the bipolarity of a
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The Bipolarity of A
The human being is a wonderful machine, unique thanks to our ability not only to
understand our environment but also to change it. What makes us different to all other
living things is our intelligence; nevertheless this touch of divinity is still limited by our
capacity to understand the complexity of this world. To cope with our limitations we relyon exceptional people that throughout history have had the ability to see the world in a
different perspective, able to make the incomprehensible to the normal person,
comprehensible, by making complex situations simple. Having the capacity to extract
from complexity a model that is so simple that permit others, not only to understand, but
to use such simplicity as the basis for new discoveries.
Looking back in history, it was not until Newton stated the three universal laws of motion
in 1687 that the doors opened to enable many of the advances of the Industrial
Revolution. This ability to simplify what most humans see as an abundance of chaotically
ordered data is repeated in many disciplines; such as Aristotle for philosophy, Freud forpsychology, Einstein for physics and even in more soft and contemporary disciplines we
could mention Porter for strategy.
Simple is wonderful, it is a luxury, especially today in which change has accelerated
dramatically due to the ever expanding flow of information. Management of organizations
has become more complex up to the point of being chaotic. An ever expanding amount of
options, theories, markets and technologies has left us with less certainty of our actions.
It was not until I joined Frisa that I got a taste of simplicity in management theory, it all
started with 4 simple letters; PAEI. Letters that modeled the required elements needed tomanage an organization in the short and long term. While at the same time simulated not
only the behavior of individuals, but also the lifecycle of organizations. This model has
not only changed my perception of the dynamics of management but has opened my
eyes to new possibilities.
The element of this model that has puzzled me the most has been the A
(Administration) role, since it is one of the most potent role, since it gives the company
the efficiency needed to grow and be profitable; but at the same time is the most
dangerous since it is the culprit of the aging of organizations.
The history of Frisa and the Adizes Methodology
In 1991 Aurelio Flores returned to Monterrey after working with Dr. Ichak Adizes in
California for a long period. Aurelio found in the Adizes Methodology a powerful model
which he learned and helped improve during his long relationship with Ichak. When he
returned to Mexico he started to help a small firm with annual sales of US$17 M named
Frisa. He helped determine the companys structure, established management
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processes, metrics and a reward structure. After working three years with Frisa, the
company was healthy and with great growth potential.
Aurelio continued helping Frisa all the way through 2003, during this period this culture
was deeply rooted within the organization, especially in all those who participated in what
was called Aureliazos (Syndags). Even years after Aurelio stopped consulting due tohealth problems; the culture was still alive
By 2009, Frisa had grown its sales 10 fold since Aurelio left Frisa, a new crisis had arisen
due to the financial meltdown of 2008, and Frisa decided to reawaken Aurelios culture by
contacting the Adizes Institute.
Reawakening Aurelios Culture
I joined Frisa in early 2009, I found Frisa to be a different company, but I did not know
why. There were traits in the culture that I could not figure out; decisions were
participative, after all meetings everyone gave their comments in an orderly fashion,there was a huge aversion to corporate controls, and there were management tools
called Blue Books and Black Books1. In conclusion, I did not know why, but I found in
Frisa an extremely flexible and execution oriented organization, a place where things
worked...
It was not until Frisa hired the services from the Adizes Institute that I started to
understand the secret of Frisas success. As time progressed the whole company was
reintroduced to the Adizes Methodology. The different concepts were incorporated in the
everyday work, to the point that they have come to be part of Frisas language at all
levels.
It has now been three years that I have been fortunate enough to work with the Adizes
Methodology. I have witnessed the impact it has had in Frisa and in its culture. I believe
that today Frisa has gained a privileged position compared to its competitors to continue
rapid growth while at the same time providing its customers with the best product and
service.
1When I asked in Frisa the origins of the names of the Black and Blue Books they told me that the names originated
because of the color of the cover. Later on when the Adizes Methodology was reintroduced I realized that even thoughthe culture prevailed, the origins and theory was in many cases lost due to change.
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The Multi-dimensionality of PAEI
When explaining the PAEI concept one notices the different dimensions in which it can
be applied. The core of this model lies within the outcome each of the letters generates in
organizations and in people:
P Generates Effectiveness in the Short Term
A Generates Efficiency in the Short Term2
E Generates Effectiveness in the Long Term
I Generates Efficiency in the Long Term
Once this has been established, the best way to illustrate the impact of each letter is to
describe the styles of individuals utilizing this model:
Paei ProducerFunctionallyoriented focused on results in the short termpAei AdministratorSystematicfocus to create Efficient results in the short term
paEi Entrepreneur a Proactive focus to be effective in the long term
paeI Integrator an efficient focus in the long term through Organicintegration
All people will inherently feel more comfortable with a certain style which will remain with
them throughout their life. The objective of all individuals is to always maintain all letters,
by shifting from one letter to the other, and keep exercising them even though there is a
natural conflict between them. Personal growth is achieved by strengthening more than
one letter, while always maintaining the flexibility of working with all of them when
needed.
Organizations as people are more similar that we believe they are. The structure needed
for an organization to prosper repeats itself throughout Industries, geographies and even
purpose. Each part of the structure is identified with a PAEI role, and it must be paired
with individuals that have similar styles and permit them to flourish individually to insure
that all are present in the organization.
PA AE Ep Ei
Production Accounting Marketing HR Dev.Sales IT R&D
Admin HR Legal EngineeringQuality Finance
2To betterexplain the Dynamics of A, this dimension which refers mostly to Efficiency, I will refer to this concept with
the symbol of Prime () after the letterA. (example: A would mean Efficiency in the short term and would not refer
directly to the role of Administration)
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As in people, organizations also have lifecycles. These lifecycles are generated
depending on which letter of the PAEI models prevails within the Organization. Even
though there is a natural path and sequence to the lifecycle, the understanding of the
PAEI model can help influence the path to Prime, and avoid mistakes that can lead to
aging or death. The following is the lifecycles and their PAEI sequence:
paEi: Courtship
Paei: Infancy
PaEi: GoGo
pAEi: Adolecense
PAEi: Prime
Even though there are more dimensions than those explained previously, there is one
other dimension that is crucial to facilitate handling change, which is the organizational
structure needed to aid in efficient problem solving. There are two types of problems:
PA Problems: those problems where the solution is visible and can be solved in
the short term.
EI Problems: are those problems where the solution is not clear and a team of
people is needed to find the best solution in the medium term.
To be able to be efficient in solving problems the organization must establish a PA
structure, which is a Hierarchical structure that promotes top-down information flow and
an EI structures, which is a participative structure which promotes a bottom-up
information flow.
As one can notice the power of the PAEI model comes from its multi-dimensionality that
permits the different dimensions of management to connect with one single model.
The despicable A
When starting to work at Frisa, I found a misconception about the A role. A was
associated with aging. This belief resulted in a conduct that rejected any type of control
from the Administration area, since it was interpreted as a threat to the companys
flexibility.
As the Adizes Methodology was reintroduced it became clear that the A role had more
than one side to it, and the application of the PAEI model worked in many dimensions. If
A was applied to P, it generated efficiency in the company. As a matter of fact,
unknowingly, one of the most important factors for Frisas success was the
systematization and efficiency in operations (A to P) that permitted enormous flexibility in
the production processes.
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It was not until I read Dr. Adizes Management Insight named Which has priority:
Effectiveness or Efficiency, in which he concludes that Efficency (A) in the long run is
more important than Effectiveness. This insight shed enough light for me to understand
the critical impact that A has in the growth and profitability of any company. It also led
me to better understand where the confusion in Frisa arose between the A that refers to
efficiency and the A that refers to a more Administrative Role.
After reading the article, I was reminded of movie with Eddie Murphy named Coming to
America. Murphy worked in a burger place called McDowels (a cheap imitation of Mc
Donalds). There is a scene where Murphy surprises Cleo Mc Dowell (the owner) while
trying to copy an operating manual from Mc Donalds. I understood that the difference
between the burger place in the corner and Mc Donalds had been the A; the ability of the
company to replicate an efficient and repeatable process in order to grow and be
profitable. This is also true with companies like Walmart, Dell, and any franchise model
throughout the world. It is important to note that it is not the A alone that accomplishes
growth and profitability; nevertheless it is the A that helps the other letters to attain their
full potential.
Entropy and Inertia in the Adizes Lifecycle
In Richard Rumelts book Good Strategy, Bad Strategy, he talks about using Inertia and
Entropy as a competitive advantage over competitors. The following is how he uses
these concepts:
Organizations experience significant entropythe continual drift towards
disorganization. Much of the useful work of managers and consultants is maintenance
the constant battle against entropy. Strategists must battle this never-ending drifttowards disarray within their own organization. And they must try to exploit the
disarray of their rivals. [Ch. 14, Inertia and Entropy]
Competitors do not always respond quickly, nor do customers always see the value of an
offering. Good strategy anticipates and exploits inertia. [Ch. 14, Inertia and Entropy]
Rumelt is making reference to the effect of A during a
companys lifecycle. As shown on the left, Prime is
attained when the level of control and flexibility are at
the same level, but when aging starts, Inertia takes
over and A increases making it more difficult forcompanies to adapt to the changing environment. On
the other extreme of the lifecycle curve we can see
how companies in their early stages are subject to
entropy. Their lack of systems and efficient processes creates chaos.
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If one looks at the different causes of premature death of companies in the early stages
all but one (Premature Aging), are caused by Entropy (a lack of A). On the other hand,
all the stages relating to aging companies generate Inertia which is an excess of A which
undermines all other roles within the PAEI model.
What makes P grow?
As companies shift from Courtship to Infancy, P is introduced; the company starts to
provide to its customers. If the E in courtship has read market needs correctly, sales will
rapidly grow and an entropic environment will quickly set in. Demand will outgrow
production and distribution capabilities, administrative systems will not be in place, there
will be a lack of cash flow and not even the founder will have time to do what he does
best, bring new ideas to the table.
This is when A comes to the rescue Unfortunately things start to get confusing. What
dimension of A are we talking about? It is not the structural A which brings
Administrative processes into play. It is not the time to understand cost structure, nor is
the time to be able to have financial information a couple of days after month end. The
A needed is the one that generates Efficiency (A), and when correctly applied it will
limit entropy.
Looking back to the Mc Donalds example; when Cleo Mc
Dowell was looking at Mc Donalds operating procedures,
he knew that for him to grow and compete he needed
efficient processes in order to serve his customer and be
profitable, he needed to grow its P using A.
On the other hand, taking a look to the Bad side of A, lets suppose that McDonalds
continues to strive for Efficiency, trying to extract the most resources from the market. It
can reach a level of efficiency in which quality and service will suffer. If the other letters
such as the E do not step in, Inertia will be so powerful that the company will start aging
quickly. Soon P will be turned into p and Aristocracy will soon appear, until p will finally
disappear.
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A on A, a dangerous combination
When companies reach GoGo in their lifecycle P and E are strong, nevertheless the
struggle against Entropy is fought by individuals not by institutionalized processes. This is
when companies are at risk of falling into entropy and dying, especially from the excess
of E from the founderand his ever changing priorities.
It is now time to focus on the A, and bring institutionalization to
the company through processes that will provide systemic control
of Entropy, but be flexible enough to avoid too much Inertia. The
areas like Administration, Legal, production control, and Quality
start to take control; the company starts to be more dependent
on procedures and systems than in individuals. Variability is
reduced and Efficiency (A) turns into king.
The company is proud of As accomplishments, the company has reached Prime and
growth and profitability join in. The perfect balance is reached, the company enters into a
state of Flow3and the effort needed to achieve its goals is reduced. If E does not start
to make noise and create internal change in the organization, A will continue to provide
efficiency until Inertia will kick in. Once the company rests in its comfort zone it will start
to age.
A on E and I
My initial mental model of A did not permit me to mix A with E and I, nevertheless Istarted hearing throughout the company Lets put some A on E and I. This was
anotherhint that led me to differentiate the A with A.
Companies are initially driven by their founders E, as they reach Prime this E has to
be transferred from the Founder to the companys institutionalized processes. This is
when A comes in; an organizational structure which encourages E has to be
established, a strategic policy has to be determined to focus the E, and the E has to
be distributed throughout the organization.
In the case of E, A brings the tools needed to transfer the
Entrepreneurial spirit from the Founder (Ef) to the Company (EC).
Once this is achieved, the long term future of the company is no
longer dependent on an individual. A good example is GE, even
though this company was initially founded by Thomas Edison, it
3Flow was proposed by psychologist Mihly Cskszentmihlyi and it is defined as the mental state of operation in which
a person performing an activity is fully immersed in a feeling of energized focus, full involvement, and enjoyment in theprocess of the activity.
http://en.wikipedia.org/wiki/Mihaly_Csikszentmihalyihttp://en.wiktionary.org/wiki/mental_statehttp://en.wiktionary.org/wiki/mental_statehttp://en.wikipedia.org/wiki/Mihaly_Csikszentmihalyi -
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has now lasted more than 100 years. It has transformed itself many times through its
history and it is no longer dependent on its founder or on long time leaders like Jack
Welsh.
On the Bad Side ofA, it can also make Ec go back to e. A good example is Bell Labs,
which had been at the core of innovation in the 20th
century; nevertheless its innovationmodel was not able to change with its environment. By the time it was bought by Lucent
Technology the rigidity of its innovation processes that was more focused on research
than in product innovation, had not adapted to the changing environment and was no
longer able to serve its markets. It did not take much for Lucent to go under.
A on I, necessary for growth
When Aurelio started to introduce the Adizes Methodology in Frisa, the I was suffering
severely. The company was in financial trouble, there where huge changes in the
industries served; entropy was rampant and the environment that prevailed did not
encourage the establishment of I.
As Aurelio started introducing the Adizes Methodology, rules of behavior were
established, Syndags were done, a reward system was implemented and a common
vision and mission was designed. In other words, Aurelio established Systemic
processes that permitted the correct management of an organization. This created an
environment of Mutual Trust and Respect which in turn encouraged the strengthening of
I. At the end it was the A that facilitated the growth of I, and it was the creation of this
I that permitted Frisa to grow so quickly.
After Aurelio stopped consulting in 2002, Frisa began a second stage of growth which ledto its diversification into the Aerospace Industry in tandem with an accelerated growth in
its usual markets. This not only created a growth in sales, but
also in the number of its personnel, which grew from 250 to
more than 1,300 in 5 years. Even though Aurelios culture was
strong (I) in the top management, the influx of new personnel
and the lack of a formal yearly process4 started to generate
entropy which led to a lower Integration throughout the
system.
Once again, it is Change and the lack of systemic processes that caused Frisas I toweaken. Now that Frisa is again implementing the Adizes Methodology it is evident how
the level of Mutual Trust and Respect is growing. Additionally to the normal yearly
process and the implementation of the EI Structure, the companys structure has
4Such as the Adizes Methodology yearly process that includes Syndag, Mission Vision, Structure process
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separated HRA and HRD. This change is bringing A to the I by institutionalizing the
development process of the personnel of the company.
On the other hand, what are the effects of Inertia on the I? A good example of Inertia on
I are many religious institutions, which have maintained integration with rules and
processes (A) that were designed centuries ago. Cultural changes have evolved muchfaster that this rules, which in the end have generated disintegration. It is no surprise the
reduction of followers of these religions in the new generations. Change is the only
constant in this world, so it is easier to work with change than try to fight it.
The balancing act between A and E
Looking back at the behavior of each of the letters of the PAEI model when A is applied,
it is clear that Efficiency will improve their behavior and take them to Prime. Nevertheless
what is the medicine needed to control the negative effects of A.
Could P be the answer to stop A? P enjoys Efficiency; it is more productive withefficiency. The less change the better for P, it will continue to Provide to its customers
with minimum energy. At this stage P and A are great friends, and P will never stop A
Could I be the answer to stop A? I is a follower and will always be a follower.
Integration is its main purpose, and conflict goes against its objective. So if A is winning
I will be always backing the winner.
E is the only one that can save us from A. Taking a look at
the graph of Flexibility and Control, one can notice that E is the
one that provides the flexibility while the A provides the control.It is not until E and A are in equilibrium that the organization
can reach Prime.
These two roles will always be in conflict. A necessary conflict
that will prevent the organization either, to start aging due to Inertia or to inhibit the
organization to reach PRIME due to Entropy. The balance has to be found, and
surprisingly enough we can find this balance through A. The Adizes Methodology
provides the process that helps keep the right balance between all letters so that PRIME
can be reached and maintained through time.
PAEI and Virtues
I stumbled on an interesting quote written by a German Philosopher and Scientist named
Lichtenberg that says;
Order leadstoallvirtues! Butwhatleadsto order?.
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A Virtue can be defined as characteristics that promote collective and individual
greatness. Aristotle goes further and describes the dynamics of virtues by stating that
Virtues are things which are destroyed by deficiency or excess. As an example;
someone who runs away becomes a coward, while someone who fears nothing is
reckless. In this way the virtue "bravery" can be seen as depending upon a "mean"
between two extremes.
The understanding of the dynamics of virtues leads to the conclusion that to maintain a
virtue in PRIME (equilibrium) you need order. In other words, individuals need an efficient
systemic approach or process that maintains a virtue in Prime so that they can cope with
change.
The complexity of Human Beings is so great that even though we can define the effects
and dynamics of virtues, it is difficult to establish common criteria to define what Virtues
are those that help individuals reach greatness. On the other hand, Organizations are
simpler since they are limited by their purpose, so finding the characteristics needed toachieve Prime is a simpler task.
The PAEI model is a good example of the characteristics
that lead to greatness (Prime) in organizations. Like
virtues; it is not until all letters of this model reach
equilibrium that an organization can reach prime. For this,
Order or what I call A is needed. But to maintain
equilibrium As counterpart (E) has to also exist and it is
not until the Aristotelic Golden Mean is found that
Greatness can be achieved.
One last comment on Aurelio and Ichak
I did not have the fortune of interacting with Aurelio, nevertheless from what I have heard
he was a result oriented (P), highly insightful person (E). Nevertheless his practice died
when he was no longer able to perform his consulting services.
On the other hand, Dr. Adizes has been able to systemically put A to the P, and currently
has an institute that has both, the capacity to train others in his methodology, while at the
same time deploy consultants around the world to implement his methodology in different
organizations.
The difference between the style of the two, I believe is A, and in a way this difference
will determine the transcendence of the methodology trough time. I do believe this
methodology is truly profound in its insight, and can do great good to the management
practice. I sincerely hope that the Adizes Institute continues to evolve to Prime so that it
can continue offering value to organization well beyond its founders era.