneur’s conjectureabout an opportunity could not be accurate as conjecture could only be proved by futureevents, thus facing uncertainty and risk5. Knight further espoused that opportunityidentification depended on individual intellect and foresight, which required certain personalcharacteristics on the part of the entrepreneur. Knight also stipulated that prior experience inthe industry where an opportunity was sort would lead to better knowledge of potentialoutcomes in the marketplace. Many of Knight’s insights have formed the basis ofentrepreneurial research in the personality, attribute and cognitive psychology areas.Schumpeter in the 1930’s expanded upon Knight’s hypothesis and explained innovation asbeing based on new information coming out of changes in technology, political forces,regulation, macro-economic factors and social trends. An entrepreneur perceives newinformation from changing events and configures resources to exploit a perceivedopportunity. Thus innovation is based on new knowledge and requires people to makedecisions on little hard data, thus involving uncertainty. People perceive opportunities throughcreativity (a theme taken up by many writers in the last two decades). Opportunities can beexploited by changing the ‘means-end’ framework, through five sources of opportunities; 1.new products or services, 2. new geographical markets, 3. new raw materials, 4. newmethods of production, and 5. new ways of organising6. Schumpeter saw market evolutionthrough a process of ‘creative destruction’, where firms develop and launch new productsthat make existing products outdated and disappear from the marketplace. Schumpeter’swork is particularly important in seeing the internet, electronics and biotechnology industries,where new developments quickly change the ‘means-end’ structure of the market, and relateto the importance of university start-ups as a future source of change in the marketplace7.The rapid change of companies listed in the Fortune 500 list over the last thirty years wouldtend to support Schumpeter’s concept of ‘creative destruction’. Schumpeter also postulated

that the entrepreneurial nature is usually short lived where after start-up, a firm will focus onbuilding up it’s position in the market and then strategically defend it’s interests. Thispostulation has great impact on the lifecycle of the firm and been the subject of many writer’sfocus on strategies to maintain the entrepreneurial aspects of the firm in maturity.Schumpeter’s work has also influenced so many thinkers in the area of strategy over the lastcentury, probably Porter’s ‘value-chain’ and Drucker’s sources of innovation concepts.Hayek saw that all firms were in a state of disequilibrium in a market that also was indisequilibrium. Through the pricing mechanism, entrepreneurs would make decisions whichwould change the market8. This requires a decentralised economy where people woulddiscover opportunities based on idiosyncratic information gathering throughout their life andthe freedom to act9. Thus, under these conditions, entrepreneurship would continue to drivethe market toward efficiency, inferring entrepreneurship is important aspect of economyefficiency and growth, a matter of current socio-economic policy in most economies, whereentrepreneurship is a major employer and contributor to GDP. Andrews took the state offirm disequilibrium further into a strategic perspective that classical economics had not done,looking at a firm’s strategic behaviour in the marketplace. Success or failure is crucial to thefirm in it’s outcomes and influence on the economy and in general firms operate in a marketmaintaining fairly uniform prices, collecting a share of loyalty from consumers. It is theimperfect competitive factors such as quality of service, range of different products,advertising, etc, that maintains a firm’s health in a narrowly specified industrial market10.Andrew’s theory, expanded by Penrose developed the idea that every firm is unique in themarket with its own strategies, set of skills and personal qualities which influence the firm’sgrowth11.Kirzner in 1973 took a different perspective on innovation from the Schumpeter argumentstating that individuals only use the information they possess to form beliefs about thedifferent configurations of resources to exploit opportunities12. Firms make errors in decisionsresulting in failure or less than optimum performance in the marketplace, which createopportunities for others to exploit. This offers another type of opportunity than theSchumpeter type that co-exist in the marketplace at the same time13, but require lessresources and risk to capitalise upon. Kirzner views the marketplace as in equilibrium wherefirms travel along it and are by nature less innovative than Schumpeter’s model, accepting onthe whole, the established way of doing things and not creating major disruptions to anindustry14. Kirzner’s arguments lend weight to the postulation that most firms innovate in anincremental manner rather than transform an industry they are in.E. F. Schumacher’s book was one of the most profound statements about the environment,economics, humanism, poverty and creativity, ever written. The title, Small is Beautiful is alittle bit misleading as it was a critique about the abuse of power of large businesses aroundthe world in their disregard for the environment, ethics, employees and the community.Schumacher suggested that large corporations should break down their organisations so thatemployees within the smaller units could become empowered and creative. He pointed toAlfred Sloan’s breakdown of General Motors into smaller units as an example. Schumacheralso focused on the third world problems of poverty and argued that current paradigm ofeconomic aid was not effective and that ‘knowledge was the best form of aid’. Schumachersaid that “to equalize rural-urban affluence requires a great effort of imagination; …. Systemsof ideas and values that suit relatively affluent and educated city people are unlikely to suitpoor, semi-illiterate people. Poor people cannot simply acquire an outlook and habits ofsophisticated city people. If the poor cannot adapt to the methods, then the methods mustbe adapted to the people”15, thus offering a whole new paradigm in aid and development.Schumacher said that there are other important goals rather than just improving a person’sincome such as personal and community empowerment, independence, creativity and self-esteem.Although the book was a best seller, few people have actually read it and even fewer haveimplemented Schumacher’s theories. However many governments reviewed the problems of

small businesses and developed schemes to assist in financing and marketing productsproduced by micro-enterprises. In Japan, the One Village – One Product (OVOP) programwas started and later Thailand commenced it’s One Tambon One Product (OTOP) Program,both with good success. Schumacher’s ideas bear relevance to corporate creativity today andcould grow in importance in the approach taken to the development of rural micro-enterprises in the future in developing countries16.Production ThoughtAt the turn of the 20th Century, the business community was primarily concerned withmanufacturing and assembly. There were no guide books or management manuals to assistmanagers at the time and management thought had been guided by historical antidote.Frederick Taylor was an engineer who carried out time and motion experiments on theworkforce at the two steel mills he worked at. Taylor came up with a set of principals in whatbecame known as scientific management. Taylor believed that the principal objective ofmanagement was to secure the maximum output per worker17, taking all thinking away fromthe shopfloor. He laid down a set of guidelines18 for managers to determine the single bestway of doing things, eliminating all useless movements. Workers would be set targets andquotas with incentives and penalties. Management would walk around the shopfloor timingworkers performance and measuring it against standards. Management would be able to findthe best person to perform each action, thus leading to optimum efficiency.The concept of scientific management sweep through corporate America. It was seen as asolution to poor worker motivation, which was considered a major problem at the time.Scientific management had its critics then and now, been seen as dehumanising. It was alsocriticised for focusing on quantity and ignoring quality. However, scientific management wasthe first set of management principals that could be put into effect by managers at the time.In fact, there are still thousands upon thousands of factories around the world today thatutilise this philosophy, without managers even knowing it is scientific management. Ninetyyears later elements of Taylor’s principals have re-emerged in Champy and Hammer’sconcept of re-engineering.Taylor also advocated automating as much as the workflow as possible in what became thebeginnings of mass production. This was achieved through specialisation and division oflabour. Henry Ford utilised these principals and built a mass production line with workersperforming specific set tasks. Ford focused on developing standardisation of production,utilising uniform parts to produce automobiles at the minimum possible cost, so that carscould be marketed to the masses. This was in stark contrast to other automobile productionat the time which produced made for order based on teams of skilled craftsmen.The company organisation developed into specialised separated departments fulfilling thefunctions of the company like purchasing, production, sales, accounting, personnel and R&Dwithout lateral communication between the departments. Managers had their specialisedfunctions and were encouraged to focus on their responsibilities and not worry aboutproblems in other departments.Henry Ford was able to create a large functional organisation that could produce products ata cost which enabled marketing to the general population. Ford’s orientation was to set aprice and then expect the company to develop production in a way where cost could meet hisprice objectives19. This set the tide rolling towards the industrial era in the US, where largecorporations dominated the economy for many decades. However Ford’s organisation wasnot without it’s problems. Mass production lacked flexibility which customers could takeadvantage of, which at a time the Ford Motor Company nearly succumbed to. The nature ofmass production created worker alienation, which manifested itself in the growth of labourunions and the nature of organisation utilised by Ford created sub-cultures which tended tosee other departments in the same organisation as foes and adversaries, leading to anabsence of teamwork, a problem many corporations still suffer from.

While America’s industrial sector became a world leader, after World War II, the Japaneseeconomy was almost completely devastated. Japanese industrialists turned to W. EdwardsDeming and Joseph Juran, who at the time were almost totally ignored in their owncountry. Deming advocated that meeting customer expectations through quality was the keygoal of the organisation and products should be totally redesigned along with productionlayouts, so that quality could become part of the process, rather than an inspection after theproduct is produced. The pursuit of quality holistically by an organisation would create totalcommitment. Deming’s system relied on producing statistical information which would beused by groups on the shopfloor with management to create a process of continualimprovement in the organisation20. Juran’s ideas were similar and focused on developing thewhole organisation as a systematic process to seek continual quality improvement, wherequality was the responsibility of each and every employee. Juran developed a concept calledCompany-Wide Quality Management (CWQM)21.Deming and Juran’s systems fitted well into the collective culture of Japanese society andmanaged to link customer orientation into the production floor where workers wereempowered to control the process under a system called Total Quality Management (TQM).Quality was redefined as a process and not a standard. The success of the Japaneseeconomy and rise of Japanese brands in the 1980’s helped to bring on a managementromance with Japanese techniques, however even though numerous consultants and booksappeared, Western companies had many problems in totally accepting and implementing thequality concepts espoused.In the early 80’s quality began to be considered a key to organisational effectiveness andcustomer responsiveness, particularly with the superior quality of Japanese manufacturedgoods in the market. A number of gurus began preaching the value of enterprise qualityaround the world. Philip Crosby argued to corporate America that quality lies in simplicityand firms should seek excellence and develop a culture of continuous improvement in allaspects of the business, including customer relations and all employees should be involved.Crosby asserted that quality is free and in his book of the same name said the road to qualitywill result in cost reductions, higher profits and turn the organisation into one that iscustomer orientated22. David Hutchins in Europe developed quality circles alone similarphilosophies23 and many businesses and Government organisations (including Malaysia)employed consultants and attempted to implement these new ideas. By the end of the 1980’smost organisations became disillusioned with the concept probably because of insufficientmanagement support at the top, as it was seen to interfere with management prerogatives.However the quality movement put more people orientation into the management of theworkplace through watered down programs with similar objectives.The ‘quality movement’ manifested itself with a number of ‘branded derivatives’ ; QualityManagement Systems, Performance Measurement, ’Excellence Model’, TQM Self Assessmentand the latest hybrid The Six Sigma. This fascination with Japanese management techniques,the ideas of kaizen (continuous improvement) and Porter’s concept of competitive advantage,gave rise to the idea of determining who is the very best and measuring one’s own processesagainst that benchmark. It is a continuous systematic process for evaluating products,services or flows and processes against the identified competitive standard. McNair andLiebfried outlined four areas where benchmarking can be applied24; 1. Internal Benchmarking is a process similar to quality management, where the company’s standards are checked to see if there can be further improvements in quality and cuts in wastage, 2. Competitive Benchmarking to compare the company’s standards against rival companies in the marketplace,

3. Industry Benchmarking to compare the company’s standards against the general industry, and 4. Best-in-Class Benchmarking to compare the company’s standards against the best companies in the world.Measures of corporate performance had been mainly financially based and benchmarkingtook a wider company measure over processes, customer service, products and otherpotential key measures. Benchmarking was initially utilized for manufacturing processes, butXerox in the 1980’s used to method to compare themselves to their competitors products andcustomer service, so they could learn how to outperform their rivals.Benchmarking was originally used by Xerox in the US, when it lost dramatic marketshare inthe mid 1980’s. Benchmarking became very popular in the United States, Japan and Europe,particularly with large corporations. It is usually utilized with another program like leanmanufacturing or re-engineering. Benchmarking can be a powerful management tool forchange and also seeking ways to develop competitive advantage over rivals in the market.The tool helps highlight to employees what needs to be done in the firm to survive in thelong term, thus helping to show the realities of the environment the firm is facing, forcingproblems to be solved.As corporate America continued to rise in the first half of the 20th Century, the sheer size ofmany organisations began to show lack of responsiveness to their customers due tocumbersome bureaucracies. This required an overhaul of the functional bureaucraciescontrolling manufacturing ventures into something more effective. Alfred P. Sloan ofGeneral Motors was faced with this problem during the crash of the 1930’s and in competitionwith Ford. Sloan re-organised General Motors along federal (state) and product lines withdecentralised decision making authority in regards to all respects of their operations25.Decentralisation was not a new idea. The East India Company operated decentrally26 in the1700’s due to very slow communications at that time. This was however due to necessity,rather than an act of strategy. Decentralisation allowed managers to vary strategies,organisational design and control systems to suit their particular markets and thus be moreresponsive to their customers. Sloan’s decentralisation showed that organisations need to bemodelled on the particular strategy the firm wishes to follow and in the case of a largecompany serving multiple geographical markets, multiple strategies may need to be followed,which Chandler expanded upon in strategic management theory27. Corporatedecentralisation became the model that was followed for decades by large corporateorganisations and was utilised by most multi-national corporations around the world tobalance central with regional control28.In the late 80’s and 90’s, decentralisation began to show weaknesses as it was inflexible andcumbersome to operate within. These corporate empires became the field of conquest bystrong divisions like finance that wrapped other divisions in paperwork and procedure,creating powerful divisions exercising lateral control through internal power strategies.In the 1980’s manufacturing became the US concern again for management. Japanese andEuropean goods were flooding the US market and US industry was feared to lose it’sdominance. Hayes and Wheelwright published a manifesto warning US manufacturers thatif the manufacturing sector continues to be neglected by management, it will not survive.Hayes and Wheelwright argued that the tight financial controls exercised by corporations overtheir manufacturing operations leads to lack of innovation and failure to look at the long termimplications of their decisions29. They further argued that manufacturing is viewed as havinga neutral role in the company’s overall corporate strategy and with technologyaggressiveness, the role of manufacturing could be turned into a source of companycompetitive advantage. Manufacturing should be seen as a productive confederation with

strong linkages to the rest of the corporation, customers, competitors, suppliers andmachinery manufacturers. From the strategic point of view capacity, facilities (includinglocation), process technology and the product/process matrix should be examined to developthe best overall configuration to suit the long term strategic objectives of the company. Thisshould be an evolutionary process where decisions about vertical integration and ‘make orbuy’ can evolve over a period of time, thereby improving on competitive advantage. Hayesand Wheelwrights ideas did influence the approaches to manufacturing, supply chainmanagement and overall strategic development of companies and brought attention to thecomplexity of manufacturing and strategy to the management of corporations during the 80’sand 90’s. It did not reach the limelight of many other ideas as Hayes and Wheelwright did notoffer the ‘quick fixes’ that some other ideas were offering at the time.The Japanese manufacturing phenomenon continued to infatuate western managementduring the 1980’s with many authors publishing explanations of the Japanese success andreasons for US failure to keep up with the new competition. Lean production was developedfrom a combination of Japanese manufacturing and process techniques based on threetenants. Firstly the shopfloor was based on just-in-time assembly, where suppliers woulddeliver to the shopfloor at the time parts were needed for the assembly of a product that wasto meet customer requirements at a specific time. This was appealing because the just-in-time philosophy aimed to eliminate all inventory on the part of the manufacturer, thus savinginvestment in parts waiting around for use on the assembly line. This was in stark contrast tominimum re-order point purchasing and materials requirement planning (MRP) used in the USwhich required the holding of large stocks on inventory. Secondly, responsibility for qualityrested with all employees of the organisation and the quality assurance aspect of theproduction process was integrated into the line with immediate corrections, rather thaninspections where defects were put aside for rework after assembly. The term ‘zero defects’became the catch cry. Thirdly, was the development of a value system which promoted thecompany as an integrated organisation dedicated to serving the customer through quality,coupled in close relationships with both suppliers and customers.Richard Schonberger summarised all these concepts and processes30 in 1982, six yearsbefore Monden Yosuhsiro and Ohno Taichi espoused the Toyota Manufacturing System whichwas based on lean production in 1988. In 1990, Womack, Jones and Roos from MIT andCardiff Business School hypothesised that the US was still in the age of mass production,while the Japanese had been able to combine the flexibility of craftsmen with the cost savingsof mass production31. Thus, if teams are reorganised into production teams, both the qualityof the craftsman and low costs of mass production could be achieved. Womack, Jones andRoos were certainly not new in their ideas, but their book became a bestseller and seen bymany in the corporate world as a ‘quick fix’. Most of their ideas were misinterpreted asmanagers saw lean production as a means to cut back on staff and declare themselves a leanorganisation.Besides misinterpretation, lean production was modelled around the automobile industry andit proved very difficult to translate the ideas to other industries, except engineering basedassembly industries. However some of these companies like British Aerospace derived greatbenefits from this philosophy.Michael Hammer published an article in the Harvard Business Review in 1990 proposing arethinking and complete redesign of the businesses processes to achieve radicalimprovements in performance, cost, quality, service and speed32. Hammer in 1993 expandedupon this philosophy 1993 with James Champy publishing a bestseller advocating thecomplete analysis of all business processes in a company and redesigning them in the mostefficient way possible to eliminate all wastage. Companies develop set ways of doing thingswhich have usually developed into inefficient silos, hindering company performance. Thismethod was referred to as Business Process Re-engineering (BPR)33.

Many critics saw re-engineering as a return to the days of Taylorism and ScientificManagement, while others criticised it as a lean excuse for redundancies, which were beingforced upon many corporations due to the advent of information technology that wasreducing the need for employees. One of the greatest problems with the philosopy was thatexecutives were only too willing to cut down aspects of the organisation that didn’t personallyaffect them, but were loathed to do anything that would affect their own livelihoods and asHammer himself said executives were the ones themselves that undermined the the verystructure of their rebuilt enterprises34. Re-engineering became another management catch crybringing in large revenues for CSC Management Consultancy, which James Champy wasprincipal. Companies like Hallmark Cards and Kodak in the US successfully applied re-engineering with very positive results, but BPR became so much associated withredundancies, it forced a change of name to Business Process Improvement (BPI).Strategic ThoughtSun Tzu’s The Art of War was written 2,500 years ago and was most probably the firstcomprehensive book of military strategy ever written. Sun Tzu saw strategy as a tool inwarfare, primarily out of sight of the enemy, aimed at gaining advantage and defeating anadversary by fighting as few battles as possible35. Military strategy has influenced businessstrategy as it has a similar objective of achieving a desired result and winning. Some of theimportant principals of Sun Tzu’s strategies that can be seen as relevant to business aresummarised below: • Business is extremely important to the owner so thorough planning is necessary • Avoid if possible direct competition against competitors (i.e., find a market where there is no competition) • Emulate as much as possible the strengths of your competitors and build your strengths where your competitors are weak • Ensure you have a planned exit strategy if necessary • Know your competitors well, you will have a better chance of success • Good leadership is a powerful motivator of followers (wisdom, sincerity, benevolence, courage, strictness) • Show by example • Develop shared values in your organisation to gain commitment • Develop competitive advantage and make full use of it in the marketplace • A powerful and efficient leader is indispensable to the success of the firm • Have a good technical background • To be competitive, a company must be able to capitalise on various changes in the economy, business and social environments and develop strategies accordingly • Must realistically understand what is in and outside of your control • Position yourself close to the resources you need and markets • Strength is a relative concept, no absolute superior or inferior strength, it is how you arrange your resources that can bring success • Hide your strengths and weaknesses from your competitors so you have the element of surprise in the marketplace • Seek out as much information about your competitors, markets and customers as possible • Delegate subordinates with enough authority to get the job done • Training is an important method of achieving efficiency • A combination of benevolence and strictness is the key to guaranteeing loyalty of your staff • Be transparent in your reward systems so employees know what they will receiveMany authors writing about Asian business attribute Chinese business success to thefollowing of the doctrines of Sun Tzu36. This may have some positive bearing in the businessstrategies of some businesses, which are quoted as examples in books37, and Sun Tzu’sphilosophies have certainly influenced writers38. But as other authors have commented in the

Asian SME context, most businesses start out finding the correct business strategies bynothing more than trial and error until they find the winning set of strategies for theirbusinesses39.Modern corporate strategy began with Igor Ansoff in 1965 with a comprehensive theory ofcorporate strategy. Ansoff postulated that strategy is a matter of combining products with themarkets selected by the firm, where the firm continually monitors these markets and makesdecisions to enter and exit40. Ansoff introduced gap analysis as the key to making decisionsabout markets to enter and developed the concept of synergy, where the return from acompany’s combined resources, should be greater than the sum of its parts.Ansoff’s book was well received by the corporate world, but it was hard to completelyunderstand and implementation proved harder than the concepts. Ansoff in later worksstated that firms were paralysed by analysis and stipulated five key elements41 that werecritical to the firm’s success; 1. No single formula will work for all firms, 2. The most important strategic variable is turbulence in the external environment, 3. The aggressiveness of the strategy must match the strength of the turbulence in the environment, 4. Management must have the capability to implement the strategy, and 5. The key internal variables are cognitive, psychological, sociological and anthological.This became known as the Strategic Readiness Diagram.At the same time, management consulting was beginning to grow as a business andAustralian Bruce Henderson set up the Boston Consulting Group (BCG) as a strategicconsultancy firm. Henderson espoused that strategy is needed by firms to successfully exploitopportunities and create value through competitive advantage. He developed a matrix modelto evaluate strategy along two axis of relative market share and market growth. This becameknown as the Boston Matrix based on a single hypothesis that high market share in a growingmarket is the most profitable position a firm could be in. The Boston Matrix proved verypopular as it could indicate visually potential strategy and was easy to understand andsimple. This innovation created the ‘off the shelf’ consulting culture in corporate America andembedded consultants into the board rooms of many firms. Other consulting firms developedtheir own modified versions of the matrix, of which the General Electric and McKinsey Matrixare best known. The Boston Matrix also created a preoccupation about market share, whichinfluenced marketing strategy for many years.George Steiner in 1979 wrote a book on strategic planning which was more like a step bystep manual. Steiner organised the tools analytic of strategic planning in a way that theycould be used by line managers in the firm, rather than in a separate detached planningdepartment. Steiner argued that strategic planning is an attitude and all employees should beinvolved in the process. Planning should be “inextricably interwoven into the entire fabric ofmanagement and not something separate and distinct from the process of management”42.Steiner also went on to stipulate that small business should also develop strategic planning intheir businesses and that not-for-profit organisations require strategic planning. Steiner alsorecognised that executives have personal aims which will influence the planning process.Finally, Steiner was one of the first writers in the area of strategy to recognise thatcorporations have a social responsibility to society. Steiner offered the corporate worldsomething with much more depth than the matrix and is probably under recognised for hiscontribution to management theory.Michael Porter’s books are probably the largest selling management books of all time anddid not come to popularity through catch phases and ‘quick fix’ scenarios. His work iscompletely meticulous and detailed in it’s descriptions of the environment and firm operatingwithin it. Porter in his first book Competitive Strategy developed a theory of how a firm can

examine the environment and develop strategies to achieve long term competitiveadvantage. Porter identified five competitive forces in the environment; 1. Customers which will vary in their bargaining power over suppliers and will try to exercise any power they have to lower prices, 2. Suppliers which will vary in their bargaining power over customers and will try to use any power to maximise the prices they receive from customers, 3. Substitutes to the goods and services a firm produces that will limit the prices a firm can obtain from the market place, 4. Rivalry in an industry that will force firms to engage in cutting prices, advertising, promotion, R&D which is likely to reduce profits, and 5. New entrants into an industry that will bring with them resources and the intention of taking market share away from incumbents, which acierates the decline of profits in an industry43.These forces can be applied to five types of industry scenarios: fragmented, emerging,mature, declining and global. Porter’s framework gave strategists the opportunity to examinethe forces of the environment in a new way and see that aspects of the external environmentcan actually be changed with particular strategies.Porter’s second book Competitive Advantage postulated that there are three ways a firm cangain competitive advantage; 1. By becoming the lowest cost producer in the market, 2. By being a differential producer in the market, or 3. By being a focused producer in the market44.Porter introduced the concept of the value chain where the internal processes of a firm couldbe examined in an integrated way to determine the parts of the chain that could create value.Porter took the strategic focus away from market share competition through cost competitionto the plain of differentiation, both firm and product. His works opened up a new way oflooking at strategy with new options available to the strategist, where firm based strategiescould be developed rather than product/market strategies. Although Porter’s work is highlyquoted and has become in some respects a benchmark in the strategy world, it is sometimescriticised about the lack of focus on the human aspects of strategy. Other perceivedlimitations of Porter’s work is that it doesn’t explain the role of new technology in creatingnew markets and industries. However Porter himself said that his models are only a guide forconsideration and that firms will have to develop their own specialised strategies according tothe circumstances. Porter’s work is more a work of economics than management and isheavily used in government and research institution studies of industries around the world,including here in Malaysia.Where Porter was clinical and analytical, Kenichi Ohmae, formally the head of Mckinsey’sJapanese office and now a global consultant was more intuitive in his approach to strategy.Ohmae developed the 3C’s Framework or Strategic Triangle45 where the corporation itself, thecustomers and the competition is the basis of all strategy where sustained competitiveadvantage can exist. Corporate centred strategies aim to develop company strengths relativeto it’s competitors in the functional aspects of the business that are critical to success. • Selectivity and sequencing: the corporation does not need to have a lead in every function to win, it gain a decisive edge in one function that will enable it to move ahead of it’s competitors. • The case of make or buy: Outsourcing of production increases flexibility. Inflexibility of competitors to change and adjust production may have strategic implications. • Improving cost-effectiveness: can be achieved through reducing costs more effectively than the competition, be more selective in inventory carried and products

offered, i.e., cherry picking the most high impact aspects of operations or profitable areas, or share key functions with the other businesses of the corporation or even with other companies to reduce costs.Competitor based strategies can be constructed by seeking possible sources of differentiationin all company functions. • The power of corporate and company image. • Capitalising on profit- and cost-structure differences: advantage in lower fixed cost to variable cost ratio will be beneficial in sluggish periods where prices can be lowered to gain market share. • Tactics for Flyweights: When competing against giants, use pricing incentives. • Have the right balance of resources, i.e., not too many managers, plant and equipment and funds. Too much of any resource is wasteful, inefficient and will cause problems to the company.Customer based strategies should be the basis of all strategies and the others follow tosupport them. • Segmenting by objectives: look at different ways customers use products and segment this. • Segmenting by customer coverage: trade off marketing costs verses coverage and create the optimum market coverage, as over coverage will only create diminishing returns. • Resegment the market: In a fiercely competitive market select a key group of customers and re-examine what they are looking for. • Changes in the customer mix: Look for changing demography, distribution channels and customer types/size, etc.Ohmae brought a sort of empowerment to marketing management where they could look atmarkets in new ways with flexibility. However not many could fully implement the wholestrategy triangle as a holistic strategy. Ohmae’s works and ideas are greatly respected and hestill consults to a large number of corporations and governments today.Other thinkers at the time also developed concepts of strategy which were to heavilyinfluence corporate relationships. Harrigan in response to declining companies suggestedthat if strategic alliances could be developed between two companies that served theirmutual interests in a win-win situation, then competitive advantage could be achieved46.Many alliances between corporations developed in the 1990’s in all areas of business frombanks and supermarkets, oil companies and supermarkets, and between airlines.Henry Mintzberg, one of management’s most prolific writers over the last 50 yearschallenged the built up theory and practice of strategic planning developed by Ansoff, BostonConsulting Group, Steiner and Porter by arguing that strategy is not the result of planning butthrough organizational osmosis. Mintzberg saw planning as more a myth than a reality due tothe following reasons; • Processes are more ritualistic and bureaucratic which strangles innovation, • Data as a source of information can be broken up into ‘hard’ ( facts & figures) and ‘soft’ (intuition from antidote) data. Most often the hard data is worse than the soft data as a source of decision making. • Managers are detached from the daily exposure to the business, where they should be immersed inside the business to create full understanding of the issues involved47.

Gary Hamel sees that this age is presenting revolutionary challenges to the way peoplemanage and the closer we get to the information age, the more questionable existingmanagement practices will be48. Existing management practices take place within theboundaries of convention, company tradition, settled authorities and within an existingfunctional specialisation. Companies are bound up in their own set rules, which acts as aboundary they cannot escape from. Hamel contends that strategic innovation is central to thecreation of new wealth and companies must deeply consider the development of newstrategy. Existing strategic planning aims for incremental improvement of the firm and thatstrategy tends to be lucky foresight more than anything else. Hamel maps out fourpreconditions for the emergence of strategic innovation in the firm49; 1. The whole organisation needs a voice in creating strategy, 2. Discussion about strategy must cut across industries and organisations so that knowledge can be combined in new ways, 3. People will embrace change if they identify opportunities and rewards for themselves, and 4. Companies must carry out market experimentation to determine what new strategies work.Costas Markides sees strategic innovation about developing a fundamental re-conceptualisation of what business is really about, which will lead to a drastically differentway of doing things in an existing business50. Strategic innovation occurs when a companyidentifies a gap in market positioning, moves to fill that gap and finds a new mass market.This occurs in three ways, a) new emerging customer segments or existing customersegments which are neglected by competitors, b) new customer needs emerging or existingcustomer needs which are neglected by competitors and c) new ways of producing, deliveringor distributing existing or new products or services to existing or new customer segments.Strategic innovation, according to Markides is difficult to achieve in organisations, due tostructural and cultural factors. Markides suggests that companies must be prepared to askbasic questions about the way they are doing business, in order to move to strategicinnovation, however this is difficult for companies making profits to do as they are in thecomfort zone and hesitant to perceive future issues related to their strategic and financialwellbeing. Companies that can move to strategic innovation are those who look strategically,rather than financially or artificially create a positive crisis to activate the organisation intopositive thinking.In the area of marketing, companies from the 19th Century began developing brands todifferentiate their products from their competition. Brands probably developed in the tobaccoindustry, where different tobaccos in regional America began to be transported to differentlocations were identified by a brand. Coca Cola was a soft drink that carried the name todistinguish it from the number of other colas on the market. Proctor & Gamble in Cincinnatifound in the 1930’s that it had a number of successful brand in the same category likeCamay and Ivory soaps that needed a new way to manage so that due focus could be givento each brand. The company gave responsibility for total brand management to a singleperson (product manager) under a brand management system, which took over all decisionmaking in regards to the brand in the company51. Brand management spread throughoutmost consumer goods companies and is still a widely practiced functional structuring of amarketing organisation today.Thomas Watson Senior, the founder of IBM realised that for an organisation to beprofitable, focus must be orientated towards the customer rather than the product. Theobjective of a company is to serve the customer, rather than become immersed in theproduct and technology it has developed. Watson developed this concept and embedded itwithin the core values of IBM which was based on the belief competing vigour sly andproviding first class customer service was the key to success. This philosophy is successfullyused as a strategy in a number of companies around the world today as a source of theircompetitive advantage, including FedEx, Thomas Cook.

In 1960, E Jerome McCarthy identified the four P’s of the marketing mix; product, price,place and promotion52, as the most important ingredients in setting marketing strategy. Itwas not a great breakthrough in marketing thought, than rather a convenient way to viewstrategy. It was developed at a time when mass industrial marketing was growing rapidly andin recent times the marketing orientation of strategy has dramatically changed as the 4 P’shave become much more integrated and other factors from a customer point of view likecustomer needs and wants, cost, convenience, communication, distribution and relationshipsare seen as being more important. However, the concept until today is taught in marketingcourses around the world and used by management in their marketing strategy development.Right into the 1960’s most companies in America were production orientated, seeing themarket as the means to dispose of their production. This went well until slow downs inconsumer purchases create stock build ups in warehouses and interfered with production.Theodore Levitt argued that companies should become much more customer orientated intheir approach to the market53. Levitt’s ideas were inspired by Ford providing customers withwhat he thought they wanted and the rise of General Motors in gaining market share byproviding customers with variations of the basic product by providing new colours, morechoice and new models. Although Levitt’s ideas were accepted by corporate America in the1960’s, it was not until the 1980’s that the marketing revolution came to fruition. Marketingdepartments began growing and the marketing manager became a powerful driver of thecompany. Philip Kotler is probably the world’s most prolific writer on marketing andstructured the discipline in a way that marketing management could rise to the fore ofcorporate management. His works are used in business schools around the world and is seenby most as the world’s authority on the subject.Organisational ThoughtConfucius was born with the name K’ung Ch’iu in the Lũ Kingdom of China in 551 BC, andwas in later life called K’ung Fu-Tzu (Master Kung) by his followers. He is probably the mostfamous Chinese moralist, intellectual, philosopher and educationalist known outside Chinaand his teachings have had great influence on China’s social and political thought over thelast 2500 years, as well as spreading to East and South-East Asia54. Confucius developed asystem that saw man as a social being, interconnected to society through a system of moraland social ethics, concerned with perfecting human character to create a virtuous socialorder.While the traditions of Confucianism have historical and regional variations, there are certaincentral ideas and values which are common. These values have constituted the key elementsof the traditions of societies which have endured history and political upheavals. The basicConfucian concepts embraces a dynamic cosmological worldview for promoting harmonyamidst change, where individuals exist in concentric circles of relationships with ethicalresponsibilities that place importance on the family, within a hierarchical social system, whereloyalty to elders is paramount and a generational concept of gratitude and respect for earlierancestors exists. Education is the mechanism where individuals are cultured and developedas a means to enrich society and create a social and political order. History is valued ascontinuality and a basis for moral reflection and learning.The worldview purported by Confucius is characterized by four key elements; 1. an anthrop cosmic perspective of the great triad of heaven (a guiding force), earth and humans, 2. an organic holism where the universe is seen as unified, interconnected and interpenetrating, where everything interacts and affects everything else, 3. a dynamic vitalism of underlying units of reality which is constituted of the material energy force of the universe (chi), the natural force of the universe, which creates

reciprocity between man and nature and is the substance of life responsible for continuing process of change in the universe and 4. ethics embracing man and nature.Within this context, Confucian thought sees the person in relation to others and not as anisolated individual. Thus, in Confucian society, the common good is more important thanindividual good. In this view, self interest and altruism for a common cause is not alwaysmutually exclusive.Confucius was more concerned about the process of human development, rather thantheological concepts and ends55. He believed the principals of relationships could be extendedfrom that of running a family to the governing of a kingdom or nation; “Those who want tobe a leader or ruler have to have their own house in order”56. Through education and ritualswhich signified respect, man would develop five inner virtues; integrity, righteousness,loyalty, reciprocity and human-heartedness, which once developed would radiate externallyfrom the individual, so that society could be governed by man, rather than rules of law. Tothis end, Confucius defines five primary relationships that will achieve this; ruler and subject,parent and child, elder and younger brother, husband and wife, and friend and friend. As achild develops and learns, he or she will first learn to love and respect the parents, thenbrothers and sisters, then relatives, and later all of humanity. This piety is called Hsiao, whichis considered the root of all humanity.This philosophy was able to change the family in agrarian China from a unit of production toa collective moral dimension, with a social code for each rank of the family hierarchy, verydifferent from the Western concept of individualism57. This led to the concept of guanxi ,much written about in Western literature, “a focus on relationships with a shared history,respect for the past, a value that many – not all – Chinese cherish”58.Two other concepts in Confucianism are Tao, the way of life and Te, potency and self-sacrificial generosity with humility, with the moral power of attraction and transformation,associated with these qualities. The humanistic attribute required to achieve the above isthrough Jen, which means love, kindness and goodness, qualities of the perfect individual.This is the essence of what makes humans different from other members of the animalkingdom. Failure to develop Jen would lead an individual to quickly develop forgoneconclusions, dogmatism, obstinacy and egotism, which would block wisdom and preventpeople from making new insights and discoveries, as one’s mind must remain open tobecome wiser. Li is the expression of Jen in a social context through norms, rites and ritualsgoverning ceremonies according to one’s social position. Through Li, the individual expresseshis respect and reverence for others59.Confucius was not influential in government during his time, serving only in minor positions,and wondering around China giving advice to those few that listened. However, he attracteda number of followers, who later held office in government, advised by Confucius on mattersof ethics and piety. However he became quickly disillusioned as they didn’t take his counsel.Confucius spent most of his last years working on his classics.After his death, Confucianism had to contend with other philosophies of Taoism andBuddhism during the 3rd to 7th Centuries, creating a blend of philosophies creating Neo-Confucianism, dominating philosophical thought in China during the Tsang Dynasty (618-906AD), the Sung Dynasty (960-1279 AD) and later during the Ming Dynasty (1472-1529 AD).Confucian institutions in China slowly disintegrated after the overthrow of the Last Emperor in1911, although it survived in practice in Taiwan, Hong Kong, Macao and parts of South-EastAsia after that time.Confucianism has been examined and debated about its significance to Asian Economicdevelopment by Western scholars, over the last few decades. Confucianism is oftenmisunderstood, as to its real interpretations. Most have believed that Confucianism is

completely worldly and humanistic, lacking any divinity. However Confucius last book TheAnnals of Spring and Autumn (chũnqĭu) is full of references to the divinity of heaven and itsinfluence upon man and reason for existence. Some scholars have criticized Confucius worksas being nothing more than a reaffirmation of earlier thoughts, with no originality60, althoughConfucius himself stated the need to look back to learn history as examples of models andacts of piety. Many misunderstand the concept of holism, not necessarily meaning holism ofsociety, but holism of the worldview from a family perspective61.During the 1980’s and 1990’s many academics became interested in the connections betweenConfucianism and the spectacular rise of the Asian Tigers. Some argued that Confucius wasopposed to modernization as it didn’t advocate individualism, common to the Westerncharacteristics of entrepreneurship, was too dependent on guidance, emphasized an all rounddevelopment of personality to harmonise with the environment, which discouragedaggressiveness and encouraged traditionalism, rather than modernisation62. However Tusuggested that individualism is a Western mode of capitalism and East Asian had developedanother model based on relationships to develop change through consensus and networks,with a sense of personal discipline63. Confucianism was criticized for lack of profit motive, ashis philosophies discouraged self-motivation and that merchants were not included inConfucius set of key relationships. However, through responsibility and obligation to family,other motives exist, such as their well-being64, and treatment of those inside and outside anindividual’s universe of relationships will be different, i.e., treated with respect but caution,more adversarial, rather than brotherly relationship. Confucianism is also criticized for its lackof innovation, whereas the reality of Chinese business has been to seek ways to control anexisting market, rather than create new value through innovation65.It can also be argued that Confucianism actually has little influence on the way Chinesebusiness is operated, at least in South-East Asian countries like Malaysia. Although Chinesebusiness sustains and nurtures family members and maintains a paternalistic and hierarchicalnature of authority within the enterprise66, there is little evidence that Malaysian Chinesebusinesses rely on guanxi networks for growth and development, have little interest in longterm sustainability and little adherence to the Chinese philosophies associated withConfucianism67. It is also unlikely that many contemporary Chinese have a thoroughunderstanding of the Confucius philosophy or the will or want to fulfill the piety and wisdomdefined by Confucius in everyday life, as one of Confucius followers Mèngzî warned, Jen is aconcept not easily achieved by man. However modern life and business may tend to bejudged by old values, creating a complexity of behaviour that is often hard to understand68,especially by the older generation that is Chinese educated. Finally, John Naisbitt in hisprophecy book Megatrends Asia predicted that the unique strengths of Chinese businessnetworks, able to make speedy decisions and able to obtain resources through connectingpeople would make the Chinese business model the ideal flexible form of social organizationfor the globally connected world of the future69. However this would assume that harmonydoesn’t exhibit restriction on individuals from criticism of strategy, even though it may beconstructive, as the practice of authority in Chinese companies means obedience rather thancareful questioning of the status quo70.Max Weber is one of the earliest modern scholars who studied the relationship betweenreligion and economic behaviour. He found a connection between the rise of capitalism in theWest and the Protestant work ethic. Weber believed there was a strong influence oneconomic and work behaviour from religious beliefs – i.e., religious values spill over to allareas in one’s life71. Weber compared this to Confucian ethics and found that people followingConfucianism tended to harmonise themselves with their environment and develop acollective form of social relationships. Weber postulated that different philosophies andreligions in East and West would lead to different types of entrepreneurial spirit andmanagerial styles72. These ideas have great relevance to the scenario on entrepreneurship inMalaysia due to our diverse multicultural, ethnic and religious makeup.

Weber also studied the nature of organisations, which influenced thinkers on bureaucracyand organisation throughout the whole 20th Century. Weber concluded that the most efficienttype of organisation was a mechanical bureaucracy, which was based on the followingpremises73; • There was a division of labour where each job was broken down into simple, routine and well-defined tasks, • There was a well defined hierarchy of authority along a multi-level formal structure, ensuring each person had a person of authority over them, • The hierarchy operated upon formal rules and procedures to ensure uniformity and objectivity to regulate the behaviour of employees, • Sanctions are used uniformly and impersonally to avoid personal preferences of employees, • Employment and promotion decisions are based on merit and qualifications, competence and performance of potential candidates, • Members of the hierarchy have the opportunity to pursue a career path through the hierarchy, and • There is a distinct separation of members’ organisational and personal lives.The central idea in Weber’s ideal organisation was standardisation and objectivity. Weber’smodel is very similar to the type of organisation in government and large corporations. Smallcompanies will also usually display an organisation chart somewhere in the front office. Butthis is usually as far as Weber’s ideal type of organisation goes as personal issues, politics,conflicts over goals and objectives and informal groups with their own agendas will develop.One cannot dispute that Weber’s influence still influences management today in the way theyview the organisation of a firm, non-profit organisation or government department.Chester Barnard, an executive with AT&T and later President of New Jersey Bell TelephoneCompany in the 1930’s further added to our understanding of organisations by seeing thatfunction was more dependent on the intangibles of personal relationships. Barnard postulatedthat loyalty was the most important factor in an organisation running smoothly and the mostimportant role of the executive was to create shared values within the organisation74.Barnard’s ideas were almost totally ignored for 50 years, but became an important aspect ofthe cultural paradigm, the Japanese management romance and a number of other ideas inthe 80’s and 90’s.One of the most eminent management commentators of the 20th Century Peter Drucker in1954 developed the concept of Management by Objectives (MBO). Drucker saw that therewas great risk that managers lose sight of the original purpose of their function withexecutives daily schedules and they needed a planning process that would developcoordinated objectives for each member of the organisation to achieve so the organisationcould meet its overall objectives75. The planning process would involve all executives, whichwould help in gaining their personal commitment to achieving their individual objectives andthe results could be measured against the set objectives. If things weren’t travelling towardsthose set objectives, these problems could be diagnosed and modified objectives set ifnecessary. MBO became very popular during the 1960’s and 1970’s with many authorspublishing books extolling it’s virtues and consultancies thrived on educating corporateAmerica on the system. One of the first of many management acronyms SMART waspopularised, meaning; specific, measurable, achievable, realistic and time related. MBOseemed to completely disappear by the end of the 1970’s.Systems Theory originally came from the natural and physical sciences, accredited to Ludwigvon Bertalanffy76. However, Kenneth Boulding applied systems theory to management in1956, where Boulding thought it could be applied to all general relationships within andexternally to the organisation77. It was never meant to replace all other specific theories, butrather act as a general roadmap to view organisational dynamics and processes. The generalcomponents of systems theory are as follows;

• Every system is made up of a number of interdependent sub-systems, • Every system is open and dynamic, • Every system transforms inputs into outputs, • Every system seeks to maintain equilibrium, • feedback will modify inputs or transformations to adjust processes to manage equilibrium, • Every system has multiple purposes, objectives and functions, which are often in conflict, • Every system is unique, and • If a system does not adapt to changing circumstances it will be in threat of survival78.Systems theory is not concerned with goals, but process orientated towards maintaining longterm survival, through resource acquisition, processing dynamics and outputs. A number ofhybrid models were developed for organisational research purposes79 in quantitativemodelling of organisational effectiveness. Systems theory influenced further models of theorganisation and environment in the 1960’s and 1970’s (see Lawrence & Lorsch, JamesThompson) and there is some influence of the systems approach in Porter’s work. Systemstheory was also utilised in early management information system (MIS) development duringthe 1970’s and 1980’s80. The author also believes that systems theory has an application inproduct development (see Chapter xx). An adaptation of systems theory, contingency theory81 took over bringing the concepts of external stakeholders into management theory.During the 1960’s a number of important studies were made looking at the most optimumtype of structure required to operate successfully within various environments. These studiespartly explain the different forms of firms existing in different industries and the studies gaveinsights upon strategy and organisational development.The type of environment has great bearing on uncertainty for the firm, and thus survival. Itwas hypothesised by Burns and Stalker that different types of environments wouldinfluence the type of organisation within it, in-order to cope with the degree of turbulence.They studied English and Scottish industrial firms to determine how their organisationalstructure and managerial practice might differ according to the environment. The type ofenvironment was defined by the rate of change in technology in the firms’ respective productmarkets. They found that the type of structure of the firm that existed in rapidly changingenvironments was dramatically different from the structure of a firm in a stableenvironment82. Burns and Stalker characterised firms in stable environments as mechanistic,where they tended to be centrally controlled, highly formalised procedures and jobdescriptions, where staff would carry on routine functions and the firm would be relativelyslow in responding to uncertainty. This type of situation could be equated to a manufacturingcompany producing plastics to industrial customers, the car industry in Malaysia during the1980’s and 90’s, utility companies or the Government service. In a rapidly changingenvironment, firms where organically structured where they would be more flexible andadaptive with more lateral and informal communication within it. Influence in the organisationwould come from experience and knowledge rather than formal authority of position, withmore loosely defined job functions than a mechanistic organisation. This could be equated tothe computer industry in Malaysia.Fred Emery and Eric Twist described four types of environments that firms could operatewithin83; 1. A relatively unchanging placid-randomised environment which has the least threat to a firm as uncertainty is low. Such an environment would be a food stall or restaurant business. 2. A slowly changing placid-clustered environment where threats can come from time to time and have to be dealt with by the firm. Such an environment would be a

manufacturing operation that has a need to release waste effluent into the environment and can occasional face community protest or changing Government regulation, or an insecticide manufacturer where regulation could affect the products the company manufacturers, so must undertake some long term planning. 3. An environment where there are a number of competitors seeking the same objectives, where one or two firms can influence the market is a disturbed-reactive environment. In this environment, prices can change or other events which potentially can drastically change the fortunes of the firm. An example of this type of environment would be the soft drink or coffee market. In this type of environment, the firm will have to be tactically alert and calculate competitor reactions to any initiatives the firm made, thus survival requires flexibility. 4. The most dynamic and uncertain environment is the turbulent-field environment, where there is continual change and elements of the environment become more interrelated, i.e., customers and suppliers are also competitors, product life cycles are extremely short, etc. Change is not easily predicted, so planning is extremely difficult, if not impossible. This environment would be similar to the computer market.Many believe that more business will be undertaken in the turbulent-field environment in thefuture, especially with technology based firms in the electronics and biotechnology industries.If this is the case, then the type of firm that operates in this type of environment, must bestructured to match the uncertainty that will generated. If this is correct, then the types offirms we know will drastically change in structure and style in the future, from thetraditionally structured firm we know.Paul Lawrence and Jay Lorsch took the previous studies further and sort to find outwhether more successful firms in an industry would have better organisational type matcheswith the environment, than less successful ones. They assumed that the internal organisationwas complex and not singular as in the previous studies. The external environment wasmeasured by the degree of uncertainty to the firm and the internal environment of the firmwas measured by how differentiated it was between different departments in their views tothe environment and how integrated the departments were through common goals andcoordinating mechanisms. They found that various department have to meet the demand oftheir sub-environments, as differentiation and integration are opposing forces within anorganisation. Firms in uncertain environments tended to be very differentiated in theiroutlooks, but the successful firms were also highly integrated through planning and externalgoals. Firms in more stable environments tended to be more homogeneous, and the moresuccessful firms were also more integrated than less successful ones. This concluded thatdifferentiation between departments was necessary to solve their particular problems ofmanufacturing, sales or R&D, but at the same time needed to be coordinated to achieve theoverall firm goals in the external environment. Thus it is important for success to be internallycoordinated and have a structure that suits the degree of uncertainty in the externalenvironment84.Up until the 1950’s, most organisational theorists viewed an organisation with clear lines ofauthority, high formalisation, centralised decisions making, a high division of labour, with awide span of control at the supervisory level. Joan Woodward found in her study of firmsutilising different technologies in manufacturing that more effective firms developed specificforms of organisation. Mass production technology firms were highly differentiated and thusrelied on extensive formalisation and delegated little authority. Unit and process technologyfirms, were structured much more loosely and flexible, which was achieved through lessvertical differentiation (i.e., less levels in the organisational hierarchy), less divisions oflabour, more group activities, more widely defined job responsibilities and more decentraliseddecision making within the firm. High formalisation and central control did not appear feasiblein unit production, custom made and non-routine technologies as was the case in continuousprocess technology of mass production. Woodward’s studies indicated a relationship betweentechnology, structure and effectiveness and thus argued that organisational effectiveness wasa function of an appropriate structure-technology fit85. Woodward’s studies dispelled the

belief that there was one universal type of organisation and management, which led tofurther studies in this area.James Thompson sort to create a classification system that would categorise technologytypes found in organisations. He proposed three types of organisation that are differentiatedby the tasks an organisational unit performs; 1. Long Linked Strategy – tasks or operations that are sequentially interdependent as technology is characterised by a fixed sequence of repetitive steps. This type of technology would include mass production and fast-food outlets. Such organisations need management to focus on controlling inputs and outputs, i.e., acquiring raw materials through purchasing and selling the finished production, sales and marketing. Procuring raw materials and finding customers is the type of uncertainty these organisations face. 2. Mediating Technology – is one that links clients, which are both part of the input and output of the organisation. These types include banks, post offices, courier services, etc. Organisations in this category act as a mediator, performing an interchange activity linking individuals or other organisations, thus the activity requires standardisation. The organisation’s success will depend on attracting clients on both sides of the process, i.e., a bank needs deposits and people to lend money to. The dependence on clients creates uncertainty in these types of organisations. 3. Intensive Technology – requires a customised response to a diverse set of requirements, which depends on the nature of the particular client problem. Uncertainty is generated by not being able to predict the types of problems coming to the organisation by clients. This type of organisation includes hospitals, repair shops, research & development organisations or management consultancy firms. Such organisations will require resources continually available in various departments of their organisation on stand-by for particular problems that arise. Each department through coordination will make a contribution to the solution of the client’s problem. What specific technologies are needed will depend on the nature of the problem and this is coordinated through a feedback mechanism developed and managed for this purpose.The significance of Thompson’s studies is that in every organisation, technology creates atype of interdependence that must be addressed. Thompson’s ideas can be translated intoorganisational structural design, where different levels of demand upon decision making andcommunications as the result of technology application will require different forms ofcoordination through rules and procedures. Each of the above interdependencies requires acertain type of organisation type to facilitate organisational effectiveness86; • Long Linked Technology is accompanied by sequential interdependence, where procedures are highly standardised and must be performed in a specific serial order, best managed through moderate organisational complexity and formalisation. • Mediating Technology requires pooled interdependence, where two or more units contribute separately to the whole organisation, best managed by low organisational complexity and high formalisation. • Intensive technology creates reciprocal interdependence, where the output of individual units influence the overall result in a reciprocal fashion, best managed by high organisational complexity and low formalisation.Charles Perrow postulated that technology across organisations needs to be categorised, ifthe above concepts are to have more meaning. Perrow took a wider view of technology,looking at the knowledge required to operate it, rather than the actual technology itself87.Perrow identified two underlying dimensions of knowledge related to technology; 1. Task Variability, comprising of two sub-types

a) Few in number if the job is high routine, like in manufacturing or fast-food, and b) Large variability, where the job is non-routine and requires different activities like management, consulting, fire fighting or police work. 2. Problem Analysability, where the type of problem diagnostic procedures followed to find successful outcomes requires different types of analytic approaches a) Well defined problems where an individual can use logical and analytical methods in searching for a solution, i.e., accounting and bookkeeping, and b) Ill defined problems where problems vary according to task, such as an architect, researcher, advertising executive, where prior experience, judgement and intuition to find a solution through guess work and trial and error.These two dimensions of knowledge related to technology can be applied to four types oftechnology; 1. Routine Technologies – where there are easy to analyse problems with few exceptions, i.e., mass production processes, petrochemical refining or bank teller, 2. Engineering Technologies – which have specific problems requiring specific application of knowledge, but can be handled in a rational and specific manner, such as construction and tax accountants, 3. Craft Technologies – which deal with relatively complex problems but with a limited set of exceptions, such as car repairs or performing artists, and 4. Non-routine Technologies – which are characterised by many exceptions and difficult to analyse problems, such as research and development in universities and strategic planning.Perrow argued that in routine and engineering technologies, problems can be solved usinglogical and rational analysis and in craft and non-routine technologies, problems need to besolved with intuition and guess work based on experience. In engineering and non-routinetechnologies, the mode of analysis would need to switch to a more intuitive framework. Inroutine and craft technologies, the mode of analysis would need to switch to a moreanalytical and logical framework.Perrow further postulated that control and coordination methods should vary with the type oftechnology utilised within the organisation. The more routine the technology, the more highlystructured the organisation should be. Conversely, non-routine technologies would requiregreater structural flexibility. Four key aspects of structure could be aligned to the type oftechnology utilised; 1. the amount of discretion that can be exercised for completing tasks, 2.the power of groups to control the unit’s objectives and basic strategies, 3. the extent of theirinterdependence between the groups, and 4. the extent of coordination of their work.The studies above on environment and technology showed that organisational design is muchmore complex and multi-dimensional that was generally accepted by theorists at the time andorganisational design has a bearing and influence on organisational effectiveness. Manymanagement ideas and theories in subsequent years based their ideas on variousorganisational designs as a means to develop organisational effectiveness (this will bediscussed in much more detail later).During the 1970’s, some organisational researchers began applying psychological, sociologicaland anthropological approaches to look intrinsically at the organisation and how it functions.Anthony Pettigrew’s prior work on organisations looked at the context of who exercisedpower88. To further understand how power develops, he studied how organisations evolve,utilising the cultural paradigm as an analytical tool89. Although the idea was not new, PeterBerger and Thomas Luckman had back in the 1960’s written about culture as a basis of acommon perception, legitimater of behavioural patterns, and source of collective identity90,

while others had used organisational artefacts as a method of organisation analysis91,Pettigrew had used a cultural framework in holistic context.This led to a great amount of interest in the topic by researchers, who began writing on thesubject. Terence Deal and Allen Kennedy published Corporate Cultures in 1982 talkingabout strong cultures and values as a key to success, using examples from some of the mostsuccessful US companies92 and Ralph Kilmann with Beyond the Quick Fix, espoused cultureacross five corporate elements as paths to improving the bottom line; strategy, structure,rewards, skills and teams93. During 1980’s corporate culture quickly became a mainstreammanagement theory which attracted numerous management consultants offering culturalchange as an ‘off the shelf item’ for instant cures to corporate ills. The cultural paradigmhowever has found its way into many other management theories over the last two decades,and is considered an important aspect of organisation success by most, if not all.Edgar Schein defined culture as “a pattern of shared basic assumptions that the group haslearned as it has solved its problems of external adaptation and internal integration, that hasworked well enough to be considered valid and, therefore, to be taught to new members asthe correct way you perceive, think, and feel in relation to those problems”94. Thus a cultureis a shared learning of the organisation on how to survive in it’s environment and manageand integrate itself internally. Culture is thus the mechanism (or way) that an organisationdetermines solutions to all the issues facing it and it’s members. It affects all processes withinthe organisation, where to some degree the views about things are shared by all its membersabout the right way about doing things. The ideas about the way of doing things developsthrough the history of the organisation and exists at three levels; 1. Assumptions: are the deepest level of culture and tend to be unconscious ideas about broad human issues that are fundamental to the organisation and individual. They include ideas about human nature, human activity, relationships and the nature of reality and truth, concepts of time, space and the nature of things. Assumptions are deep seated and tend to be non-negotiable ideas and truths to people. 2. Values: are learned and have to do with the way things are done and thus directly influence behaviour. Values influence what things are important to people, how people communicate with others, the standard of work done, punctuality. Once one understands values, one is able to see why an organisation operates as it does. 3. Artifacts and Creations: are the most superficial aspect of an organisational culture and usually the things outsiders notice most. Artifects include, the physical characteristics of the organisation, such as office sizes and décor, parking spaces, the way people dress, symbols and logos such as organisational charts, stories about the organisation told by employees, rites and rituals during work, i.e., how meetings are conducted, language, basically things that one can see hear and feel95. Culture is learned through the organisation by rewards, both formal and informal, i.e.,acceptance by other employees into the group and as a way to reduce stress and anxiety incoping with uncertainties. Organisational dysfunction occurs when informal group valuesdiffer from the organisation as a whole, thus creating friction between formal organisationalgoals and informal group goals. Thus organisational culture has great influence upon the waywork is done, affecting issues like productivity, decision making, perception of risk in makingdecisions, creativity and innovation. Finally, the founder of an organisation plays a pivotal rolein influencing the organisational culture and the understanding of culture has increased theimportance of leadership in organisations immensely.Although most, if not all would agree the culture of an organisation is an important factor insuccess, managing cultural change is difficult. Firstly, understanding the elements of anorganisational culture is difficult because those who try to interpret a culture usually carrytheir own bias with them in the interpretation. Clifford Geertz warns “that what we call ourdata are really our own constructions of other people’s constructions of what they and theircompatriots are up to”96. But as Kilmann, et. al. state “even if we learn to decipher

organizational culture, it is not clear that full knowledge of our own culture will help uschange it”97. Secondly, as culture takes years to develop and form into assumptions, beliefsand values, and these are reinforced by a strong glue of history, socialised behaviour andsupporting rituals, it is extremely difficult to change things that employees have becomecommitted to over this long period of time. Yet as observed in corporate takeovers andmergers, the overall culture of the organisation can change rapidly98 and literature citessuccesses through various methods of promoting change through consultation99, changingreward systems100 and socialising new entrants into the organisation101. Culture is considereda critical issue today in management and as Robbins states “there is a great deal riding onthe outcome of this debate”102.Gareth Morgan saw that in reality managers have very little power over change inorganisations. The complexity of organisations defies any possibility of obtaining acomprehensive analysis of what is actually the reality in place. Existing organisation andmanagement theories are limited because they are based on implicit images or metaphorsthat may only lead a manager to see and understand the dynamics and flux in a partial way.Thus, Morgan suggests that by using multiple metaphors to view complexity, it will lead tobetter understanding where leaders and managers can then take steps to steer thetransformation of the organisation.Morgan sees organisations are in continual flux, buffeted by external and internal forces andthat in reality an organisation is in a state of chaos, which is more the natural order of things,rather than the hierarchy and control frame we usually view an organisation as. In his book,Images of Organization, Morgan looks at organisations as mechanistic and organic systems,the organisation as a brain, the organisation as a culture, the organisation as an instrumentof dominance, the organisation as a physic prison, the organisation as a sea of flux andtransformation, and the organisation as a political system. Each metaphor has it’s ownstrengths and weaknesses, but by utilising multiple paradigms, managers can gain a muchmore extensive understanding of organisational dynamics, than just utilising a singlemetaphor103. As the process of nature prevents us from planning or predetermining theprecise attributes of an organisation, management must learn to manage within this context,where their fundamental role is to shape and create contexts, in which the appropriate formsof self-organisation can occur.The understanding of change is thus involves the creation of new contexts that would breakup the old established patterns, in favour of new ones. Competing invisible forces (attractors)compete with each other to generate a situation where the organisation can travel alongdifferent paths in the future. The manager must find the right place and time and create anew context that make the present paradoxes or contradictions irrelevant. Change becomes adialectic, where potential new futures have their opposites which are resisting any change,for example; Innovate ----------------------------Avoid mistakes Think long term--------------------Deliver results now Cut costs----------------------------Increase morale Reduce staff-------------------------Improve teamwork Be flexible---------------------------Respect the rules Collaborate--------------------------Compete Decentralize-------------------------Retain control

Managers must recognise that there are benefits in the dimensions of both contradictions andthus find ways of creating contexts that maintain the desirable aspects of both dialectics.Usually the manager needs only make small changes that have the potential to lead to gettransformations in the organisation.Morgan’s work is a powerful tool, which although leads to a much better understanding ofhow organisations function, does not provide easy remedies and methods for organisationalchange or development, from a practitioner’s viewpoint. It has become an important piece oforganisational knowledge, which has led to lots of further research using these ideas inorganisational understanding over the last twenty years. Arie de Geus in the late 1990’s,used metaphor and paradigm in his bestselling book The Living Company to liken a companyto a living organism to explain survival and the learning process in organisations104.During the 1980’s many US firms were operating in other countries and found that they hadto adjust their modes of management style to account for the culture of the country theywere operating in. Austin stated that as well as a foreign company needing to adjust theirfinancial, production, marketing and products to operate effectively in other countries,managers also had to adapt to the cultural dimension, which governed all relationships,attitudes, values and approaches to work activities of local employees105. Geert Hofstedestudied 88,000 employees of one MNC over sixty-seven countries to develop a framework forunderstanding cultural differences and defined cultural differences along five dimensions106; 1. Individual verses collective orientation: the extent to which people have an individual orientation, concerned primarily for themselves and families, verses to the extent that an individual identifies with a group and feels their interests are best served in a group context, which they will give loyalty, 2. Power-distance relationships: the extent to which people accept that power is distributed to individuals and institutions unequally, thus in high power-distance relationships there is more respect for authority, where one would not be expected to go over their boss, than in low power-distance cultures where people would be sensitive to people showing authority and seek help from those they believe they could get it from107, 3. Uncertainty avoidance: the extent to which people feel threatened and stressful towards ambiguity and the importance attached to rules and procedures, i.e., workers characterised high on uncertainty avoidance like in Malaysia would tend to value security over self actualisation108, 4. Masculinity: the nature of dominant values in the organisation such as assertiveness and directness, and 5. View of time: refers to the different time frames used by people and organisations, which influences values about certain actions relating to procedures and decision making, status and rewards, etc.Hofstede’s work indicates that many motivational theories may not work in certain cultures,which is of great importance to developing motivational policies in the workplace. Thissomewhat puts a question on the teaching of Western management theory at localuniversities and the value of Malaysian’s studying management at foreign universities,returning home trying to implement what they have learnt, without any consideration to it’srelevance to the Malaysian context. Hofstede’s work has become a benchmark for studyingcomparative cultures and is beginning to be used in comparative inter-cultural studies ofentrepreneurship.

Fons Trompenaars, a consultant and author teamed up with Charles Hampden-Turnerto describe how culture influences people to think and behave in particular situations andhow this affects management. Trompenaars and Hampden-Turner argue that culture is anembedded set of rules and ways a society has become organised to deal with recurringproblems and issues it comes up against. Thus culture will determine how people deal withthese problems.Trompenaars and Hampden-Turner postulate that culture is an extremely complexphenomenon which cannot be easily rationalised. Even within a single country a cultural traitcan differ significantly within an ethnically homogeneous population. Trompenaars andHampden-Turner surveyed 15,000 managers in 28 countries to explore the differences incultures and hypothesised there are seven areas where diametrically opposed paradoxesoccur109; • Universalism verses Particularism • Individualism verses Communitarianism • Neutral verses Affective • Specific verses Diffuse • Achievement verses Ascription • Sequential verses Synchronic • Internal verses External Control.Universalists (US, Canadians, Australians and Swiss) tend to follow sets of rules, seek clarity,and follow logically and systematically, therefore assuming there is one correct way of doingthings. In contrast particularists (South Koreans, Chinese and Malaysians) are pragmatic,flexible, make exceptions according to situations and thus act more in ambiguity, thereforefocus on the peculiar nature of the situation. Individualists are orientated towards the selfand family, while communitarialists are orientated towards a group. Neutralists are orientatedtowards not expressing opinions and emotions openly, while affectivists are orientatedtowards giving opinions and showing emotion in public. Specificists tend to separaterelationships between business and personal lives, where diffusists tend to blend relationshipstogether. Achievement is orientated towards what one does, whereas ascription is orientatedtowards who we are. Sequential view time as separate periods and are orientated with thepresent, while synchronic is orientated to blending in past, present and future together inones outlook. Internal views dominance over nature, while external views are subservient tonature.Such a framework provides allows understanding of different attitudes, which can assist inunderstanding how to do business and manage in a different cultural environment. Forexample, univeralists will want specifics in business negotiations and may feel when they aredealing with those of a particularist orientation that they are getting nowhere with small talkand pleasantries, seeing discussions as irrelevant. It may be best to reward those with anindividual orientation for teamwork and those with a communitarian orientation for individualcreativity within a team. Neutralist orientated people will be hesitant to tell their superiorwhat they really think, while affective people will be very assertive. Specific orientated peoplewill separate home, family and personal lives from the office, while diffuse orientations willtend to expect personal relationships with superiors. Achievement orientated people will seekstatus and recognition by achievement and be task orientated, where those with ascriptionorientation will seek status by position and be process orientated. Sequential people will betask orientated in a specific order, where synchronic people will view the past, present andfuture together and seek tradition and visions. Internally orientated people feel they cancontrol events around them, while externally orientated people will look for ways to work withthe environment around them. The above paradoxes are two extremes and most culturaltraits will fit somewhere in between the two. Although Americans, British and Spanish can allbe considered to have a sequential outlook, Americans tend to have a much more futureorientation than the others and the Spanish tend to have a slight orientation to the past,

where this could be summated to mean that Americans have strong visions and designs onthe future, whereas the Spanish prefer to keep the traditions of the past in what they do.Trompenaars and Hampden-Turner argue that the success of the ‘Asian Tigers’ can beattributed to ‘seven major integrations’, where rules are made by exceptions they encounter,all players learning co-operatively110. This is a fundamental difference to universality, whereconsistent rule of law is valued. Consequently, based on these observations theyhypothesised that the best way for individuals, communities and organisations to advanceand create wealth is through reconciliation, rather than negotiation. Trompenaars andHampden-Turner also postulate that American managerial models cannot be applied to othercultures because of differing cultural paradoxes.Trompenaars and Hampden-Turner’s work is wide and controversial and attracted criticismsfor being too concerned with diversity, rather than culture. The ‘Asian Economic Crisis’ in thelate 1990’s also supported detractors of their theories. The concepts however have opened apath to understand issues in managing cultural diversity, but the larger messages have goneunheeded in Western management.Dr. Asma Abdullah is the only Malaysian included in this chronology. She is an executive inhuman resources for a major multinational company and also an adjunct Professor inManagement at Universiti Utara Malaysia (UUM). Dr. Asma in her book ‘Going Glocal’reviewed Malay culture in both society and the workplace and concluded that we mustdevelop a deep understanding of our culture to understand it’s strengths and limitations. Shebelieves that there is conflict in the workplace between modernity and the traditionalassumptions and values of the Malays. To resolve these conflicts and create new values thatwill lead to excellence, the very roots of culture (AKAR) must be examined, as just picking upnew values such as a competitive spirit, willingness to take risks, doing your own thing, willlead to great stress and anxiety and personal conflict and be rejected.There are numerous forces acting upon the nation – globalisation, industrialisation,development, Westernisation, Islamisation, modernisation and the Government’s ownaspirations of Vision 2020, that’s will require cultural change to meet these challenges ahead.This will require a change in peoples values, but Western values may not be completelysuitable for Malaysia. One will have to pick and choose the best ideas and values to assimilateinto the work culture. This will require an objective assessment of existing cultural values onwork behaviours, and identify what underlying assumptions and values are blocking thedevelopment and evolution of more performance orientated values. This will best be done byblending task orientated values with existing people orientated values through what Dr. Asmacalls ‘cultural surgery’.Dr. Asma presents a model of six independent dimensions of culture to explain the Malayculture and use as a starting point in changing values111; • AKAR (Roots): the values and underlying assumptions in society, installed into Malaysians from their upbringing a) harmony with others in the family, work and community b) respect for elders and those with knowledge c) focus on building relationships before undertaking any tasks d) politeness e) influenced by a sense of shame rather than guilt f) spiritual background and orientation g) sense of group cohesion and identification h) looking at a person’s character and competence • IMAN (Meaning): Adhering to a set of standards and principals which guide actions and serve as a moral reminder a) religious beliefs

b) honour c) harmony with oneself and others • ILMU (Knowledge and Learning): Acquiring knowledge and experience through learning a) spiritual knowledge b) vocational and professional knowledge • RASA (Intuition, Sensitivity, Feeling): empathetic feelings for others a) interpersonal communication b) emotions • AKAL (Logic): Intellect, understanding and wisdom a) balance with AKAL so not completely emotive in thinking b) understanding of issues c) assists in developing an integrated approach to life • AMAL (Practice): Power to act and accomplish what we want without being dependent on others. The manifestation of other dimensions in action. Once understanding the cultural dimensions which have bearing on motivation and satisfaction of the individual, the process of cultural change can be undertaken through the following steps; • Removal of extreme interpretations of values • Replacement of current work rituals that are non-productive • Improvement and enhancement of positive cultural values, and • Planting new values by providing a nurturing environment for them to develop. Dr. Asma’s work is well appreciated and respected in academic circles and largecorporations nationally and provides a key through her thorough work in understanding theculture of the Malaysian workplace. Her work is an example of adaptation of Westernmanagement theories to suit the Malaysian context.Management ThoughtWorld events and media portrayal of Islam over the last few decades has projected negativeimages, which are based on a total misunderstanding of Islam and the principals itencompasses112. Predominantly, Islam through many eyes is seen as a homogenous view ofthe world, where many elements of the media have stereotyped113 it as an extreme religion.This situation has not been assisted by the lack of published academic and intellectualthought114, which could assist in developing more balanced views about what the principals ofIslam stand for. The focus of most published works on Islamic economics and business hasbeen in the domains of finance and morals115, which leads most to the conclusion that Islamhas little to contribute in the theories of economics and business.The first and most comprehensive model of Islamic economy in modern times was publishedby Dr. M. Umer Chapra in the early 1990’s. His hypothesis was that existing economicmodels of capitalism, Marxism, socialism and the welfare state have failed to provide fullemployment, remove poverty, fulfill needs and minimize inequalities of income distribution.Both the market and centrally planned models have been weak in providing overall wellbeing,where problems of family disintegration, conflict and tensions, crime, alcoholism, drugaddiction and mental illness have indicated a lack of happiness and contentment in the life ofindividuals. Dr. Chapra stated that a new system needs to be considered which couldoptimize human wellbeing and presented an Islamic model of economy, which never beentried or implemented in any world economy and has potential to solve common economic

problems due to the overall humanitarian goal of achieving the wellbeing of all members ofsociety116.Dr. Chapra in an on-line interview was very critical of the development of Islamic economicand business theories claiming they were unbalanced in their approaches. He was reported tostate that “Primary attention has been given so far to Islamic Finance. This has led to thefalse impression that interest-free finance is all that Islamic Economics has to offer. Sincemost of the governments in Muslim countries are not yet convinced that interest-free financeis workable, excessive emphasis on it has created a resistance in official circles againstIslamic Economics. They find it to be of little value. This is unfortunate. We must blameourselves for this. Islam is a complete way of life and is capable of solving the problems ofnot only Muslim countries, but also of mankind”117. In the same interview Dr. Chapra said thatit was the responsibility of Islamic intellectuals to show how Islamic economics could solvethe socio-economic problems that humankind faced. This is in great need because there is adistinct lack of theoretical and empirical analysis to show that an Islamic strategy can helpsolve economic problems, particularly with the current state of the Islamic world, where thereis decline in moral values, exploitive financial systems, illegitimate governments, landlordism,lack of education, absence of justice and ineffective operation of incentives and deterrents.Dr. Chapra believes that there is great repetitiveness in what is written about Islamiceconomics which is not serving any cause. An Islamic alternative needs to be spelt out, whichcan only really be done after the real position in Islamic countries is analysed, i.e., howindividuals, families, firms and governments actually behave, so the gap between ideals andreality can be measured and Islamic remedies developed.The message of Islam forms its basis from the Al-Qur’an, which is the direct word of Allah(S.W.T.). The Hadĭths are documents made up of lessons taken from the life of theMessenger Muhammad (S.A.W.), written down by a number of apostles, which put theknowledge from the Al-Qur’an in both context in which they were revealed and assist indeveloping a general and universal significance118. Without the Hadĭths many importantaspects of Islam would not be known today and the Al-Qur’an would be at the mercy of thosewho misinterpret it119.To date “The fanaticism and prejudice for Western managerial systems have also, amongother things, veiled the relevancy of Islam as a model of management, as well as generatinga cynical reaction that the Islamic model existed in history and concept only, but neverpracticed in modern life, even by countries with a Muslim Majority”120. Islamic scholars arguethree main reasons for the need to develop and implement an Islamic business framework; 1. The nature of man: Man has both the potential to rise to great spiritual heights and also disintegrate into total immorality. Man’s ability to act rightly or wrongly is a matter of moral choice. Under the Islamic viewpoint, man’s purpose on earth to carry out ibadah (relates man to Allah {S.W.T} through spiritual acts)121 and follow God’s will with total devotion, according to his natural disposition (fitrah); where everything fits into the divine pattern under the laws of Allah (S.W.T)122. Submission to the laws of Allah (S.W.T) brings harmony to man, however man was created with many weaknesses123, forgetfulness124, greed for material comforts and power125, is capable of oppressiveness and ignorance126, is rash and impatient127, stringy and miserably128, ungrateful129, quarrelsome130, ruthless131, and full of self interest132, which can easily lead him astray. 2. The amoral society: General society has become amoral and lapsed in faith, believing that truth and reality is based on what can be touched, smelled, seen, heard and tasted. This has lead to a society that has become materialistic and less spiritual. This absence of spirituality is leading business into immoral activities such as stealing, lying, fraud and deceit, making people believe that they cannot succeed without pursuing the same practices133.

3. The underdevelopment of Islamic societies: Approximately 80% of the World’s Muslins live in poverty, as cultural minorities in other countries, with high incidences of unemployment and low productivity134. Countries with majority Muslin populations, are declining in their knowledge generation, research, innovation and educational standards135, have a generally a lower life expectancy, higher illiteracy rates, lower GDP per capita rates with the majority of people living in fragile and non-arable lands, poorer infrastructure and water supplies and a larger number of dependents than the non-Islamic World136. Islamic GDP as a percentage of total World GDP is estimated to be only 45% of what it should be, in order to be on par with the rest of the world137.The basic Islamic principals and their interrelationships are shown in figure 1.x below. Tahwid Fard’ain Al-Iman Syar’iah Ad-Din Fard Kifayah Al-Ilm Halal Toyyibat Al-Amal Musharakah Ibadah Al-Ta’awun Shu’ra Adab Al-Fasad Amanah Al-Falah UmmahFigure 1.x: An Islamic Business FrameworkThe Al-Qur’an was revealed to the Prophet Muhammad (SAW), who was born into a tradingfamily and brought up by Abu Talib, who was a trader. Society in the Prophet’s time wasalmost totally dependent on trade as a means to earn a living and unlike any other religion,the Al-Qur’an is heavily written in the metaphor of business and trade. Within many parts ofthe Al-Qur’an life is paralleled to a business venture, where one earns profits to gain entryinto heaven – profits meaning faith and good deeds to others and those that accept Allah’s(SWT) guidance as a bargain to save them from punishment on judgment day138. Islam urgesindividuals to strive their utmost to earn large monetary rewards and spiritual profits, while atthe same time being inspired to be successful and honest people139. This is part of theconcept of ad-din, which makes material and spiritual pursuits inseparable, where one’swhole life is concerned with the needs of humankind here on earth to secure a comfortablelife in the Hereafter140. Consequently, Islam does not prohibit worldly success141, in fact Allah(SWT) has provided opportunities for humankind to obtain success and it is certainly the

responsibility of the individual to do so142. However involvement in business should also carrywith it benevolent intentions for others while seeking success for oneself143.Islam espouses a market economy with freedom of the individual to operate a business withminimal outside interference;“He who brings goods to the market is blessed with bounty, he who withholds them iscursed.”(Ibn Majah & Al Hakim)A market mechanism is urged with free flowing knowledge without exploitation bymiddlemen;“Do not chase after those who are going to the market before they reach the place.”(Al-Bukhari & Muslim)Islam also prohibits price manipulation;“Anyone who withholds goods until the price rises is a sinner.”(Muslim).Thus Islam espouses that free trade is a major factor in the enhancement of living standardsof the general community, subject to some constraints on business in the interests of thewider community.Central to Islam is Tawhid “…a man’s commitment to Allah, the focus of all his reverence andgratitude, the only source of value. What Allah desires for man becomes value for him, theend of all human endeavour144.” Tawhid is the Islamic way of life, the fundamental of allIslamic civilization, which is process, means and end together. Tawhid is both the essence ofthe individual and the society he or she lives in. Tawhid is acceptance of one creator and Hisdivine guidance of humanity145. Tawhid implies both the mission and morality of humankind inboth social and spiritual contexts.Mankind’s responsibilities under Tawhid fall into two categories, fard’ain which is anindividual’s obligation to perform his or her religious duties and fard kifayah, which is anobligation for man to serve the entire community, through services to each other, necessaryfor the community to live safely and comfortably. Thus the obligation to improve the MuslimUmmah (community) falls under fard kifayah146, where undertaking business is the principalmethod147 of improving the economy and community;“Be involved in business as nine out of ten sources of income lie in business”(Ihya)The building blocks of Tawhid are the concepts of al-iman (belief), al-ilm (knowledge) and al-amal (pious acts and efforts). Al-iman is the belief in the existence of one God and Creator,with a commitment to His teachings and revelations, revealed through the Al-Qur’an, andProphets, through the Hadĭths and Sunnah (What the Prophet Muhammad (S.A.W.) said, did,agreed or disagreed to). Our faith in Allah (S.W.T.) is reflected in our daily behavour,influenced by our moral system formed and contained within us. It is our inner self;

“Faith is not expectations and not outward ornamentations, but implanted in the heart andrealized through actions.”(Ibn Najjar & Dailami)Al-iman is deepened by al-ilm148, which is the responsibility of all Muslims to seek149 in orderto fulfill and perform al-amal. Knowledge (spiritual, wisdom and scientific) is the foundation ofall acts of al-amal which would be futile and unproductive without the search for furtherknowledge150 to enhance the wellbeing of society151. Islam places great importance onscientific discovery, knowledge and wisdom to develop civilisation152. Al-iman and al-ilmmanifested through al-amal is the basis of the advancement of civilization for the benefit ofhumankind and the Ummah (Muslim community), in particular. This is undertaken under theprincipal of ad-din, mentioned above, which is referred to as ibadah.In Islam a person, who of faith, knowledge and pious devotion, manifested in effort and acts,using reason and experience and adheres to the teachings of the Al-Qur’an and Prophets is aperson of Taqwa, adhering to the philosophy of Tawhid. He is fulfilling his purpose on earthto perform ibadah153 to God, through obedience (ta’ah), which conforms to his true andessential nature (fitrah) of man. This relates man to God through everything an individualdoes, including spiritual duties, thoughts, actions and deeds to other people154.As man operates in a social environment, Islam prescribes a number of forms of businessorganization, through which his obligations can be fulfilled. A mushharakah can take anumber of forms; a) Mudarabah: Partnership where one manages the partnership and another supplies the financial support, b) Shirkah: where two or more individuals pool financial resources and share profit and loss on an agreed ratio and held liable to the extent of their capital, and c) Syari’ah: each partner is able to operate other businesses, independent of the principal business.Such business organizations are founded and operated on the principal of al-ta’awun (mutualassistance and cooperation) among members of a society for both their mutual benefit andthat of a society as a whole155.Islamic business is governed by the rules of syar’iah, the path by which all Muslims shouldfollow. The syar’iah is the divine law that establishes the standards of justice and humanconduct, as well as what is permitted and prohibited in action. The syar’iah is based on theAl-Qur’an, Sunnah and interpretations by Islamic scholars. Some Muslim scholars have statedthat these standards are beyond human and are a goal or path of guidance156, where otherssee these utopian ideals as mandatory for advancement of the community157.Central to the syar’iah are the concepts of halal and Toyyibat, which govern all the economicactivities of man in wealth production and consumption of wealth, where certain means ofgaining a livelihood are declared unlawful158. Halal means lawful or permitted for Muslins159, aconcept that is much wider than just issues of food, concerning as to whether things areundertaken according to the syar’iah160. Toyyibat is a much wider concept, meaning good,clean, wholesome, ethical in the Islamic concept. In nutrition, toyyibat is much wider thanhalal, as food must also be clean, safe, nutritious, healthy and balanced161. Toyyibat wouldalso mean that agriculture must be undertaken within sustainable practices162, and inbusiness that things are done with good intentions163.

In Islam, the individual’s vision, mission and objectives in business is to achieve both successin this world and the hereafter. This is al-falah. Islam puts very little restriction upon the scaleof worldly success164, except specifying, it must be reasonable, provides the comforts ofworldly life165, with consideration to the poor and suffering166, and within the balance ofworldly and spiritual life167. Mans success must also serve the legitimate needs of theummah168. This is in great contrast to the singular objective of profit maximization incontemporary business thinking169.Allah (S.W.T.) equipped man with the faculties of understanding right and wrong, so that hemay obtain a bright destiny170. Man has a free choice in what he chooses. Opposition andstraying from his true nature (fitrah) will bring discord to the individual where negativeattributes will distort his true nature, which could lead him into doing evil deeds171. Theindividual has his al-iman and al-ilm to keep him from this path of self destruction (al-fasad),which would manifest itself through nepotism, favourtism, envy, greed, corruption, injusticeand ignorance172. This in Islam is the influence of satan, manifested in many different ways toman to lure him away from God’s chosen path for him. Man becomes unfocused throughignorance and lack of knowledge173.Achieving al-falah means that man has lived up to God’s trust placed upon him, throughperforming his ibadah, while obeying all the laws of the syar’iah. This is where man hasovercome his weaknesses in the service of Allah (S.W.T.) through righteous deeds (amal), inhis obligation of fard kifayah. Man has reached the state of amanah, fulfilling the trust Godhas put in him174.Islam also specifies the way organizations should be operated and managed. As discussed,an organization must base all its work on al-amal and ibadah with the overall managementobjective of achieving al-falah for the organization as a whole and each individual within it.This is based upon a foundation of al-iman and al-ilm, within a civilization based upon atawhid philosophy, so that employees have the opportunity to achieve taqwa and avoidstraying towards the state of al-fasad. Central to achieving this are the concepts of shura(participation in decision making and community learning) and adab (justice and rights).Shura is total organizational community participation in decision making to ensure anorganization gets the best views, is creative, to develop employees understanding ofdecisions made, to achieve better implementation of decisions and strengthen the Islamicfraternity175. Shura is can also be seen as a organizational control mechanism to preventmanagement and individuals within the organization from straying down the path ofignorance, greed and oppression176, so that the organization can continue to serve itsmembers and the wider community and thus sustain itself. Shura creates a positive learningenvironment within and organization, similar to the concepts of learning organizationdiscussed later in this section. The Al-Qur’an states that the concept of shura is mandatoryupon an organisation177.An organization should build its foundations upon the basic principals of human rights in itsadministration based on the concept of adab. Adab is based on the existence and recognitionof Allah (S.W.T.) and recognition of his commands and laws (syar’iah). Within anorganizational context, adab persuades man to do good and avoid evil (al-fasad), inaccordance with the nature of man (fitrah) and nature of his action (al-amal). Adabcomprises four major responsibilities, 1. responsibility to God, 2. responsibility to oneself, 3.responsibility to society and other human beings, and 4. responsibility to the universe andother creatures178.Over the last few decades Western management ideas and ethics have moved closer toIslamic principals and ethics. The concepts of Islamic business and the ethical issues involvedwill be discussed in depth in chapter 26.

Henry Fayol was the manager at Comambault, a well known French company in the 1880’swhich was heading towards bankruptcy when he took over. Fayol managed to turn thecompany around and upon his retirement, began preaching his theories of management179,later to be known as process approach (also known as universal, functional, operational andclassical approach). Fayol’s principals were underscored by Taylorism at the time, but had amuch more humanistic approach to management, believing in incentives through profitsharing for motivation and training of workers, etc. Fayol identified four features of anorganisation as; • Specialisation: Work should be organised into logical functional groupings, • Unity of Command: Every employee should report only to one supervisor, • Chain of Command: Starts with the person in charge (managing director, CEO) and finishes with the least skilled employee, and • Coordination of Activities: Use of communication methods (memos, meetings, etc) to ensure communication between specialised groups.Fayol identified five functions of management; planning, organising, staffing, command andcontrol, which should be undertaken according to fourteen principals; 1. Division of work: Work should be specialised, 2. Authority: The right to give directives and expect compliance, 3. Discipline: Obedience and respect with reward and punishment systems to support, 4. Unity of command: The receiving of orders from only one superior, 5. Unity of direction: One superior and one plan for a group, 6. Subordination of individual interests to general interests: An individual’s or group’s interests should be subordinate to the organisation, 7. Remuneration: Fair and equity payment for work, 8. Centralisation: The size of the organisation should be taken into account when deciding whether decisions should be made centrally, 9. Scalar chain (line of authority): Communications should normally flow up and down the organisational hierarchy, but lateral communications should occur as long as superiors are kept informed, 10. Order: Everything in their place and a place for everything, 11. Equity: Personnel must be treated with kindness and justice, 12. Stability of tenure of personnel: to avoid rapid turnover of personnel, 13. Initiative: All employees should be encouraged to exercise initiative within the limits imposed by superiors, and 14. Esprit de corps: Harmony and union among employees.Fayol’s work, even a century later appears very relevant to management and influencedmany other theorists over the years, such as Luther Gulick’s POSD-CORB classification ofmanagement functions180, George Terry’s classification181, Koontz and O’Donnell182 andUrwick183. Some of Fayol’s concepts were implemented at Genral Motors by Alfred Sloan.Fayol’s principals were accepted in France, but unheeded in the US until after 1949, when hisbook was published in English184. In the opinion of Luthans, “Fayol made a significant, if notthe most significant, contribution to an overall theory of management185.”Mary Parker Follet was a political scientist in the first half of the 20th Century and wasinterested in extending the influence of democracy into industrial organisations, which seesaw were ironically totalitarian in a democratic society. Follet argued that managers had aprimary responsibility to develop a situation where people are able to make contributions oftheir own accord. Managers should learn by their own experience and call in specialists wherenecessary to contribute to the overall organisation186.

Follet was also interested on the influence of organisational political power on decisionmaking and postulated that disagreements can be settled in three ways; by domination,where one party imposes a will upon another, by compromise, where each party gives a littleto the other, and by integration, where parties invent a solution that better accommodates allparties187. Follet favoured the last form of solution as she believed that solutions could not besustainable if they were zero-sum.Follet’s ideas influenced many areas of management, in the areas of decision making,organisational politics and industrial democracy, which was experimented with by a few firmsin the 1960’s and 70’s188. She developed the idea of win-win negotiations which was thesubject of many books in the 1980’s and was an early developer of the theme ofreconciliation for the development of value, that Trompenaars and Hampden-Turnerpostulated in the 1990’s, discussed previously. Probably her biggest contribution tomanagement was her arguments about a much needed humane approach to management,which was needed at the time to counter the influence of Taylorism on American industry.Follet’s ideas at the time fell to death ears except for a few notable exceptions like Marks &Spencer189 in the UK and Levi Strauss & Co.190 in the US. However it was the beginning of aperiod where a number of studies and ideas were to take place and be developed, that wouldhave great influence on future management thinking.Elton Mayo, an Australian researcher in the United States was investigating the reasons forhigh employees turnover at the Philadelphia Textile Mill in 1923 and 1924. After interviewingand consulting with employees, Mayo’s group set up a number of rest periods during workwhich resulted in reduced turnover and more positive work attitudes. At the same time ascientific management study was being undertaken at the Western Electric Plant inHawthorne, Illinois. Between 1924 and 1927 these studies examined the effect of lightingillumination, which would be expanded upon and continue into the 1930’s. The experimentswere intended to examine the effect light intensity on productivity and expected to see adirect correlation between light intensity and productivity. However to their surprise, theresearchers found that no matter the light intensity, productivity would increase. Somethingelse was influencing increased productivity. This led to a completely accidental discovery. Theresearch group concluded that it was the novelty of the situation that was the factor inincreases of productivity191. The studies continued with Elton Mayo joining the group, whichexperimented with changes in job design and pay incentives as new variables. The resultsindicated that pay schemes and incentives were not as importance as group influence onproductivity in the workplace through the norms they develop. Group norms developed toprotect the group in the organisation from external influences such as management. Forexample, the group would restrict production out of fear they would work themselves out of ajob or that management would raise quotas. The group developed it’s own sanctions againsterrant members through ridicule, ostracism and name calling.The Hawthorne studies is the single most important research breakthrough in managementtheory during the 20th century. The results showed the importance of the informal group onproductivity and satisfaction in the workplace and issues like job security can be consideredmore important than financial rewards. Mayo himself argued that self esteem was vital toperformance and management must take account of human nature as social motives. Failureto do this will lead to lower productivity, through covert activities like restricting production orin extreme cases sabotage192. Consequently, non-directive styles of supervision would bebest to promote harmony and avoid conflict, allowing strong interpersonal bonds between thegroup members to develop as a means of satisfying social needs and inducing highproductivity193.Industry didn’t jump on the bandwagon over these new ideas, however the knowledgegained from the Hawthorne studies was set to influence a number of thinkers in thedevelopment of management thought including, Macgregor, Maslow, Herzberg, Schein,Arygris and Bennis, in the formation of what is called the human relations school of thought.

In the discipline of psychology, Henry Murray was an author of one of the first textbooks onpersonality. Murray was one of the first to develop a model of motives and their relationshipwith behaviour. His model was developed for the Office of Strategic Services, the forerunnerto the Central Intelligence Agency (CIA) to evaluate the motives and access potentialbehaviours of world leaders. Murray believed that people rarely do things for a single reason,their unique range of needs had many levels where some dominated more than others. Forexample, a high need for dominance, coupled with a low need for intimacy would developleadership behaviour where the person would have little regard for the feelings of others. Incontrast, a person with a high need for dominance, but accompanied for a medium need forintimacy, would be more considerate about the feelings of others. A description of Murray’sFive categories of needs is below194;Ambition Needs • Achievement: to master, manipulate or organise others, objects or ideas.; to accomplish difficult tasks rapidly and independently; to overcome obstacles and excel; to suppress rivals by exercising talent, • Exhibition: to be seen and heard; to be centre of attention; to make impression on others; to excite, fascinate, entertain, intrigue, amuse, entice, or amaze others, • Order: to put things in orderly arrangement, to desire cleanliness, organisation, balance, neatness and precision.Needs to Defend Status • Dominance: to seek to influence or direct the behaviour of others by persuasion, command, suggestion or seduction; to control one’s environment, particularly the social environment; to restrain of prohibit others.Needs Related to Social Power • Abasement: to accept injury, criticism and blame; to submit passively to external force; to resign oneself to fate; to admit inferiority, error or wrong doing; to confess and atone and seek pain and misfortune, • Aggression: to overcome opposition forcefully; to avenge an injury; to attack, injure or kill another; to forcefully punish or oppose another, • Autonomy: to shake off restraint; break out of confines; to get free; to resist coercion and restriction; to avoid being dominated; to be free to act according to one’s wishes and to remain unattached, • Blame-avoidance: to avoid humiliation at all costs; to avoid situations that may lead to embarrassment or belittlement; to refrain from action because of fear of failure or worry over scorn, derision or indifference from other.Social Affection Needs • Affiliation/Intimacy: to enjoy cooperation or reciprocal interaction with others; to draw near others; to please and win affection of those like you; to remain loyal to friends, • Nurturance: to take care of others in need; to give sympathy and gratify the needs of helpless others, such as a child or someone who is weak, disabled, inexperienced, infirm, humiliated, lonely, dejected or confused; to assist persons in danger; to help, support, console, protect, comfort, nurse, feed and heal others, • Succor: to receive aid from others; to have one’s needs gratified by another; to be nursed, supported, protected, advised, indulged, loved and consoled; to always have a supporter or devoted protector.

Murray also developed a test of peoples’ needs and motives through their perceptions of theworld, called the Thematic Appreciation Test (TAT)195, which was one of the first types ofpersonality tests ever developed.Murray was a very respected psychologist. Although his work isn’t featured much inpsychology literature today, he was a great influence on many others in this area. Murray’sTAT test is one of the most cited psychological tests ever196 and a forerunner to many otherpsychological tests, including the numerous ‘entrepreneurial attribute’, ‘suitability’ and‘personality’ tests, published in entrepreneurship texts today. Murray’s work has very rarely, ifever been applied to management, most texts preferring the work of Hertzberg, Maslow andothers. Certainly Murray’s Needs Hierarchy has never, to the author’s knowledge, beenapplied to the much researched question in entrepreneurial research; ‘why does a personbecome an entrepreneur?’ Murray’s model may be a good way to look at this issue,especially in Malaysia, where culture has a more collective than individualistic orientationunder Hofstede’s classification of culture, discussed previously.Management approaches to motivation in the workplace during the 1940’s were simple andclear cut, seeing worker motivation as a result of monetary incentives, job security and goodworking conditions. Such a simple approach to solving complex issues was falling short. Theonly other alternative was the democratic principals of management, which were notacceptable at the time. Little had been done to apply psychology to business behaviour, atthe time.Abraham Maslow, a clinical psychologist realised there were higher needs that peopleperceived which influenced motivation. Maslow outlined a complete theoretical model ofneeds and motivation in 1943197, drawing upon his clinical experience as a psychologist. Hebelieved needs could be arranged in a hierarchical manner, where once a set of lower needshad been satisfied, they no longer served to motivate the individual and a set of higher levelneeds become important to motivate the individual; 1. Physiological needs: are the most basic level in the hierarchy, which correspond to hunger, thirst, sleep, shelter and sex, etc. Once these basic needs are satisfied, they no longer motivate the individual. Only the next level of needs will motivate. 2. Safety needs: are the second level of needs that an individual seeks such as emotional security and safety. Like physiological needs, once they are satisfied, they no longer serve to motivate the individual. 3. Affiliation and love: are the third level of needs which concern an individual’s acceptance and belongingness to a group and society. 4. Self esteem needs: this is one of the higher levels of individual needs where power, achievement and status become important. This level includes both self-esteem and esteem from others. 5. Need for self-actualisation: Once all other needs are satisfied the individual seeks self fulfilment and seeks realisation of his potential. This is related to a person’s self concept and perception of self into reality.Maslow did not apply the hierarchy of needs to work motivation for almost twenty years198,however others popularised Maslow’s theories into management literature. Maslow’shierarchy of needs is taught in almost every business school in the world, and for a long timeuncritically accepted. However, Maslow’s theory was developed in American society in the1940’s and fails to explain issues why people deprived of lower needs turn to spirituality anddevotion to religion199. Research utilising Maslow’s theories has come up with inconclusiveresults200. Most importantly, Maslow’s theory failed to take account of the influence of cultureon social needs in the workplace, which puts into question the theories relevance to theMalaysian work context.

David McClelland was a Harvard University psychologist who is best known for hisachievement model and work on power in organizations. McClelland with his co-researchersbegan looking in 1947 at all aspects of achievement. He developed a profile of thecharacteristics of a high achiever201; 1. A high achiever will take moderate risks, 2. High achievers have a desire for immediate feedback on how they are progressing toward a goal. High achievers prefer to do things that give relatively quick results, such as sales jobs or management positions with measurable performance criteria, rather than something long-term with slow results. Professions like research and development or a teaching profession would be frustrating to them. 3. High achievers find accomplishment satisfying in itself, they don’t necessary want the accompanying rewards. Their attitude towards money is not as an ends, but look at money as a form of feedback or measurement of how they are performing. Given the choice of a non-challenging job with a high reward or a challenging job with a low reward, on the whole, the high achiever would select the latter. 4. High achievers are preoccupied with the task, once they have set their goals, they will pursue them until the goals are achieved. They cannot stand to leave a job half done and not satisfied until they have made full effort. This often reflects in their outward personalities, which can have a negative effect on others. Often high achievers have the characteristic of being a loner. They tend to be very realistic and don’t allow others to get in their way. Typically these people are good salespeople, but not good managers. Similarly they are good entrepreneurs, but not good at managing an ongoing enterprise.Approximately 10% of the population could be considered high achievers and this can beseen from childhood202.McClelland also researched a person’s needs for affiliation. He found that the need foraffiliation or intimacy with a group plays an important role in motivation. There are variousreasons behind the need for intimacy. Groups are perceived to provide a sense of security forindividuals where there is some uncertainty, or fear of something external to the individualand group. Groups also provide individuals with a cognitive clarity (sense of how to interpretevents around them) and a way to make a self evaluation and social comparison about theway they should dress, talk, think and act. Generally, women’s needs for intimacy are higherthan men.McClelland also researched a third motivator, status, power and prestige. Many people arestatus seekers in their careers, who desire material status symbols like good clothes, bighouses, expensive cars, etc. This infers in their self-perception of higher in a social hierarchythan others. Social status can also be achieved through membership of a family, personalqualities, academic achievements, material processions and authority and power throughcareer position. Status-determining factors may differ from culture to culture and will dependon cultural roles and values. McClellend stated that the drive for status for some people isvery high and it seems to start developing at an early age. The need for status and power isa need to have an effect on others and a need of control over their lives and work.Associated with these needs is the likelihood that such people will also be susceptible tostress and anxiety and vulnerable to aliments and diseases, like high blood pressure203,caused by a sense of lack of control over their lives and work204. The power need in men andwomen is perceived differently and will behave differently by this need motivation.McClelland stated that each person has all three needs to different extents within them,which influence their behaviour. However one need will dominate as a rationale andmotivator for their behaviour at any given time.

The psychoanalytic influence of Freud and Klein had led to beliefs that achievement motivesare only developed in childhood and once developed, nothing much can be done to changethem. McClelland went on to conduct courses on developing a need for high achievement inindividuals, as he believed this could be learned and conditioned. He conducted these classesall around the world (including Asia) among both groups of company executives, whichproduced very positive results, measured by improvements in income levels after the course.The achievement-motivation course also worked on producing new entrepreneurs in Indiaand indicated that this sort of training could have benefit in assisting disadvantaged groupsas well as corporate groups in developing their achievement-motivation205. The achievement-motivation course had four goals206; 1. To teach participants how to think, talk and act like a person who is a high achiever, 2. To stimulate participants to set higher, but more carefully planned goals over the next two years, 3. To give participants more knowledge about themselves, and 4. To create group bonding from learning about each others hopes and fears, successes and failures, and from going through emotional experiences together, in a retreat setting.McClelland extended his research to societies and hypothesized that in a country whosepopulace showed a high achievement factor, the country will experience high economicgrowth and prosperity, whereas a society consisting of low achievers will economically declineand eventually collapse207.David McClelland’s work was similar to Maslow’s and had many parallels with otherbehaviourist psychologists at the time. McClelland also showed that need achievement andmotivation could be learned and that self esteem and mutual group reinforcement andsupport was very important to this. Contemporary behaviourial research intoentrepreneurship heavily cites McClelland’s work on the issues of why people becomeentrepreneurs.Frederick Herzberg was another clinical psychologist with a passionate humanity,influenced by his wartime experiences. Herzberg basically believed that tasks performed bypeople at work has an influence over psychological growth and people were satisfied andmentally to the extent that work provided opportunities for achievement, recognition,challenge, personal advancement and learning208. Herzberg extended the work of Maslow andundertook a study of accountants and engineers in Pittsburgh, from which he developed hisTwo Factor Theory. Herzberg identified certain factors relating to the work task that he calledhygiene factors, which reduce a persons dissatisfaction with their work situation andmotivators which result in job satisfaction. Herzberg postulated that hygiene factors must besatisfied before motivators have a positive effect on the employee’s commitment to thecompany and productivity. A description of the hygiene factors and motivators is below209;Hygiene Factors • Salary • Status • Security • Working conditions • Fringe benefits • Company policies, i.e., leave etc. • Interpersonal relations in the workplaceMotivators

• Meaningful work • Challenging work • Recognition for accomplishment • Feeling of achievement • Increased responsibility • Opportunities for growth and advancement • The job itself.Herzberg;s two factor theory, like Maslow’s became a standard textbook and business schooltheory and was widely accepted by practitioners in the 1960’s. Herzberg’s work was the focusof numerous studies in subsequent years, which gave a number of criticisms of the two factortheory210. However it is widely recognised today that Herzberg’s work was still anintermediate explanation of job satisfaction and it influenced much further research into thearea of job satisfaction and job enrichment.American psychologist Douglas Macgregor developed a theory on two different views ofpeople and their implications for management. Theory X was an assumption by managersthat people were basically lazy, extrinsically motivated, undisciplined, want job security butno responsibility in their jobs. In contrast Theory Y was an assumption by managers thatpeople do not inherently dislike work, are extrinsically motivated, are capable of self-controland seek responsibility211. Most managers took the Theory X view and thus it could beexplained why they were reluctant to delegate responsibility, etc. Adopting a Theory Yapproach is a more innovative way of managing, where responsibility, much looser controland much more goal-orientated approaches can be undertaken. Macgregor had the samehumanist philosophies as Maslow and Herzberg, believing that human motivation wascomplex and the organisation could benefit from the differences of individuals, thus Theory Ymanagement was the preferred option to go.Macgregor’s work still has great influence on management today and is still standard in mosttextbooks and business schools. Macgregor’s ideas probably brought about the developmentof the human resources manager as an extension of Theory Y management in theorganisation, where training systems were developed to promote this style of management.Macgregor was working on Theory Z, which aimed to bring together the needs andaspirations of the individual and organisation, when he died in 1964. William Ouchi tookover the idea and examined the lessons US companies could learn from their Japanesecounterparts, such as consensus decision making, lifetime employment, slow promotion andplanned succession, concern for employees including social life, and commitment to thefirm212. Macgregor’s work was also to influence the writings of Kanter, Bennis and Peters,which we will be looking at soon.Dr. Bruce Tuckman developed his group behavioural modal in 1965. Tuckman’s modelexplains how a group forms and develops from the interpersonal relationship point of view.Tuckman postulates there are four stages in group development; 1. Forming: this point the individuals roles are still ambiguous and unclear and there is a high dependence of the leader for guidance and direction. Members of the group ask a lot of questions about purpose and external relationships and the leader is the dominant person in a still informal environment. However individual members maybe testing the tolerance of the group and leader. 2. Storming: During this stage decisions are not easy to make as members are developing their positions in relation to each other and the leader within the group. Challenges to the leader may come at this point as cliques and factions form. The group is beginning to have a purpose and objectives, but still with some uncertainty as direction and focus is distracted by relationships and emotions, often in the form of a power struggle. The group forms methods to solve these problems through compromises or other mechanisms.

3. Norming: During this time there is usually consensus within the group, which responds to the facilitation by the leader. People accept their role and responsibilities and decisions start being made. Commitment and unity is now strong and the group may engage in social activities. The team has decided its process, working styles and rules. The leader has earned some respect from the group. 4. Performing: The team clearly understands what it is doing and the reasons for doing so. This vision is shared and the group has momentum without much interdiction by the leader. There is focus on goal achieving and the team makes most decisions against the objective of meeting the goals set. Disagreements are solved within the group amicably and any necessary changes in structure and processes made when seen fit. Team members have developed a sense of comradely and work by delegation.Tuckman’s model was one of the first propositions about group dynamics and leadership inthe group environment and certainly had influence of the ways of thinking about anorganization as a culture and on future leadership models postulated by Tannenbaum andSchmidt. Group dynamics are an important part of management studies at business schoolsbecause of its influence on leadership, productivity, satisfaction, efficiency and innovation.Unfortunately, Tuckman’s contribution has all but disappeared from the textbooks, with hisideas absorbed into more holistic models of organization.Henry Mintzberg in the early 1970’s dispelled the myths of management by analysing whata manager really does and cast these activities into various roles, which could be groupedinto three categories213; 1. Interpersonal role: as a figurehead, leader and decision maker, 2. Informational role: as a monitor, disseminator, spokesperson and, 3. Decision maker: as an entrepreneur, disturbance handler, resource allocatur and negotiator.Mintzberg found that what work people do in different positions of the hierarchy andfunctional level was in essence very similar in role and characteristics, i.e., all were afigurehead for the department or section, leader, liaison person, monitor and disseminator,spokesperson, entrepreneur, disturbance handler, resource allocatur and negotiator. In thejobs managers do there is both a routine and non-routine component. Managers need to beboth generalists and specialists and usually work on information supplied verbally.Management is more an art than science basically relying on intuitive and non-explicitprocesses. Mintzberg found that managers change their focus from subject to subject,problem to problem and unable to concentrate on any subject for any length of time withoutan interruption. Mintzberg’s studies and surveys proved that management is really a complexsplit focus task, which challenged notions prevailing at the time.The combined works of Mayo, Maslow, Herzberg, Macgregor and Tuckman, among manyothers in the other paradigms of strategy, organisation, marketing and production, changedthe way management was viewed. This propelled management schools to the forefront,where the Master of Business Administration (MBA) came into it’s own as a perceivednecessity for rising management to take. This gave rise to the birth of the professionalmanager, for the first time graduates not necessarily linked to disciplines like engineering oraccountancy, who upon graduation began filling the ranks of lower and middle managementin organisations around the world. Previously, people in organisations could work their wayup from the bottom, i.e., in a bank start as a teller and one day rise to the level of manager.Management schools put a stop to this and in many ways stopped the upward mobility ofpeople in organisations, based on experience and loyalty. The 1980’s came with theperception of the ‘gung ho’ manager, which was about to be encouraged even further withthe flood of new ideas in management and number of business books on bestseller lists.

Tom Peters and Robert Waterman were employees at Mckinsey, one of the premiermanagement consulting firms in the United States. They carried out research to identifycommon characteristics of successful companies, based on a selection criteria of six financialmeasurements. Their basic conclusion was that excellent companies exercised commonsenseand kept very close to the business basics214. Peters and Waterman called in two academicsRichard Pascale and Anthony Athos to assist them make sense of the data and select theimportant characteristics of success. Strategy, structure and systems had betweendetermined and Pascale suggested style and shared values to complete five components ofthe Seven S Framework. After some weeks of discussion skills was added to the framework tomake up six components. The seventh was decided upon as sequencing, but later replacedwith staff. Peters was also proposing adding power, but this didn’t eventuate215.The Seven S Framework was featured in Peters and Waterman’s book In Search ofExcellence, published in 1982. The book was far from being an academic piece of literatureand written in a popularist format, easy to read with lots of stories to get the messagesacross. Even though the Seven S Framework was sharply criticised for making organisationalbehaviour simplistic, akin to an advertising agency developing slogans and that many of theexcellent companies described in the book are not performing well now216, the book hadmany relevant messages, in a chapter by chapter format, which came to corporate Americaat the right time217; 1. A bias for action, active decision making - getting on with it. 2. Close to the customer - learning from the people served by the business. 3. Autonomy and entrepreneurship - fostering innovation and nurturing champions. 4. Productivity through people - treating rank and file employees as a source of quality. 5. Hands-on, value-driven - management philosophy that guides everyday practice - management showing its commitment. 6. Stick to the knitting - stay with the business that you know. 7. Simple form, lean staff - some of the best companies have minimal HQ staff. 8. Simultaneous loose-tight properties - autonomy in shop-floor activities plus centralised values.Given the criticisms, In Search of Excellence is one of the all time best selling managementbooks of all time and Tom Peters is the most highly demanded speaker in the managementcircuit. Peters in his way of putting things has managed to inspire many and bring up the‘management culture phenomenon’. However, although most managers at the time had acopy on the bookcase behind their desk, actually how many read it and were able toimplement any of the ideas is another thing. Tom Peters as an influence on managementthought continued with his books A Passion for Excellence, Thriving on Chaos, LiberationManagement, The Tom Peters Seminar, The Pursuit of Wow! and The circle of Innovation.Bestsellers that followed the ‘strategies for success’ format more than a decade later includeJerry Porras and James Collins’, Built to Last and Jeffrey Pfeffer’s The HumanEquation.Roseabeth Moss Kanter is a professor at Harvard Business School and also a consultantand lecturer travelling around the world with her message to audiences. Although she doesnot take the evangelistic approach of Tom Peters, her work is rigorous but at the same timepopularist, and appealing to her audiences. Kanter of concerned with integration between theindividual and the corporation, influenced by Mayo and Macgregor’s works and a pragmaticidealist viewpoint, viewing organisations as micro-societies somewhat akin to the culturalframe like Schein, Kilmann and Deal and Kennedy. She has also drawn from Hofstede andTrompenaars in her later works.

Her first book Men and Women of the Corporation published in 1977, Kanter examinedbureaucratic organisation and hypothesised that managers are emersed within a restrictiveenvironment and espoused new types of organisations that would empower the manager.The Change Masters in 1984 continued with her theme of empowerment in organisations,where unwillingness and even fear prevented corporations from disengaging from theiranchors of the past and creating more innovative and dynamic environments.Kanter’s third book When Giants Learn to Dance in 1989 encapsulated the message oftransformation to a new type of corporation, necessary because of the dynamic environmentsand forces of globalisation firms now find themselves in. Kanter espoused that companiesmust take a re-look at their core competencies, expand through strategic alliances and utiliseoutsourcing for specialisation and peripheral activities. Proof of this is the growing serviceindustries around the world. As companies become more globalised cross, culturalmanagement will become one of the biggest management issues facing the corporation.Kanter said that successful corporations will break away from their structures where processwill dominate, creating a much more flexible organisation where resources can bereconfigured in the best ways to meet the challenges it faces. Communication will flow wherenecessary rather than through formal channels of a hierarchy. Kanter calls this the postentrepreneurial firm which will be created by commitment from management at the topchanging employees values, change of structure and education within the middlesmanagement and freeing up lower management to participate in creating ideas for newproducts, services and markets, new processes and ways to get closer to their customers.Kanter identifies seven skills managers will have to develop to transform themselves from justmanagers to business athletes218; 1. Learning to operate without the support of hierarchy, 2. Knowing how to compete in a way that enhances rather than destroys cooperation, 3. Operating with the highest ethic standards, 4. Displaying humility, 5. Developing a focus on process, 6. Being multi-disciplinary, and 7. Gaining satisfaction from results.Kanter’s works are popular because they show what a corporation could be and demonstratespragmatic ways on how to achieve this, in an era where corporations are pre-occupied withdown-sizing, cost-cutting and eliminating middle management. As with Tom Peters In Searchof Excellence, how many of these ideas are implemented is questionable, but manycorporation managers have become empathetic with the ideas, values and strategic issuesthey face in the near future.The corporate world in the 1980’s had grown so powerful, many corporations were largerthan some national economies and seemed to operate without the scrutiny of anybody.Decisions made by corporations could devastate local economies and the Union Carbideaccident in Bhopal, India in 1984, showed how unaccountable corporations could be. UnionCarbides actions of stripping the assets of the company and distributing the proceeds toshareholders219, rather than attempting to assist and compensate the victims, led todisillusionment with corporate management. Corporations and managers seemed to haveunlimited power and ruthlessly pursued the goal of profits without accountability to anyone220.A perception prevailed that ‘making money and greed was good’ epitomised by the characterGordon Ghekko in the blockbuster film, Wall Street. The brave new world of the corporationwas here, but it had come with a spiritual vacuum.Enter Stephen Covey, a devout practicing member of The Church of Latter-Day Saints,evangelistically preaches personal development, fulfilment and spirituality within the contextof the organisation. Covey’s first book The Seven Habits of Highly Effective people set a

standard of highly ethical and humanistic principals that all individuals should strive for inbusiness221; • Be proactive as this will develop the ability to control one’s environment, rather than be controlled by it, as is generally the case. • Begin tasks with the end result in mind, avoid distractions and concentrate only on relevant activities, which will make you much more productive, • Organise correctly and undertake the most important tasks first in a step by step approach, • Look for win-win strategies so that all benefit, • Listen to people first and understand them before you try to make them understand you, which will assist in maintaining positive relationships with people, • Look to develop synergy between people which will develop a better outcome, greater than what individuals can achieve working by themselves, and • Continually seek self-renewal, spiritually, mentally, emotionally, socially and physically.Covey’s book sold over 15 million copies and launched him on a career of consulting to manyof the top Fortune 500 companies. Covey built a training and consultancy company which hasover 12,000 direct facilitators with curriculum materials translated into numerous languages.Covey’s organisation has also developed pilot programs with cities wishing to becomeprincipal centred communities. Covey’s set of life rules is not without their critics who claimhis ideals are too idealistic and difficult to implement as well as being seen as a quick fixapproach. However, this does not detract from the extremely large following of devotees toCovey’s methods growing around the world. There are similarities with Peter Drucker, DaleCarnegie and David Allen in the approach. Dale Carnegie’s work is also on the rise again inpopularity and consequently, corporations are taking notice of the importance of employeepersonal growth within the corporate environment.The ideas of empowerment continued through the 1990’s with observable changes in theways corporations set up their internal structures. Ratios between employees and supervisorsdecreased dramatically and support staff in offices also decreased dramatically withexecutives doing their own typing, photocopying, etc. Secretaries were replaced withassistants who became involved in the managerial work itself. One cannot forget that therewere other factors like the development of information technology and need of firms to costcut staff to cope with the downturns and recession in the economy during the early 1990’s.Corporations with information technology could, where before they could not decentralisedecision making and operate with less middle management. With some scepticism, one couldcome to the conclusion that the concept of empowerment, an espoused word in corporatevocabularies, was either misunderstood or mis-practiced, intentionally or unintentionally.However, continuing along the lines of Argyris, McGregor, Kanter and others, Quinn Millsand Bruce Friesen espoused empowerment as something far beyond managementdelegation but as a management style222. Although there is more than fifty years ofmanagement thinking supporting the philosophy of empowerment, it still remains to be seenwhether it is a fad or substantial change in the way management does things.Companies have always sort to measure their performance and realised the limitations ofrelying on just financial reports. For years there has been debate by the accountingprofession about the need for wider methods of measuring performance. Corporate scandalsduring the 1990’s also indicated a need for board of directors to have some sort of measureto show the overall wellbeing of the corporation223. Management also realised that it was notthe formulation of strategy that was difficult, but its implementation224, so some sort ofmeasure of implementation success was required. Finally, management also needed atechnique that would also garner commitment from employees for the company’s goals andmission225.

Robert Kaplan, an accounting professor at Harvard and David Norton, a consultant,developed the concept of the balanced scorecard which was a way of measuring importantvariables across the organisation, so data could be viewed in a holistic way. Cause and effectrelationships could be examined and management could analyse the effect of changingsomething one area on all others areas of the business. The balanced scorecard focused onfour main areas226 of the business; • From the Customers Perspective – how they see the organisation and what has to be done to remain a valued supplier? • From the Internal Perspective – what internal processes must be improved if objectives in relation to customers and other stakeholders are going to be achieved?, and • Innovation and Improvement – how can the company continue to improve and create value in the future? What measures are required? • Financial Perspective – how does the company look to the shareholders?One of the keys to developing a successful scorecard is selecting the correct indicators andensuring they are complementary and not duplicating or overlapping227. Included in theindicators must be lead and lag indicators which show current position and indicate withstrategy, where the firm can travel. The balanced scorecard proved too popular to be called afad and use of it has extended into government and non-profit institution. The balancedscorecard approach has also become a large consulting industry with computer softwaresystems available.Leadership ThoughtNiccolo Machiavelli was born in Florence, Italy in 1469. Machiavelli entered the Florentinegovernment as a secretary and quickly rose and was soon on the council responsible fordiplomatic missions. Machiavelli was later dismissed from office when a political change tookplace. He was never able to return to office because of the controversy of his books had onhis character, many believing he was ruthless and uncompassionate.Machiavelli’s writings showed insight about how a leader could develop and stabilize agovernment, particularly about the human character of leadership. Machiavelli’s viewscompletely lacked sentimentality, were amoral (i.e., he left out judgments about religiousethics and wrote more from the point of view of a paganistic nature) and took a pragmaticand effective view of things. He did not make his views known about right and wrong228.Machiavelli’s best known book is The Prince which describes the methods by which a leadercan gain control of the realm. Machiavelli focuses on the conquering prince who has a difficulttask of stabilizing his new found power and realm and needs to build a structure andorganization that can be sustained. A prince publicly must be beyond reproach, but behindthe scenes things are required of him that are of an evil nature in order to achieve thegreater good.Machiavelli’s second work his Discourses on the First Ten Books of Titus Livy is a set of workson how to start, develop and maintain the republic. Each book begins with a principal whichis supported with Livy’s history of Rome and other ancient models of history. Many of theconcepts in this work such as checks and balances and the strength of the tripartitegovernment structure are still valid today and similarities can be seen in the structure ofmany democratic governments today.Machiavelli had profound insights into organization and it’s dynamics centuries before modernmanagement thinkers wrote about them. He talked about setting goals and objectives anddeveloping accountable bureaucracies. Machiavelli also talked about using shared values todevelop a shared commitment and common purpose in the organisation229, something

features very prominently in the contemporary ideas of organizational culture and leadershipmodels. Machiavelli saw the restrictiveness of the organization upon the individual230,prominent in the concept of empowerment today and that shareholders are really not thegroup that ultimately controls the organisation231.Machiavelli was misunderstood in his own time and continues to be. Today a person who isdeemed to have a Machiavellian personality is seen as manipulative and unethical in theirbehaviour and attitudes232. The concept of ‘the end justifies the means’ goes back toMachiavellian thought, where evil actions can be justified because it will ultimately creategood for the greatest number of people. However this could be a grave misinterpretation ofMachiavelli, further evoked in modern times through the popular cottage industry of bookspublished about Machiavellian ideas. In The Prince, Machiavelli placed a number ofrestrictions on evil actions, stating, 1. this was only acceptable for the stabilization of thestate, 2 individual power for powers sake is not acceptable and does not justify evil actions,and 3 it should not arise out of selfishness and degeneracy233. Perhaps Machiavelli is onlybeing criticized for his blunt and honest appraisal of basic human nature, stripped of it’smoral overtones. In modern management we can see many examples of this, such as theexample of the cutting of staff in the name of empowerment or lean production, wheremanagement really has another agenda, mentioned previously in this section.Machiavelli’s works have the status of classics and have tremendous political, organizational,strategic and political genius. This can be seen if one understands that Machiavelli’s intentionwas to eliminate cultural and religious values to provide a naked view of human instincts.Machiavelli’s contribution was the beginning of political science and understanding the natureof power. Machiavelli’s premise was that power is neutral and good or evil is generated bythe way it is used. Organisations, firms and corporations can also be seen through a politicalparadigm, as a way to understand it’s dynamics from the power pint of view. Anthony Jaybrought Machiavelli into management prominence and thought in his 1970 book Managementand Machiavelli.Psychologists understood the importance of leadership on conflict, cohesiveness, motivation,power and the overall effectiveness of the organisation. Leadership was recognised as thedifference between success and failure, whether in business, government, politics or sportsgames. Yet with its importance, up until the 1930’s the qualities of successful leadership werestill an unexplainable concept. The pioneers of leadership studies were Ronald Lippitt andRalph White.Lippitt and White undertook a study of three boys clubs, each subjected to different types ofleadership, authoritarian, democratic and laissez faire. The authoritarian leader was verydirective and allowed no participation, the democratic leader encouraged group discussionand decision and the laissez faire leader gave complete freedom to the group. Under controlconditions the leadership styles were practiced to see their effects on satisfaction, frustrationand aggression. The boys found an overriding preference for the democratic leader. Boyssubjected to the authoritarian leader either behaved aggressively or apathetically. The laissezfaire style actually produced more aggression than the autocratic style234.Sweeping generalisations could not be made from the studies as the effects on productivitywere not measured. However this study had great historical significance in a similar mannerto the Hawthorne studies and proved in a scientific way that different styles of leadership canproduce different reactions from the same groups.Rensis Likert in the mid 1940’s undertook a study of supervision, productivity andsatisfaction that group members derive from participation at the Michigan offices of thePrudential Insurance Company. Results showed that supervisors of high productivity sectionswere more likely to; • Receive general, rather than close supervision from their supervisors,

• Like the amount of authority and responsibility they have in their jobs, • Spend more time in supervision, • Give general rather than close supervision to their employees, and • Be employees orientated, rather than production orientated235.The low productivity supervisors had essentially the opposite characteristics. The employeesorientated supervisor became the general model of supervision for the human relationsschool of thought. This research has been often cited as proof human relations type ofapproach is effective in management.In 1945 the Bureau of Business Research at Ohio State University initiated a series ofleadership studies. The studies started with a premise that no satisfactory definition ofleadership existed. The outcome of the study showed that leaders high on initiating structure(goals and tasks) and consideration (friendly, trusting, respectful and warm) have employeeswho show high performance, low turnover and low grievances rates. Leaders low on initiatingstructure and consideration have subordinates with low performance, high turnover and highgrievance rates. Leaders who display a combination of high initiating structure, but lowconsideration resulted in high performance, but also high in turnover and grievance. Leaderswith a combination of low initiating structure and high consideration resulted in lowsubordinate performance as well as low turnover and grievance rates236.These studies were the first to show the importance of task direction and consideration ofindividual needs in leadership behaviour and highlighted some of the faults in scientificmanagement, still the benchmark in supervisory theory at the time.Robert Blake and Jane Mouton developed a very popular at the time grid of variousmanagerial styles in the mid 1960’s. The grid shows on one axis concern for people and onthe other axis concern for task accomplishment. These were similar variables to both theOhio and Michigan studies. The grid identifies five basic styles of management representingvarious combinations of task orientation and concern for people. Blake and Mouton point outthe the best style will depend upon the situation237, i.e., factory, country club, school, office,etc. This approach was to become important in organisational development wherepractitioners wanted to shift employees’ values within the organisation.Research to date had still failed to provide an overall theory of leadership, so Fred Fiedlerturned his attention on the situational aspects of leadership. During the 1940’s he searchedfor the situational variables that impact on leadership roles, skills and behaviour, and theireffect on subordinates performance and satisfaction. Over twenty years Fiedler was able todevelop a situational model to understand organisational effectiveness. His model combinedthe relationship between leadership style and favourableness of the situation. Favourablenesswas defined along three variables238; 1. The leader-member relationship, 2. The degree of task structure, and 3. The leader’s position power.Fiedler then postulated that an effective manager diagnoses the situation along the threedimensions and then determines whether their style fits in. Thus, if leader-member relationswere good, structured task orientation would be appropriate. However if their power positionwas weak, they might be best to apply an unstructured task orientation. If leader-memberrelations were poor and their power position strong, a structured task orientation could beappropriate. However if their leader-member relations were poor and power position alsopoor, an unstructured task orientation would be most appropriate. This model became aguide on how to structure leadership in varying situations of subordinate relationships andeffective power over the group.

Rensis Likert continued his research for many years and in the mid 1960’s proposed fourbasic styles of leadership; 1. System 1: (Exploitive Autocratic) where the leader has no confidence and trust in their subordinates, subordinates do not feel free to discuss things about their job with their superior and consequently ideas and opinions on how to solve problems never reach the leader. This system is very authoritarian and tries to exploit subordinates. 2. System 2: (Benevolent Autocratic) where the leader has condescending confidence and trust in their subordinates, but subordinates still don’t feel free to discuss things about their job with their superior and only a few ideas ever get to the leader. This system is still authoritarian but in a paternalistic manner. However there is little delegation of tasks to subordinates. 3. System 3: (Participative) where the leader has substantial but not complete trust and confidence in their subordinates, so still wants to keep control of the decision making. Subordinates however feel free to discuss problems with their superior and the leader usually hears ideas about problems from their subordinates. Leadership is in a consultative style and asks for and receives input from their subordinates, but maintains the right to make the final decisions. 4. System 4: (Democratic) where the leader has complete confidence and trust in their subordinates in all matters, subordinates feel completely free to discuss problems and issues with their superior and ideas always reach the leader, who tries to make constructive use of them. The manager in the beginning will give some lead, but the process will become totally participative.Likert’s research found that systems 3 and 4 were the styles that produced the besteffectiveness and styles 1 and 2 produced the lowest effectiveness. Likert also recognisedthree forms of variables that would influence the effectiveness of leadership style within theorganisation239; 1. Causal variables: independent variables that determine the direction and results of the organisation that are under control of management, 2. Intervening variables: reflect the internal climate of the organisation, i.e., performance goals, loyalties, attitudes, perceptions, motivations which all effect interpersonal relationships, communication and decision making in the organisation, and 3. End-result variables: dependent variables like the outcomes of the organisation, i.e., productivity, service, costs, quality and incomes.Likert postulated that the style of management had very complex effects upon theorganisation, where for example, a change in leadership style to system 1 may increaseprofits but deteriorate attitudes, loyalty and motivation, etc. In the long term these variablesmay lead to an erosion of profits. Thus, a change in management style may have a time lageffect before the impact of change is really felt upon the organisation. Short term cause andeffects may be very different in the short term than the long term.Likert’s work went some way in explaining leadership and the causes and effects upon andorganisation and it’s employees. However it had to be recognised that each industry had adifferent history of development, sets and levels of skills and different procedures, so eachcompany would require it’s own unique style of leadership.Around the same time as Likert, William Reddin expanded upon Blake and Mouton’s modelof leadership adding in personalty dispositions into their management styles. This becameknown as Reddin’s 3-D Model of Leadership Effectiveness. Reddin postulated that thepersonalty disposition of the leader could lead to either effective or ineffective leadership.Effective psychological dispositions (or archetypes) would be240;

• Executive: This style has a great deal of concern about both task and people. A manager using this style would be a good motivator, sets high standards, recognises individual differences and utilises team management. • Developer: This style has maximum concern for people and minimum concern for task. A manager using this style has total trust in their people and is primarily concerned with developing the best out of them. • Benevolent Autocrat: This style has maximum concern with task and minimum concern with people. A manager using this style knows exactly what is needed and goes about achieving it without causing any friction or resentment. • Bureaucrat: This style is primarily concerned with rules and procedures and maintaining control of the situation.Ineffective psychological dispositions (or archetypes) would be; • Compromiser: This style has a great deal of concern to both task and people. This style is poor for decision making as it has difficulty taking account of all the pressures surrounding the situation, while trying to balance concerns for both task and people. • Missionary: This style gives maximum concern for people and minimum concern for task. This leader is always trying to be a ‘do gooder’ who values harmony in the end. • Autocrat: This style has maximum concern with task and minimum concern with people. The leader has no confidence in others, has an unpleasant disposition and interested only in the immediate job. • Deserter: This style has minimum concern for task and people and the leader is uninvolved and passive.All models to date had been situation prescriptive and didn’t answer how a manager shouldact and what decisions should be made in a given situation. Victor Vroom and PhilipYetton developed a specific model on how decisions ought to be made (normative) thatcould actually be used in making decisions. Managers select a decision style according to theamount of participation in decision making that is appropriate for the situation. Vroom andYetton outlined a number of variations according to authoritative, consultative, group basedand delegative styles in making decisions, which can be either individual or with interactionwith a group. A summary of the decision making choices available to the manager are241; • Authoritative a) Individual: The manager makes the decision by themselves using available information, or you obtain the necessary information from your subordinates and use it to make the decision, or, b) Group: No group interaction or the manager obtains information from subordinates and makes the decision by themselves. • Consultative a) Individual: The manager shares the problem with their subordinates, obtaining all their ideas and then make the decision either taking into account subordinate ideas or disregarding them. b) Group: The manager shares the problem with their subordinates, getting their ideas without bringing them together as a group, then make a decision either taking into account subordinate ideas or disregarding them or share the problems in a group meeting and then make a decision either taking into account subordinate ideas or disregarding them. • Group Based

a) Individual: The manager shares the problem with subordinates and analyse the problem together and arrive at a consensus of opinion in a free and open environment. • Delegative a) Individual: The manager delegates the problem to one of their subordinates providing them with all the information available and giving the subordinate authority for making the decision with the manager’s support. b) Group: The manager shares the problem with subordinates as a group and they develop a solution. The manager acts as a coordinator of the group and willing to accept and act upon any solution the group develops consensus on.A decision tree is used with eight situational questions where the manager would ask todetermine the best style to make the decision242 (see figure 1.xx).Vroom has developed this model into a computerised version and uses it in training anddevelopment programs. The model is extremely logical and provides a prescription of howmanagers can make decisions under varying circumstances.The late 1980’s and 1990’s saw a change in focus of leadership to the potential a leader hasand their ability to drive an organisation forward in these changing times. Contemporaryleaders need to be very different from the past having to manage across cultures, throughthe challenge of globalisation and with the various interests of stakeholders both inside andoutside the organisation. Warren Bennis is an academic who has always been able tocapture the future trends of management and the environments they face and has steadilyrisen in popularity. In his book with Burt Nanus, they arrived at a number of commoncharacteristics that a number of dynamic and notable contemporary leaders possess243; • Leaders are able to command the attention and commitment of those that work for and with them to achieve visions, • Leaders are skilled communicators and able to cut through the multiplicity of issues and different frames people perceive, using simple signs and language, • Leaders show consistency of purpose in their dealings with colleagues and various constituencies they deal with, creating a sense of trust, and • Leaders are able to identify their own strengths and weaknesses and use this knowledge to their advantage.Bennis and Nanus see a vast contrast between a leader and a manager; • Managers administrate and leaders innovate, • Managers are copies of each other and leaders are unique and original, • Managers stabilise and sustain while leaders develop, • Managers focus on structure and process while the leader on people, • Managers rely on control and leaders on trust, • Managers have short-term goals and leaders long range, • Managers ask ‘How’ and ‘when’ and leaders ‘what’ and ‘why’, • Managers are concerned with profits and leaders a vision, • Managers accept the status quo and leaders challenge it, • Managers are followers and leaders their own person, and • Managers do things right and leaders do the right thing.Bennis and Nanus conclude that business needs a new generation of leaders and notmanagers. It is the leader who will be able to deal with volatility, turbulence and ambiguity inthe future, rather than the manager. Bennis’s ideas set the momentum of the newmanagement paradigm going, which has been followed by a number of authors puttingvarious slants on their arguments.

At the same time, the concept of the transformational leader was developed as a leader whoa) is able to raise the consciousness about the importance of outcomes, b) shows the valueand benefits of focusing on the groups’ rather than individual interests, and c) raises theiremployees needs levels so they value challenges, responsibility and growth244. In the early1990’s the superleader went beyond the transformational leader by helping their followersdiscover their own abilities and grow245. The superleader empowers followers to contributefully to the organisation and develops self-leaders who take over responsibility for their ownself motivation and personal behaviours246.Wells saw leadership roles in a number of paradigms as a way of explaining variousorganisational roles247; • Sages: Expanding their knowledge about many subjects to improve strategy development, • Visionaries: Inspiring people to go beyond their previous accomplishments, • Magicians: Bringing change through bridging the gap between where the organisation is now and where it wants to go, • Globalists: Coordinating the experiences of people from various cultures, seeing diversity as a strength, • Mentors: Helping employees advance in their careers and bringing them to their potential, • Allies: Building up effective teams and alliances, • Sovereigns: Taking responsibility for all decisions, • Guides: Stating principals clearly so all can understand and develop commitment, and • Artisans: Trying to improve performance by ensuring the quality of the company’s products and production processes.Creativity/Cognitive ThoughtCreativity and cognitive thought is where substantial breakthroughs have been made over thelast century. We have reviewed economic, production, strategic, organisational, managerialand leadership thought and see that learning, creativity and innovation have become a majorpart of those paradigms or disciplines. We can think of strategy as creativity, the way a firmdevelops an idea into something that can be executed. If we take the Darwinian view of anorganisation that it must evolve and change in order to survive, creativity and learning isparamount to this. The transformation of Nokia from a logging company to a mobile phonemanufacturer, Bunnings similarly a timber company in Tasmania, now the market leader inthe retail and wholesale hardware industry with outlets all over Australia and here in Malaysiathe transformation of Singer from a sowing machine manufacturer to a company with a chainof specialised household goods outlets, tends to support this view. Vijay Arora and LorenzoFaraone strongly argue that even technical disciplines like engineering will be primarilyorientated towards creative thinking and problem solving with the need of strongcommunication and leadership skills as we head towards what they call knowledgeengineering248. This will shift the paradigm of the engineer and other technically orientateddisciplines completely.Ivan Pavlov was a Russian physiologist born in 1849. He founded the Institute ofExperimental Medicine in 1890, where his primary interest was digestion. Early in the 20thcentury Pavlov commenced experiments on the conditional response of dogs. Pavlovpresented a piece of meat to the dogs, ringing a bell each time. After a period of time, herang the bell without presenting any meat and the dogs and found the dogs still salivated inanticipation of the meat. This experiment showed that conditioned response (salivation) couldbe achieved from a conditioned stimulus (the bell), hence the name conditional learning.By continually repeating the conditioned Stimulus, the conditioned response weakened, andthen eventually to dissappeared, which Pavlov termed extinction. Surprisingly though, a after

a day or two, when the conditioned Stimulus (sound) was recommenced, the dog producedthe Conditioned Response (salivation) again, which is called spontaneous recovery. Thisshowed that conditioned behaviours can become very deeply embedded and well established.Pavlov’s work began the behaviourists school of psychology thinking, where many felt it wasmore advantageous to deal with observable behaviours rather than the elusive mind249.Pavlov’s classical conditioning experiment for this reason was probably the single mostfamous study ever conducted in the behavioural sciences250. Burrhus Frederic Skinner,one of the grandfathers of modern psychology felt that Pavlov’s conditional learning onlyshowed reflexive behaviours and involuntary responses and thus represented only a verysmall aspect of human learning251. George Kelly, another forefather of modern psychologysaid “there is no reason we should not be grateful even though we are not quite sure what itwas he demonstrated”252. Pavlov’s experiments brought up more questions than it answered,which we don’t know much about253; 1. Is learning a sudden or gradual process? 2. When learning occurs, what exately are we learning? 3. How many kinds of learning are there? 4. Is learning without awareness possible?These questions are relevant to creativity and cognitive processes and require numerousother questions to be asked before we can attempt to answer them.Newman, Summer and Warren in 1972 made an attempt to define some generalguidelines to stimulate creativity within an organisation254; 1. Recognise psychological barriers – primarily psychological and cultural barriers, 2. Try changing attributes of the problem by focusing on other attributes, 3. Be alert for serendipity, and 4. Recognise that computers have the ability to supplement the human mind in particular stages of the creative process.At the time, this was about the only advice around to assist managers make creativedecisions.Scientists looked at ways individuals and organisms learned, thought and developed strategy.Polva in 1945 saw that individuals and groups made decisions based on only partial data andadjusted strategies based on continual evaluation of the environment. Thus decision makingwas a merging of logic, philosophy and psychology255. John Hutchinson saw heuristics as ablend between the systems and behavioural approach to decision making as consideration ofstrategy would take both major variables and people into account, where there is a need tomake non-rational decisions to find preferable solutions and avoid frustrations256. StaffordBeer saw heuristics as a method of behaving which will lead towards a goal which cannot beprecisely specified because we do not know what it actually is. Beer went on to say that wetend to live our lives by heuristics, and try to control our lives by algorithims (rules)257. Ourlives are controlled by goals, yet our goals are in the future, which is uncertain and influencedby the turbulence of the environment.Theoretically, if we give a computer and algorithm which operates a heuristic, and let itdevelop a strategy, the computer will be able to take account of all experiences we ashumans may forget and thus create superior strategies than humans can258. Thus computersin games like chess will be superior to humans. These ideas were developed into 4GLcomputer languages in the 1980’s and used in business strategy games at the time. Theseattempts didn’t achieve much significance in the area of management, except forcomputerized production planning models in industry, employing heuristics in their programs.However the heuristic paradigm is a good way to look at how a firm develops strategy and

this understanding has potential applications in the development of manufacturing facilitiesfor new products259, etc. Recently, researchers have identified that heuristic biases incognitive processes could be an explanation of why some individuals spot opportunities andothers do not260, which is very important aspect of strategy development.Brainstorming was developed by Alex Osborn in the early 1950’s as a tool in advertising forgroups to generate a large number of ideas without consideration for their merits. Osborndescribes brainstorming as the brain storming over creative problems in a commando fashionwhich each stormer attacking the same objective261. To develop maximum creativity from thegroup, four rules must be strictly enforced and followed by all; 1. Critical judgement is not allowed, 2. Complete freedom is welcomed, 3. Quantity over quality is wanted, and 4. Combination and improvement are sought.Other specific aspects that will enhance effectiveness are a) sessions should be limited toaround one hour, b) the problem shouldn’t be revealed before the session, c) the problemshould be clearly stated and not too broad, and d) if a product is being discussed actualsamples should be present262. Brainstorming assists decision makers think of unexpected andpotentially useful strategies for settling a problem. However brainstorming can produce anumber of shallow ideas, but it can increase the overall creativity of a group.Brainstorming spread from advertising to all types of management decision making, howeverit is extremely limited for specific technical problems263, and best for product, name or just toencourage creativity within a group. Recently brainstorming software has been developed264to assist groups and some companies like Australia Post have developed brainstorming labswhere employees can hold sessions using the walls to scribble upon.William Gordon developed a technique based on the assumption that creativity can be bothdescribed and taught to individuals and groups265. The Synetics technique involves two steps,1) making the strange familiar and 2) making the familiar strange. The strange familiar phaseis analytical in nature describing the problem. The familiar strange phase involves a consciouseffort to look at the problem from a completely different viewpoint. Four types of analogy areused to stimulate creativity: personal, direct, symbolic and fantasy. These are considered thetools to initiate creative processes and by switching analogies to sustain the process. Anexample of the effectiveness of this method is the solution found for underwater constructionby drawing analogies to shipworms, where they tunnel into wood and create a watertightcompartment for themselves. Synetics differs from brainstorming where it is more suitable tolooking at complex problems266, as the example above displays. Synetics is not as well knownas brainstorming but it has potentially greater application in decision making, especially in riskand uncertainty.Game theory was originally developed by mathematicians to provide decision analysis basedon the consideration of various options and anticipated reactions by competitors. It was alsothe base of the Program Evaluation Review Technique (PERT) and Critical Path Method(CPM), used in project management. Eric Berne developed an interpersonal relations modelcalled transactional analysis (TA), which provided a framework for individuals to evaluaterecurring sets of interpersonal transactions based on parent, adult and child frames267. Hisbook Games People Play almost had a cult following at the time. This technique becameextremely popular in the late 1960’s and is still used by many business schools as aninterpersonal tool in organisational development. The concept was expanded to blend theoriginal strategic aspects with the interpersonal aspects of TA to develop organisationalsimulations in potential business situations to play out scenarios such as what would be theeffect on strategy, organisation and individual if a competitor lowered their price in themarket, etc. Organisational simulations are now an important part of experiential learning inbusiness schools and corporate training.

Edward de Bono is accredited to have pioneered the concept of lateral thinking. De Bonopostulates that the brain is designed to make sense of the world by forming routine patternsof perception from incoming information. Information is channeled through our brain whichdampens our creativity268. De Bono further postulates that once we understand this, we areable to break out of these patterns. He developed numerous concepts of deliberate thinkingmethods and creative thinking, teaching how to make thinking a conscious act rather than areactive one. De Bono has developed a number of games to develop thinking skills. He is aprolific writer with over 65 books to his credit and set up the Cognitive Research Trust, whichproduces and promotes material based on his ideas. De Bono has been lecturing andconsulting to governments and corporations for more than 30 years.Herman Witkin had studied differences in peoples’ perceptual styles for 30 years andbelieved that personality can be revealed through differences in how people perceive theenvironment269. People make judgments on how they perceive the environment and Witkinfound through a series of studies that people can perceive the environment in one of twoways. Witkin developed a test where people had to look at a complex picture with severalhidden items in it. The goal was to find as many items in the picture. Some people viewingthe picture would be bound up in the detail and not be able to see the items. These peopleare said to be field dependent. Others would be able to pick the items out and would bedeemed field independent.From further studies, Witkins found that field dependent students tended to favour socialsciences and education, while field-independent students tended to favour the naturalsciences, mathematics and engineering 270. Field dependent people would rely more on socialinformation and relate to others for opinions, look for social interaction and in generalorientated towards people. Field independent people function with more autonomy anddisplay a more detached and impersonal orientation to others. They are not very interested inothers opinions, keep their distance from others and not very social271. Further studies afterWitkins death found that field independent people tended to be less distracted from stimuli inthe environment and able to concentrate on what they felt was necessary to focus on andalso able to remember more details than field dependent people272. Other studies haveshown that field independent people are able to pick out themes more easily in multi-mediapresentations than field dependent people273. Field dependence-independence shows thatpeople also perceive and process information differently. Field independent people are goodat selecting information in resource rich environments and block out what is not important,while feild dependent people tend to process information in chunks and are good at seeingconnections between pieces of information274.The above studies have implications for the way people learn and how different peopleperceive environments, which has great implications in seeing opportunities and developingstrategy. Even the nature of information and how it is formatted and presented will influenceperceptions. Field dependence-independence also hints at how different people will displaycreativity skills. Field independent people are skillful at analyzing very complex situations andextracting what they see as relevant information from the stimuli of information, but willneglect social skills. Field dependent people will look more holistically and use their strongsocial skills to put things more in social contexts than field independent people275. Theseideas haven’t been directly applied to strategic though in management, but could providesome very useful insights into how we perceive and construct our ideas.Chris Argyris research began in the 1940’s when management was still seen as cut and dryin its approach to organization. Managers assumed they knew what to do, it was a matter ofdeveloping and organizational structure to carry out the requirements, tasks andspecializations of the firm, orders would come down through the system and each personwould be accountable and responsible for their jobs276. Managers believed they had all thenecessary theories and methods available from the classical school of management thoughtfor the smooth operation of the firm and were unwilling to change methods and practicebecause they had brought success previously and any change would threaten management

prerogative and their right to authority277. This belief by managers prevents change in thefirm as managers who return from seminars with new management ideas, introduce to staffwithout changing their underlying values and beliefs, leading to implementation failurebecause employees see no change in values and remain apathetic and indifferent278.Argyris, a philosophical humanist believed that current management philosophies ignored thecomplexity of the individual. Organisations operated with the assumption that employees hada psychological inability to be responsible and tended to treat them as children, inhibitingmaturity in the organisation279. All organizations have an informal structure where individualsdevelop relationships to fulfill needs, alternative informal leaders have a great influence onbehaviour, groups control member behaviour to satisfy their needs and because of the formalleader’s power to reward and punish, there is conflict between the formal and informalorganisation280. This causes incongruities between what the organization demands of themand individuals basic needs, where they fail to obtain full expression of their personalities andremain dependent, rather than an independent person281. The behaviour resulting can lead toapathy, uninterested attitudes towards work, lower work standards, utilization of companyresources for task avoidance and deep general work dissatisfaction282. Argyris found that in organizations, managers would espouse theories to employees aboutgoals, assumptions, values and beliefs about behaviour expected of them, but act differentlywith another set of assumptions, values and beliefs, theories in action, that would bestronger in guiding employees behaviour than the espoused theories283. Espoused theories bymanagement could range from autocratic to fully participative management, but almostalways, managers theory in action would resemble what Argyris called a model I behaviour,built on the following basic assumptions; one must achieve one’s own goals as they seethem, one must win rather than lose, one must minimize eliciting negative feelings inrelationships and that one must be rational and minimize any emotions284. This leads to abehaviour that seeks control of others, leads to minimum confrontation on any emotionallycharged issues, suppression of new ideas and solutions, bent on providing safety tomembers. Any confrontation will lead to defensiveness in what Argyris calls single looplearning. In such a situation assumptions about issues are never questioned to avoidambiguity and maintain safety. Under such a situation, when company goals are not beingachieved, corrective decisions will be made without analyzing the reasons for the problems.Nobody will challenge the assumptions and corrections will continue to be made bymanagement on the same basis, failing in many cases to correctly address the real problems.Single loop learning is often reinforced by management success in the past, where there hasbeen little failure (or perceived failure) to require any evaluation of the way things aredone285.When people in organizations can question basic assumptions and look at the underlyingcauses of problems, this according to Argyris is where real organizational learning occurs.This is called double loop learning, which can lead to better organizational and marketeffectiveness. This type of learning requires a model II behaviour, built on the followingassumptions; action based on valid information, action based on free and informed choice,action based on internal commitment to choice and there is constant monitoring of efforts toimplement choices286. Such an approach to management behaviour builds an environmentthat can promote learning in the organization and overcome the obstacles to learning.Argyris developed a workable theory of personality in the workplace, where a universaltheory of personality is lacking in modern psychology, radically departing from Freudianconcepts. His model also looks at leadership in a dynamic manner rather than the twovariables of style and task, that other models have tended to provide as variables. Argyrismodel is used extensively by organizational development practitioners to facilitate change inorganization basic assumptions, utilizing various diagnostic techniques like sensitivitytraining287, which Argyris was partly responsible for developing. Argyris and Schon admit thattheir model may be utopian and its effect of implementation will only alter manager’sespoused theories and only deliver marginal improvements288. It will require great effort on

the part of a leader to change basic assumptions, values and beliefs in the organization tosupport model II behaviour in a sustainable manner289.Certainly Argyris contribution to management has been one of the greatest of the 20thCentury, with his work supported by deep academic research, rather than unsubstantiatedopinions. The concepts of learning organizations are generally traced back to him, althoughBateson at the same time also developed a similar concept of deuteron learning, first usedon the analysis of the double bind personality of schizophrenia290. Argyris is considered one ofthe founders of the human relations movement of management thought along with Maslow,Macgregor and Herzberg.Reg Revans is a former Olympic athlete and co-worker with E. F. Schumacher at theNational Coal Board in Britain. Revans developed the concept of action learning in the coalmines of Britain in the late 1940’s to develop organisational and community learning. In thelate 1960’s he moved to Belgium where an Action Learning research project was commencedat the Foundation Industrie-Universitē, in conjunction with industry and a number ofuniversities. Later the Revan Centre of Action Learning and Research was opened at SalfordUniversity in the UK.Action Learning is an experience based approach to working on meaningful problems as away to learn. They learn from their attempts to change things as a group and reflect on thechallenges of the problem through a questioning insight. The methods of their solutions canbe utilised in solving other organisational problems, using the hindsight they have acquired.Groups will have a facilitator who will look at their assumptions and beliefs and providefeedback and scrutinise their mental models used. Action Learning is used to solve complexissues that can not easily be solved, to find solutions for the underlying causes of theproblem, determine new directions and maximise opportunities and create new ideas. Revansexplains Action Learning with the formula L = P + Q, where L is learning, which occursthrough programmed knowledge P, and insightful questioning Q291.Action Learning usually comprises the following activities; experiential learning, creativecomplex problem solving, acquiring of relevant knowledge and co-learning group support.Action Learning is orientated towards learning by doing in a group orientation, focusing onorganisational issues, where people play different problem solving roles, and a group decisionis made. The steps of the Action Learning process are; 1. Clarify the objective, 2. Formation of a group comprising mixed skills, 3. Analyse the issues and identify actions for resolving them, 4. Reframe the problem in different ways to seek new perspectives, 5. Determine goals, 6. Develop action strategies and test them if possible, 7. Take action, 8. Repeat the cycle until the problem is solved by going in different directions, and 9. Capture the learning through instructor intervention by redefining the problem, find ways to improve performance of the group and identify how their learning can be applied to themselves, group and organisation.The strengths of Action Learning are considered to be an intelligent and creative way to actand learn at the same time, as this will create the type of work environment needed for thecomplex environments organisations face today. It is considered both a good method forsolving complex problems and at the same time assist in changing organisational culture tomore creative learning values, which will be reinforced by the tangible results gained from theprocess. Action Learning will also enrich the participants as individuals in assisting them infacing everyday problems in life. The downside is that Action Learning requires organisationand a skilled facilitator to run the programs. How the program is designed will be critical forthe success of the outcomes. If management will not recognise that it could benefit from the

views of others and not willing to question basic assumptions, the Action Learning group willnot achieve much. Such an approach to decision making can feel threatening to manymanagers security and make them feel vulnerable, as it involves taking risks. Action Learningis also hard to measure its benefits in tangible measurables in the short-term.Action Learning is now used by many management schools and consultants to train CEOsaround the world. One of the mistakes management makes about this tool because of itssimplicity is to fail to realise that the method requires a change in values on the part ofmanagement to make it work in a sustainable manner within the organisation. ActionLearning has some elements of double loop learning and an organic approach tomanagement problem solving in a highly participative manner, which is very different fromthe way many organisations actually work today, as it does away with a lot of formalstructure.Manfred Kets de Vries and Danny Miller wrote a speculative book based onpsychoanalytical theory applied to organisations to examine the dysfunctions of humanpersonality on organisational effectiveness. They postulated that organisations were veryclosely mirrored by the personalities of senior managers. As with humans, organisationalstrategy, structure, decision making and orientations can display a normal to neurotictendency, which will cause organisational dysfunctions. This invisible influence is ignored bymanagement and needs to be diagnosed and remedied.Kets de Vries and Miller outlined the potential organisational dysfunctions that managementshould look out for292; • The influences that top management’s neurotic styles of behaviour can have on organisational functioning. For example, strong need-achievement tendencies will influence leadership behaviour, locus of control will affect strategy, paranoid characteristics will develop suspicion and mistrust of others, compulsiveness will develop pre-occupation with perfection, dramatic styles will develop excessive drawing of attention to self with a narcissistic pre-occupation for activities and incapacity for focus, a depressive style with feelings of guilt, worthlessness and inadequacy of being at the mercy of events and a schizoid style where there is detachments and on-interest in the firm. • Groups will develop fantasies, which serve the needs of the members. For example, The manifestation of a common enemy where most of the group becomes focused on, leading to inactivity, short-sightedness, misdirection and non-productiveness. Groups become dependent on one person who is idealised and make no decisions without their approval. Groups live in a false hope of waiting for an event that will come and change things, and their behaviour is affected. • Individuals, unconsciously treat a current relationship as though it were an important relationship from the past, like a parental figure or sibling from early childhood that has many conflicts unresolved. Thus through this re-enactment, transference of the relationship causes the individual to behave intensely and inappropriately. • Destructive types of superior/subordinate relationships characterised by control, smothering of initiative, constraining of growth and essentially making them puppets or when the superior takes no interest in subordinates, offering them no guidance, support or security. Each of these behaviours carries injustices and dangers for the organisation. • The effects of emotional challenges of home and work on the manager and effects on behaviour and satisfaction and job performance. • Anxiety within the organisation and fears of loss of status and self image, giving rise to resistance to change through a variety of defence mechanisms. These mechanisms block awareness of important facts and data and inhibit responses to them. For example, something has been lost, but continue to act as though nothing has happened, i.e., product distribution, a contract, etc.

Ket de Vries and Miller then outline the key challenges and dynamics relevant to theorganisation, where key stages must be worked through to develop change acceptable to allmembers of the organisation. Organisational neurotic tendencies must be neutralised so thatthe organisation is able to scan the environment clearly for opportunities and developstrategies, methods of work and structure that are appropriate and effective. Ket de Vriesand miller’s work did not become popularist, although Ket de Vries is considered one of themost influential management thinkers in Europe today. His ideas, although taken up in theorganisation culture paradigm, where ignored in the cognitive area and are only now justbeginning to be examined more closely in entrepreneurial research coming out of Europeover the last ten years.David Kolb is Professor of Organisational Development at Case Western Reserve University,Cleveland, Ohio, where he teaches and researches in the filed of learning and developmentand founder of Experience based Learning Systems. He published his learning styles model in1984. Kolb postulates that different people prefer different types of learning styles which heidentifies four distinct learning styles293, • Diverging (feeling and watching) - People preferring this style are able to look at things in multiple perspectives. They are sensitive to people, events and the environment. They prefer to observe rather than act, tending to gather information and use imagination to solve problems. They are people orientated, tend to be emotional, strong in the arts and have broad cultural interests. Diverging people perform better in situations that require ideas-generation, i.e., brainstorming. People with the Diverging style prefer to work in groups, listen openly to ideas and relish personal feedback. • Assimilating (watching and thinking) – This style is a concise, logical approach, where ideas and concepts are more important than people. Assimilating people like clear explanations and prefer to look at abstract concepts, logical ways, rather than the practical approach. They excel at understanding wide-ranging information and are able to filter, channel and organize it into a clear logical format. Assimilating people are suited for information and science careers. In formal learning situations, they prefer readings, lectures, exploring analytical models, and having time to think things through. • Converging (doing and thinking) - People with a Converging learning style can solve problems and will use their learning to find solutions to practical issues, from ideas and theories. They prefer technical tasks, and are less concerned with people and interpersonal interaction. People with a Converging learning style are more attracted to technical tasks and problems than social or interpersonal issues. They can solve problems and make decisions by finding solutions to questions and problems, thus suited to specialist and technology areas. People with a Converging style like to experiment with new ideas, to simulate, and to work on practical applications. • Accommodating (doing and feeling) - The Accommodating learning style is hands- on, and relies on intuition rather than logic. These people use other peoples analysis, and prefer to take a practical and experiential approach. They are attracted to new challenges and experiences, and carrying out plans. They commonly follow instinct rather than logic. People with an Accommodating learning style will search for information rather than carry out their own analysis. This learning style is useful in tasks requiring action and initiative. People with an Accommodating learning style prefer to work in teams to complete tasks, like to have goals and experiment with different ways to achieve itLearning undergoes a four stage cycle, where immediate or a concrete experience provides abasis for observation and reflection. This is assimilated and developed into an abstractconcept producing a new mode for action which can be actively tested through newexperiences.

Most people have strong preferences for a given learning style. They develop theirpreferences during their development. Kolb identified our development stages as294; 1. Acquisition - birth to adolescence - development of basic abilities and cognitive structures 2. Specialization - schooling, early work and personal experiences of adulthood - the development of a particular specialized learning style shaped by social, educational, and organizational socialization 3. Integration - mid-career through to later life - expression of non-dominant learning style in work and personal life.Our choice of learning style is influenced by two pairs of variables: concrete experience(feeling) verses abstract conceptualization (thinking) and active experimentation (doing)verses reflective observation (watching). Feeling/thinking and doing/watching are oppositesor dialectic in Kolb’s terminology, which means they are conflicting and we cannot achieveboth at the same time. So our learning style will be the product of two decisions295; 1. grasping experience or how to approach a task by watching (reflective observation) or doing (active experimentation), and 2. transforming experience or our emotional response to the experience, by preferring thinking (abstract conceptualization) or feeling (concrete experience).People placed in a learning environment that has stimulus not coherent with their preferredlearning style, will face problems. For example, people who prefer the Assimilating learningstyle will not be comfortable without notes and instructions. People who prefer anAccommodating learning style are likely to become frustrated if they are forced to read lots ofinstructions and rules, and are unable to get hands on experience. Knowing a personslearning style enables learning to be orientated according to the preferred method, wherepeople will respond better to stimulus. Our ability to take on new styles and integrate themtogether can be developed over time.Kolb’s model provides a way for us to understand individuals’ different learning styles andshows a cycle of experiential learning that can be applied to all styles. Kolb’s work is heavilyinfluenced by the earlier works of Rogers, Jung and Piaget. His work was consideredgroundbreaking and these methods are commonly used around schools, universities andcompanies around the world. Kolb’s work has great significance about how we perceive andlook at opportunities and formulate strategy and how people in organizations learn andbehave.Peter Senge is the Director for Organizational Learning at the Sloan Business School at MITin Boston. He was one of the high profile academics during the 1990’s and propelled theconcept of Learning Organisation into the management vocabulary. Senge defines thelearning organisation “where people continually expand their capacity to create the resultsthey truly desire, where new and expansive patterns of thinking are nurtured, wherecollective aspiration is set free, and where people are continually learning to see the wholetogether”296. Such organizations according to Senge will be able to face the rapidly changingenvironment with flexibility and adaptive ness, driven by peoples willingness and capacity tolearn at all levels. However current organization structures and form are not conducive tolearning and people although having great capacity to learn, do not have the tools needed.Senge also identified seven learning disabilities which are responsible for organizationalfailure297;1. I am my position,2. The enemy is out there,

3. The illusion of taking charge4. The fixation on events5. The parable of the boiled frog6. The delusion of learning from experience7. The myth of the management teamSenge postulates that it is internal systems rather than external threats to an organizationthat causes most crisis within an organization. If this is correct, then the underlying causesand patterns of behaviour, becomes the most important issue for an organization. Thus theremust be change in the way companies are structured and decision making processesundertaken. Senge lists a number of rules which organization should follow to make thesefundamental shifts298;1. Todays problems come from yesterdays "solutions"2. The harder you push, the harder the system pushes back3. Behavior grows better before it grows worse4. The easy way out usually leads back in5 - The cure can be worse than the disease6. Taster is slower7. Cause and effect are not closely related in time and space8. Small changes can produce big results, but the areas of highest leverage are often the least obvious9. You can have your cake and eat it too, but not at once10. Dividing an elephant in half does not produce two small elephants11. There is no blameSenge stated that relationships are usually not of a linear nature and the principals above willbe understood when we can change our linear, unidirectional causation way of thinking.Causality can be traced back through feedback loops, so the causal reasons for effect can beidentified, as well as what is affected by it. Feedback is not a one-way flow and there arereciprocal influences, sometimes with immediate effect and sometimes with delays.Understanding the whole will enable seeing the process of change, rather than a meresnapshot of events, which are viewed as isolated. Senge believes that people want to be part of something bigger than themselves to growand this is where they have opportunities to ‘re-create’ themselves. The prevailing method oflearning in organizations is adaptive learning focused on survival, but for a learningorganization there must also be generative learning, organizational learning disabilities can beovercome. Generative learning requires a mastering of five disciplines;

• systems thinking; seeing the world and events as a whole, where forces behind them are related. This helps us to see relationships and helps us to see how to change things effectively with minimum effort, i.e., to find leverage points in the system. • personal mastery; the process of continually deepening and enriching our personal visions, the focusing of energies, developing patience and seeing reality objectively. • mental models; are unconscious metaphors of how we see things, which influence how we act. If we can understand how we see things, we are in a better position to see reality more objectively. • building shared vision; to develop a shared picture which will create commitment, rather than just compliance by individuals, and • team learning; is the ability of the group to rid themselves of their assumptions and begin to think together. This must be done openly without anyone trying to win.These disciplines can be focused towards seeing wholes, rather than parts, seeing people asactive participants, rather than helpless reactors and to creating the future, rather thanreacting to the past.Senge and his team spent many years developing this process. However companies found itextremely difficult to implement as managers were unwilling to give up power, orgainisationsdidn’t give enough flexibility and authority to staff, individuals were weary about taking onthe responsibility, managers and employees just simply didn’t have the skills and the processwas undermined by organizational politics, something which is not directly tackled in Senge’sprocess. Learning organizations are fundamentally different from authoritarian organizationsand it was beyond management to let go and make these radical changes. Learningorganization is not a quick fix as many had assumed, but a daunting task requiringexploration of individuals performance, personality and ambitions in life, something beyondmany peoples willingness to commit to. There are few organizations that resemble Senge’smodel and while business wants to develop long term growth and stability, their focus is onenhancing brand recognition and status299, intellectual capital and knowledge and productdevelopment and ensuring production and distribution efficiency300, and solid financialreturns301. There have been many suggestions that Senge’s model is just too idealistic andperhaps ahead of its time because of its revolutionary approach302 and that it will take peopleto really make a commitment to organizational life in new ways. In 1994, Senge with hiscolleagues published the fieldbook303 providing more ideas and suggestions about how todevelop the process of learning organization.It had long been known that the brain was divided into two spheres, where the left sidethought serially and the right side thought spatially or holistically304. However, thinkers increative thinking began defining more specific parts of the brain as origins of specific types ofthinking. De Bono had developed his four wheels metaphor of human thinking to explaininformation processing and patterning of the brain305. Ned Herrmann developed a wholebrain metaphoric model consisting of four quadrants to explain thinking style preferences.Hermann had a degree in physics and worked at the human resource department of GeneralElectric and after years of research on creativity and the brain, released various parts of thebrain directed our thinking in different ways.Herrmann believed the brain was physically and metaphorically divided into four quadrants,each with its own language, perception, gifts and ways of knowing and being306. These fourquadrants, represent four distinct thinking processes307; 1. Left Side: works on logic, words, structures and analysis. It is sequential and time bound (masculine). • Quadrant A: Thinks in terms of numbers and words. Will solve problems using logic based on certain assumptions and tend to reduce the complex to simple. In business they honour agreements ahead of experience and facts above intuition. They prefer

to avoid emotions, sticking to facts and logic. They often appear cold, aloof, alone and sometimes arrogant, overlooking human considerations in their decisions. They know about money and how things work and think in-terms of bottom line. People dominated by quadrant A thinking would include accountants, engineers and surgeons.• Quadrant B: Task orientated and results driven. There are some similarities with quadrant A type thinkers, as they take a verbal and linear approach, rejecting any ambiguity. Where A wants to know the facts, B will want to know whether it has worked in the past. B is hands on and will want to get things done and will reject the analysis from A. Quadrant B thinkers work well in a world of rules and procedures. They have the ability to focus on one thing at a time and persist until things are done. They are perfectionists in detail and demanding towards themselves and their subordinates. They seek security in working to rules and procedures and strong at creating order out of chaos. B people are often seen as boring, small-minded, intensive and anti-social. They seek control and don’t handle change well and find it difficult to handle emotions. People dominated by quadrant B thinking would be bookkeepers, administrators, bureaucrats and clerks.2. Right Side: works with emotions, pictures, whole entities, inter-relationships and synthesis. It is holistic and time-less (feminine).• Quadrant C: Thinks visually and holistically. These people are sensitive, receptive and moment to moment mood changers. C people are aware of people around them and are emotional and spiritual. The care for and want to help others. They are also empathetic, nurturing and musical. They are however adverse to people of different quadrants, as they don’t like dealing with facts, goals, time and money. Communication is important to them and relationships are more important than tasks and content. C people are seen by others to be agreeable, pleasant, supportive of harmony, sentimental and always people orientated. They are often thought of as non-conformists by A and B people. Cs thinking processes are interpersonal, emotional, feeling base, kinaesthetic and feeling based. These people are affected by mood in decision making. People dominated by quadrant C thinking would be teachers, social workers, nurses, trainers and musicians.• Quadrant D: Thinks interpersonally, kinaesthetically and emotionally. These people are excellent at new ideas and thrive on the excitement over them, due to their possibilities, surprises and uncertainty. Quadrant D people are not good at working with others because they are non-verbal and abstract in their concepts. They find it difficult to adhere to deadlines. They don’t like structure and loath working in groups and see the world in visions and images. However they are imaginative, creative, artistic, fanciful and open minded. Facts are no good to them as experience. Quadrant D people see people from other quadrants as impediments, but need them to help turn their visions into reality. They are risk takers, impetuous, rule breakers, like surprises and curious. Quadrant D people think about the big picture, cutting edge or making breakthroughs. Quadrant D people are most likely to be found in art and design and architecture. They would like to be explorers, scientists and researchers.Communication is the best way to see manifestation of quadrant thinking in people.According to Herrmann, single quadrant dominate people are less than 5% of thepopulation and about 38% are have two quadrant dominance, with influence from theother quadrants308. People who have double dominance along the same hemisphere areintegrated and their thinking processes are strengthened, but when double dominance isacross the hemispheres will experience both strengths and disadvantages, as there willbe conflicts, rational logic verses emotion, the future against the past and people versethings, etc. However on the positive side it can lead to a powerful combination ofabilities. Approximately 34% of people are triple dominant thinkers309, this gives theperson the ability to communicate to three quarters of the population in the metaphors

they understand. Only 3% of people have four quadrant thinking310, which gives them the power to move across quadrants and see things in multiple perspectives and communicate to the whole population. The four quadrant model provides and excellent way to view thinking and understand behaviour. This model is used to develop creativity in individuals and groups through Herrmann’s consulting company which uses a questionnaire to measure cognitive preferences of people, the Herrmann Brain Dominance Instrument (HBDI). The Herrmann model is becoming popular in cognitive psychology to look at questions in entrepreneurial decision making, which is a rapidly growing area of research. Arora and Faraone believe four quadrant thinking is a must for the development of strategy, so balanced appraisals, taking all factors into account can be made and maximum creativity developed within the organisation. The ability to harness and synergise different quadrant thinking people in the organisation will be one of the most important jobs for the leader in the future311.Art Kleiner and George Roth developed a tool of how to learn from the organisation’s ownexperiences, so lessons can be put into effective future action. They call this techniqueLearning History, which involves writing a narrative in one column about an importantorganisation event like a product launch, new opening, or new initiative and in the othercolumn those involved write down their reflections, comments, observations and feelingsabout the event. The narrative can then be used for discussion, where lessons andconclusions can be drawn. This organisational learning involves sharing the information,ideas, thought and feelings, so that lessons and conclusions will be shared by all. Kleiner andRoth argue that this form of organisational learning is very valuable as it can createcommunal agreement about issues, where it can be translated into more effective action inthe future312. This method is very similar to business case studies at management schools,which are an important source of learning from the real world. Learning history takes thecase study approach into the group’s own organisation. Although the concept has some greatreflective possibilities in developing strategies, it has not caught on in the business world.

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The evolution and influence of thinking in management

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