“Those who fail to read history” are always re‐discovering it and proclaiming it as new. But, contrary to George Santayana, they’re wise, rather than “condemned,” if they repeat history – within a contemporary framework.
“The forms of production are the fundamental determinant of social structures which in turn breed attitudes, actions and civilization,” Joseph A. Schumpeter, the free market economist, wrote a half‐century ago, in paraphrasing Karl Marx’s “economic theory” of history. “Marx illustrates his meaning by the famous statement that the ‘handmill’ creates feudal and the ‘steam mill,’ capitalist societies,” Schumpeter added.
Today, Schumpeter is best known for describing entrepreneurial capitalism as “Creative destruction,” but, at the time of his death in 1950, he was predicting the triumph of market Socialism as a convergence of big (bureaucratic) government – and equally big (bureaucratic) business Today, he would probably the recognize Internet as symbolic of the global economy as the tyrannical tycoon was for assembly line capitalism in the early twentieth century and the man in the grey flannel suit for bureaucratic capitalism in mid‐century.
Now comes Frank Ostroff, the author of The Horizontal Organization: What the Organization of the Future Looks Like and How It Delivers Value to Customer, to describe what might be called “platoon capitalism,” teams organized across hierarchical. functional lines to serve clearly defined customers needs. Ostroff is a consultant who has helped public and private organizations develop horizontal management approaches, and is both an expert on the method and an advocate of its virtues. Nevertheless, there is no reason to doubt the claims he makes, based on case studies of Ford Motors, General Electric, Xerox, Motorola, Barclay’s Bank in England, and perhaps, most intriguingly, the Occupational Safety and Health Administration (OSHA), an exemplar of the “command and control” regulatory agency traditionally detested by business interests.
Indeed, there was much to detest about OSHA – from within its ranks as well as from outside – as I can personally attest to, having once been the agency’s deputy press officer. “OSHA’s people had been battered and bruised by years of political administration,” as Ostroff quotes Joe Dear, the former Labor Department assistant secretary, primarily responsible for “re‐inventing” the agency. “People who had attempted to assert leadership for change were punished. The culture was rigid, hierarchical, slow, protective. People were unwilling to step forward.”
They had good reason, as, indeed, did the employees of the other organizations cited by Ostroff. Working in vertical or hierarchical organizations, all too often, means the acceptance of two lamentable, but inescapable, realities. The first can be summed up in four words: “Never trust the boss.” The second calls for ten words: “Never tell the boss anything that can be used against you.”
The reason, as explained by Ostroff, is simple, although expressed diplomatically, as befits a management consultant. “In vertical organizations, people often use information to control others and protect themselves or their turf, not to support the frontline troops and improve the company’s performance.” The modifier should have been “invariably”.
However, Ostroff’s use of the phrase, “frontline troops”, in this context to describe workers who actually deal with the public is, not only appropriate but suggestive. The first two acronyms (words formed from the initial syllables or letters of other words) to become part of the American language were, SNAFU for “Situation Normal … All F. … . Up”, and CYA, for “Cover Your A. …” Both date back to World War II, and unlike most acronyms in our current era of bumper sticker thought weren’t made up to fit pre‐selected images for political, management or public‐relations purposes.
They were the expressions of GI’s (government issue) draftees frustrated in carrying out their “value proposition” – in horizontal organization speak – winning the war and going home. SNAFUs could occur at the platoon level, but most happened up the (vertical) line of the military organizational structure responsible for supplies, reinforcements, air cover, etc. And CYAs were, of course, invariably the province of “higher authority.” Slogging on to victory despite all the SNAFUs and CYAs, was, as Gen. Dwight Eisenhower said, the “one truly heroic figure” of WWII , GI Joe.
When I was writing When Dreams Came True: The GI Bill and the Making of Modern America, in the middle‐1990s, GI Joe’s virtues had long been forgotten amid celebration of the presumably remarkable baby‐boomers. It took me a while to understand how GI Joes, with almost no academic credentials, became, in the words of James Conant, president of Harvard, “the best students Harvard” – or any other university – “ever had.” The best explanation came from a psychologist who suggested, “The armed forces were always intent on ‘getting the job done,’ and always in a hurry. They rushed the recruits through ‘just enough’ of everything, trusting to the exigencies of actual fighting to augment the scanty education of the trainee.”
Something else was also at work. The GIs learned from each other and their sergeants, lieutenants and captains; they had to, their lives depended on each other. That necessity of working – and learning – from one another also seemed to explain the success of the team‐oriented, franchise operations which grew up in the enormous expansion of the suburbs driven by no money‐down GI Bill mortgages, William Levitt’s teams of house builders, Eugene Ferkauf’s “buddies” who built the suburban department store chain, E.J. Korvette’s; and Kemmon Wilson and the “fathers‐investors” in motels where kids could stay at no extra charge, Holiday Inns.
So, I called franchise businesses horizontal organizations, from an historian’s perspective, although management theory still implicitly embraced the “fundamental determinant … of social structure” based on the assumption of big government and business converging in market Socialism. The apogee and perigee of such top‐down, command and control, management occurred, of course, in Vietnam under the man once acclaimed as America’s greatest management genius, Robert Strange MacNamara. Metaphors, such as “goals and timetables, attrition, body counts,” were substituted for the real “value proposition” winning or butting out. Junior officers were rotated in and out of Vietnam to “get their ticket punched” for promotion, if they weren’t “fragged.”
Business, not having war colleges for rising leaders, has perhaps been slower to catch on to the demise of market Socialism. Concepts that are “more metaphorical than actionable,” in Ostroff’s phrase, i.e. “clusters, orchestras, inverted pyramids, etc.” were substituted for “value propositions” i.e. the Ford Customer Service Division’s: “Fix it right the first time, on time, in a competitive price in convenient locations.” OSHA, before re‐invention, measured success by numbers of inspections , citations and fines. Now the “value proposition” is: “elimination of all preventable injuries, illnesses, and deaths from the American workplace within ten years.”
But, make no mistake, it takes top‐down leadership to “empower people” to “make teams … the cornerstone of organizational design and performance,” as Ostroff quotes Dear as saying: “Leaders have to expose themselves to incredible personal and professional risk. People need to know every leader is at least as far out on the limb as they are in terms of having the change work. If people see genuine commitment, your change‐ready people will come forward. They will commit.”
After that, defining the “value proposition” is really as simple, as profound and revolutionary as civilization, capitalism and democracy. Socrates said it first, “Wisdom consists of knowing what one knows – and what one does not know.” GI Joe would have said: “What the hell are we talking about?” and, “What are we going to do about it?” Any student of the Jesuits as Bill Clinton was knows the process as “defining your terms.” And, if he’s as smart as Clinton, he knows, he who defines the terms first probably wins.
Maybe the era of big business is over, too.
