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About the Adizes Institute The Adizes Institute (USA) is an international consulting organization, one of the top ten consulting companies in the world according to the Leadership Excellence rating. The organizational change programs implemented by the Adizes Institute are based on

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Important BPM Methodologies This section covers the main BPM models and methodologies. BPM has evolved over a long period of time. Today's concept of BPM is the result of the merger of three main trends that have developed independently over many years. These main currents

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1 Isaac K. Adizes Managing change I. Azides. Managing Change: Peter; Saint Petersburg; 2012 ISBN Original: IchakAdizes, Mastering Change The Power of Mutual Trust and Respect in Personal Life, Family Life, Business and Society Translation: V. Kuzin Abstract The book “Managing Change” is dedicated to the processes of management decision making. The problems arising as a result of the ongoing changes are quite predictable and solvable. I. Adizes clearly shows how to effectively resolve situations related to the creation of an efficient team, conflicts of interests, the receipt of constructive proposals, disrespect for other people’s opinions, and mutual distrust of participants in the change. The author examines management and decision-making processes through the prism of national characteristics in a particular country. In this, his theory compares favorably with most modern management theories based on American business experience. I. Adizes analyzes the cause-and-effect relationships, specifics and mentality of various national groups through a serious study of the business cultures of various nations. Another important feature of this book is that it is written in the form of a dialogue between a “guru” and his imaginary follower. Brilliant and aphoristic explanations of I. Adizes, based on a thorough knowledge of the subject and a lot of real life examples, allow the reader to easily master the essence of his methodology. The book will be of interest not only to teachers and students, but, first of all, to practicing businessmen and consultants. In it you will find many valuable recommendations and generalizations, unexpected approaches to well-known problems, as well as tools for analyzing current business problems. The CD is included with the printed edition only.

2 Contents Terms that are registered trademarks 5 Adizes Institute Foreword by the scientific editor 6 Reviews of the Adizes methodology 8 About the author 10 Acknowledgments 11 Conversation one 13 Traditional management theory 14 Functional point of view 17 Conversation two 22 The four roles of decision making 24 Short-term and long-term effectiveness 26 Conversation third 36 Long-term efficiency 40 Long-term productivity 43 Mechanistic or organic consciousness? 46 Summary 50 Conversation Four 52 Conversation Five 66 (P): Lone Cowboy 67 (-A): Bureaucrat 71 (E-): Arsonist 74 (I): Super Follower 78 Conversation Six 80 (): Dead Wood 81 Conversation Seven 93 Conversation Eight 109 Problem 115 Pre-problem 118 Preliminary pre-problem 122 Conversation nine 127 Conversation ten 136 The common denominator of success 140 Conversation eleven 152 Conversation twelfth 159 Conversation thirteen 171 Conversation fourteen 179 Summary

3 Itzhak K. Azides Managing Change All rights reserved. No part of this book may be reproduced in any form without the written permission of the copyright holders. 4

4 Terms that are registered trademarks of Adizes Institute Adizes Capi (EI) Structure Founder s Trap Go-Go Insultant Opporthreat PAEI POC Symbergist Syndag Synerteam For the interpretation of these terms, see the text of this and other books by I. Adizes. 5

5 Preface by the scientific editor Dear reader! The book you are holding in your hands was written by the famous “guru” of management theory, Dr. Isaac Adizes. Just a few years ago, this name in Russia was known only in narrow scientific circles; it was referred to in dissertations and scientific articles. But in most cases these were references to exile, since the books of I. Adizes in the original were practically inaccessible, and Russian translations did not exist. But over the past two years the situation has changed dramatically: several of his books have already been published in Russian; his articles and interviews often appear on the pages of domestic business and scientific periodicals; From time to time Dr. Adizes gives lectures in Russia. These positive changes have largely occurred thanks to the efforts of the Institute of Business and Business Administration of the Academy of National Economy under the Government of the Russian Federation, where he is a scientific consultant, and his applied management theory, known throughout the world as the “Adizes methodology,” is the basis of our educational programs. In all of his monographs (and there are already more than twenty of them), Dr. Adizes examines the development of organizations and their behavior within the life cycle, problems of leadership, change management, and management styles. Thanks to Adizes’ unique methodology, all these elements of management theory not only received a new scientific meaning, but also began to be used in practice to solve the most complex management problems. What is the essence of this methodology? If we try to define it briefly, then two concepts, analysis and synthesis, are quite sufficient. Any community, be it a company, a family or a country as a whole, is a living organism that has its own life cycle. They are born, grow, reach their peak, eventually enter a stage of decline and die. This is a classic life cycle curve, in which only the first and last stages are constant. The set of all other stages and their sequence is an individual feature of each organization and its management system. Therefore, the ability to effectively solve problems that constantly arise in an organization comes to the fore. To do this, it is necessary to constantly analyze the situation in which the company finds itself, identifying what is “normal” and what is “abnormal” at this stage of the life cycle. The effectiveness of decisions made entirely depends on how fully the features of managing an organization at various phases of the life cycle are taken into account. The fundamental monograph by Itzhak Adizes “Corporation Life Cycle Management” (Peter, 2007) is devoted to a detailed analysis of all stages of the life cycle. At the same time, any management process is a relationship between people. Three points need to be made here. First: all people are different. Second: ideal people (including leaders) do not exist; everyone has their own strengths and weaknesses. Third: change is a constant factor in any activity. The fundamental part of Adizes' methodology is based on these three conceptual observations. The book “Managing Change” is devoted to the consideration of management decision-making processes. The problems that arise as a result of the changes taking place are quite predictable. To make quality decisions, you need to create a balanced and efficient complementary team of managers. However, any team is a clash of different interests, styles of thinking and behavior. Therefore, conflict is inevitable, but it is very important that it is constructive so that the parties hear each other and benefit from their differences. And such a situation is only possible if 6

6 tea, when people trust and respect each other. It would seem that these are completely abstract concepts that are difficult to apply in the real decision-making process. But that's not true. The essence of trust is that, although the team may differ in particulars, it is united in its strategic interests. And respect for the opinions of others, even if different from yours, allows you to take into account all the nuances and make a high-quality management decision. Therefore, an effective manager gathers around him people with different styles of behavior, whom he respects and trusts, since they are united by common strategic interests. I would like to note an important feature of Adizes’ methodology, which is most clearly manifested in this book. The vast majority of modern management theories are based on American business experience and rely on the Anglo-Saxon model of behavior. But the modern world is diverse, and standard methods and techniques are not always applicable and effective in different regions. That is why Adizes’ theory compares favorably with all others, since the author examines the processes of management and decision-making through the prism of national characteristics in a particular country. He always tries to understand the cause-and-effect relationships, specifics and mentality of various national groups through a serious study of the business cultures of various nations. It should be noted that this book is written in the form of a dialogue between a “guru” and his imaginary follower. Adizes’s brilliant and aphoristic explanations, based on a thorough knowledge of the subject and a lot of real life examples, allow the reader to better understand the essence of his methodology. I am sure that this book will be of interest not only to teachers and students, but also, first of all, to practicing businessmen and consultants. In it you will find many valuable recommendations and generalizations, unexpected approaches to well-known problems, as well as instrumental methodology for analyzing current business problems. Good luck, dear reader! Ashot Seferyan, Candidate of Sociological Sciences, Director of the Executive MBA program at the Institute of Business and Business Administration of the Academy of Economy under the Government of the Russian Federation 7

7 Feedback on the Adizes Methodology When we first heard about Isaac Adizes from the presidents of various companies whom we knew and respected, these people simply said that he was a representative of a new tribe of management consultants, a person who really understood how business works and what needs to be done to make it work even better. In fact, Adizes is more than just a consultant. He is a pioneer in the field of management and is a serious, insightful and skilled observer of organizational behavior, which he has studied for over 25 years. Magazine "The Editors of Inc." Last year, we increased sales by 70%, reduced operating costs, increased profitability and significantly improved the climate in our organization. These results were largely achieved thanks to the use of the Adizes methodology. Donald Boroyan, President of Francorp, Inc. Mutual respect and enthusiasm have reached previously unseen levels in our company. Adizes gave us the means and the impetus to involve all of its employees in the management of the company. There is no doubt that the changes in the internal climate have been incredible... his method allows you to get from everyone the contribution that he is able to make to the success of the common cause. Frank Chamberlain, President, Porter Paint Company Corporations, like people, exhibit different qualities at different times in life. Dr. Adizes describes these stages in a way that no one has done before; it provides you with opportunities to better understand your corporation, allowing you to become immeasurably wiser. William Farley, Chairman of the Board of Farley Industries With Itzhak Adizes, we examined our management structure to find ways to give it more focus and definition, and as a result we charted our organizational structure... It was a real success! At first we were skeptical, but at the end of the work we were indescribably delighted. We were able to achieve high focus and significantly increase individual and collective responsibility. Ernest Fleischman, Vice President and Executive Director of the Los Angeles Philharmonic Adizes' methodology has helped us solve many structural and functional problems. I am confident that today it is the most advanced management methodology in the world. P. N. Gerilymatos, President P. N. Gerilymatos S.A., Greece Adizes helped us start thinking as one corporation. Previously, each of us acted only as a representative of his unit. Fernando Hilsenbeck, Vice President of Villares Industries, Brazil Adizes simplified management theory. His message is clear and concise. As with the books of Peter Drucker, the more 8

The more time you invest in reading Managing Change, the greater the return on your investment. George Landgrebe, President and Director of American Banker/Bond Buyer Isaac Adizes is a true management guru, and his ideas are applicable both in personal life and in running companies. In his book you will become familiar, as I was, with the benefits of a complete, balanced theory that can be successfully applied in everyday life. Harvey McKay, bestselling author of How to Swim with the Sharks and Not Get Eaten Adizes is one of the few management consultants who has been able to translate a set of theoretical concepts into extremely powerful practical guidelines for managers. What's even more impressive is that he integrated these principles into a comprehensive management system. Moreover, this ambitious undertaking was carried out using a life cycle concept that targets a common source of difficulty that many managers face. William Newman, Professor Emeritus, Columbia University Graduate School of Business Dr. Adizes' methodology not only provides a uniquely powerful means of building a functionally effective organizational structure, his approach allows you to drive functional change while improving the moral climate of your organization. Lauren Rothschild, President, American Protection Industries, Inc. The management development program developed by Adizes helped me learn new and effective ways of making difficult management decisions. Lee Ruwitch, Publisher, Miami Review The experience was overwhelmingly positive. People who attend different stages of the program are convinced that the methodology is very useful and that the time spent on mastering it will pay off handsomely. Students of the program become more confident in the future of their companies. In the process of training, we develop inner self-confidence and inner trust. People become calmer and better prepared for the future. Paulo Villares, President and Director of Villares Industries, Brazil Reading and re-reading Adizes stimulates not only my innovative thinking, but also my effective actions. How unusual is his common sense approach to dealing with complex situations! Kirby Warren, Professor, Columbia University School of Business 9

9 About the Author Dr. Itzhak Calderon Adizes is the founder and director of the Adizes Institute in Los Angeles, California, and director of the institute's Adizes Graduate School for the Study of Change and Leadership. Since 1975, he has been developing a diagnostic and therapeutic methodology for implementing organizational changes, now known throughout the world as the “Adizes methodology”. Isaac Adizes applies his methodology in a variety of organizations with a number of employees from 30 to 150 thousand people. His methods of organizational therapy have helped commercial and non-profit organizations in the USA, Canada, Sweden, Denmark, Iceland, Norway, Finland, France, Germany, Switzerland, Russia, Yugoslavia, Holland, Belgium, Austria, India, China, Israel, just to name a few companies from more than 40 countries to achieve high results and take leading positions in a variety of industries, from banking to food supply. This methodology is outlined in many textbooks and recorded by the author on audio and video tapes. Today, more than 1 thousand companies around the world use the Adizes methodology and more than 200 certified graduates of the Adizes Institute serve organizations around the world. Isaac Adizes gives his lectures in four languages: English, Serbo-Croatian, Hebrew and Spanish. An excellent speaker, he has been a keynote speaker at numerous professional conferences and conventions and has addressed corporate executives in more than 35 countries, including Russia. Personally advised the presidents and prime ministers of Ghana, Macedonia, Greece, Sweden, Israel, Mexico, Brazil. Dr. Adizes' articles are published in such well-known publications as Fortune, Business Week, New York Times, London Financial Times, and his speeches are broadcast by many television and radio stations. Dr. Adizes, whose works have been translated into 30 languages, is the author of more than a dozen books, including Industrial Democracy, How to Solve the Mismanagement Crisis, Corporate Lifecycles, Mastering Change, Pursuit of Prime, and others. as well as many articles in newspapers and magazines. He teaches at the Anderson Graduate School of Management at the University of California (UCLA), and also serves as a visiting professor at Stanford University, Tel Aviv University, and Hebrew University of Jerusalem. Lives in Santa Barbara, California, and Caesarea, Israel, with his wife Nurit and six children. 10

10 Acknowledgments The list of people who contributed to this book would be quite long. I have given lectures based on the material offered in the book for twenty-five years. I started with a small, simple model and then gradually developed it as people became familiar with it and made comments. 1 Someone disagreed with her and enriched me with their critical arguments. Someone helped to present my ideas more clearly and offered me their real stories, jokes, anecdotes and even caricatures. Over time, I realized that what I talked about in my lectures on organizations also applies to personal life. When I was invited to speak to heads of state and ministers, the applicability of these ideas to socio-political problems also became obvious. So who should I thank? Who should I start with? Some people stand apart here. First of all, these are my parents, who, thanks to their Sephardic wisdom, were able to teach me a lot. Besides my parents, I must name Mr. Vukadinovic, my first teacher in Belgrade, who taught me a lesson that I will never forget. At that time I was an eight-year-old child who miraculously survived the fire of the Holocaust, in which half of my family died. I was timid and shy. Another child in our class constantly publicly insulted me with anti-Semitic remarks. Mr. Vukadinovic put us both in front of the class and told us about the brotherhood of people, how we all look the same, but at the same time we can enjoy our uniqueness. He talked about trust and respect. He put us at the same desk for the rest of the year, and my enemy became one of my best friends, with whom I still have excellent relations. Next, I want to thank Yehuda Erel, one of the leaders of the Israeli youth movement Noar La Noar. I came to Israel after the end of World War II, wanting to make a home there, but also afraid of being rejected. He helped me find my roots and a sense of belonging in a new society, teaching me to help those less fortunate than me. Then came the years of study in the United States. Professor William Newman of Columbia University taught me the theory of management, but more importantly, he did so using his open-minded and practical vision of the management process, which I also try to emulate in my intellectual life. Finally, for three years I gained valuable knowledge from my friend Amrit Desai (also known as Gurudev), spiritual leader and founder of the Kripalu Center in Lenox, Massachusetts. From him I learned a lot about love, about harmony, about integration with the world around us. I can't help but mention Rosemary Sostaric, Adrienne Denny, Elspeth McHattie, Charles Mark, Bill Chickering, Michael Leim and Denise Rice. Each of you contributed to the preparation of this book for publication. Thank you from the bottom of my heart. To each of our teachers, colleagues and students, I express my most sincere gratitude and gratitude. Yitzhak Kalderon Adizes, Ph. D. Santa Monica, California, 1 Ichak Adizes, “Beyond The Peter Principle,” manuscript, UCLA Graduate School of Management. Later published as “Mismanagement Styles,” California Management Review 19: 5 20 (Winter 1976); then expanded and published as How To Solve The Mismanagement Crisis (Dow Jones/Irwin, 1979, Santa Monica: Adizes Institute, 1980); later served as the basis for Corporate Lifestyles: How And Why Corporations Grow And Die and What To Do About It (Englewood Cliffs: Prentice Hall, 1988). eleven

12 Conversation one The meaning of management Once I got into a conversation with one of my students. He was an intelligent and inquisitive young man. He wanted to find out what special knowledge of management I had that enabled me to teach and lecture around the world. So he asked if I would have time to talk to him about this topic. I liked his curiosity and agreed to answer his questions. As we walked through the park, exchanging questions and answers, the concept of this book gradually formed in my head. I know that you have been studying management processes for over twenty years. What is it? First of all, we need to define what the word “manage” means. 13

13 Traditional Management Theory I have discovered that in some languages, such as Swedish, French and Serbo-Croatian, the verb to manage does not have a literal translation. In these languages, verbs such as “to guide,” “to guide,” or “to command” are more often used instead. When people speaking these languages ​​want to say what Americans mean by using the verb to manage, they usually also use this English word. For example, in Spanish the verb manejar, the literal translation of to manage, is closer in meaning to the verb to handle (“to handle something, to manage something”) and is used only in relation to horses or cars. When the Spaniards want to use a word close to the word to manage in the American sense, they say “manage” or “do business.” But isn't the management process universal? No. In some countries, management as practiced in the United States and taught in American business schools is prohibited by law. In the system of “self-government” in the former Yugoslavia, the head of an enterprise who made an economic decision unilaterally could end up in court. Such an action would be interpreted as a violation of democracy. Instead, the plant director had to “suggest” a solution, and the workers could accept or reject it. In Israel, the head of the kibbutz, who essentially occupies the position of manager, is regularly re-elected so that no one person can claim permanent leadership of others. Are you saying that the head of the kibbutz leads the people for a while and then returns to the farm to milk the cows? Or cook food, or wash dishes. In this organization, no leader is elected forever, just as the government in democratic countries is not elected forever. Otherwise it would violate the principles of democracy. Head of a kibbutz is not a profession. What should be understood by the word “to manage” if in some languages ​​it does not have a direct translation, and in some socio-political systems the activity it denotes is considered unnecessary or even prohibited? What synonyms would you suggest? Decide, act, plan, control, organize, dominate, achieve goals, lead, motivate, complete... Some dictionaries offer the same synonyms for the word “manage” as you do. But there are also other intriguing synonyms, such as dominate or rule, which are given in the American Collegiate Dictionary. The Oxford Dictionary adds the verbs “to manipulate” and “to connive” to this list. It is interesting to note that none of the dictionaries I looked at listed the verbs “to lead” or “to motivate” as synonyms. I don't like the synonyms "connive" or "manipulate." And there is a good reason for this. To understand what it is, let's define the “common denominator” of all the synonyms mentioned above, with the exception of “lead” and “manipulate”. Imagine the process described by each of these words. Animate their meaning. Can you now identify the common denominator? Act... plan... control... organize... achieve... complete. 14

14 They all describe a one-way process. The one who leads tells those he leads what they should do. The leader determines what needs to be done, and his subordinates become the instruments to achieve the goal. That's why we call a manager the "head" of a department and his most capable subordinate his "right hand." The right hand does exactly what the head tells it to do, while the left hand acts as if it can act of its own accord. Her behavior is not completely controlled. But managers are also called supervisors. Because the supervisor is supposed to have "superior vision" (literally superior vision). Look at the rank insignia of American officers. The way these signs change as military rank increases can be compared to climbing a tree and then flying into the sky. Lieutenants have "sticks" that are associated with tree branches. The captain already has two wands, located on the tree of the military hierarchy above the lieutenants' wands. The major has a leaf as his insignia, which represents the top of a tree. The colonel soars in the sky like an eagle, and the general has stars as his insignia. The higher a person rises in the organizational hierarchy, the better his vision should be. The disadvantage of this philosophy is that it diminishes the role of subordinates. The lower they are on the tree, the less they can see and the less they are allowed to know. Understand the meaning of the word “subordinates”. It denotes people who are subordinate to someone. If a manager belongs to the highest category, does this not mean that ordinary personnel should be classified as a lower category? In Hebrew, the word for "subordinates" literally means "bent by force," as if these people always acted in accordance with the instructions of their leader. Not much fun. This is true because the process of management, as taught as an academic discipline or practiced, is not free from value judgments. It is not only science and art, but also an expression of socio-political values. This is a political process that carries a certain value load. But we put aside consideration of the verbs “to force” and “to motivate.” Don't these synonyms free the management process from what is associated with hierarchy and one-way traffic? What is the meaning of the words “force” and “motivate” in this context? Don't they imply that as a manager or leader, I should know what I want my people to do? The problem is finding a way to get and motivate people to do the things I want. If I can't control them, then maybe I can motivate them. What does this remind you of? Manipulation. Absolutely right! A New Yorker cartoon comes to mind. A woman, a psychologist by profession, is trying to persuade her son to take out the trash. Tired of her speeches, the boy says: “Oh okay. I'll take out the trash, but please don't bother me 15

15 motivate! Even a child sees signs of manipulation in motivation. What he must do has already been decided. The only question is how to make him do it. Is it any wonder that unions often oppose programs to expand and diversify operations that management uses to increase worker motivation? Trade unions see in these programs only a cunning ploy aimed at increasing labor productivity and profitability of production in the interests of the administration. The only benefit for workers is that by participating in these programs they can keep their jobs. The same hidden manipulation effect is present in the verb “to force.” If you delve deeper into the essence of some leadership theories, it becomes clear that they view leadership as a process of making decisions not about what needs to be done and why, but about how to get followers to follow leaders. Should a leader direct the actions of his followers or discuss decisions with them? This can appear manipulative because the leader is not obligated to care about what his followers actually need. In some industries, the word “management” has become almost a dirty word. In the United States, humanists often use it as a synonym for exploitation. What do you offer? 16

16 Functional Perspective We need to understand the role of management based on the function it performs: why do we need it? And this function must be free from value judgments, from any socio-political or cultural prejudices. It should be the same whether we are running ourselves, our family, a business, a non-profit organization or a country. Regardless of whether we are talking about business management, raising children or government leadership, conceptually it should be the same process. The only difference will be the size and nature of the unit being managed. This sounds promising. In what direction will we move? Do you agree that change is permanent? The process has been going on since the beginning of time on Earth and will continue forever. The world is undergoing physical, social and economic changes. Even you have changed in the last minute. Changes happen constantly. Indeed? And change creates problems. Undoubtedly. And problems require solutions. Agree. And decisions cause even more changes. We can display this sequence using the following diagram: So, if the changes remain, what else should remain? Problems. And the greater the scale and speed of change, the more numerous and complex the problems we will face. People shouldn't feel like they have to deal with every possible problem all the time. When a set of problems is solved, it will be replaced by a new one. We will stop facing problems only if there is no change at all, and this will only happen when we... Die. Right! To live means to solve problems, and to develop means to acquire skills in solving increasingly complex problems. 17

17 The purpose of management, leadership, education or governance is: to solve today's problems and prepare to solve the problems that will arise tomorrow. This is necessary because the world is constantly changing. No management is required where there are no problems, and we will not have problems only when we are dead. Managing means being alive, and being alive means facing change and the problems it creates. How do we manage change? I believe that change management consists of two processes. First you decide what to do, and then... You must implement your decisions. Exactly. Both processes are necessary for successful management, and their joint use is a sufficient condition for obtaining the desired result. Therefore, our management process diagram will look like this: And these processes are free from value judgments. You can use them to control anything from the criminal underworld to the society of saints. Whenever a change occurs, you must make decisions and then put them into practice. But are both factors really necessary? Some people hate making decisions. This process turns out to be too painful for them. Do they really have to decide something? Refusal or avoidance of a decision is also a decision. Such people must understand that whenever a change occurs, they are obliged to make a decision, otherwise the change itself will de facto make the decision for them. But although decision-making is necessary, it is not sufficient. The decision made must be implemented in practice. Successful management requires both making the right decisions and effectively implementing them. You cannot provide good governance if you implement bad decisions well and poorly implement good ones. Wait a minute! Why is implementation considered in isolation? Shouldn't it naturally follow a good decision? In fact, a decision is not a good one unless it contains a plan for its implementation. Thus, all that is needed to manage is to make excellent decisions. Dot. But it's not that simple. Take a look at your own life. How many decisions have you made that remain unimplemented? Even if you sat down at the table and made 18

18 an exact list of everything that needs to be done, you still did not ensure the implementation of the solution. Do you smoke? Or are you overeating? Since both are unhealthy, you may have already decided to give up these habits. However, it is possible that you continue to behave the same way, despite having a detailed plan for implementing changes. Are you saying that I have no control over my lifestyle? Isn't that right? Have you really implemented all of your resolutions to make changes? No, not all. I'm still trying to lose a few extra pounds. I have made the decision many times to change my diet, but never followed through with it. This makes me sad. The same can be said about almost any organization. Management may decide to change course, markets, product lines, or company culture. However, such changes are very difficult to implement. A similar picture is observed in the management of states. Many leaders, even dictators, complain that their decisions to make changes are not implemented in practice. For example, Hitler was unable to enforce his decision to burn all German cities lying in the path of the advancing Allied troops. This decision remained on paper, although Hitler could execute anyone who openly dared to disobey any of his orders. Both factors, decision making and decision implementation, are necessary to cope with change, and both factors are sufficient. If I want to solve problems and successfully manage my personal life, career growth, family relationships, organization or country, then I must make the right decisions and then achieve their productive implementation. Of course, and your experience of changing the power system shows that the quality of the decision can neither predict nor guarantee the likelihood of its successful implementation. Some of the most outstanding decisions to make changes remained unimplemented, and some harmful decisions, such as continuing to smoke or eating poorly, were implemented very quickly. If you follow instructions on how to make good decisions, those instructions will weaken your efforts to implement the decisions productively. And if you follow instructions for productive implementation, they will weaken your ability to make good decisions. I think this should be illustrated with an example. Take a look at existing political systems. What system is designed to increase the likelihood of making good decisions? Which system encourages open debate and zealously protects freedom of information, freedom of debate and freedom of the press, ensuring that good decisions can be made? Democracy. Right. But have you noticed how difficult it is in a democracy to implement political decisions that require change? The system can make good decisions, but the legitimate political polyphony necessary for this becomes an obstacle to the implementation of the decision. Most democratic leaders complain that they cannot implement their policies as quickly as they would like. 19

19 Now tell me, what political system ensures the rapid implementation of decisions, but does not allow discussions, doubts and questions? Totalitarian state. Right. However, totalitarian regimes usually make bad decisions. But why? Because rapid implementation comes at the cost of restricting freedom of the press, assembly and debate. The principle here is: “Do or...” This makes it difficult to exchange information necessary to make informed judgments. Instead of objective decisions, such regimes often make biased decisions that have dire consequences. So you want to say that good governance is democracy in making decisions and dictatorship in implementing them? Right! In your personal life, this means that to make good decisions, you must be an open-minded person. You must be a democrat in your own mind and in your relationships with other people. But once the decision is made, you need to become a dictator, which in your personal life implies a strong commitment to the choice made and an unwavering commitment to its practical implementation. This is easier said than done. Undoubtedly. I call the combination of democracy in decision-making and dictatorship in their implementation the word “democracy”. It's a difficult process. Many people use it completely wrong: they try to be dictators in making decisions and democrats in implementing them. I guess this applies to me too. When I made the decision to lose weight, I acted like a dictator. "All is decided. There can be no more discussion here. Period,” I told myself. And I was determined until the moment when the sandwiches arrived. After that, I turned into a democrat in the usual way and began to listen to the inner voices of protest. You get the idea, my friend. You need to use the principles of democracy and dictatorship in the correct sequence. You must be first a democrat and then a dictator, and the difficulty here lies in the word "then." When do you stop being a democrat and become a dictator? When do you begin to suppress manifestations of internal dissent? Some people turn out to be democrats when making decisions and continue to be democrats in the process of implementing them. They act unproductively because they keep changing their decisions. At the same time, decisive people carry out implementation skillfully, but their narrow-mindedness negatively affects the decision-making process. It is difficult for them to prove something because they do not know how to listen to others. As a result, they make decisions based on inadequate or distorted information. Unlike the democratic style, which is effective but unproductive, the totalitarian style is productive but ineffective. Are you saying that the democratic system is unproductive? Absolutely right. If you try to use it to organize a productive political process, it will lose its effectiveness. Likewise, will you argue that totalitarian regimes cannot be effective? If you look at them carefully, the meaning of your statement will become clear. 20

20 After all, the economy of the USSR, with its centralized planning system, experienced difficulties in meeting production targets, which even led to a food shortage in the country. Totalitarian regimes are ineffective. The more democratic they become, the more effectively they can work. But at the same time they will have to partially lose their political productivity. Yes, and this is not easy. People usually want to get something more without losing what they already have. They prefer to have “more” rather than “instead.” To govern, command, educate or rule means to make decisions and carry them out, to be a democrat and then to become a dictator. This is very difficult, not only when managing a business, but also when managing family and personal affairs. This is one of the reasons why the management process is so difficult. You must make a decision and ensure its implementation, demonstrate open-mindedness and steadfastness at different times. With this definition, the management process will be comprehensive, universal and free from value judgments. I think I get your idea. Both factors are necessary, and the presence of both is a sufficient condition for success. The better our solution and the more productive its implementation, the better we will be able to manage. But how can we make a good decision and put it into practice productively? How can we measure the quality of decisions? I could analyze the decision after the fact and accept it as correct. But wouldn't such an analysis be belated? This is a great topic for our next conversation. So, see you tomorrow. In the same place at the same hour. Till tomorrow. Thank you very much. 21

21 Conversation two Predicting the quality of decisions So, where are we? You said that the quality of management, leadership, education or leadership depends on the quality of decisions made and the productivity of their implementation. Today we were going to talk about how to make good decisions. Then let's begin. To make a good decision, we need to know how to predict its quality. We don't want to analyze a solution after it's been implemented and then judge it based on our successes or failures. But how can such a prediction be made? Let's look at a simple example. Let's assume that we have made a description of the problem situation containing all the information necessary to diagnose and solve the problem. Next we give this description to a group of four people. These people know nothing about the real situation other than what is presented in the description. They do not have any additional information. We ask them to work together to study the problem and come up with a solution. The group should then prepare a written statement of the problem and its solution on paper and submit it to us in a sealed envelope. Now let's go to another group of four and give them the same task. She will also not be provided with any additional information beyond that contained in the original assignment. The second group will have to give their description of the same situation and offer their solution. Once both groups have completed their work, we will have two sealed envelopes. But will these envelopes contain descriptions of the same problem and the same solutions? No. Most likely, they will describe different problems and propose different solutions. Right, but why? The initial problem situation is the same. Both groups have the same information. Why will problems and their solutions be different? Because all people are different! You just named a key factor in the management or leadership process! To manage successfully, you must manage people who write the problem in the envelope instead of the problem in the envelope. There are managers who say: “I love to lead. But I can’t stand my subordinates!” But if a manager does not like to work with people, then this means that he chose the wrong profession. Too many managers, leaders, or parents of growing children say, “Give me the envelope!” They then open the envelope and state, “Wrong problem! Wrong decision! The right problem and the right solution are...” They think they are leading, commanding, or nurturing, when in reality they are just trying to do the best they can. Even if they approve of what's in the envelope, how can they know they've found the right problem and the right solution? 22

22 But if they are managers, then they should know the situation better than their subordinates. That's why they get higher salaries, right? Isn't that why they become our leaders? They should know better, but do they really? Does a higher salary guarantee broader and deeper knowledge? Do our leaders necessarily know more than us? Then why are managers paid more? What do we reward our leaders for? At least not because they know more about the problem or its solution. They are paid more for knowing how to find the right, “in-the-know” people and for managing those people in a way that gets them to make the right decisions. If a leader claims that he himself knows everything, then his organization is in danger. If managers want to have the right problem description and the right solution, then they must have the right people on hand for the situation. They must create an environment that will enable these people to gain the right understanding of the problem and help them find the right solution. But how can I, as a leader or manager, recognize the real problem and the real solution? How can I tell the right problem and the right solution from the wrong ones? If I don't know more than the people I manage, how can I evaluate their decisions? After all, I could be wrong, right? To find out whether your people are offering a good or a bad solution, you must ask two questions. If the answer to both questions is yes, then you have the right problem and the right solution. If you get a “no” answer to either one or both questions, then you have the wrong problem description and the wrong solution. What kind of questions are these? To understand what these two questions are, we will have several discussions. At first, these discussions may seem complicated and overly academic. But later the usefulness and applicability of the concepts discussed in them, as well as their ability to lead us to obtain answers to these two questions, will become obvious. I'm ready. Let's continue! 23

23 The Four Roles of Decision Making No decision is made in a vacuum. It is taken to achieve something. A solution is considered good if it achieves the desired results. The quality of a decision must be assessed taking into account its impact on the system for which it was made. Thus, if a solution can make the organization both efficient and productive in the short and long term, then it is a good one. Now let's look at the characteristics of a good solution that can provide an organization with productivity and efficiency in the short and long term. To do this, we can use the following table: I have studied management practices in many countries and observed what happens in different settings. I was like that doctor who, while stationed for a long time on a British warship, could see how people who were deficient in vitamin C developed scurvy. I studied management in countries where some managerial functions were prohibited by law, and observed and analyzed the management “diseases” that developed. 2 At the same time, I identified the necessary characteristics, those four “vitamins” that I called “decision roles”, which ensure the creation of a healthy organization, that is, effective and productive in the short and long term. When any of these roles cease to be fulfilled, the result is a corresponding pattern of mismanagement. 3 I can analyze and predict the outcome of a decision by analyzing the roles that are played and those that are not. What you're saying is that whenever one of the roles is not fulfilled, a corresponding type of mismanagement occurs. And by knowing which roles are missing, you can predict whether the organization will be mismanaged and ineffective and/or unproductive in the short and long term. Right. Then you can look at management problems the same way you look at illnesses, figure out what missing roles caused them, add the missing role or roles to the system, and return the organization to a healthy state. Yes! I look at the organization as a whole system and consider everything that makes it “healthy” or “sick.” I solve specific problems by treating the entire system. I call this approach the Adizes methodology. Adizes' methodology was proposed by 2 Ichak Adizes, Industrial Democracy: Yugoslav Style (New York: Free Press, 1971); reprinted Santa Monica: Adizes Institute, 1977). 3 Ichak Adizes, How to Solve the Mismanagement Crisis. 24

24 provides a holistic theory of management, both therapeutic and preventive. For example, one company, thanks to the use of this methodology and other factors, was able to increase its sales over ten years from $12 million to $750 million without diluting its capital through an additional issue of shares. 4 Another company, also without issuing additional shares, increased its profits from $150 million to $2.5 billion over ten years. 5 But will the benefits be permanent? It can be so if the company constantly receives support in the form of regular use of the methodology. Otherwise, in the long term, the effectiveness of the methodology will decrease, and in the end the organization will lose the benefits it receives. We get a similar result after stopping regular exercise or abandoning the proper nutrition system. But can anyone use this methodology correctly? He can if he is taught it properly. How different is this from what traditional consultants do? We do not prescribe medication in the sense that we do not write consulting reports. We develop the organization's ability to release and harness its internal energy so that it can take care of itself. We train the organization to produce the necessary “vitamins” so that it can continue to be healthy without our intervention. Traditional counselors don't teach how to stay healthy. Usually you need to periodically contact them for help. Our methodology is different. It not only helps the organization change, but also develops its ability to cope with future problems and therefore does not develop dependence on outside interventions. It teaches the organization how to properly manage itself on an ongoing basis. I'm interested to know more about all this. What are these four roles? 4 According to Peter Resnick, Chairman and President of The Franklin Mint. See quote on back of dust jacket. 5 Tom Monagham and Robert Anderson, Pizza Tiger (New York: Random House, 1986). 25

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“It is not the strongest or the most intelligent species that survive, but those that best adapt to change,” said Charles Darwin. Dr. Isaac Adizes continues this thought: “We will stop facing problems only if there is no change at all, and this will happen only when we... die.”

Adizes' methodology is based on the basic principle: any organization, like any living organism, is constantly changing and faces problems. At each stage of organizational development, a company expects a specific set of changes.

“Managing Change” is not a miracle cure that will cure all management problems. This book will teach you how to effectively diagnose an organization's "diseases" and "cure" them. You will learn how, using the internal energy of the company, you can independently produce the four necessary “vitamins” to maintain the health of the company for a long time.

Who is this book for?

For those who want to make change manageable

From the author

I have studied management practices in many countries and observed what happens in different settings. I was like that doctor who, while on a British warship for a long time, could see how people who were deficient in vitamin C developed scurvy. I studied management in countries where some managerial functions were prohibited by law, and observed and analyzed the management “diseases” that developed. In the course of this work, I identified the necessary characteristics - those four "vitamins" I called "decision-making roles" - that ensure the creation of a healthy organization, that is, effective and efficient in the short and long term. When any of these roles cease to be fulfilled, the result is a corresponding typical pattern of mismanagement. I can infer and predict the quality of a solution by knowing which roles were and were absent during the decision process.

I call this approach the Adizes Methodology. Adizes' methodology offers a holistic theory of management, both therapeutic and preventive. For example, one company, thanks to the use of this methodology and other factors, was able to increase its turnover over ten years from $12 million to $750 million without diluting its capital through an additional issue of shares. Another company, also without issuing additional shares, increased its profits from $150 million to $2.5 billion over ten years.