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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 rely on 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 for psychology, 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 to manage 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

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 to health 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.

When 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 though the culture prevailed, the origins and theory was in many cases lost due to change.

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 Producer Functionally oriented focused on results in the short term pAei Administrator Systematic focus 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 Organic integration 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 Production Sales Admin HR AE Accounting IT Legal Quality Ep Marketing R&D Engineering Finance Ei HR Dev.

To better explain the Dynamics of A, this dimension which refers mostly to Efficiency, I will refer to this concept with the symbol of Prime () after the letter A. (example: A would mean Efficiency in the short term and would not refer directly to the role of Administration)

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: Paei: PaEi: pAEi: PAEi: Courtship Infancy GoGo Adolecense 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

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.

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 drift towards 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 for companies 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.

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.

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 founder and 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 Flow3 and 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 I started hearing throughout the company Lets put some A on E and I. This was another hint 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

Flow 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 the process of the activity.

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 of A, 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 innovation model 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 led to 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 to weaken. 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

Such as the Adizes Methodology yearly process that includes Syndag, Mission Vision, Structure process

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 much faster 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 with efficiency. 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 leads to all virtues! But what leads to order?.

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 to achieve 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.