A Critical Introduction To Organisation Theory

A CRITICAL INTRODUCTION TO ORGANISATION THEORY
A CRITICAL
INTRODU CTION
TO ORGANISATION
THEORY
BRUNO LUSSATO
Conserwtoire national des Arts et Metiers
Translated from the French by

Alison R. Julier
© Dunod, Paris, 1972
English translation © The Macmillan Press Ltd 1976
Softcover reprint of the hardcover 1st edition 1976
All rights reserved. No part of this publication may be reproduced or trans-

mitted, in any form or by any means, without permission
First published 1972 by Dunod, Paris

This translation published 1976 by
THE MACMILLAN PRESS LTD
London and Basingstoke
Associated companies in New York
Dublin Melbourne Johannesburg and Madras
Distributed in the United States

by Halsted Press, a Division of
John Wiley & Sons, Inc., New York
SBN 333 17894 7

ISBN 978-1-349-02508-4 ISBN 978-1-349-02506-0 (eBook)
DOI 10.1007/978-1-349-02506-0
This hook is sold subject to

the standard conditions
of the Net Book Agreement
To Professor Raymond Boisde
as a token of my gratitude
Contents
Foreword by Professor Adolphe Andre-Brunet xi
Acknowledgements xv
Note to the reader xvii
Chapter 1 Man and his Artificial Aids

1.1 Scientific method and the business firm 1
1.2 The firm as a 'living' organism 2
1.3 Vocabulacy and syntax 3
1.4 Man and his artificial aids 4
1.5 The head of the firm and his tools 7
Chapter 2 Problems of Terminology: Different Approaches to the

Business Firm 11
2.1 Introduction 11
2.2 Interdependence between vocabulary and conceptual
classifications (taxinomia) 11
2.3 The three levels: fact-language, theoretical language and
technique language 13
2.3.1 Fact-language 13
2.3.2 Theoreticallanguage 14
2.3.3 Technique-language and its instruments 14
2.4 Interaction between the languages, transfer of words and
changes of meaning 15
2.5 Semantic delimitation of the terms: administration,
management, direction, etc. 16
2.6 The relations of the domains of study and action with the
languages 17
2.7 The schools of thought and their origin 20
2.7.1 Introduction 20
2.7.2 Necessity for a knowledge of the schools ofthought 23
vii
viii A Critical Introduction to Organisation Theory
2.8 Relations between business•, theory, instruments and outside
environment 23
2.8.1 Relations between business• and theory 24
2.8.2 Relations between theory and instruments 24
2.8.3 Relations between instruments and business• 25
2.8.4 Ecological relations 25
2.9 Division of the business firm by nature, object and degree
of formalisation of its activities 21
2.9.2 The division of the business• into five functional sectors
(nature of activities) 29
2.9.3 The division of the firm according to objectives (by
domains of study) 32
2.9.4 Division of the business into zones of formalisation 36
2.10 Provisional classification of theories 31
2.1 0.1 Classification of schools or their specialised
branches, according to the sectors of the firm 38
2.1 0.2 Grouping of schools according to their sources of
~~00 ~
2.11 Classification of instruments: techniques and machines 41
Chapter 3 The Schools 46

3.1 Introduction 46
3.2 The birth of scientific management and the classical school 41
3.2.1 The basic hypotheses and the implicit postulates 47
3.2.2 The implicit hypotheses 51
3.2.3 The school of Mooney and Reiley 53
3.2.4 The school of Sheldon 53
3.2.5 The school of Mary Parker Follett 55
3.2.6 The scope of the classical movement 56
3.3 The behaviourist movement (the behaviourist or human sciences
school) 51
3.3.1 The reaction to the classical school 57
3.3.2 The principles 58
3.3.3 The scope of the human relations school 58
3.4 The .mathematical movement 60
3.4.1 Definitions and historical note 60
3.4.2 Misuse and limits of operational research: criticisms 62
3.5 The socio-psycho/ogical movement and the school of social
systems 65
3.5.1 The notion of system in the Gestalt theory 65
3.5.2 The position of the school of social systems in relation
to some classical principles 66
3.5.3 Assessment of the school of social systems 69
Contents ix
3.6 The neo-classical school (or empirical movement) 70

3.6.1 The evolution of the schools 71
3.6.2 The principles and the basic hypotheses of the neo-
classical school 71
3.6.3 Assessment of the neo-classical school 77
3.7 General systems theory and its developments 19
3.7.1 Birth or'the idea of system 79
3.7.2 The postulates 84
3.7.3 J. Forrester's contribution and the foundations of
Industrial Dynamics 89
3.7.4 The limits of Industrial Dynamics 99
3.7.5 An example of simulation language: the GPSS oflBM 100
3.8 Further developments of systems theory 104
3.8.1 The current situation 104
3.8.2 The structural approach 105
Chapter 4 Operational Division of Flows 110

4.1 Introduction 110
4.2 Objects treated by a business system 112
4.2.2 Physical and monetary flows (relationships between
merchandise and money) 112
4.2.3 Symbols and signs (abstract objects) 116
4.2.4 Psychological objects 117
4.3 The different phases of the firm 120
4.3.1 First definitions 120
4.3.2 Physical phase 125
4.3.3 Psychological phase 125
4.3.4 Abstract phase 127
4.4 Relationships between the different phases and the circuits 130
4.4.1 The passage from the physical phase to the abstract
~ase 1~
4.4.2 The interphases 132
4.4.3 Definition and symbolisation of interphases and
interfaces 133
4.4.4 The circuits 137
4.4.5 Incomplete circuits 141
4.4.6 Man/environment relationships 143
APPENDIX Method of evaluating the organisation of business firms 147

1. Aim of method 147
2. Conception of an analysing instrument 148
X A Critical Introduction to Organisation Theory
3. From theory to practice: the use of the grid in a large
electronics company 154
4. Preliminary conclusions 156
Bibliography 163
Index 167
Foreword
Adolphe Andre-Brunet
A company is' a legal-economic-social entity, which in order to achieve

its chosen objectives, within the framework of a given organisation,
sets in motion manpower, capital and goods, making use of techniques
of production, marketing and administration'. The operations which it
effects produce results of which, where there is a profit, the proportion
retained by the firm increases its financial strength.
This definition, which I put forward a very long time ago now, covers
all categories of enterprise, whether they are public or private, whether
they pursue their activities under a more or less definitely capitalist
regime or within the framework of strict central planning. Whatever
the character of the political or economic constitution by which they
are governed, all such enterprises in fact obey the same rules of man-
agement; only the objective varies.
Although, because of its generality, my definition seems to survive
the passage of time, it is none the less true that certain elements of
business companies are undergoing a mutation and the analysis of its
causes justifies a search for new forms of organisation. The evolution
(sometimes far-reaching), observed in organisation and administration,
results from an increased need for information, from the considerable
facilities available to those responsible for management for collecting
and processing data, and from the importance taken on at the very
heart of the enterprise by human problems.
The management of modern organisations demands much more exact
and more numerous calculations than in the past, either because
competition is becoming keener since markets have become larger or
because, in spite of apparent simplification, the progress of technology
makes economic life more complex, or finally because the appearance
of computers and new administrative methodologies multiplies the
xi
xu A Critical Introduction to Organisation Theory
managers' need for information. Speaking of information science, it can

in fact be truly said - reversing the famous saying - that the organ
creates the function.
But better use of information science, operational research and cyber-
netics makes opportune the development of charts or models which show
clearly the flow of a great variety of elements circulating within any
economic enterprise or linking it with its setting, and at the same time
necessarily imposes the adoption of standardised, rational and precise
terminology.
All language raises problems of communication which bring into
focus, quite apart from the dilemma between the signifier and the
signified, the people for whom signification must have a meaning.
At the same time, it becomes apparent that it is necessary to take into
account the attitude and the reactions of those who, at different levels
of the hierarchy, co-operate in the working, running or administration
of the enterprise. That is why the multiplication of relationships which
are to be found within and outside any economic unit, as well as the
importance assumed by psychological and moral factors in contem-
porary economic life, paradoxically result in making the development
and facility of communication into just so many new chances of mis-
understanding. One can then understand the growing place occupied
by semantics in the contemporary world and also its intervention in
areas where previously it was unknown.
The psychological aspect of communication is therefore becoming,
as a natural development, one of the essential elements in the life of an
organisation and what was at first a by-product, then a necessary
condition, gradually becomes, under the influence of other preoccu-
pations, an objective in itself.
The history of what may be called ' business psychology' has, in my
opinion, developed through three periods which may be classified,
provided that it is accepted that its evolution did not reach every
economic unit at the same time, or to the same extent, even in the same
country.
For a long time, the human factor was hardly taken into consider-
ation: that was the period when labour was treated essentially as a
production factor, on the same level as, for example, raw materials;
that was, let us say, the materialist period.
Then, a better understanding and control of the psychology of the
worker was taken to be one of the effective ways of increasing produc-
tivity: that was the utilitarian period which still persists.
We seem, finally, to be entering into a new co-operative or partici-
pationist phase, which shows a clear break with the preceding period;
psychological considerations cease to be exclusively a factor in pro-
ductivity and become an objective. A marked trend has emerged over
the last few years characterised by a shift of the organisation and the
Foreword xiii
management of economic life from the level of material and immediate
utility to the level of a more distant but higher purpose. It is basically
in an attempt to respond to this aspiration, which may often be confused
but is none the less strongly felt, that new concepts of management are
developing.
As early as 1951 I argued that understanding of the business firm and,
in a more general way, of the whole economy, involved the development
of coded economic information; this largely presupposes the formula-
tion and widespread acceptance of standardised accounting techniques.
Probably the important role that I assigned to this administrative
technique was surprising at that time, since I did not hesitate to assert
that it should constitute a powerful factor for social comprehension.
Without returning to the doctrinal debate, let me mention the con-
siderable progress achieved in France in the field of financial infor-
mation in the course of the last two decades: the first phase of the
evolution which I hoped for has now been completed; the second, that
of economic information, can thus begin under favourable auspices.
Though the business firm has always constituted an entity of which the
unitary character is essential, the approaches to it have too often been
partial or analytic when they were intended to become rational. But
it has at last been understood that what is essentially synthetic cannot
be apprehended exclusively by analysis. For this reason the study of the
new forms of organisation must offer an interdisciplinary aspect - it is
tempting to say 'transdisciplinary ', to underline clearly that the whole
is not the same as the sum of its constituent parts. Similarly, the close
interdependence of the various elements of which the structure of
organisations is composed, has led contemporary authors to call them
systems, assuming it is understood that this is a notion applicable, not
only to actual companies, but to all organisations whose activity has
an economic, administrative or even political character.
Systems are precisely the subject of Professor Bruno Lussato's work

which I have pleasure in presenting now.
After examining the problems of terminology and before analysing
the notions of flows and phases, the author - in order to place his own
ideas in a historical perspective - devotes himself, in this book, to a
critical analysis of the various schools of thought on the subject of
organisation, and shows the evolutive character of their theories. In a
forthcoming work, in which certain of his dominant preoccupations
begin to be expressed, he assembles the elements necessary for a
psychological theory of information; representation, the semantic
theory of substitution and the theory of evaluation of needs and values,
are then studied successively.
Two other books are in preparation. In the first, of which the pro-
visional title is ' Management and Cybernetics', Bruno Lussato will
xiv A Critical Introduction to Organisation Theory
study in depth the idea of systems - which he defines as autonomous

groupings of elements whose reactions are reciprocal and among which
circulate flows of a material nature (physical or monetary) and of a human
nature, in the form of information, flows which prompt decisions to be
made at every moment- and he finally reaches the general conclusion
that every organisation is made up of a conflicting hierarchy of systems.
In a forthcoming volume, devoted to the socio-psychology of organi-
sations, Bruno Lussato will set out his own views particularly on the
subject of the rationalisation of choice, strategy, typology and diagnos-
tic of structures, functional and 'federative' decentralisation ... subjects
which only need to be mentioned in order to evoke their present-day
perspective and importance.
This then, however inadequately summarised, is the content of the
important work which Professor Lussato - who was our brilliant pupil
at the Conservatoire national des -Arts et Metiers before becoming our
distinguished colleague - will use as the opportunity to unfold before a
wide public the principles which he has been expounding for several
years in his teaching and in his advice to the important firms to whom
he is a valued counsellor.
An undertaking of this sort was not easy and ran the risk of falling
into a twofold trap: either elaborating a theory which is the fruit of
intellectual speculation whose logical progression is quite out of touch
with reality or else, on the other hand, using a mass of data collected in
the course of vast experience but only making a simple juxtaposition of
facis without any original contribution.
Being a man of great gifts, having a very open outlook and being
endowed with a deep sense of reality, knowing how to abstract from his
experiences a theory which is 'thought out' because it has been 'lived
through', our author has been able to avoid these obstacles.
During the long journey which he will make in the world of systems,
he will analyse or call to mind various aspects of most sciences and
techniques of organisation (cybernetics, operational research, infor-
mation science) and social sciences (psychology, sociology, communi-
cation science, semantics). His aim is not to demonstrate his erudition,
but to take into account the multiple aspects displayed at the present
time by the organisation and management of economic entities. Follow-
ing in his footsteps in this way, the reader will certainly find as much of
interest as I did myself in studying the manuscript.
As for the goal which Bruno Lussato has set himself -to present a
theory of systems - I am convinced that his book will constitute a
fundamental contribution to the reform of the business firm, which is
without doubt one of the major problems of our time.
Professor Adolphe ANDRE-BRUNET
President du Departement ' Economie et gestion'
du Conservatoire national des Arts et Metiers
Acknowledgements
This page fulfils a moral obligation rather than the usual concern for
conventional politeness. In fact, without the active encouragement of
my teachers and my colleagues, without the patience of the editor who
had to wait several years for a book which was continually being
rewritten, this work could not have seen the light of day.
My thanks go first to Professor Raymond Boisde, to whom this
volume is dedicated. My debt to my teacher and predecessor in the
Chair of Organisation at the Conservatoire national des Arts et Metiers
goes far beyond the homage to be expected of a disciple. I am in fact
indebted to him - as are many others -for my vocation in organisation.
From his teaching, over and above its straightforward scientific content,
I should like to mention the concern for objectivity which he was able
to pass on to his pupils: it is this concern which has led me to compare
doctrines and theories in this work.
I wish to express my gratitude also to Professor Adolphe Andre-
Brunet whose brilliant teaching and original ideas enriched my training
and who, in the preparation of this book, has not only encouraged
me and given me precious advice, but has also helped me to perfect the
conception and the form of it throughout. If this book is, as I hope,
within the g·rasp of the non-specialised reader, it is due to his help.
His constant concern has in fact been to make the subject-matter -
however abstract and at times dull - comprehensible and useful to the
non-specialist, without lapsin~ into vulgarisation.
This book would not have its present character if various discussions
with Professors Ansoff, Forrester, Richard Johnson and Herbert Simon
had not enabled me to clarify its basic elements.
Equally I wish to thank Mr Jacques Thomas who, besides giving me
the benefit of his professional experience, also gave me his invaluable
help in reading the text, as Mr Jean Hernandez has also done. In
addition the text has been annotated by Mr Marcel Bourgeois who has
been kind enough to contribute in this way to the commentaries
XV
xvi A Critical Introduction to Organisation Theory
provided by the notes for the reader. May they find here the expression
of my profound gratitude.
It remains for me to thank my pupils C. Feuillette, F. Guillon,
B. Kitous, F. de Labarthe, for their useful contributions to this work,
and finally Nettie van Scherpenzeel who brought her skill and patience
to the practical work of preparing the manuscript.
Note to the Reader
This work is intended for all those interested in the management,
organisation and setting up of complex systems in which psychological
factors play a decisive part, either at the decision-making level or in the
course of practical or administrative activities. That is the case with
distributive enterprises (large shops, chain stores and shopping centres)
and mail-order networks, whose activities are closely governed by
psychological influences. These influences are revealed by pathological
changes in the processes of communication and decision-making - false
motivation, errors of perception, inappropriate criteria of evaluation,
semantic distortions- changes which are easily accepted or even pass
unnoticed.
A co-ordinated approach is essential for the analysis and description
of these complex systems in which subjective phenomena follow on,
with unbroken continuity, from practical and administrative procedures.
An approach of this sort should describe the effect of these procedures
on the workers, having recourse to the concepts of semantics and
theories of perception, learning and motivation.
In choosing this approach we are almost immediately faced with the
term 'information' whose contradictory meanings are strikingly evident
as soon as we move from the sphere of practical everyday business to
the domain of information science, semantics and even aesthetics.
It seemed that an attempt to resolve these contradictions, within a
larger framework than classical models, was not without interest at a
time when the concept of information appears to be the keystone of
modern organisational theory.
This study originally formed part of a work which was being prepared
under the title ' Principles of administrative and commercial organi-
sation' which Professor Adolphe Andre-Brunet had kindly asked me
to write for the series 'Business Economy' which he is editing for the
publishers, Dunod.
xvii
XVIII A Critical Introduction to Organisation Theory
A section of this work was to deal with the trend of thought generally
known in America as 'Systems Theory', which is derived from business
cybernetics (Stafford Beer), and which may be considered as a synthesis
of the quantitative trends (Churchman, Hoggatt) and the socio-psycho-
logical trends (Rensis Likert, McGregor, Chris Argyris, Cartwright,
Herbert Simon) which characterise modern research. According to this,
a firm is considered as a system composed of sub-systems fitting into
each other, through which circulate flows of materials, money, goods,
personnel, operational information (Jay Forrester). and also emotional
and semantic messages (Bavelas, Leavitt, Tagiuri).
This theory, expounded by such eminent workers as R. Johnson,
M. D. Mesarovic, James Rosenzweig, J. March (to name only a few
among the most important) embraces such numerous and disparate
models, each employing its own vocabulary, that it seemed necessary.
before describing them, to construct a general framework to allow the
reader to place them in a homogeneous context. It was a question not
so much of attempting the synthesis of a subject which was too broad
and elusive, but of forging a conceptual framework in which the classical
models would fit logically, a sort of meta theory comprising an inventory
of the ideas of the different theories and their interrelation.
In order to do this, before embarking on the study of these theories.
it was appropriate to devote a preliminary chapter to examining the
zones of contact between the field of awareness of the members of an
organisation and the reality with which they are dealing. For this. it
was necessary to define the changes of state undergone by information
(in the broadest meaning of the word) from its physical origin to the
fields of perception where decisions are developed and to analyse the
processes of accumulating data which take place in the intermediary
channels. The need was therefore evident for a terminology equally
suitable for describing highly formal administrative circuits and infor-
mal procedures linked to psychological decision-making.
For want of a better guide, I used my study 'Elements for a psycho-
logical theory of information' (1959-62) which brings together in a
formal synthesis certain research work on perception and motivation,
in particular that of Osgood, Piaget and Rapaport. I have borrowed
from this theory the concepts and terminology used in the description
of psychological mechanisms which seem compatible with the cybernetic
approach which I have adopted and with the non-psychological part of
the study.
Contrary to what might be supposed at first sight from their form and
from the bibliographical references attached to them. the concepts
set out in this work are not deduced from theoretical research - with
which they have often been found to agree subsequently- but are
drawn from real cases. This book would probably not have seen the light
Note to the Reader xix
without a close and precious collaboration over nearly eight years with
Mr J. Grouillet, development manager of a large department store
which is well known for the complexity of its administrative and com-
mercial problems and the variety of psychological situations they
involve. The result of this collaboration has been constant interaction
between theory and practice in a particularly complex field. It has
permitted extensive generalisations from the fruit of experience without,
it is hoped, falling into the trap of unrealistic speculation.
In this connection it can be noted that the framework and ideas found
here have been the starting point for research currently being carried
out on a management simulator for large commercial undertakings.
This simulator had to take into account not only the usual parameters
but also psychological and semantic factors. In order to set it up it was
therefore necessary to find the answer to difficult questions such as
'How will certain people accept a certain system of programmed
learning? How much and in what way will the display of information
influence decisions? What degree of precision is required to avoid
overloading the socio-psychological channels of the decision-makers?
What is the quantity of meaning transmitted? ... '
In setting up this type of simulator, the relevant but imprecise com-
ments found in earlier work, on the subject of the influence of human
problems in automation, can only be of limited help.
They must be replaced by an operational model, based on hypotheses
which can be checked and leading to relationships and parameters
which can be used directly in a management simulator.
A model of this sort has not yet been created or investigated experi-
mentally. Nevertheless, the approach adopted here has permitted my
research to progress and seems to have been of some help to research
workers in the same field. At the beginning, I followed the famous
model of Jay Forrester (Industrial Dynamics, 1961 /1965). Unfortunately,
as the author himself willingly conceded to me in an interview, the
present state of psychological and semantic research has not yet enabled
him to absorb interrelated movements in his system.
For that reason, after setting aside more analytical models of the
GPSS (IBM) type, I turned to MODSIN by F. Peccoud, a model which
is still in full evolution, and at present seems to be among the most open
to the integration of semantic factors.
This book consists of a historical note on the various trends in
organisation which have succeeded each other since the pioneering era
(Taylor, Fayol, etc.). This account is preceded by a survey of the lan-
guage problems which occur between the various protagonists of an
enterprise. The usefulness of this survey is proved in the course of the
critical analysis of the Schools of Organisation which have each, as
might be expected, introduced new terminology.
The volume continues with a description of the conception of a
XX A Critical Introduction to Organisation Theory
business organisation in the form of phases and flows thus adhering to

the fundamental principles of the dynamics of systems.
In my next book I will present the turn-table and analytical instru-
ment essential to the construction of a socio-psychological model of an
organisation. In fact, it puts forward three successive stages in learning
about the psychological elements of a company. First, one is led to view
each individual as a centre of attention and to consider that it is not
good enough to record his behaviour and hope that his chance actions
wiii not seriously impair the working of the system. After studying the
distortion of information at the individual level, an attempt is made to
elucidate the meaning of the term meaning of information. In fact it is at
this level that information systems break down.
To do this it has been necessary to make quite an extensive study of
languages, codes and symbols and this constitutes the second stage of
my investigations. The main theories of semantics have been analysed
and recast in a conceptual framework of which the ba'sis is the psycho-
logical model of information constructed previously. The third stage
leads to evaluating information within the organisation in terms of the
personal scales of value which the individuals have developed. This is
where a synthesis of the preceding work is achieved.
Two appendixes, one in this book and the other in the forthcoming
book, add a practical note to the work. The first is a method of investi-
gation into the organisation of companies. The effect of this method is
to identify the historical deposits left by successive currents of organi-
sation theory in a given company. The second appendix describes a
computerised simulation of the suggested model of the psychological
aspects of information.
This rather lengthy digression on the origin of this work shows the
reader that it is both theoretical and practical, but it is doubly incom-
plete. It is incomplete both on the pedagogical level, since it should be
preceded and followed by chapters introducing business cybernetics
and administrative logic, and also on the experimental level, since the
management simulator towards which it should lead, only exists at the
experimental stage.
I have nevertheless risked publishing it because certain research
workers have found it of interest. But above all it is the encouragement
of Professor Adolphe Andre-Brunet, who thought that the information
theorists would find that it casts new light on the psychological prob-
lems of companies, and even on their practical problems, which has
prompted me to present this book to the public.
If this essay could arouse in the reader a critical attitude and a desire
to become better acquainted with the uncertain regions separating
man's field of consciousness from the data reaching him, or if, quite
simply, it could prompt him to make direct contact with the works
referred to, its aim would be achieved.
1 Man and his Artificial
Aids
l.l SCIENTIFIC METHOD AND THE BUSINESS FIRM
In the introduction to his work on decision and control, Stafford Beer
(1966) showed how far, even in our 'scientific' era, the concept of
science, of its aims and its significance, remains foreign to many directors
and engineers ... and to certain academics. It is easy to identify the
spirit of research with the tools which it requires for work in certain
fields; and these tools tend to become an end in themselves.
For some people, a thing is scientific if it is measured, expressed in
statistics or makes use of certain instruments such as chronometers
and computers. In their eyes, science is synonymous with objectivity
and they favour extreme rationalisation of business policies.
Others, on the contrary, consider that the management and organi-
sation of companies are matters for subtle judgement and that scienti-
fic formulations, which are too rigid and too inflexible, cannot
replace nor even appreciably facilitate the director's decisions.
This mistrust is still more widespread in commercial circles where,
rather paradoxically, directors accuse operational research of not taking
'all factors' into consideration, whereas its aim is precisely to enlarge
the field of data and the capacity of the human brain for integration,
where they are inadequate.
We are at present living in a period of transition which, by reason of
constant acceleration, is taking on the appearance of a revolution,
touching all fields of thought. Let us think for example of the difficult
transition from the 'clas!iiC' Aristotelian system to the 'modern'
relativistic, non-Aristotelian system which has led to the concepts of
cybernetics. First Korsybski, in his famous and much discussed Science
and Sanity (1933), then K. Lewin (1931 ), 1 Bertrand Russell and many
others, have underlined the need to refashion the vocabulary of the
different disciplines to adapt to new concepts.
Now, though it may be, as Dante asserted, that 'there is no worse
2 A Critical Introduction to Organisation Theory
error than nomenclature', nothing is more difficult than to rationalise

a language. Physics and mathematics benefited first from the non-
Aristotelian system, then psychology to a lesser degree. Now it is
reaching the field of organisation and business management, over-
throwing the most firmly established principles. ·
This new methodological approach is as far from a narrow conception
of science as a tool of measurement, as it is from the idle empiricism of
classic doctrines of organisation. But, several managing directors protest
management is not a science but an art; it is experience or, if you prefer a
more precise term, the method of 'trial and error', which instructs us.
Here too, we meet the same misunderstanding about the word
'science'. Science, in fact, is not a collection of fully developed tech-
niques; it is above all a search for models, conforming more and more
to an inaccessible reality and intended to plot the range of human
behaviour in given circumstances, with ever-increasing precision,
whatever the degree of ignorance at the start.
Science does not seek utility, or material progress, or increased
productivity; it finds these on the way, precisely by avoiding costly
haphazard gropings. In this respect, the axiomatic method constitutes a
striking short-cut compared with the complementary method of trial
and error (which is however still necessary).
Seen in this perspective, the disciplines of scientific organisation are
no longer limited to the increase of productivity and the welfare of the
worker, but endeavour to define as faithfully as possible that complex
organism, the business firm. This attempt at understanding, which goes
far beyond simple descriptive analysis, should, in my opinion, precede
any search for improvements, and in the same way investigations,
treatment of defects and fundamental research should precede the
search for applications of theory.
1.2 THE FIRM AS A 'LIVING' ORGANISM

The firm, like all social groups, can legitimately be compared to a
living organism. It has the same definition and cohesion.
As Peter Drucker rightly observed, the first aim of the firm is not the
search for profits, but the search for survival, profits being the basic
condition for that. Like a living being, it is endowed with an instinct
for self-preservation which balances the risk inherent in the instinct
towards expansion; it possesses an information system and a flow of
materials and energy governed by a veritable metabolic system. I do not
hesitate to state that this is a case of functional similarity of structure,
much more than a simple analogy. To be convinced of this it is enough
to compare the work of K. Lewin (1941) on the evolution of behaviour
in the course of a child's development, with the parallel research which
Mason Haire conducted (1959) on the expansion of companies.
One of the principal contributions of the non-Aristotelian spirit to
Man and his Artificial Aids 3
medicine has been the total 'molar' approach to the human being and
the importance given to interactions between body and mind. Today,
psychological processes, though poorly understood, are no longer
considered simply as aids to healing; mental illnesses can, we know,
cause organic deterioration as profound as that caused by physical or
chemical agents, and many lesions have as their origin nothing but
emotional traumas which were neglected thirty years earlier. I am re-
calling the importance of these interactions, which is no longer seriously
disputed by anyone, because they exist in firms as well. In fact, although
we are not always aware of it, in addition to its' hierarchical skeleton'
and its 'physiological mechanism' comprising the whole of its charts
and instructions, plans of campaign and flow of material and energy
which feed it, a firm also possesses a 'psychological system' which is the
product of the mental state of its staff and its past history. The influence
of the past is often shown by corporate feeling, traditions or jargon
which are evident in its activities.
Indeed, the school of human behaviour (Elton Mayo and Roethlis-
berger) demonstrated a long time ago the effect of a good working
atmosphere on productivity and the importance of informal organisation,
thereby encouraging the introduction of social sciences into the firm. But
it is only recently that we have recognised that, without neglecting the
factors of atmosphere and motivation of the worker or the group, we
should consider the ' psychological ' system and the ' physiological '
system - the informational material of the firm - as a whole.
Psychosomatic illnesses exist in organisations too, and many appar-
ently technical failures have their origin in psychological changes in
those responsible for planning or execution.
Following the important work of March and Simon (1958), this
psychological apparatus seems to be animated not only by the moti-
vations, drives, sympathies and other behavioural traits of emotional
existence, well known to specialists in human relations, but also and
above all by the cognitive, perceptual and decision-making processes
which form the principal link between man and his work, between the
'psychological ' and 'physiological', between individual desires and the
execution of a task.
Today, directors must therefore consider their firm as an indissoluble
whole, a complex of joqs, services, processes, rules, rumours, desires and
hopes, of considered or spontaneous decisions which are judicious or
haphazard, verifiable or intuitive - a universe in perpetual evolution,
sometimes expanding, sometimes regressing.
1.3 VOCABULAR Y AND SYNTAX

The use of outmoded language to describe and understand such a com-
plex universe is both damaging and inefficient, as semantics has clearly
shown.
Before embarking on any analysis, the organisational theorist will

therefore begin by defining his terms exactly, using one term (or symbol),
and one only, to express an object, a relationship, an event or a concept.
Two notions, however close they may be, must always be expressed by
two different words, and every effort will be made to use only terms
which have previously been defined.
Observation, reflection and research constantly bring forth new con-
cepts which will be expressed with the aid of a specific vocabulary, and
will be articulated with equally new syntax. It would be dishonest and
illusory to dispense with this vocabulary and syntax under the pretext
of facilitating the task of the reader. The translation of original concepts
into everyday language inevitably detracts from them. (Think of such a
transcription of the words: application, network, flow, entropy, degree
of liaison.) Specialised terms, far from being a translation into jargon of
everyday words, in fact designate a reality which may be increasingly
subtle and inaccessible to ordinary perception but whiCh nevertheless
makes itself evident through tangible and sometimes spectacular effects
on the life of the firm.
These recommendations and reflections might seem pointless and
superfluous if current scientific literature and the language adopted by
the experts -information theorists, organisation theorists or business
psychologists- did not remind us daily how timely they are. Of course,
the same idea or the same object are often expressed by different terms,
notably in the rapidly expanding domain of information science; and
the double usage which results necessitates the drawing up of tables of
equivalence between manuals and systems.
In the domain of equipment installation and specialised techniques,
this double usage is frequent; on the other hand, in the field of concepts
and systems analysis, there is a lack of symbols and vocabulary. We are
short of words; the ambiguity of abstract terms such as information,
symbol, sign, structure, system, module, shows this well enough. The
thesis of F. Bonsack (1961), quoted elsewhere, tells us for example
that the term entropy, apparently unequivocal, covers at least two
ideas which are separate and sometimes contradictory and which
Yaglom and Yaglom (1959) called variability-entropy and specificity-
entropy.
1.4 MAN AND HIS ARTIFICIAL AIDS

One of my friends, a devotee of Teilhard de Chardin, who introduced
me some t1me ago to the controversial ideas of that famous anthropolo-
gist and the equally controversial ideas of the structuralists, was worried
recently by a certain contradiction between these two schools of thought.
Teilhard de Chardin maintains, as we know, in agreement with the
evolutionists, that the history of man from the so-called savage state to
the atomic era continues a process which began with the appearance of
life and which pursues its course by the construction of increasingly
complex forms.
On the other hand, upsetting the myth that our civilisation is objec-
tively superior, Levi-Strauss shows that our products are not necessarily
better than those of the so-called primitives or, more precisely, that
scientific thought is not superior to the thought of savages. It is not
inferior either; the two.are simply different and equally well adapted to
their own setting.
Such divergence between evolutionism and structuralism is only
apparent, as in all similar cases, and does not stand up to any serious
consideration.
The work of the structuralists, research on the psychology of cognitive
development (J. Piaget and the Geneva School), research by the Psycho-
linguistic Institute of Urbana on values, and many others, show that in
fact no proof exists which supports the possible 'inferiority· of the
brain of' primitive' man. (By brain, we refer here not to the organ but
to the psychological functions which are- perhaps wrongly- associated
with it.)
This brain accomplishes its task, secretes its thoughts (if we dare use
this expression, following the primitive reductionists), in as efficient
a way as ours: it can in certain circumstances develop a cognitive
system which is no less complex or profound than that of many West-
erners at the present time.
To prove this, it is sufficient to compare the acuity and observant
intelligence of a Hopi hunter, the symbolic power of an Eskimo shaman,
to the stereotyped thinking of certain so-called sophisticated Western
individuals (from the playboy to the consumer of certain weeklies).
Looking elsewhere, are not the methods of forecasting and making
decisions used by many directors of prosperbus firms very much nearer
to primitive thought than to the axiomatic method used in this book?
And who would think of criticising them?
However, even though man's brain does not seem to have changed
appreciably in the limited time and space of our history- which appar-
ently goes against the evolutionary hypothesis - the same cannot be
said of his works.
It would be ridiculous and unjust to deny, as some people do, the
superiority of the 'St Matthew Passion' over any incantation; or that of
modern surgery over magic medicine (though the latter is having new
developments in psychosomatic medicine); or that of the algorithms
of operational research over the traditional rules which used to govern
battle strategy.
Now, Weston La Barre has shown that mutations in the living being
no longer reach his physical organs by the hereditary route, but through
his artificial creations, transmitted by the other sort of heredity, arti-
ficial in itself, which is constituted by language; and, like Jerome
Bruner (1966), I must quote the striking phrase of La Barre: 'Man must
not be limited to his organic frontiers but associated to his artificial aids.'
We are in fact living in the era of artificial aids. This term must
certainly not be limited to its present therapeutic connotation: spectacles
or an artificial lung- but taken in its most extensive sense. The micro-
scope and the telescope increase the range of our eyes and are an
extension of them; atomic energy, missiles, remote-controlled micro-
tools multiply our strength, our field of action and our muscular skill;
the computer takes charge of the routine functions of memory and
decisions, and before long our perspicacity and our intelligence will be
assisted by more refined simulators developed from perceptrons, or by
programmes for recognising shape. Therefore, it really is in the field
of our artificial aids that mutations are taking place.
In this connection, A. Greimas (1966) and J. Bruner (1966) point out
that, contrary to what we observe in animals, heredity in man plays a
limited part in the transmission of the tools of survival, and language
(which, as we know from the works of geneticists such as Professor
Jacob, shows disturbing analogies with the genetic code) takes over from
our instincts and forms a sort of artificial heredity.
The comparative research of J. Bruner and his school seems to show
that there is a fundamental difference in character between our modern
civilisation and primitive civilisations: the growing and overwhelming
influence of formal language and abstract reasoning, to the detriment
of informal communications, direct action by the environment and
learning by experience.
Thus, when we consider the complex man-human creation (man +
artificial aids)- rather than an individual endowed with a psychological
system which is enclosed and limited to its organic frontiers - primitive
thought appears to be clearly less efficient than Western scient;fic
thought, in the field of creative construction, which seems to confirm
the evolutionary hypothesis. Such a field must not be confused with the
domain of human achievement, moral evolution or ecological balance,
where unfortunately progress seems more debatable.
Those who formerly used to scrutinise the future anxiously in order
to attempt to see the superman of tomorrow, or any other ' Martian'
endowed with rather disturbing new organs, were behind the times.
The mutant has been there for many centuries. Today far more than in
his early days, man exists not by his natural powers of thought or by
his human organs whose evolution is not well known to us, but by his
creations, by the synthetic thoughts that circulate in the collective
memories of computers, by the instruments which he develops and by
the catalysers of mutation which every scientific culture contains.
Therefore we must admit that the cultural patrimony inherited from
primitive thought has not the same fecundity nor the same quickening
force as our own. The proof of this is given every day by ruthless natural
selection which is everywhere incessantly removing and stifling ancient

customs and eroding values produced by outmoded ways of thinking.
This is not a preconceived subjective judgement of superiority or
inferiority: in fact, if it is not compensated, the loss of certain traditions
can without any doubt put the socio-psychological and moral equi-
librium of humanity at risk. My intention was rather to state the facts
concerning the survival value of primitive thought in the present-day
competitive environment. According to all the evidence, it is less well
adapted than modern scientific thought and as such is destined to
disappear.
It therefore seems imprudent to assert (as certain structuralists are
incorrectly supposed to say) that all modes of thought are equal and
that the concept of evolution is subjective.
1.5 THE HEAD OF THE FIRM AND HIS TOOLS

The artificial organs and operators, or 'artificial aids', which I have
just discussed, are equally effective in the struggle of the business
organisation (like another living organism) in a competitive environ-
ment of increasing complexity and difficulty.
I have already likened the behaviour of many directors, including
some of considerable importance, to primitive thought, so well described
by C. Levi-Strauss (1962). This, as we know, is firmly anchored in
everyday experience and rests upon qualitative classification of phe-
nomena which, though full and incisive, remains quite superficial and
overlooks latent interreactions in favour of obvious features. Like the
native game-hunter, the director intuitively interprets certain signs
which are imperceptible to an inexperienced observer, and draws from
them conclusions which are often surprisingly accurate, by devious
routes which owe more to the psychology of the unconscious than to
methodology or epistemology.
Nevertheless, though they may have been legitimate in the past and
may still be appropriate today in limited cases, such procedures are
rapidly proving themselves inadequate when confronted with the
transformation of industry, of markets, of the economy, of political
and social structures, in a word, of the environment. Moreover, they
are notoriously unsuitable for the transmission of knowledge and the
training of young staff and directors.
The modern company today must be equipped with new tools which
extend the scope of the sensory and motor organs of the people who
work in it, and with suitable language to replace ambiguous and impre-
cise business jargon. In this connection, let us remember the consider-
able work achieved in France by the commission for the standardisation
of accountancy - known under the rather restricting title of General
Accountancy Plan - the findings of which were presented in 1947 by
its Chairman, Adolphe Andre-Brunet.
After undertaking a vast international investigation into the various

aspects of the standardisation of accountancy: structure of accounting
systems, typical forms of financial documents, rules for evaluation,
methods of calculating costs, and terminology, Adolphe Andre-Brunet
considers terminology as the essential element in the standardisation of
accountancy, beside which the other elements are insignificant. He
thinks, moreover, that the adoption of terminology composed of clear
and precise expressions constitutes a fundamental requirement for easy
fruitful communication between the various employees of a firm
(technicians, commercial and administrative workers on the one hand;
managers, heads of department and executives on the other hand)
and also, outside the firm, for reliable economic information. 2
Although languages of this sort have been rapidly developed within
production units, large administrative offices and military organisations,
considerable difficulties have been encountered in the course of attempts
to introduce them into commercial undertakings, where the psychologi-
cal necessities already mentioned have decisive importance.
Michel Foucault (I 966) distinguishes mathesis, or the language for
classifying exact and unambiguous knowledge, from taxinomia, or
the language of meaning.
Though mathesis, with its algorithms, is most suitable for a produc-
tion factory with repetitive and exact operations, the language of a
business firm necessitates more refined implements, and also the con-
struction of semantic decoders with much more sophisticated appli-
cation - as well as syntax analysers which are based on formal grammar.
It is therefore not surprising that the most recent research into artificial
languages, derived from the theory of automatic machines and of formal
grammar, agrees on many points with trends in structuralist ideas in
their most complete form, and also with work on quantitative semantics
(C. Osgood, 1957).
One of the most fruitful of the contributions made by the theory of
automatic machines has perhaps been the confirmation of the intuitive
idea that 'a process only needs to be made explicit in order to allow
it to be performed by a machine' (the Turing machine). The Turing ma-
chine- a purely imaginary creation - would be a sort of tape-recorder,
which would enable complex processes to be reduced to simple
recording and deleting operations with a tape which would move to the
left or the right of a reading and recording head.
From this point of view, the hardware stems from the software.
I have been able to observe this personally in the course of a study of
circulatory flow; the study started with a transport diagram and led to
the creation of remote-controlled electronic vehicles, much more
suitable for the task than the standard mass-produced machines. 3
The machine ought therefore to be designed in accordance with the
system and the system should not be altered to fit the demands of
standard equipment. The latter are subject to commercial restrictions
and result from technical or even psychological compromises which are
often questionable. They rarely permit the creation of solutions which
are flexible and really appropriate for the complexity of the business.
Let us admit that we must lay the blame for the well-known failures
of' integral automation' and other' total systems' on the subordination
of systems to existing equipment.
The principle of creating 'tailor-made' devices following a specific
functional structure is certainly not new. It is being applied with success
in a growing number of industrial processes and it would already have
inspired the conception of data processing equipment, allowing several
years' progress to be gained, if the instrument makers had not been held
back by the passivity of their clients. The latter, instead of analysing
the structure of their business, the whole range of their requirements and
the workings of their systems of values- in a word: defining their needs
clearly - are too often content to compare the technical specifications
of the equipment that is offered to them, which is moreover very similar,
without considering whether other instruments could not be created
which would be better suited to their problems. 4
This inability of the users of equipment to define their needs has a
more profound origin than simple laziness. If the dtfinition of the
system must precede the choice of equipment, then this definition
must be achieved. In that precisely lies the difficulty since, though certain
ratios such as rotation of stock, service costs, percentage of errors, and
total profit to the square metre, can be expressed without ambiguity,
it is not the same for the majority of questions which are asked at all
levels: How to choose between security and trustworthiness; what
exactly is the meaning of a certain numerical measurement; is the work
accomplished to be measured by an arbitrary scale of production or by
a subjective evaluation of the achievement of goals? How to evaluate
positive potential factors such as innovations, or negative ones such as
obsolescence, and follow their development?
While the answers to such questions are not found, the models
will necessarily remain fragmentary and the automated systems based
on them will simply be aids to management. It will only be when we
know how to express these vital questions without ambiguity and insert
them into a formal framework that it will be possible for an automatic
machine to answer them.
Therefore it is necessary first of all to resolve the problems raised by
communication between man and the artificial world surrounding him.
Systems theory offers some hope of success here, provided that we avoid
concerning ourselves exclusively with the information circulating in
machines, and give very close study to its influence on human recipients.
Moreover it is not sufficient to pursue the investigation as far as
man's physiological channels, as does W. S. McCulloch (1965); man's
field of consciousness must be covered too, as it is the semantic universe

where every decision and every action are formulated. Research in this
field has already led to remarkable results which information theorists
and organisation experts would be well advised to look at, if they do not
know them. 5 There they would find, for example, K. S. Lashley's
discovery of memory matrices in the nervous system, and the scanning
mechanisms which operate incessantly in perception and evaluation of
results (J. Piaget, 1961 and Allport, 1955). They would observe that our
systems for recording and checking data are constructed on the model
of our subconscious processes.
Seen in this perspective, man is not in any way the complement of an
artificial system, constructed for him but without him, to which he
might be opposed through an apparent but superficial duality. On the
contrary, he is at the origin of more refined and more complete models,
developed from the elucidation of the secret mechanisms of his thoughts.
It is commonplace today to assert that, by relieving man of the most
routine mental tasks and allowing deeper reflection, automation extends
the range of his decisions and makes his behaviour the fulcrum of the
firm's activity.
That is not sufficient. Today, more than ever, those who create
systems, the information theorists and the boards of directors, together
with the psychologists and semanticists, must strive to learn more about
the mechanisms underlying reflection, and the subtle scales of values
which direct every decision.
2 Problems of Terminology:
Different Approaches to
the Business Firm
2.1 INTRODUCTION
The impact of cybernetic models and automated systems on business
organisations and on people constitutes the subject of this work.
Human factors occupy an important place in this study which is devoted
to complex systems, subjected to strong psychological influences.
The desire for semantic clarification necessitates a preliminary
definition of the terms firm, organisation and cybernetic models.
In this respect, though the content of the last of these three expressions
is approximately settled and will be the object of a later definition, that
of the two others is, on the other hand, extremely ambiguous.
The words firm and organisation are in fact part of a category of
equivocal and largely overlapping terms: administration, management,
direction, chain of command, structure, organisation, for business
activities, and management science, operational research, scientific
organisation of work, systems theory, business economy, scientific
decision-making, automated management, etc., for methods and doc-
trines.
These terms are so important and their use is so frequent, that it is
impossible to envisage any detailed approach to business models with-
out agreeing beforehand on their meaning in the limited scope of this
work, while hoping for the formulation of definitions with a general
standardised value.
2.2 INTERDEPENDENCE BETWEEN VOCABULARY AND

CONCEPTUAL CLASSIFICATIONS (TAXINOMIA)
First it is appropriate to underline, with C. Levi-Strauss (1958), the
interdependence between the classification of ideas and objects and
11
the language selected. Words are in fact defined by classes created by

an arbitrary cutting up of reality, according to variable criteria (of
utility, of aesthetics, etc.). 1
A typical example is offered by the word staffwhich, in certain cases,
represents a group activity and, in others (staff and line) a service
relationship, by contrast with hierarchical relationships (line). These
words relate less to a faithful transcription of reality than to an artificial
classification, adopted for simplicity.
In fact, as soon as we study communications between individuals in
detail, we perceive that they comprise orders characteristic of hierarchi-
cal relationships (line) just as much as discussions associated with staff
(in the first sense). Similarly they convey procedures characteristic of
service relationships- suggestions and influences- without any possi-
bility of making a distinction between these various types of message.
This explains the famous definition of H. Simon, describing the organi-
sation chart as a collection of suppositions and estimates. The words
hierarchical, functional, staff, line, general staff, etc., are therefore not
valid in the setting of a detailed approach to organisational structure.
They only retain their meaning, and thence their utility, within certain
well-defined limits.
It is easy to observe that most of the words that appear to us to
correspond to real objects and to objective relationships, are in fact only
the reflection of conceptual divisions. The latter, though they may be
useful and suited to some needs (they are not always so), nevertheless
rest on bases which are artificial or even totally arbitrary.
But these divisions, these criteria and these concepts, which are at the
origin of words, are also in return designated by words and defined by
groups of words. It is a matter of the 'enclosure' of the semantic world
such that it is impossible to refer to things in order to explain signs. 2
An example is the chain of definitions in a dictionary which leads us back
to the point of departure after many detours.
One method of escaping from the interplay of definitions and avoiding
the trap of circularity is to sort out the terms according to levels of
hierarchy. 3 This method consists of separating the words which desig-
nate the objects. and relationships belonging to the domain to be studied
(here it is the organisation) from those associated with its study.
At a higher level it is advisable to make a distinction between the
expressions proper to the studies envisaged and those which describe
the research methods and their value (epistemology, methodology, meta-
theory, etc.).
Epistemology is the critical study of the origin, value and scope of the
sciences, while methodology is devoted, as its name implies, to the
methods used in the preparation and proof of experiments and hypothe-
ses. The aim of metatheory is to determine, not knowledge itself, but
the theories which co-ordinate this knowledge.
Problems of Terminology 13
2.3 THE THREE LEVELS: FACT-LANGUAGE, THEORETI-

CAL LANGUAGE AND TECHNIQUE LANGUAGE
Three levels of abstraction can briefly be distinguished:
I. The level of immediate experience;
2. The level of theoretical reflection and of generalisation based on
this experience;
3. The level at which this theory is put into action.
A particular language corresponds to each of these levels.
2.3.1 Fact-language
At the descriptive level, a language can give an account of a business
in its concrete and indivisible totality. The words and the syntax of
which it is formed can express a firm's characteristics, its activities and
its particular fields, and constitutes what I shall call the fact-language.
The fact-language comprises all the terms used in the business firm
to designate relationships with the clientele, the merchandise, the money,
the methods of payment, and also human relations. It covers the basic
language in everyday use, and at the same time, technical or conceptual
terms taken from other levels, and a 'jargon' specific to the business or
the profession, even slang, exclamations and gestures as well.
The fact-language encompasses the language (langue) and speech
(parole) of the linguists (cf. F. de Saussure, 1916) and also the pre-
symbolic or informal language of the semanticists (Hayakawa, 1939),
a language composed of words without meaning in themselves, but
which are meaningful in a certain affective context. Here is an example
of this: 'The figure has only gone up by 5 per cent this year: it's deplor-
able. If it goes on like this, we shall be eating our shirts ... ' etc., which,
translated into explicit terms, means: ' We have become accustomed
over the last five years to noting growth in the business figures of the
order of 20 to 25 per cent. This sudden slowing down in the progression,
at a moment when we are investing considerable sums in expansion
projects, is disturbing, because it may be an indication of a changing
tendency.' It is obvious that a computer would not be capable of carry-
ing out this translation.
The fact-language is therefore relative to a domain which could be
called 'living experience of the firm', 'concrete reality', 'daily life',
'practical work of the firm'. This domain will be designated more
succinctly in this chapter by the word business* followed by an asterisk,
in order not to confuse it with the same word taken in its usual sense.
The fact-language is fluctuating and its propositions are specific.
The same situation never recurs twice running, and the prohibition of
Korsybski (1933) concerning the verb to be finds its perfect illustration
here. In fact, it can never be said, in business*, A is B - or that two
objects are identical. For example, two refrigerators are never identical.
They may present the same external physical characteristics, and cost
the same; but one will prove defective and cause expense and loss of
reputation to its maker or supplier, while another will behave normally.
What is more, even in a case of physical identity (which is impossible),
a client will want the first of the objects and not the second for reasons
connected with their presentation, the lighting ... or simply whim or
superstition!
2.3.2 Theoreticallanguage
At the level of theoretical reflection, there has developed a language
corresponding to the concepts taken from observation and first-hand
experience.
This language, of a higher level of abstraction than the first, has a
more general application than the fact-language. That is w_hy it com-
prises a great number of terms with less specific purpose, expressing
ideas and methods which can be generalised. The universalists call this
stage a 'distillation of principles from first-hand experience to achieve
generalisation' (Koontz, 1964).
While the fact-language concerns the business*- a concrete reality,
irreversible and always different - the theoretical language includes
key words which serve to express the great principles which actuate the
doctrines of organisational theory, from Fayol to Forrester.
Unlike the fact-language, the theoretical language is not limited to
fairly standard usage. In preference to the imprecise vocabulary and
complex syntax of natural languages, it frequently employs a more simple
and more exact language, borrowed from mathematics or formal logic.
It is sufficient to read through A Behavioural Theory of the Firm by
R. M. Cyert and J. G. March (1963), or Industrial Dynamics by Jay
Forrester (1961), to measure the importance of formalisation in works
of general scope.
The domain expressed by the theoretical language will be called
theory, as an abbreviation of business theory, doctrines of business
management or principles of organisation.
2.3.3 Technique-language and its instruments

Fact-language and theoretical language overlap considerably, though
the first leads from reality towards action and the second is deductive
and serves for the composition of coherent models. From their inter-
action a third language is born: that of techniques.
In fact, the methodological tools of the theorist which are verbal
and conceptual at the start, do not remain so for long. Fertilised by
contact with the living terrain of the firm, they become concrete in
methods, procedures, diagrams and instruments, crude at first 4 but
becoming progressively more rtfined and culminating in the subtle
algorithms of operational research and of the great management com-
plexes.
The considerable development of these instruments of organisation

(methods and machines) confers a certain autonomy on them. They
have become detached from the main block of doctrines and use highly
specialised languages (and sometimes jargons). In fact, we need words,
ever more words, to designate methods and their syntax, machines and
their elements. These words belong to a language which is placed half-
way between the fact-language and the theoretical language. We suggest
that they constitute a technique-language.
The domain that they represent is therefore, on the one hand, that of
concrete instruments: the information theorists' machines and hard-
ware; and on the other hand, that of conceptual and symbolic instru-
ments (methods, techniques and software). The technique-language is
more specific than the theoretical language and more general than the
fact-language.
2.4 INTERACTION BETWEEN THE LANGUAGES, TRANS-

FER OF WORDS AND CHANGES OF MEANING
These three languages present numerous points of contact, owing to
the interaction of the domains which they cover.
In the same way there are close contacts between the purely abstract
concepts of the theoretical language: information by omission, staff and
line, for example, and the firm. They are reflected by concrete effects
on the structure and functioning of the latter. This influence of the
theoretical domain on the concrete domain of the firm leads to a transfer
of the corresponding words from the theoretical language to the fact-
language.
The interactions between business*, theory and instrument, and the
exchanges which they occasion in the verbal and symbolic field of
vocabulary and syntax, far from making unnecessary the distinction
between fact-language, technique-language and theoretical language,
seem, on the contrary, to underline the need for it.
In this way, there is evidence of the existence of transference of terms
from one to the other, which is often unnoticed and always subtle.
Implicit transfers can be classed among the major causes of the inextri-
cable tangle of the 'semantic jungle', denounced by Harold Koontz
( 1969) in a well-known article as the first of the five causes of mental
confusion in the jungle of 'management' theory. Thus 'organisation'
means equally well (a) structure of the firm, formal authority and
activity of the firm, formal framework and (b) social structure and the
whole combination of total human relationships in group· activity. 5
However, they sometimes take on a more serious form than the simple
changes in meaning quoted by Koontz.
In fact, it is not unusual for the words of the theoretical language,
or the technique-language, to be used in the fact-language, Principles
are then taken for realities and means are taken for aims. This confusion
is certainly the origin of many failures suffered by the universalists,
dogmatic theoreticians, or organisation theorists too much imbued
with their principles, and by certain specialists in operational research,
who identify the practical application of their techniques with the
organisation or management of the firms.
To summarise: the words of the fact-language express the first-hand
experience of the business*, and allow the elements of it to be classified
and manipulated according to the needs or the objectives; the words of
the theoretical language designate the concepts born from analysis and
reflection, and permit them to be combined; finally, the words of the
technique-language serve to describe and bring into use the techniques
and machines based on these concepts.
2.5 SEMANTIC DELIMITATION OF THE TERMS:

ADMINISTRATION, MAbiAGEMENT, DIRECTION, ETC.
It is appropriate to reconsider the signification of the terms mentioned
earlier in the light of the conclusions we have just drawn.
The ambiguity of these terms stems largely from the fact that they
belong simultaneously to two or more languages. Let us go back to
them and try to situate them in relation to the linguistic domains
previously defined. At the same time, it is not my intention to provide
definitions (which vary from one work to another), but to delimit the
field of application of the terms and to establish their association with a
linguistic category and with the corresponding domain.
Administration belongs to the fact-language if it is taken to mean the
control of everyday affairs, effective application of the (physical) means
necessary to the accomplishment of the activities of the firm, the ex-
ecution of procedures, instructions and other administrative tasks.
But this word also belongs to the theoretical language in so far as it
designates the development and application of principles of organisation,
and to the technique-language, if it covers specific techniques such as
electronic planning or cybernetic control.
Management. I am persuaded to adopt this term although, like
Octave Gelinier, I am hardly convinced of its stylistic purity. (All the
same, this has very little importance from the point of view of method-
ology!) This word contains at one and the same time the 'fact-word'
chain-of-command (relating to the concrete action of the firm on the
people), the 'technique-word' organisation in its restricted sense of
procedures and techniques for co-ordinating functions and activities,
and finally the 'concept-word' belonging to the theoretical language:
doctrine, designating the body of principles which inspire the other two
facets and constitute the charter and the strategy of the firm.
Direction is sometimes confused with management, although the
former term, in contrast to the latter, does not generally belong to the
technique-language and is rarely attached to the theoretical language.
The direction does not concern itself with principles or techniques;

it can call on these with the help of specialised services or advisers; its
object is the firm as a living or concrete entity.
Work study, which must not be confused with organisation (which
designates either the structure of the firm, or the method of organising
that structure) belongs to the theoretical language when it is a body of
more or less scientific concepts, and to the technique-language, by
reason of its arsenal of techniques for improving prcductivity. Although
it has an effect on work, of which it proposes to increase the efficiency,
work study is not work itself. Unlike a manager, the work study expert
does not interrupt the execution of work, except to study it or propose
modifications in it. The director, on the other hand, comes to grips with
reality and does not attempt to develop theories or techniques. He
contents himself with drawing more or less consciously on the first,
applying or getting others to apply the second.
In this he differs from Peter Drucker's manager who does not limit
himself to playing his part in the life of the firm, but also studies it and
draws from it principles for action and organisation. Following the
example of Alfred Sloan Jr, president of General Motors and one of the
leaders of the neo-classical school, he is at one and the same time a
practitioner and a theorist.
Industrial engineering, systems analysis, scientific decision-making,
job simplification, all designate specific techniques. Their vocabulary
therefore belongs to the technique-language, although there is evidence
all too frequently of movements into the fact-language or the theoretical
language which are vigorously denounced by certain writers, who
sometimes commit worse errors (but not the same!)
It is such vocabulary movements that can be blamed for the tendency
to take certain techniques (the transmission of data in real time, the
PERT system, cybernetic control or industrial accounting) for principles
of organisation, or even for real factors in the firm (scientific decision-
making).
A preliminary diagram, illustrating the relationships linking the
various linguistic domains and the terms whose content has just been
determined, can now be drawn up (see Figure Ia below).
2.6 THE RELATIONS OF THE DOMAINS OF STUDY AND

ACTION WITH THE LANGUAGES
In Figure I a the organisation theorist bridges the gap between the
technician (operational research worker or information scientist)
and the director of the firm or, more simply, the director as defined
above. The theorist must attempt to know the language of the latter
and also that of the technician, nevertheless without entering into
detail.
The contacts between the manager and the organisational expert are
I
I
INFORMATION I
SCIENCE
OPERATIONAL
RESEARCH
FIGURE Ia. Relation between enuues (machines, techniques, theory,

business•, technique-, fact-, and theoretical languages), and a few terms
representing the schools of thought, of which the limits are indicated.
Thus, the direction is focused on the business•, and the vocabulary of
the director is limited to the fact-language (apart from borrowings and
transfers of words, represented here by grey areas or arrows, while the
field covered by the management is much wider, encompassing principles,
but not techniques); the manager's vocabulary is more extended, including
terms from the theoretical language.
all the closer because they have in common a knowledge of the theor-
etical language. Nevertheless, although the manager understands the
principles and the projects which the organisational expert submits to him,
he only takes part in their development indirectly, by approving or reject-
ing them, or adding modifications, suggestions, or even creative elements.
In the same way, the organisational expert must be able to discuss
specific techniques, such as the PERT method, with an operational
research worker, or an audio-visual training project with a psycho-
sociologist. He must command enough of the technique-language to
be able to understand, criticise or even reject the methods suggested to
him, even though he is not responsible for developing them.
On his side, the information scientist is just as familiar with the
methods of operational research, formalised languages and analytic
processes which enable him to enter into discussion with the organi-
sational expert, as with the functioning of computers and allied ma-
chines, of which he must recognise the characteristics and choose the
right models for each particular purpose.
Of course, these divisions are arbitrary and we find specialists limiting
themselves to fractions of these domains and using ultra-specialised
language (time-keepers or programmers, for example), and also 'all-
rounders' who cover a very vast field, from the theory of structures to a
knowledge of hardware and organisational equipment. Nevertheless,
we must be careful not to confuse, on the one hand, the eclecticism of
the 'all-rounders', who must make a considerable effort to synthesise
their knowledge and to keep it up to date, with, on the other hand, the
intellectual appetite of certain people who use words from domains that
they do not know very well, often with the wrong meaning. In fact, in
the hope of making an impression, these people often add to the con-
fusion which I have already deplored at the beginning of this chapter
(this is what S. I. Hayakawa calls 'babouism ': using technical words
without really knowing their meaning).
Business science
It remains for us to define the field of business• science. First, it must
be emphasised that the business is considered in its totality, that is, the
formal aspect of i!s organisation- man/machine/system and physical
characteristics/administrative system -conceived with the accomplish-
ment of its objectives in view, just as much as the informal aspect,
associated with the para-organisational characteristics of the employees
(motivation, or activities outside the firm).
The term business• covers units of production and distribution and
also non-profit-making organisations, or specialised services: military
organisations or hospital establishments.
This tendency to enlarge the meaning of business leads to a compar-
able extension of the science devoted to it, and it is characteristic of the
FIGURE I b. Relationship of industrial engineering to management and other

disciplines. From Lyndall F. Urwick, • Development of the industrial genius',
in Industrial Engineering Handbook, ed. H. B. Maynard (McGraw-Hill, 1963).
contemporary era, as is shown by manuals such as the Handbook of

Organisations published by Rand McNally (1966), or the fundamental
work of Johnson, Kast and Rosenzweig (second edition 1967), which
deal with systems for anti-missile protection as well as with the organ-
isation of hospital establishments.
2.7 THE SCHOOLS OF THOUGHT AND THEIR ORIGIN
2.7.1 Introduction
Business science - to use the name which avoids terms with more
restricted meaning such as management science, job organisation,
business economy, business management, modern management, which
are all encompassed by it- arose from the meeting of new techniques
and theories, within firms in the course of evolution.
As is shown by Figure 2, which is a more elaborate form of Figure I,
this meeting will produce different results according to the degree of
sophistication of the techniques, the stage of development of the con-
cepts and the inertia of firms which adapt themselves more or less
successfully to the accelerated changes of the economic and social
environment. The vocabulary of business science at a given time and
place will be a function of the state of the technique-language, the
fact-language and the theoretical languages.
If we consider, with S. I. Hayakawa (1939, 1941)6 that a scientific
doctrine is expressed by a coherent and specific language and that,
reciprocally, a system of words on which agreement is reached explicitly
or implicitly defines a school without ambiguity, 7 then we shall not be
surprised at the number and variety of schools which have followed
Taylorism, after a succession of technical and socio-economical up-
heavals.
Orders, suggestions, modifie~~tions, complaints
DEVELOPMENT
means of investiption and concepts
~ Princi.-1 (dominant) relations
-..,effect of borrowing and transfer of words
FIGURE 2. The schools of thought; their origins.

This variety is due equally to the complexity and scope of the domain
studied and to the difficulty of comprehending its totality. It is enough
to refer to one ddinition of the business firm among many others, that
of Learned and Sproat (I 966), to measure its heterogeneous nature.
These authors, attempting, not without difficulty, to define the organi-
sation of the business firm, finally enumerate the elements which are
associated with it and which we could call the factors of the business
firm. They comprise:
I. One or more aims;
2. The activities necessary to attain these aims and a division of the
activities into tasks among the members of the organisation;
3. The integration of the tasks to form elements co-ordinated by
various means, among them a formal hierarchy or chai·n of command;
4. Motivations, interactions, attitudes and values oriented in accord-
ance with the aims;
5. Processes, decision-making, communications, control, rewards,
sanctions, all used to define or attain the aims, and to maintain the
organisation of the orientation defined by these general aims. ' These
processes comprise: control, decisions and communications.'
6. An organisational structure 'designed to harmonise the elements
which we have just enumerated '.
The authors then establish a distinction between what we will call
three sectors of the business:
(a) The structure of the formal organisation, comprising the physical
activities inherent in the tasks and the integration of these tasks into
a chain of command;
(b) Organisational behaviour, which comprises motivations, gratu-
itous activities, interactions, attitudes and values;
(c) The informal structure or the relationships and influences which
occur without official authority.
The field covered by Learned and Sproat's definition, however partial
it may be, is so vast, and the terms which it embraces are so varied that
one can understand how disparate and partially contradictory schools
have appeared, each one only bearing on a limited sector of business*,
according to the needs and trends of thought of the moment.
According to the nature and the relative weight of the concepts and
techniques, and also according to their acceptance by the firms - a
factor on which the characteristics of each school are dependent - there
exist between these schools affiliations of a multidimensional nature,
not a linear nature.
If we examine these affiliations, which will be analysed later, we
observe that, in spite of certain appearances, we cannot in any way
speak of revolutions, or even of simple evolution, in relation to succes-
sive conceptions of the business firm. To go back to the striking expres-
sion of Gaston Bachelard, it is not so much a question of a consecutive
series of stages as of a process of total or partial envelopment of one
doctrine by the following one.
2.7.2 Necessity for a knowledge of the schools of thought

The ideas on which the models and diagrams of this work are based
are taken from the general theory of systems. This discipline seems at
present, at least by its ambitions if not always by its achievements, to be
the broadest theoretical envelope that we know of the schools which
have preceded it.
To clarify the profound significance of the theory of systems, it is
indispensable to sketch a picture of the schools which have led to it.
In so few pages, there can be no question of more than outlining the
trends of thought anterior to this theory, and the reader in search of
more ample information would find it fruitful to refer to the .;pecialised
works of H. Kountz and C. O'Donnell (1964), Mason Hairt: {1964),
E. P. Learned and A. T. Sproat (1966), Johnson, Kast and Rosenzweig
(1963, 1967), and to the shorter works of J. O'Shaughnessy (Dunod.
1968) and J. L. Massie (1965).
For the reasons set out above, the classification of the schools, and
the sequence we adopt, are rather arbitrary. Moreover it must be
emphasised that the personality of masters like Henri Fayol, Herbert
Simon, Peter Drucker or Jay Forrester, are far too great for the doctrinal
labels which have been imposed on them. The work of these writers
overflows the limits of their schools and the defence of rigid orthodoxy
is much more the responsibility of their disciples than their own. The
influence of these disciples is certainly responsible for a good oral sterile
partitioning and quarrelling.
It is important, before embarking on the de,scription of these schools,
to define a framework of reference which will enable them to be placed
in relation to each other.
2.8 RELATIONS BETWEEN BUSINESS*, THEORY, IN-

STRUMENTS AND OUTSIDE ENVIRONMENT
Let us go back to and complete Figure 2, page 21. We shall find
again in Figure 2 the three domains already defined: the business*, the
theory, the instruments (techniques and machines). The languages
which correspond to them are respectively: the fact-language (using
terms such as: invoice, due date, liquid assets, Bank X, Branch BA,
etc.); the theoretical language (comprising, for example, terms such as
functional authority, scope of activity, supervision, decentralisation,
integration, management by objectives, etc.), and the technique-lan-
guage, comprising terms such as overflow planning, flow diagram,
exponential smoothing, variance and standard deviation, sequential
access memory, punch card, etc.
In this figure, the interior and exterior links between the three entities
are represented by three sorts of arrow: => show the dominating in-
fluences of one entity on the other. Others, with a broken line: - -+
represent reciprocal or retroactive influences. The black arrows -+
symbolise the effects of the movement of words between the different
languages.
The explanations which follow are devoted to the relations repre-
sented by the different arrows.
2.8.1 Relations between business* and theory
(a) Direct relations

This concerns the development of general principles of organisation
on the basis of first-hand experience. It is what the 'empiricists' call
distillation, an expression which is quoted with some irony by their
detractors.
(b) Retroactive relations

The reciprocal influence of the theory on the business* has no less
importance than the direct action of the business* on the theory.
This occurs not only through considered and sophisticated organi-
sation of strategies and activities, but also through the invisible con-
ditioning of the actions, behaviour, plans and working environment
which come under the hidden influence of implicit assumptions and
hypotheses which are often dubious.
This is translated on the linguistic level by the infiltration of the
theoretical language into the fact-language. A famous example is given
by the scope of authority (see 3.2.1 (d)), a concept which, though ill-
defined and subject to numerous controversies, has none the less be-
come firmly established in practice by assuming a concrete form.
2.8.2 Relations between theory and instruments

Through contact with business, and the requirements of methodological
necessities (need for precision, desire for the verification of hypotheses,
improvement of the means of action), specialised and refined theoretical
thinking creates technical or conceptual tools of which the diagrams of
the movements of printed papers and the M.T.M. (Time and Motion)
are classical examples.
The power of these conceptual tools is noticeably increased by the use
ol physical tools or machines (hand-operated devices or automatic
ma<::hines) and computers. In information science, the terms software
and hardware designate respectively conceptual tools and machines,
which are closely dependent on each other. The machines encourage the
development of new techniques and these, in their turn, call for the
development of constantly improved equipment (here is a case of

positive feedback, familiar to cyberneticians).

They are numerous and result from the impact of techniques on con-
cepts. These relations are sometimes contradictory as is shown by the
advent of remote handling and multiprogramming, in the broad sense
of time sharing and memory sharing (and not in the strict meaning of
the term) which, for some, favours centralisation, and for others presses
for an increased decentralisation (control by objective).
2.8.3 Relations between instruments and business•

They weigh quite heavily on the organisation of the business. In this
connection we know of the upheavals in the working habits and the
structure of a business house caused by the installation of an analytic
method of accounting (conceptual tool) or a new computer (machine).
As the tool is generally in advance of the business, the latter must
adapt itself to keep up with progress. This necessity is expressed by the
well-known saying: 'A third-generation computer should be matched
to a "third-generation" business', which involves, of course, a 'third-
generation' structure stamped with new concepts; this illustrates very
well the interdependence of the three entities: business•, theory and
instrument.

The adaptation of the business to new techniques does not take place
without difficulties or regrets. In the last resort, it is on the success of
this adaptation that its permanent establishment depends. The retro-
active influence of the business on the techniques and machines is
translated both by sanctions (acceptance, encouragement, modifications
or rejection) and the orders, requests for modifications or complaints.
As the organisational theorists, economists and manufacturers of
machines cannot generally subsist without clients, one can imagine the
influence that the success or failure of their adaptations may have on
fundamental research and the development of techniques, when success
or failure are often independent of the intrinsic value of the methods and
equipment.
2.8.4 Ecological relations

(Action of the external environment on the business•, the theory or the
instruments.)
(I) Business*
The state of the business is conditioned at one and the same time by its
internal evolution and by changes in the environment. These tension
factors, as they are called by Sheldon, have been particularly studied
by the systems theorists (Stafford Beer, Johnson, Kast and Rosenzweig);
being at the source of the needs of the business, they act through this
channel on the evolution of techniques.
This is how the tensions aroused by the constraints of a state of war
have favoured the appearance of new techniques such as Methods Time
Measurement (M.T. M.) or operational research (see 3.4.1 for definition)
and the necessity to keep military research secret without inactivating it,
led A. Bavelas to consider the problems of inter-group communications.
Later, under a regime of growing prosperity and over-production, less
attention has been given to producing more than to distributing the
products manufactured; from this, for example, stemmed the research
of Kurt Lewin on channels of consumption.
(2) Theory
Theoretical principles are closely linked to trends of thought, and some-
times to the fashions of the age and the social setting in which they are
formed, and follow scientific and philosophic evolution, though with a
certain delay.
The centralised conception of a business firm, favoured by the classi-
cists and corresponding to that of a central nervous system, has been
replaced today by management by objectives, on the pagoda roof pattern,
to recall J. Lobstein's term, parallel to the contemporary model of a
decentralised nervous system, supported by a reticulated system.
The impact of political and social ideologies, of philosophical and
mathematical conceptions as well as methodological ones (behaviour-
ism, rationalism, stakhanovism, empiricism) has been a determining
factor in the creation of the schools, and has conferred on them a
colouring, sometimes socialist and liberal, sometimes rationalist and
impersonal.
The influence of associated disciplines (sociology, anthropology,
psychology, economics, linguistics, etc.) has been equally important,
and it has taken the form of contributions which have been as rich as
they are fruitful, encouraged by the constitution of multidisciplinary or
interdisciplinary teams.
(3) Techniques
It is above all on the technical level that the associated branches of
knowledge, whether they are close or remote, play a preponderant part.
Mathematical statistics, operational research, industrial and statistical
economics, economic psychology, cybernetics, psychotechniques - the
list is far from exhaustive - have played such an important role in
business techniques that sometimes it has been possible to confuse them
with the latter, through one of the semantic phenomena already de-
scribed. There was only a second step to take, to slip from business
techniques to the business itself, in order to identify methods springing
from disciplines associated with business management.
This step has been cheerfully taken by those who predict directors'
chairs for future mathematicians who are ill prepared for the concrete
realities of business, thus stirring up controversies which have run
through all the recent history of organisational theory. This is an ex-
ample of interference between languages coming from different do-
mains.
2.9 DIVISION OF THE BUSINESS FIRM BY NATURE,

OBJECT AND DEGREE OF FORMALISATION OF ITS
ACTIVITIES
2.9.1 Introduction
After describing the relationships linking the business•, the theory and
the instruments, it is appropriate to classify the various schools of
thought on the subject of organisation.
The divisions of the business firm according to some other authors
are set out below (those of Learned and Sproat have already been
outlined in 2. 7.I).
SHELDON 8
Sectors:
I. Administration (establishing the rules for action);
2. Management (application of the rules set up by the Administra-
tion);
3. Organisation (of the work of individuals and of the physical means
of action).
Factors of evolution and tension
Factors of tension: internal:
I. Work force;
2. Scientific and technical development.
External factors
l. Government;
2. Attitudes of the public and the consumers;
3. Culturallevel;-
4. State of the international market;
5. Financial contingencies.
GuucK 9
L. Gulick distinguishes seven activities:
I. Planning;
2. Organisation;
3. Staffing;
4. Direction;
5. Co-ordination;
6. Feedback;
7. Budgeting.
(Note: 2. precedes 3.)
SIMON 10
Organisations may be constructed in three layers:
I. A system underlying the physical processes of production and
distribution;
2. A layer of processes connected with programmed decisions
(probably largely automated) to control the routine everyday oper-
ations of the physical system, and
3. A layer of processes connected with non-programmed decisions
(entrusted to a man/machine system) to control the processes of the
first level, to assess them and to change the values of the parameters.
JOHNSON, KAST and ROSENZWEial 1
Four functions of Management are enumerated:
l. Planning (including the establishment of the objectives, policies,
procedures and methods);
2. 'Organisation· (co-ordination of sources, and people);
3. Control (measurement and adjustment of activities);
4. Communications (transfer of information between subsystems and
the ·system and the environment).
KOONTZ and O'ooNNELL12
Domains of organisation:
1. Planning: this is the function by which the manager determines,
within the scope of his activity, which objectives should be attained,
how and when, and selects the alternatives.
2. 'Organisation' (structure)= a function consisting of establishing
a system of groups of activities, where the people know their respec-
tive tasks, their dependence on each other and the distribution of the
authority necessary to carry out these tasks. Organisation establishes
the environment necessary for individuals to work in a formally
structured group.
3. Staffing: a function consisting of placing people in the framework
of the organisation. It includes the selection, the evaluation and the
training of personnel.
4. Direction: this is a function of directing behaviour, of supervison
and orientation of people (cf. Keith Davis).
5. Control (managerial): a function consisting of making sure plans
are carried out, by measuring and correcting the activities of subor-
dinates according to the objectives.
Although 1 have emphasised the arbitrary nature of classifications,
they nevertheless make it possible to pick out the useful concepts found
in both the classic and the modern literature: staffing, planning or
organisation for example. These concordances from school to school
seem to indicate a fairly solid base which is moreover supported by the
clinical experience of business managers and organisational theorists.
The classifications made by the authors mentioned above are gener-
ally established on the basis of a division of the activities of the firm.
Depending on the authors, the constituent elements in this division are
called factors, functions, activities, sectors or layers.
If the term activity is taken in its widest sense, covering not only the
operations which lead to the achievement of the objectives of the firm,
but also the conscious and unconscious mental processes which animate
it, three types of division can be distinguished.
The first is a classification by sectors named functional sectors,
a function being a group of activities of the same nature.
The second, known as classification by domains of association, is a
division which grades business activities in accordance with their
subordination to the objectives of the firm.
The third, named classification by zones of formalisation, regroups
tasks, activities, operations and decisions, according to their degree of
explicitness or ambiguity.
Each of these types of division will be examined in turn.
2.9.2 The division of the business* into five functional sectors (Nature
of activities)
It is appropriate to recall that by business* is meant: concrete entity,
organism in action, artificially separated from theoretical consideration.
By functional sector or, to abbreviate, by sector, is meant a homo-
geneous group of functions.
The second sector, for example, combines the function of planning
with the function of control. A sector encompasses both the activities
and the processes comprised by the classical 'functions' (rumours,
activities outside the organisation, complaints, emotional exchanges,
informal communications, etc.).
First functional sector. (FS 1) formulation of aims

The first sector found by analysis corresponds to the defining of aims and
objectives; here, we must not confuse, for example, the intuitive definition
of aims and values with the scientific formulation of decisions or the
allocation of tasks. This presupposes the existence of a mechanism for
evaluating these aims and objectives, in accordance with scales of value
which enable them to be enumerated and compared. This sector, which
is of an essentially psychological nature, cannot be combined with the
other sectors since it is the origin of them.
The activities and processes of the first sector play a part in the
creation of a business firm and in the legal definition of its social ob-
jective, just as much as in the taking of major decisions, for example
expansion or contraction, security or development, diversification or

specialisation. By processes we mean the mechanisms which underlie
activities, or by which activities are organised; for example, the manifest
or latent psychological processes for the formulation of scales of value,
or the processes for the establishment of commands.
Not only do these activities and processes inspire the official attitudes
inherent in the objectives and in professional restrictions, but they are
also the foundation of individual behaviour, in the workers as weJI as
in the clients. They develop in relation to personal needs and motives,
occasionaiiy in conflict with those of the group or society (cf. Chris
Argyris, 1957).
Care must be taken in this first sector not to separate latent or unoffi-
cial needs and motives from the stated values and aims to which they
are closely linked (Biddle (1961) found it appropriate to distinguish
the' cognitive' system and the 'official' system). AII the psychological
processes which give rise to them are of the same nature, although
their very different appearance has caused them to be divided between
distinct functions by the traditional authors.
Second functional sector. Organisation. FS 2

(Establishment and maintenance of the structure of the organisation)
This sector comprises aJI the functions which are aimed at co-ordinating
the means at the disposition of the business in relation to the aims of the
first sector.
Organisational language comprises more relative terms than qualita-
tive terms, unlike the language of purpose. Co-ordinating activities
demand the establishment of relationships, comparisons and ratios of
all sorts in order to be described. This explains the frequent use of
measurement figures or structural diagrams.
The term structure, taken in a static sense (synchronic) as weJI as in
a dynamic sense (diachronic or temporal), implies the establishment of
spatial or dynamic relationships. Every activity which helps to establish
relationships belongs to this extremely vast organisation sector. The
term organisation which designates it has therefore a much wider
signification than the purely static concept which is generaiiy associated
with it: it is the establishment and maintenance of the structure of the
business by the creation, suppression or modification of the organs, and
the vital relationships between these organs. This is the multiple environ-
ment built up by the organisation: each organ having to give a specific
response directly or indirectly to an element of the environment. The
organs themselves are subdivided into instrumental roles according to
the demands of the environment and to the internal problems which
these demands create for the organism.
This very broad definition has been chosen because it has been con-
cluded that it is no longer possible to separate spatial structures from
temporal structures, and that the establishment of a plan calls for

operations of comparison and reasoned evaluation, analogous to those
required for the publication of that plan.
The carefully thought out division of the principal aims and objectives
into secondary objectives (according to products, services or geographi-
cal zones, for example), and the further subdivision of these according
to local requirements and .the establishment of relationships of sub-
ordination between the objectives and their links, all these are part of
organisation and are fundamentally different in their origins and their
character from those which give rise to the aims and objectives on the
basis of systems of value. However they are usually classified in the
same function, planning or decision-making.
The grading of objectives in a hierarchy is not fundamentally different
from the other organisational functions such as the establishment of
organisational charts or procedures, financing of manufacturing pro-
cesses or the formulation of policies, which all have in common the
creation and maintenance of structures and relationships. For this
reason, the traditional separation between planning and control may
seem artificial, since these functions bring into play dynamic and
concerted relationships, only differing by the degree of precision required
and their extent in time.
Planning concerns the future and carries with it a margin of uncer-
tainty. Control, on the other hand, concerns past activities and aims at
exactitude. Of course, this sector only includes predetermined controls
which are part of the structure, and excludes spontaneous or unexpected
checks.
Third functional sector. FS 3. Allocation ofjobs or staffing

This includes the following functions:
I. Allocation to individuals of tasks defined by the structure (FS 2),
2. Training of members of the firm,
3. Promotion policy and, in a general way, all functions traditionally
attached to staffing.
Fourth functional sector. FS 4. Informational communications (Action

on the psychological and symbolic setting)
It would be surprising to see the functions of communications and
actions included in the same category, if Norbert Wiener and many
others had not shown their close interaction.
I have nevertheless separated communications which bring about
a direct or deferred action on the human sphere (information), from
those which alter or modify the physical sphere (transmission of orders
to machines or manipulation of objects), which 1 classify in the fifth
sector.
The term informational communications is taken here., like the other
terms, in its broadest connotation. It includes the informal messages

that two partners exchange in the course of animated discussion, just
as much as official communications which are expressed in reports,
or given formal expression in liaison circulars, or automated and fed
into computer circuits.
Human contacts, the giving of orders or advice, supervision or
checking, all form part of this functional sector. It is the FS 4 functions
which actuate the system defined by the organisation (FS 2) sector and
set up by the staffing (FS 3).
Care must be taken to avoid confusion - which easily occurs - be-
tween FS 2 and FS 4. A distinction must therefore be established between
well-defined and institutionalised links in the hierarchy connecting
two posts which figure on the organisational chart (FS 2), and the' real'
relationships of instructions or injluence between the corresponding
individuals. The former are planned, the latter are sanctioned by facts.
The structure may show a certain man to be the hierarchical superior
of another, but in reality he may be manipulated by his subordinate,
and this influence may easily escape the most careful control.
Fifth sector. FS 5. Execution. (Action on the physical surroundings)

Up to this point, only the human, somewhat intellectual and abstract
aspects of business have been taken into consideration. We have
discussed the allocation of tasks, procedures, values, human contacts
and formalised communications. But there are also products and goods
which must be converted, treated, handled and transported. The activities
which deal with the physical, chemical or handling operations (excluding
the activities of preparation and checking of these operations) are
grouped under the heading execution. While the second functional
sector is the most closely linked to the theory of business, the fifth
is the furthest from it and the most deeply rooted in first-hand experi-
ence, with which it is partially combined.
2.9.3 The division of the firm according to objectives (by domains of

study)
These domains comprise activities and processes.
(a) The intrinsic domain

The activities of this domain work directly towards the accomplishment
of the recognised objectives of the firm. For a long time they have been
the sole object of organisational studies and today they are still the only
ones to which certain practicians pay attention (cf. assessment of the
classical school, 3.2.2).
The intrinsic domain is not limited to explicit or official objectives;
certain functional bridges and short-circuits in the hierarchy prove this.
The organisational charts and procedures are clearly formalised;
custom and certain existing situations are not only tolerated, but it is
admitted that they facilitate the execution of tasks and the accomplish-
ment of the objectives.
The intrinsic domain therefore corresponds to the business in the
restricted sense of the organisational classicists.
(b) The mixed domain

For a long time it has been observed that certain activities, though
outside the aim of the firm (non-intrinsic), nevertheless exercise a
favourable influence on the execution of tasks and the accomplishment
of the objectives. This indirect action can manifest itself in three ways:
1. By positive motivation of the worker and an increase in his crea-
tivity as well as in his sense of responsibility;
2. By increasing his professional value;
3. By reducing tension, preventing conflicts, or by removing inhi-
bitions which have an unfavourable effect on productivity by making
working conditions less pleasant.
These ancillary activities may be combined with the principal activi-
ties of the intrinsic domain, or may constitute autonomous posts and
functions. This is the case with social functions: a doctor or social
worker on the staff, organisation of leisure time, sporting and cultural
events, publishing a house journal; it is also the case with specialised
techniques such as suggestion boxes, psychodramas, bottom up com-
munications. 'Bottom up' is the name for a form of organisation in
which the lowest grade plays a predominant role in decision-making.
The chief takes his authority from the consensus of his assistants.
Authority is therefore delegated from the bottom to the top by various
procedures, group discussion, voting, etc. This is the case with certain
political organisations- at least in theory. These techniques enable the
individual to work for society in a less formal and more relaxed way,
and to be free of the limitations of the intrinsic domain without pre-
judicing the objectives of the firm.
An example is given by the 'cultural' education of the team or the
worker, as opposed to his more specialised technical training. Cultural
education does not at first sight appear to be useful to the firm. However,
it is known that general education classes, evening classes, even exhi-
bitions and concerts, contribute to the development of the individual
and of his powers of criticism and debate. This individual development
strengthens his sense of responsibility and favours his leadership
qualities as well as his chances of promotion. Indeed, the favourable
effect of a knowledge of music, Latin or modern mathematics on the
comprehension of complex structures is well known. Their shared roots
are shown by modern work on linguistics and formal grammars.
In addition, specialists in learning mechanisms have drawn our
attention to the importance of transfer phenomena. They demonstrate
experimentally that the learning of certain tasks can exercise a favour-

able effect on the practice and development of other tasks which may
seem very different, due to the acquisition of common aptitudes and
mental structures.
I have personally tested the truth of their observations (which are
moreover upheld by coherent hypotheses and rigorous experiments),
and I often advise students to spare a few hours away from studying the
'tricks of the trade' in favour of general cultural, artistic or scientific
activities.
I call this domain mixed, although the word shared might have been
more exact, applied to activities which, while giving immediate material
or spiritual satisfaction to the workers, benefit the firm indirectly.
The firm is in fact 'supported' by the environment. Its objectives are
not independent of global society, that is to say, of global man. It is
therefore difficult to say that the 'mixed· domain is outside the aims
of the firm. It closely shapes these aims and the ways in which they are
carried out.
These activities can be official and carry salaried positions. Funds
may be allocated to them (building of recreation halls, libraries, publi-
cation of house journals, organisation of sporting competitions, etc.).
They are most frequently unofficial: social gatherings, dinners for
former members, informal conversations in an office or during a seminar.
(c) The extrinsic domain

This is the domain which contains the activities and processes which are
not only foreign to the business, but even contradictory to its objectives.
By their very existence they are harmful, diverting part of the time,
energy, even the financial and material resources of the organism,
without any profit for the latter. It is then a question, according to the
accepted expression, of 'fat' or dead weight.
In the most serious cases, these activities play an actively negative
opposing role, which is more or less conscious and organised and ranges
from inertia to 'sabotage'. The classical authors, as we shall see, have
chastely cast a veil over this domain. In a well-organised firm (that is to
say, one organised according to their principles), it is reduced, according
to them, to negligible proportions. For example, according to Weber,
the man at work is an emotionally ascetic being, whose time is devoted
to the accomplishment of his task and, in so far as the task is clearly
defined and his remuneration is satisfactory, his personal motives
coincide with the objectives of the firm.
Chris Argyris ( 1957) is passionately opposed to this position, going
as far as to assert at the end of his work Personality and Organisation
that: 'The formal constraints of the principles of organisation are
incompatible with individual needs, which necessarily leads to frustra-
tions and conflicts.' These sombre predictions are, he declares, con-
firmed by experience.
This rather excessive position has aroused some criticism, notably
from Koontz ( 1964) 1 3 who claims that, of the four principles on which
Argyris bases his documentation and which engender the conflicts,
three are badly argued, and that it is normal for ill-applied and dubious
principles to lead to frustrations!
However that may be, it is incontestable that it is useful, when
organising and setting up systems and simulation models, to take
account of individual needs and motives, of which a great part are
moreover created by the style of management and the form of the
organisational structure.
Octave Gelinier has shown us how family businesses turn the indi-
vidual towards obedience and a desire for stability, whereas the com-
petitive structures of modern management favour a spirit of initiative
and aggression. The reverse side of the required dynamism is a certain
insecurity and tension, which are recognised as favourable by Drucker.
But if this sort of tension happens to work on a sensitive area, or
becomes linked to family or personal preoccupations, there is a risk
that it will maintain a permanent state of distress which -while it is not
always freely expressed - becomes apparent in the short term through
the well-known neuroses of the' organisation man'.
Thus, in ways which are all the more dangerous because they are
implicit and sometimes unconscious, the third domain acts upon the
first, and therefore must be given careful attention by the head of the
firm and his organising committee. The extrinsic domain is largely the
FIGURE 3. Interactions between domains; an unsuitable structure

(intrinsic domain) can engender conflicts and motives opposed to the
firm, which nevertheless counter-react on the latter obliquely through
false motivations.
result of the multiplicity of roles played by the same individual in differ-

ent, compatible or incompatible groupings offunctions. The multiplicity
of roles can turn into functional imperialism imposed by outside
groupings on the business: family, trade union, state, or old boys'
association. 14
In his famous work, Alexander Bavelas has confirmed the relation-
ships between the structure and individual reactions, emphasising that
certain organisations which are correct on the limited plane of pro-
ductivity (first domain), can have disastrous effects on the motives of
the workers, thus engendering rumours (those cancers of information),
absenteeism, and even active discontent (strikes, wage demands, inertia,
etc.). Argyris's proposition is therefore applicable in the case of struc-
tures which do not take the constraints of the third domain into account.
2.9.4 Division of the business into zones of formalisation (according to

the degree of explicitness and formalisation of activities and
processes)
The criterion of formalisation is frequently used, because it figures in the
choice of techniques and methods of approaching the problems of the
business. It leads to the division of the business into three zones (or into
more numerous zones, if a finer division is made). These zones group
the processes, activities, decisions, operations and problems, according
to their degree of formalisation. I have defined nine degrees of formal-
isation of information, arranged by degrees of complexity:
I. Constant information without effect on decisions (Example:
redundancy of an initial);
2. Binary information (Example: motor bar, commutator with two
positions);
3. Information relating to a random choice (Example: red, amber,
green lights);
4. Decimal information (decimal keyboard);
5. Alphabetic information (Letter-codes. Example: HZF or EBCE-
PIC);
6. Ideas. Letters composing a word (Example: CLIENT, OPERA,
STOCK);
7. Syntax. Context-free (Example: delivery instructions);
8. Structures with two or more dimensions (Example: graphs and
geometric models);
9. Semantics. Information depending on the context (Example:
ideological claims).
(a) Quantified or quantifiable zone

This includes routine accounting activities, the majority of production
and automated handling, control and planning operations. The infor-
mation circulating in it is quantitative and, in the case of automation,

it is digital or analogical.
(b) Qualitative zone (extensively formalised)

This encompasses the empirical methods learnt from experience, whose
qualitative nature defies measurement, and demands the active partici-
pation of the receptors for their transmission. Let us enumerate as
examples: the establishment and maintenance of hierarchical contacts,
the activities of selling everyday objects, the firm's charter and the great
majority of verbal communications.
(c) Informal zone

This includes the activities and processes which cannot be formalised,
like the relationships created through influence (sales and promotion)
and the majority of informal communications of the third domain
(intrinsic).
The information which circulates in this zone is pre-symbolic and
ambiguous; it is often expressed by gestures, miming, hints or allusions
and, in spite of its unobtrusive character, it plays a considerable role
in operations of choice and decision in the first functional sector (form-
ulation of aims and values).
The division into three zones of formalisation is, of course, arbitrary
and we could cite many other different divisions (the layers of H. Simon,
for example, cf. 2.9.1) or more refined: formalisation zones described
in Figure 4.
2 3 4 5
Rumours Conversations Procedures
I
Mental states Rules Accounting Automated
Emot1onal or
EXAMPLES Phenomena of passionate Organisational Management control and
influence and charts Control management
communications
environment Descriptions Production
ACTIVITIES Latent:
PROBLEMS Qualitative: Qualitative: Ouant1tative: Quantitative:
DECISIONS ZONES not made
poorly formalised formalised not automated digital
PERATIONS explicit
PROCESSES
LANGUAGE Pre-symbolic Verbal or Written Numerical Logical

written (or verbal) arithmetical Symbolic
and mathematiCII
sundardised
TYPE OF Non-verbal Ambiguous Symbolic

INFORMATION (figures,
diagrams)
FIGURE 4. Division of business information into five zones, arranged in

order of increasing formalisation.
2.10 PROVISIONAL CLASSIFICATION OF THEORIES

We know that theories emanate from first-hand experience or from
intellectual and technical sources outside business. They have often
limited their domain to one functional sector or one qualitative or
quantitative approach. It therefore seems fairly convenient to arrange
them according to their chosen domain or their origin.
2.10.1 Classification of schools or their specialised branches, according
to the sectors of the firm
Figure 5 gives an idea of the relationships between the different sectors
of the firm and the specialised theories. The examples quoted have only
an indicative value, and the links shown by dotted lines represent
correlations and not relationships of cause and effect of an unequivocal
character; the unbroken lines, on the other hand, indicate, closer links.
CLASSIFICATION OF THEORIES
BY FUNCTIONAL SECTORS
EXTERNAL THEORIES COMPANY
DOCTRINES
FUNCTIONAL
SECTORS
VALUE THEORY Company 'morale'
CHREIDLDGY STATISTICAL DECISION FORMULATION

PSYCHOLOGY THEORY OF AIMS
and POLITICAL
and PHILOSOPHICAL
TRENDS GENERAL DOCTRINES
--,
ORGANISATION
Establishment of
strategies.
BUSINESS ECONOMY organisation
charts
I I
1nd procedures
OPERATIONAL
RESEARCH ECONOMY OF BUSINESS
SEMANTIC
MODELS. etc
STAFFING
SOCIO-PSVCHOLOGY METHODS OF Allocation of jobs
Group dynamics REMUNERATION
Merit rating. etc.
COMMUN !CATIONS
Work by experts INFORMATION
Case studies COMMAND
HUMAN RELATIONS
r-----
ORGANISATION of
WORK AREAS EXECUTION
ERGONOMICS Action on the
.,._
................ PRINCIPLES of
physical
environment
TIME AND MOTION STUDY
Industrial engineering
FIGURE 5. Relationships between the functional sectors of the company and

some management science disciplines (theories) or external disciplines which are
linked to them.
This classification (relationships) is of course relatively sweeping.

The !heory of statistical decision-making, for example, is attached to
the study of the criteria of choice, the foundation of the formulation of
the aims and objectives of the firm. However, the classical and neo-
classical authors have brought to the knowledge of these problems a
contribution which is none the less appreciable, even though it is not
recorded in Figure 5. In spite of these imperfections, the framework
traced in Figure 5 permits the grouping of the specialised works accord-
ing to subject. The practical exercise of leadership can be attached to
sector 3 of the fi_rm, scientific preparation of decisions can be attached
to sector 2, the theory of psychological decision-making to sector l.
It will be noted that, reverting to the terminology proposed in 1951
by Adolphe Andre-Brunet, I have given a place in this figure to • Econ-
omy of business', which is the expression he used to designate the
new discipline which he proposed and which he distinguishes from
business economy. This semantic nuance translates a difference of
perspective for him. While in his eyes business economy restricts itself
to studying individually and in isolation the phenomena for which the
firm is the setting and, so to speak, the occasion, the • economy of
business' sets out to analyse the same phenomena • at the level and from
the point of view' of the firm, that is to say just as they occur within the
framework of this • legal and economic entity·, and aims to show the
• colouration' which they take on as a result, as well as the relationships
which unite them.
Andre-Brunet bases his concepts on what he calls the · domanial
equation' from which he has drawn the explanation and mode of
expression of various concepts of business: the operating results,
depreciation, flow and rotation of capital, costs, autofinancing, credit,
liquidity ... ; this is the· domanial equation' which he has conceived
successively in its static aspect and its dynamic form. Since 1945 the
teaching of this author has shown an interdisciplinary character in
advance of its time, and the ambition of the ·economy of business'
is to be • transdisciplinary '; it should open the way to a global model
of business in the precise and restricted sense of the term, that is to say,
a model in which all the monetary and physical flows could be re-
presented in their reciprocal relationships. If this objective was fully
achieved, it would be far from what have sometimes been erroneously
called global business models, which are in fact simple juxtapositions of
formulae expressing how a certain number of phenomena of manage-
ment evolve, in an isolated manner.
2.10.2 Grouping of schools according to their sources of inspiration

The classification of trends of thought on the subject of organisation
can be made according to their source of inspiration. In this respect
three main tendencies can be distinguished.
(a) The quantitative trend (or mathematical trend)

Inspired by the mathematical doctrines of operational research, by
statistics, by the calculation of probabilities, and, by the theory of
information, this trend is closely linked to the formalised and explicit

zone of business, and the accent in it is placed on mathematical models.
The statistical theory of decision-making, business cybernetics, dynamic
programming, scientific control of stocks, systems engineering, etc., all
form part of the quantitative trend.
(b) The qualitatil'e trend (socio-psychologica/ trend)

This comprises notably the school of human relations and business
socio-psychology. It concerns the informal zone most particularly and
bears on the problems of the man at work within the firm.
Statistics Probability MathematiC411 theorin
Theory of
Forrmllotic automatic
machines FORMALISED
FOCUS and/or
on mathematicel QUANTIFIED
MODELS ACTIVITIES and
(Se1rch for PROCESSES
optimiution)
Operational research
Statistial Theory of models
decision theory
Ethnology
Psychology Socio·psyd'lology
FOCUS INFORMAL or
on PEOPLE poorly formalised
(Search for ACTIVITIES and
intep-ation) PROCESSES
Social systems
Business firm
FOCUS
on tht FIRM
(Search'"'
productivity)
Classical schools Case· method

o.&M. semimn
Management doctrines
(Treatises on the running of business firms)
FIGURE 6. Relationships between the three trends- mathematical, socio-

psychological and empirical (experimental, pragmatic) -and the three zones of
formalisation.
(c) The empirical trend (practical or pragmatic trend)

The schools which are associated with this trend avoid any university
influence as being outside the concrete and specific nature of business.
They aim to constitute an autonomous and original' science' of business,
founded solely on the 'distillation' of first-hand experience.
This trend bears essentially on the qualitative zone of business.
Organisational structures, non-automated procedures, aims and policies
and empirical rules are its chosen domain.
In this domain, the mathematical schools and the socio-psychological
trend cannot, in fact, easily complete with the empirical trend. Mathe-
matics are superior in efficiency in the formalised zone, but have little
hold for the moment on a domain which stems essentially from taxon-
omy. As for the socio-psychological trend, it is too much concerned
with problems of personal and social adaptation and tends sometimes
to neglect the frequently unexciting routine of the practical working
of the firm.
2.11 CLASSIFICATION OF INSTRUMENTS: TECHNIQUES

AND MACHINES
Organisational techniques and the materials which they bring into
play can be classified according to functional sectors (Figure 7) or
according to zones of formalisation (Figure 8), in the same way as we
have classified principles and theories.
These figures need no commentary. Nevertheless let us note that in
Figure 8 the classification of machines according to trend of thought
and zones of formalisation is fairly coherent. Thus, in a general way
it can be observed, as an example, that the use of computers remains
limited to the formalised zone (although some timid laboratory experi-
ments have been made in the domain of semantics and the definition of
the language of business, or even in value systems) and this tendency
can only become more widespread (cf. the goal of McDonough, 1963
and the semantic differentiator of Osgood, 1957). On the other hand
there is an abundance of attempts to construct computer models and
simulations of non-formalised behaviour in the United States at the
present time, and these are leading to the application of 'problem
solving' (automatic resolution of non-formalised problems) and to the
comprehension of natural languages of the nth degree of formalisation.
Similarly, while the equipment associated with the informal sector
is still slight, that of the qualitative sector is very abundant and is
drawn largely from the imagination of the classical organisational
theorists (of empirical tendencies). This equipment, unlike the others,
is specific to the organisation of the firm. It includes both filing cabinets,
office equipment and reprographic equipment, fixed-speed cine-camera
and also string diagrams, various plans and, in a general way, all the
'ironmongery' necessary for the organisation of office work.
IINSTAUMENTSI
MACHINES I TECHNIQUES I THEORIES I
Pol•t•cal
valve
Planrung
Organo~at•on
Control
Staffong
Personnel
Trau,•rl9
L,----i-==::__J Ment ratmg
Managrment
Commun•ca·
Mionttn.ance
equ.pment
Transfer . - - - - - - - - , Job
Ofg.lllliU(tOn
mKI\Hlts
Numer•ul
Ma•ntenance
control •nd
rl'\ictunn
lmtruments lor
'-------,.------' ~:C'rsrt
detett•on
and control
FIGURE 7. Division by functional sectors (this is a development of Figure 5).

The impact of the theories on the instruments, and of the instruments on the
firm.
'INSTRUMENTS!
I TECHNIQUES I THEORIES
AccountLng
BuSineu economy
r groups,
Psycho·dr•m•s. e1c.
FIGURE 8. Classification of theories and instruments by zone of formalisation.

Impact of the trends of thought on techniques and corresponding use of machines.
1 M.T.M. Methods of evaluating basic times
2 Q.S.K.- Administrative M.T.M.
Koontz and
O'Donnell's
FUNCTIONAL SECTORS Functions Establishment of policies
FORMULATION ol AIMS ( Spontaneous selection of
and VALUES PLANNING
alte~natives and objectives
l
Dec•s•on
(Organisation of strategies)
ORGANISATION
(STRUCTURE! 1-----~~P~L~A~N~N~I~N~GJ~ Organised selection.ol
alternatives
,I Prepara. tion for d.ec•sion
STRATEGIES i-oot------1 ORGANISATION I
PROCEDURES
Check•ng execut•on of plans
ORGANISATIONAL {
'-_£~f!!!L
CHARTS ___~r-----e~~c::o~N~T~R~O~Lj) ~r ~~~~~~~:~ment and correcting
( ALLOCATION OF JOBS ) .. .. I STAFFING I

Check•ng e.xecution of plans
COMMUNICATIONS CONTROL I { by d•rect contact {checking
COMMAND or supervis•on l
HUMAN RELATIONS
TRANSMISSION
of INFORMATION DIRECTION I {
Leadership and supervision
lnductton
( EXECUTION )
FIGURE 9. Koontz and O'Donnell's divisions differ from those I have
suggested, since they are conceived in relation to the departments usually
found in business firms, whereas the functional sectors rest upon the
intrinsic differences in the nature of the activities. In this way, planning
and control are both premeditated, organisedactivities which make use of
comparative operations and bring similar methodologies into play; but
there is a fundamental difference of nature between the decisions forming
the basis of policies and plans (sector I) on the one hand, and the expres-
sion of these decisions and the organisation of these policies (sector 2),
on the other hand.
Intrinsic Mixed Extrinsic

domain .domain domain
•• •
<DI AIMS ond VALUES ~impl~c~t
expltctt
0 ORGANISATION ~quontibtive •• ••
••
qual•tattve
eft ROVISION OF POSTSI ,.-quantitative •• •
•
•••
0 I COMMUNICATIONS ~-quolitative
®I EXECUTION
I
inform~!
ACTION
•• ••
FIGURE 10. Correspondence between the sectors of activity and the
degree of attachment of these activities to the firm.
In total, three distinct frameworks have been defined in this section

which permit the various schools of organisational theory to be placed
in relation to each other, that is: a division of the firm into functional
sectors; a division of the firm into zones of formalisation, and a classi-
fication of its activities according to degree of association with the
objectives of the business.
Figure 9 establishes a correlation between the division into sectors
which we put forward and the functions of Koontz and O'Donnell.
Figure 10 traces the contacts linking the sectors of activity and the
intrinsic, extrinsic and mixed domains.
3 The Schools
3.1 INTRODUCTION
The science of organisation has not developed in a linear fashion. Like
all the human sciences, it has evolved by a perpetual ·envelopment' of
one school or theory by another. Each movement has developed as a reac-
tion to the one which preceded it, not without absorbing some part of it,
and faded before the one which followed it according to a similar process.
Thus a perpetual oscillation is observed between a normative drive
seeking principles of immediate application and a descriptive tendency
attached to the formulation of more and more precise models. This
·dialectic· has been enriched by associated sciences whose contribution to
the knowledge of human behaviour cannot be overlooked: psychology,
sociology, operational research, cybernetics and even, more recently,
linguistics.
It has been possible to distinguish, in a rather arbitrary fashion,
six trends of thought of different and complementary inspiration:
-A classical school springing directly from the research of Fayol
and Taylor;
-A ·human relations· movement, strongly influenced by discoveries
in psychology and group dynamics;
-A quantitative trend derived from operational research;
-A socio-psychological movement created as a reaction to mathe-
matical abstraction and largely inspired by sociology;
-A neo-classical school which has attempted to return to closer
contact with the concrete problems of business;
-Finally, a movement derived from cybernetics and known under
the name of genera] systems theory.
These different movements, which came into existence at various
times during the first half of the twentieth century, are all very much
alive today and coexist with a certain amount of reciprocal influence.
Nevertheless they do not form a permanent group and there are already
signs of new directions of research which will be mentioned at the end
of this chapter.
46
The Schools 47
In this book there can be no question of describing in detail this
collection of doctrines, nor even of summarising their essentials. It is
above all necessary, for the developments which will follow, to know
the fundamental elements of them and to highlight the points on which
they disagree or concur .• The different schools will therefore only be
approached in a very general way which will not do justice to their
complexity and their subtlety.
3.2 THE BIRTH OF SCIENTIFIC MANAGEMENT AND THE

CLASSICAL SCHOOL
3.2.1 The basic hypotheses and the implicit postulates

The great majority of Anglo-Saxon writers use the term classical
movement to designate the collection of schools of organisation which,
starting with the fundamental works of Taylor and Fayol, have devel-
oped and improved until reaching their culmination in the works of
Davis.• While there is general agreement on the enumeration of the
doctrines which compose the movement, the definition of their common
characteristics is rather imprecise and often lacks coherence. There will
be the opportunity to analyse this at the end of this account.
Following Massie, a coherent group of concepts and principles
common to the different classical schools can be distinguished.
(a) 'Scalar' concept

This concept, from which stems the ' hierarchical' principle, defines the
firm as a group of classes or 'grades' arranged in sequences. The
superior grade holds the authority and can 'delegate' it to the grade
immediately below. The intermediate grades receive the delegation of
authority from the grade above and transmit it to the grade immediately
below. The lower, or' basic' grades have no authority.
Following the hierarchical principle, authority descends a well-
defined scale of posts, in a continuous, clear line. 2
This line is composed of 'links' in the chain of command from
superior to subordinate.
A
(b) Principle of the unity of command

Let us remember that F. W. Taylor had proposed that each worker
should obey eight functional chiefs (according to the nature of the tasks
being carried out). Fayol had no difficulty in demonstrating the trouble
engendered by multiple commands, and vigorously advocated the
principle of the unity of command. In addition, a distinction must be
made between unity of command (an agent must only receive orders
from one hierarchical superior) and unity of direction (one head, one
plan for a group of activities contributing to the same objective; a body
with two heads is a monster).
Nevertheless, to answer the objection raised by Taylor, who pointed
out the impossibility of finding a universal superior who knew every-
thing and could pronounce on everything, the classical school had to
think of a compromise solution: the staff and line structure, of which
the first formulation is found in the work of Colonel Rimailho: French
methods of organisation (1936). This structure subordinates Taylor's
functional links to the hierarchical links governed by the rigorous
principle of unity of command, hierarchical authority taking precedence
over functional authority.
J.-P. Simeray 3 in fact defines hierarchical and functional authority
as a function of the type of delegation:
I. Hierarchical authority: authority delegated to people;
2. Functional authority: authority delegated to activities. This is
invested in people who receive the right to control the execution of a
certain number of activities which are, in princip1e, homogeneous,
and whose grouping is called 'function·. Functional authority cannot
prescribe activities to be carried out. It defines the rules and pro-
cedures according to which the action ordered by the hierarchical
authority must take place.
Seen in this way, the structure of the firm takes the form of a fairly
simple hierarchical tree with the trunk uppermost and the branches
below, in which authority flows one way only, from top to bottom.
The clear Iinear arrangement of the branches is however hidden by the
thick foliage of the multiple contacts which diminish its rigour: func-
tional links, 'service' links, Fayol or Simeray's bridges, carrying
opinions, suggestions, possibly irrelevant messages (i.e. bereft of mean-
ing or utility), informal communications, etc.
Is this a result of the fear of confronting such complexity, or the
difficulty of representing it graphically? Always, in classical organisa-
tional charts, the hierarchical tree is chosen in preference to the func-
tional network, and numerous misunderstandings frequently result from
the confusion between the classic organisational links and the channels of
communication (Deutsch, 1960).
While the principle of unity of command is quite suitable for small
firms, it is often found wanting in complex systems, where multiple
The Schools 49
pressures are brought to bear upon polyvalent posts. I am thinking

particularly of holding companies and the great international companies
where the national hierarchical links overlap with the so-called 'sup-
port' links, which are hardly less influential. In such conditions, the
notion of command is incapable of taking account of the extreme
variety of influences which flow as much from people's personalities as
from their place in the communication network.
(c) Exception principle

This principle, which has inspired the theory of management by ex-
ception, defines the limits of the delegation of authority. This delegation
should be carried to the maximum, the decisions being taken at the
lowest level. The routine and ordinary (programmed) tasks should be
performed by the subordinates, the exceptional tasks being entrusted
to the hierarchical superior. Top management only becomes involved
with matters not conforming to pre-established objectives, forecasts or
control criteria.
(d) Concept of the span of control

The three principles- hierarchy, unity of command and exception- very
quickly led the classical authors to consider the question of the optimal
number of subordinates to put under the authority of one hierarchical
chief. That is a very ancient problem. We know that the organisation of
the Roman army was founded on the proportion of one leader for ten
soldiers; this number, called span of control (or scope of authority),
indicates, according to the circumstances, the limits of the hierarchical
power or the extent of the delegation. The span of control was the
subject of inexhaustible controversy among the classical authors.
Graicunas subjected his assessment to mathematical laws, whose
precision seems rather ridiculous today. He analyses three types of
subordinate relationships:
-The simple direct vertical relationship between the superior and the
subordinate;
-The cross relationship, between subordinates who depend on the
same. superior, is horizontal or vertical, but has always a 'double
direction'; it is a dialogue between two subordinates;
-The complex relationship which causes the superior to communicate
with his subordinate through a certain number of human 'relays',
this relationship being at the same time horizontal and vertical.
A rapid calculation of these relationships shows that a superior who has
four subordinates at his command, and wishes to engage a fifth, will see
the total of subordinate relationships increase from 44 to 100.
R. C. Davis, with more flexibility, distinguishes physical activities
permitting a span of 10 to 30, from mental activities which reduce it to
3 to 8.
Parkinson (1957) establishes a ratio between the span of subordination

and the proliferation of manpower:
-A superior prefers to multiply the number of his subordinates
rather than the number of his rivals;
-Subordinates create work for each other.
A narrow span leads to organisational charts with a so-called 'tall'
structure, well co-ordinated and closely controlled. These structures
are efficient but rather discourage initiative and have characterised
military organisms for a long time. A broad span, on the contrary,
determines 'flat' structures which are known to demand hierarchical
chiefs of high quality and stimulate creativity.
{e) The principle of organisational specialisation

This principle has been applied by Taylor to the organisation of work
places, and by Luther Gulick to administrative and managerial tasks.
Thus Gulick (1937) differentiates activities according to (a) the object-
ives, (b) the processes, (c) the clientele or the materials, (d) the geo-
graphical setting.
Fayol avoided too narrow an application of this principle, and his
figures show a certain polyvalence characteristic of functions higher
up the hierarchy. The principle of rigorous specialisation is criticised
today both on the human plane (monotony, absence of incentive for the
worker) and also on the plane of efficiency (failure to recognise poly-
valence, which is a characteristic of human behaviour, halting of evolu-
tive capacity, development of 'professionalism' and jargons, etc.).
(f) Application of scientific method

The schools of the classical movement, like those of the neo-classical
movement which continues them, have applied the experimental
method of Claude Bernard and the scientific method of Descartes
directly to business.
The experimental method (Claude Bernard) rests upon a determinist
postulate and comprises five stages:
(a) Observation (detailed and methodical analysis);
(b) Formulation of hypotheses (or suggestions concerning the ele-
ments of the analysis and their relationships);
(c) Experiments (setting up a demonstration organisation in order
to verify the suggestions on a small scale);
(d) Formulation of quantitative and universal laws;
(e) Checking and correcting these laws.
This method, used by the most recent schools of organisation, is very
general and has universal application in the experimental sciences.
The scientific method defined by Descartes in his Discourse on
The Schools 51
Method, is more in dispute. It is founded on the four following prin-

ciples:
(a) The principle of evidence based on 'good sense' is today dis-
credited by non-Aristotelian doctrines. It was at the origin of the
errors of classical organisation which became bogged down in assump-
tions forged by 'good sense';
(b) The principle of analysis, based on the proposition that the
division of tasks into segments as small as possible will facilitate their
analysis and the solving of difficulties. This principle, when wrongly
interpreted, led to the principle of the division of work;
(c) The principle of synthesis and orderly arrangement;
(d) The principle of enumeration and generalisation (classification).
3.2.2 The implicit hypotheses

To these principles must be added implicit hypotheses, which are not
clearly stated, of which Massie ( 1965) has attempted to draw up a list.
The least that can be said of these hypotheses is that they are dubious.
The last one quoted (postulate of universality, that is to say, of the
infallibility of the doctrine) does not concern the administrative doctrine
of Fayol but is directed at his followers and the adherents of 'univer-
salism'.
The principal implicit foundations of the classical doctrine are
classified below in fourteen postulates and principles. The postulates
formulate facts recognised as obvious, such as the natural laziness
of man, while the principles recommend rules of action whose value
is no less obvious. The criterion of obviousness is founded here on the
good sense and the experience of the authors.
(a) Mechanistic postulate

Efficiency can be measured in terms of productivity, irrespective of
human factors.
(b) Rationalist postulate

Men behave in a logical and reasonable manner.
{c) Close supervision

Men need to be supervised closely {because they cheat).
{d) Principle of the detailed definition of tasks

Tasks must be strictly defined and must not overlap each other.
(e) Postulate of materialism

The worker seeks security and a clear definition of the limits of his work.
52 A Critical introduction to Organisation Theory
Provided that these conditions prevail, his behaviour and motives are
in accordance with the demands of the system.
(f) Postulate of the closed system

The firm is a closed system, which can be completely analysed.
(g) Principle ojformalisation

The only exchanges between individuals which need to be considered
are those that are official or formal (intrinsic domain, relating strictly
to the objectives of the firm, cf. 2.9.3).
(h) Principle of impersonality

Activities must be defined in an objective and impersonal manner
(depersonalisation of functions).
(i) Economic postulate

The only motivation for the workers is their salary; the creation of
a fair system of remuneration will be enough to obtain their co-oper-
ation.
(j) Natura/laziness of man which calls for strict supervision. (Note that
this implies that the supervisor himself is not lazy, which is contra-
dictory to the hierarchical structure which allows for a supervisor to the
supervisor. We would therefore have to admit that it is a relative laziness
which diminishes as we climb the rungs of the hierarchy: the head of the
firm is totally free of it, since he is not supervised.)
(k) Principle of centralisation

Co-ordination must be imposed and controlled from above.
(I) Principle of top-downwards

Delegation of authority is made from top to bottom.
{m) Postulate of specialisation

Simple tasks are easier to assimilate; it is therefore necessary to initiate
as detailed a division of work as possible to increase productivity.
(n) Postulate of unirersality

It is possible to extract, from experience, universal principles which are
valid for any man or any situation (even if they cannot always be
applied).
The fundamental principles and the implicit postulates which have
just been enumerated are present in the classical literature from the
The Schools 53
earliest works of Fayol and Taylor. The work of these two founders of
the science of organisation will not be described here; their contribution
is universally known and forms part of the elementary education of
every organisationalist. Instead, the contribution of various authors
attached to the classical movement will be outlined briefly. The account
which will be given in the following pages is not meant to be exhaustive;
it is simply intended to set up certain landmarks in the development of
the organisational sciences. The reader must therefore not be surprised
to see that a prominent place is not given to important works such as
those of Haldane, Max Weber, Diebold or Paul Planus, which are not
discussed here, either because their essentials do not depart radically
from the principles listed above, or because they only touch upon a very
particular domain of organisation theory.
3.2.3 The school of Mooney and Reiley
Principles
Mooney and Reiley, senior managers of General Motors, developed
four principles of organisation:
(a) Principle of co-ordination, in connection with unity of action;
(b) Hierarchical principle (hierarchisation of authority is indis-
pensable);
(c) Functional principle: tasks must be specialised and grouped in
functions defined without ambiguity;
(d) Staff and line principle: a distinction established between line
and staff links, which relate respectively to the activities of production
and of advisory services.
Embryogenesis and morphogenesis

Mooney and Reiley carried out admirable studies of organisations,
both in their embryogenesis (historical perspective) and their morpho-
genesis (functional perspective).
From the morphogenetic point of view, the authors studied four
organisations in particular: the state, the army, the Catholic Church
and the industrial company. They reached the unexpected conclusion
that the organisations which respect these principles most faithfully
and should therefore be the most efficient are the church and the army.
This confirms the experiments of Bavelas: the strictness of the classi-
cal hierarchy is unfavourable to creativity; on the other hand, it is
justified in relatively stable structures subjected to strong 'disciplinary'
pressure.
3.2.4 The school of Sheldon

Sheldon (The Philosophy of Management, 1913) viewed the organisation
of the firm from a functional angle. He distinguishes three groups of

functions:
(a} The administration, which formulates the rules and the frame-
work for the working of the firm;
(b) The management which applies these rules;
(c) The organisation or co-ordination of the work of individuals and
the physical means of action.
Principles
1. The rules of action must combine to work for the growth of the
general well-being;
2. The management is a psychological and ' moral ' emanation of the
community formed by the firm;
3. The manager, invested with the authority necessary for the essen-
tial objectives of the firm, also appears to be the moral guide of his
subordinates.
These three principles are worth further consideration, since they are
the sign of evolution away from the dry rationalism of the classical
authors. They throw a bridge between the strict conception of organi-
sation theory and the school of human sciences.
The first principle of Sheldon assumes implicitly that the aims of the
firm should not be expressed solely in terms of 'profit'. The second,
which carries the germ of the ideas of Herbert Simon (co-operative
coalition), shows the inadequacy of the rigorous conception of the
functional organisational structure. A firm is not merely a network of
links between jobs, filled by people as an after-thought; it is first of all
a moral community, of which the head of the firm has charge; this
implies responsibilities which are not only financial, but also social and
moral.
At the time, several traditionally-minded heads of firms set themselves
up against this daring conception which they considered ridiculous and
useless. Others accused it of paternalism.
As for the third principle, it takes on a new significance if the term
manager is replaced by management. To a certain extent, the manage-
ment of the firm is responsible for improving and promoting the pro-
fessional skills and the culture of the staff; these skills and culture must
profit the creative potential of the firm, in the short term or medium
term. Let us not forget that the firm is worth what the men who compose
it are worth.
This task must not be entrusted to a low-grade section and should
not develop in response to requests. It should be encouraged and pro-
moted by the management, and be one of its important projects. This
is, I believe, the teaching of the school of Sheldon. Certainly, other
classical authors have said it before him, particularly Fayol, but without
making it the central theme of their theory.
The Schools 55
In addition, Sheldon's interest in human relations was to direct him
towards problems of communications and to make him aware of
tensions and conflicts.
Thirty years before the school of Washington, Sheldon distinguished
two kinds of tensions residing in the firm:
1. Internal tensions caused (a) by the motives, needs and demands
of the workers as a whole and (b) by the evolution of sciences and
techniques which are perpetually calling the structure of the firm
into question;
2. External tensions, stemming from (a) the pressures of the govern-
ment and the environment (ecological restrictions); (b) the attitude of
the consumers; (c) the general level of education of the public; (d) the
state of the international market and (e) circumstances. 4
3.2.5 The school of Mary Parker Follett

The school of Mary Parker Follett is more advanced than that of
Sheldon and is situated at the junction between the classical movement
and the much more recent social systems movement. It is characterised
by the importance given to socio-psychological problems, which was
exceptional at the time. Her principles refer mainly to the problems of
co-ordination and were to be restated and amplified by systems theory. 5
Principles
l. Co-ordination through direct contact between individuals is
indispensable (cf. Fayol, principle 14);
2. Co-ordination must be established from the very beginning of any
project;
3. Co-ordination must take account of all the factors in the situation
(including the psychological factors):
4. It must be continuous and permanent.
Accordjng to Mary Parker Follett, the adjustments of structures to
suit people and situations must not be considered as parasitic pheno-
mena caused by functional errors; they are natural and are linked with
the development of ideas and techniques. The dynamism of such a
concept is therefore in opposition to the rigidity of the first classical
au.thors, and presages the cybernetic school in the idea of natural
adjustment to reality. Mary Parker Follett is close to this school and
that of systems theory in recommending:
(a) The relating of experience to its context;
(b) The consideration of as broad a span as possible of factors and
their interaction, and mistrust of fragmentary studies.
In addition, following Simon, she adheres to a pluralistic concept of
authority. Management appears to her to be a mechanism for social
conditioning in which the phenomena of interaction, integration and
success occupy a primordial place.
Conflicts are considered inevitable. There are three methods of

putting an end to them:
(a) Domination (or repression);
(b) Compromise (or bargaining);
(c) Integration (discussion of the circumstances in the presence of the
people concerned).
It may be noted that these concepts of conflict resolution are not
without echoes of the psychoanalytical doctrine which was then in full
flood.
3.2.6 The scope of the classical movement

O'Shaughnessy (1968) criticises the classical school for:
(a) The naivety of its principles;
(b) The dubious and frequently implicit character of its hypotheses;
(c) The existence of contradictory and ambiguous propositions
without criteria of application which would enable them to be distin-
guished. Thus it is that the initiative allowed to the employees contra-
dicts the centralisation of decisions; this is certainly a problem of
personal assessment, but general principles are useless if they must
always be tempered by exceptions.
March and Simon (Organizations, 1958) criticise the classical school
for
I. The mistakes and omissions in the hypotheses that concern
interaction;
2. The minimisation of the impact of conflicts;
3. The underestimation of the complexity of individuals as infor-
mation processing centres;
4. The misunderstanding of cognitive mechanisms.
In the same way, certain well-established concepts of the classical
school have been contested after reigning over ideas and structures
for many years. Let us quote, for example, the concept of the span of
control, that of the assumptions about centralisation of decisions and
that of detailed supervision.
Ian Hamilton had suggested, on the basis of his experience in the
army, a ratio of one leader to six subordinates. This number was
mistakenly generalised and was subsequently subjected to strong
criticism. Ernest Dale increased the span to eight to sixteen subordinates
for one leader and Graicunas resorted to the laborious calculations
already mentioned on the increase of the number of direct or indirect
communications when the span of control is enlarged.
It is the neo-classical school (P. Drucker) which gave a true appli-
cation to this concept, which had until then been bound to outmoded
structures. In fact, the idea of the span of subordination changes its
meaning in the decentralised structures set up today.
There is no doubt that the classical doctrines, in their original form,
The Schools 57
are no longer appropriate to present-day social and economic life, to
the extent that they gave importance to the formal anatomy of the
organisation. Nevertheless it seems useful, at this point, to go back to
the intentions which prompted the detractors of this school.
If the critics are aiming at the great representatives of this movement-
Taylor, Fayol or Gulick- they are incontestably wrong. In fact, the
doctrines of these pioneers were well-adapted to the spirit and conditions
of their time. Company directors would have been stupefied to ·see the
intrusion of scientific thought into a domain reserved, as they considered,
for experience and intuition. The sciences and techniques connected
with organisation were not sufficiently developed to be able to play a
part in its evolution. {How could the theory of social systems be con-
ceived without the ideas of cybernetics and psychology?)
Finally, the workers, subservient to the tasks of mechanisation,
had not yet acquired the right to express their personality.
In these conditions and at that time, a mind like Fayol's could not
and ought not to conceive anything other than Fayolism. To criticise
him would be as absurd as to reproach Lavoisier for not having foreseen
the transmutation of elements. If he had lived today, he would perhaps
have formulated a synthesis close to the systems theory.
However, the survival of heads of firms, and even specialists in
organisation, for whom organisation is identified with the classical
conceptions, gives a certain justification to the criticisms recorded above.
Not knowing the contribution of more modern schools (still poorly
disseminated in France, it is true), certain authors reduce business
science to the narrow application of debatable and outmoded principles
(cf. the attack by C. Argyris and the retort by H. Koontz, 2.9.3 above).
Nevertheless, while this school has aged, certain of its principles
remain valid and it is indispensable to know them well before under-
taking any organisational action. In particular, Fayolism remains an
essential framework of reference by comparison with which many
schools will later be defined, by agreement or disagreement with it.
3.3 THE BEHAVIOURIST MOVEMENT {The behaviourist qr

human sciences school)
3.3.1 The reaction to the classical school

The over-simplified theories of the classicists and the failure of their
application to group behaviour, provoked by reaction the formation
of a second important movement: the behaviourist movement, which
used the discoveries of the psychological theory called behaviourism.
The experiments of Hawthorne (Western Electric), inspired by Elton
Mayo and Fritz J. Roethlisberger and disseminated in France by
G. Friedmann and J. Lobstein, made this movement famous. The
extremely detailed observation of the behaviour of men at work led to

methodical research into the motives and contacts which ensure the
adaptation of the group to the objectives to be reached. The pheno-
mena of co-operation and conflict and the problem of communications
were studied particularly.
This movement is therefore essentially preoccupied with the mixed
and extrinsic domains of the firm, as well as with the non-formalised
zones (cf. 2.9.3, 2.9.4). Let us recall that these barriers to communication
include
I. The semantic problem of the different values given to words
according to the individuals (cf. Hayakawa);
2. The incapacity to 'hear' messages in contradiction with profound
convictions (cf. Festinger);
3. The presence, in many communications, of a 'manifest' content
and a 'latent' or implied content (cf. Greimas);
4. The status or prestige of superiors;
5. The absence of reciprocity in communications and personal re-
lations.
A great many techniques have been invented to weaken these barriers;
the development of seminars on communications gives evidence of the
interest focused on the problem.
Today this school is brilliantly represented by the work of Professor
Chris Argyris of Yale, Professor Rensis Likert (Director of the Institute
for Social Research of the University of Michigan), the late Professor
Joan Woodward and Eric Miller (of the Tavistock Institute of Human
Relations). We would also mention Robert J. Blake and JaneS. Mouton
who participated in the famous Managerial Grid created in the Southern
Human Relations Laboratory of the University of Texas.
Most members of the behaviourist school are against authority and
favour participative management. Professor Abraham Zaleznick has
studied, for example, the possibilities of universal application of
'co-operative' management. Meanwhile, Professor Lawrence (followed
on this point by 0. Gelinier) admits that different styles of management
may be appropriate to various contexts.
3.3.2 The principles

The fundamental differences which separate the school of human
behaviour from the classical schools rest upon the following points
(a) Decision-making is decentralised;
(b) One should study groups, not individuals;
(c) The integrative force relies upon trust rather than on authority;
(d) The supervisor is an agent of communication within and between
groups rather than a representative of authority;
(e) The accent is on responsibility rather than external control.
The behaviourist schools vigorously denounced the inadequacies of
The Schools 59
the classical movement. Roethlisberger, one of the founders of the

movement, maintains, in connection with the remote control of sub-
ordinates, that 'the failings of the authorities lead the authorities to
avoid failings'.
Rensis Likert confirms this point of view and considers that 'in an
autocratic organisation, the subordinates kneel before the superiors
and fight among themselves for power and position'.
More recently (in 1950), D. C. Pelz pointed out the advantage of
favouring the influence of the employees on the management, that is to
say, their participation in decisions and management. The style of
management which results (Bottom up) should, according to this author,
encourage the full use of the human and professional potential of the
firm.
The behaviourist school has permeated widely into the large American
organisations which give very great importance to initiative and to
the factors governing organisational climate. Unfortunately, it is not
the same in Europe, in particular in France, where the ideas of partici-
pation and consideration of psychological factors can still seem aud-
acious.
3.3.3 The scope of the human relations school

The human relations movement aroused a great deal of criticism which
was mainly directed at its operational inefficiency.
It is certainly legitimate to cast doubt on the respective virtues of the
carrot (remuneration) and the stick (sanctions) recommended by the
classicists. But nevertheless, to work efficiently, man needs motivation.
While good relationships in the firm, a feeling of well-being and comfort,
and a favourable atmosphere can prevent conflicts, they do not in
themselves constitute sufficient motivation. The research of Bavelas and
Leavitt seems to confirm experimentally the inefficiency of the organi-
sations in which cordial messages and discussions flourish; they show
that friendly co-operation is not sufficient to spur men on to excel
themselves.
Other criticisms concern the fact that this approach explores the
human and structural aspect of the firm, to the detriment of micro-
economic or engineering studies. 'To identify the field of human
behaviour with management', writes Koontz (1961) 'is the same as
calling cardiology the study of the human body'.
The behaviourist school has nevertheless played an important role.
It forms a transition between the classical school and the modern
movements. It had the merit of reacting vigorously against the inad-
equacies of the classicists, to whom it constitutes, to a large extent, an
indispensable complement. It was left to the social systems and neo-
classical schools to synthesise them, at the same time making operational
the psychological concepts.
3.4 THE MATHEMATICAL MOVEMENT
3.4.1 Definitions and historical note

The domain of the quantitative trend is vast and poorly defined.
Drucker (1959) enumerates the disciplines that compose it as follows:
-Operational research;
- Statistical theory;
- Statistical decision theory;
- Systems theory;
- Cybernetics;
-Electronic processing of data;
- Econometrics;
-Accounting and business economy.
On the other hand, Harold Koontz (1961) separates decision theory
from management science, which he groups with operational research;
he does not mention systems theory. The school of decision theory is
centred on the rationalised approach to decision and choice. Based on
economic theory, it resorts to utility curves and to concepts of maximi-
sation of profit, marginal utility and economic practice in uncertain
conditions. It adopts a mathematical perspective and formulates models.
The ·keyhole· of decision-making, writes Koontz, gives access to
the whole firm, considered as a social system. Some think that this
will lead to centralisation of decisions, but they forget individual
decisions.
Koontz adds that 'Operational research is not a school: mathematics
are not management science, but a precious tool, as they are for physics
or biology·. 6
In the quantitative stream (or mathematical movement) will be
grouped all the disciplines which call on mathematics as a tool to
resolve quantitative problems, excluding systems theory and business
textbooks which deal more with total structures and equilibrium, while
also calling on mathematical language.
The mathematical movement was born during the Second World
War, and the part played by the demands of strategy is sufficiently
well known to need no repetition. The circumstances which marked the
birth of this movement were exceptional and involved:
(a) The mobilisation of intellectual resources which would never
have been achieved in normal times;
(b) For the first time in organisational history, an appeal to a mode
of thought foreign to business and administration, for help purely
with theory. The techniques imported were not all new; some dated
from the beginning of the century; but their application to instructions
or planning had never before been put into effect.
(c) The creation of interdisciplinary teams, grouping together
mathematicians, engineers and economists.
The Schools 61
Although the mathematical movement first saw the light of day in a

military and logistical setting (operational research) it has since devel-
oped in the business world to which it is logically attached. It is above
all an extension of the classical techniques of workshop organisation,
derived from Taylorism (Gantt graphs, stock planning charts, statistical
control of quality). But the appearance of the classic instruments and
their efficiency have been so transformed by symbolisation and mathe-
matical calculation, that they have become unrecognisable.
The mathematical movement includes a great number of schools and
it is difficult to give a global definition of it without ambiguity. Let us
quote here that of the Operational Research Society of Great Britain
which, while it concerns Operational Research, could apply to the
whole movement:
'Operational research is the attack of modern science on complex
problems arising in the direction and management of large systems
of men, machines, materials and money in industry, business, govern-
ment and defence. Its distinctive approach is to develop a scientific
model of the system, incorporating measurements of factors such as
chance and risk, with which to predict and compare the outcomes of
alternative decisions, strategies or controls. The purpose is to help
management determine its policy and actions scientifically.' 7
This definition - which may be compared with that given in 1955
by Adolphe Andre-Brunet- is certainly very broad and could be applied
just as well to the social systems school and to systems theory. However,
the mathematical movement is distinguished essentially from more
recent schools, which will be discussed later, by a certain reduction
of reality to quantitative data, and a polarisation on techniques and
tools, without always taking into account their place in the firm as a
whole.
For Adolphe Andre-Brunet, operational research is' the combination
of methods which -after analysing, with the help of the various disci-
plines concerned, the relations uniting all the factors of a technical or
psychological nature which concur in the formation of an economic or
human phenomenon - aim, in order to prepare the decisions to be taken,
to discover rationally the most efficient or economical solutions,
having recourse to statistical and/or mathematical procedures whose
execution most often demands the use of multi-copying machines (or
computers) with an extremely rapid output'.
The first characteristic- quantitative reduction- has limited the
success of operational research to the domains of business which can
be completely formalised, where in fact spectacular successes have been
recorded. These successes have encouraged the conviction among
mathematicians that, sooner or later, everything should be formalised
and that one day a firm will be managed in the same way as we find the
optimal plan for a distribution network. The use of computers has, in
fact, made it possible to multiply the efficiency of operational research

and, through the phenomenon of transference already described at the
beginning of the first chapter, certain people have confused information
science (the technique of automatic processing of information) with
operational research, operational research with direction, and organi-
sation with management. In this connection, we must remember the
ambitious title of management science originally given to operational
research in the United States.
The second characteristic of the movement is its technological
polarisation. The term scientific preparation of decisions, often given
to operational research, is revealing on this point. Nowhere in opera-
tional research will you find principles for decision-making, or standard-
ised rules enabling the manager to make a synthesis of the even~s which
he must take into account, in order to direct his firm in the most rational
way, as an indivisible whole. The scientific preparation of decisions
presents only one aspect of reality; it is certainly important, but has for
a long time been overestimated.
3.4.2 Misuse and limits of operational research; criticisms

The qualities of the quantitative trend, the prestige attached to its
instruments, the elegant precision of its concepts and its brilliant success
in the formalised zones of administration and production, have them-
selves led to certain misuse.
The contrast between the ambitions of the mathematical movement
(see p. 60) and its natural limits- purely quantitative approach and
technical polarisation - gives a preliminary hint of certain difficulties
in integrating its exponents into firms.
There is an almost complete divorce between the school of human
relations, or of social systems, which emphasise the socio-psychological
behaviour of organisations, and the movement known in the United
States- not without paradox- as systems analysis.
This trend of thought certainly concerns the study of systems, that
is, of combinations organised in relation to an objective. But its attention
bears on exclusively separate (that is to say, discontrnuous) and numeri-
cal pieces of information; it leaves the aims and the scales of value to
the directors, with a carelessness which contrasts with the uncompro-
mising precision of the processing of information. It merely states that
' overt decisions' are outside the system, as is the 'decider', moreover.
The task of the systems analyst is to prepare decisions and not to be-
come involved in the prerogatives of the management. 8
The explicit decision is thereby fundamentally separated from the
implicit decision, which is cohtained within the system (cf. Jay Forrester,
Industrial Dynamics).
All this would not be serious, if the exponents of the mathematical
The Schools 63
movement were not too often inclined, because of their professional

formation (or deformation), to minimise the socio-psychological factors
on which the exponents of the schools of social systems and human
relations have concentrat~d, and to overlook the empirical experience
which is the basis of the teaching of Drucker, Chandler or Gelinier,
for example. It is understandable that severe judgements have been
passed on this point. Some address themselves to people and condemn
operational research for its applications (methodological and technical
errors). Others attack the very foundation of the doctrine and question
its quantitative reductionism.
Stafford Beer' denounces the 'traps and stereotypes' of operational
research and enumerates six obstacles hindering its correct application,
which can be attributed to a certain tendency to conformity:
I. Tendency to conformity among workers, enclosed in their specia-
lity;
2. Stereotyping of the definition of problems, too biased to take
account of reality;
3. Weight of the scientific attitude itself; its rigidity and determinism
are incompatible with reality. (It is often forgotten that scientific
certainty is not applicable to business);
4. Conformity of solutions, which leads to narrowing the span or
' phase space', by the limitation of variables taken into consideration
(filtering), due particularly to interdisciplinary partitions;
5. Stereotyping of the criteria of financial returns, founded on a
static or retrospective approach, instead of a forward-looking one;
6. Attitude created by self-satisfaction, and conflicts between oper-
ational research workers and the management on the subject of the
paternity of successful projects.
Stafford Beer underlines the fact that operational research restricts
itself to preparing decisions, and can do nothing about the choice of
alternatives and the· responsibility for the risks to be run. It is the
management which must assume this function of choice and risk (or
creation of values).
The criticisms attacking the limiting character of operational research
are numerous. Among many others, let us quote those of Johnson,
Kast and Rosenzweig (1961, 1966); those of Forrester (1961) and of
Drucker.
' ... Over the years, mathematics has been applied to a variety of
business problems, primarily internal. Since World War II, opera-
tional research techniques have been applied to large complex systems
of variables. They have been helpful in shop scheduling, in freight-
yard operations, cargo handling, airline schedules and other similar
problems. Queuing models have been developed for a wide variety
of traffic- and service-type situations where it is necessary, to pro-
gramme the optimum number of servers for the expected 'customer'
flow. However by their very nature these techniques must structure the
systems for analysis by quantifying system elements. This process of
abstraction often simplifies the problem and takes it out of the real
world. Hence the solution ofthe problem may not be applicable in the
actual situation. Simple models of maximizing behaviour no longer
suffice in analyzing business organizations.' 10
Forrester (Industrial Dynamics, 1961) vigorously emphasises the
' non-representative' character of formalised data:
'We should use to best advantage the extensive body of experience
and descriptive information that probably contains 98% of the
essential information on decision making. The other 2% will come
from formal statistical and numerical data.' 11
Drucker expresses doubts on the whole of the quantitative movement
and deplores its 'technocratic' aspect:
'No one, I am convinced, can read this literature or can survey the
work done without being impressed by the potential and promise of
management science. To be sure, managing will always remain
something of an "art"; the talent, experience, vision, courage and
character of the managers will always be major factors in their
performance and in that of their enterprises. But this is true of
medicine and doctors, too. And, as with medicine, management and
managers - especially the most highly endowed and most highly
accomplished managers - will become the more effective as their
foundation of organised systematic knowledge and organised system-
atic search grows stronger ...
'The potential is there - but it is in danger of being frittered
away. Instead of a management science which supplies knowledge,
concepts and discipline to manager and entrepreneur, we may be
developing a "management gadget-bag" of techniques for the
efficiency expert.
'The bulk of the work today concerns itself with the sharpen-
ing of already existing tools for specific technical functions ...
But there is almost no work, no organised thought, no emphasis
on managing an enterprise -or the risk-making, risk-taking, decision-
makingjob.'12
A third reaction against the mathematical movement has developed
in continuation of the criticisms which have just been outlined:
I. Reaction against the ignorance of informal or psychological
factors (school of social systems);
2. Reaction against the hermetic character of a certain mathematical
jargon and against the indifference of the movement to the living
and concrete realities of the firm (neo-classical school):
3. Reaction against the voluntary limitation of the field of obser-
vation and the very specialised character of the techniques (systems
theory).
The Schools 65
3.5 THE SOCIO-PSYCHOLOGICAL MOVEMENT AND THE

SCHOOL OF SOCIAL SYSTEMS
3.5.1 The notion of system in the Gestalt theory

Chester I. Barnard was the spiritual father of this movement, and
Herbert A. Simon (Carnegie Institute of Technology), Igor Ansoff,
Richard M. Cyert, James E. March are the eminent representatives of it.
All these criticisms are justified, but they are aimed more at bad
operational research than at operational research itself. The imperialist
attitude of the mathematicians has transformed a methodology which
was still incomplete into an arsenal of algorithms and there has been no
more research or operational advance in it.
The reaction to the mathematical movement resembles the reaction
of Kohler faced with certain quantitative methods: 'An eminent psycho-
logist was kind enough one day to make some approving comments
on my work on intelligent behaviour in monkeys. "All the same", he
added, "you have missed the essential part by refusing to apply the
statistical method." This statement shows undoubted inability to
perceive the problems with which I was attempting to deal ... I repeat
that quantitative research presupposes qualitative analysis to stimulate
the discovery of fruitful problems.' Let us remember that Gestalt theory,
developed by Kohler, Koffka, Wertheimer and Lewin, emphasises the
notion of structure. The theories of associations studied a phenomenon
and broke it up into micro-elements, then defined it on the basis of these
elements, by aggregation. Gestalt theory is opposed to this method and
shows that the 'relationships' which unite the parts to form a whole
have as much importance in the behaviour of the whole as has their
composition. The whole is more than the parts. It depends both on the
parts and on the whole combination of relationships (or the structure)
which groups them together. It is precisely the combination of all the
parts with the structure which is called Gestalt.
The notion of system is very old: it found precise form with the
Gestalt theory. Developed with field theory and explored further with
cybernetics, it inspires at least three schools of organisation today: the
mathematical movement already described (operational research), the
school of social systems and systems theory.
If a system can be roughly defined as a dynamic combination of
interdependent parts, united in order to reach an objective (the whole
and the parts of the Gestalt Theory), then the school of social systems
really merits its name. Its aim, in fact, is to study the socio-psychological
factors and elements of decisions whose interdependence facilitates
their mutual adjustment and the adaptation of the activities of the firm
to its objectives. According to Kohler (Theorie dynamique ou Theorie
mecaniste ?):
'We are assured that nerve fibres are in reality separate conductors in
which flow essentially independent stimuli ... However, physiological

examination leaves no doubt that the functions of the individual
nerve cells are dynamically interrelated within the ganglion tissue ...
If we take vision, for example, the organism tends to respond imme-
diately to millions of stimuli: the first stage of this response is the
organisation of a field; the psychological formula is then: type of
stimulation, organisation, response to the products of the organisa-
tion: the nervous system responds to a situation, first by sensory
events of a dynamic character which are particular to it as a system.
It therefore responds, to put it in other terms, by organisation and
then by behaviour which depends on the results of organisation.
The dynamic element comes from the sensory organisation.'
The firm is considered as a co-operative coalition which is viable as
long as it procures enough satisfactions for its members for them to
continue to make their contribution.
The range of functional sectors and of domains taken into consider-
ation is much broader than in the preceding movements. Nevertheless,
the accent is placed on the extrinsic and mixed domains and on the
socio-psychological theory of decision.
The school of social systems, as its name indicates, has been deeply
influenced by sociology and has been preoccupied with reviewing the
foundations of classical organisation theory from its own point of view.
In fact, though the members of the school of social systems have sharply
criticised the classical school, they have nevertheless relied upon its
principal assumptions to construct their doctrine. They have adopted
its essential principles, simplifying them as will be seen from the account
which follows.
3.5.2 The position of the school of social systems in relation to some

classical principles
Simon and other leaders of the school of social systems have isolated
the institutional foundations of authority and studied their effect on
the informal organisation and the social factors which Wight Bakke
(1950) called bonds of organisation (referring to business firms). 13
Among bonds of organisation, Bakke designates:
I. the system of functional specifications;
2. the system of status;
3. the communication system;
4. the system of rewards and penalties;
5. the organisational charter, procedures, etc.
For Selznick and Simon the essential tasks of the management are
the following:
I. The definition of the mission of the organisation (instituted by the
authorities);
2. The personalisation of the objectives;
3. The defence of the integrity of the organisation by the reduction
The Schools 67
of internal conflicts. These have been specially studied in Organiza-
tions by F. March and H. Simon, and will be discussed later.
Starting with observations on the nature and origin of the phenomena
of authority in business firms, the authors of the school of social systems
have touched upon all the great classical themes:
Unity of command
Returning to the old Taylor-Fayol quarrel, Simon suggests a compro-
mise rather different from the staff and line structure. In fact, he admits
that a subordinate can receive orders from several superiors in accord-
ance with Taylor's formula, but he recommends that he only refers to
one, who has been previously designated, in the case of a conflict.
This is Simon's definition of authority: 'Capacity to make decisions
which are accepted by others.' rt is not necessarily exercised from above
to below: a superior can accept an idea from a subordinate. Organi-
sational charts only give a very poor idea of the relationships of authority.
In addition, an area of influence is fixed for each unit and is governed
solely by its jurisdiction and authority. The area of influence is strangely
similar to the functional supervision of Taylor, but has none the less
more flexibility.
Span of control
According to Simon, large companies should choose either a span of
control with a tall structure, or a broader span giving a flat structure.
In spite of some objections, he considers that there is a limit to the
number of subordinates that can be attached directly to one chief.
Centralisation-decentralisation
Selznick considers that centralised decision-making is necessary in
certain stages of the vital cycle of the expanding business. Simon also
writes in Administrative Behaviour that centralised decision-making
contributes to co-ordination responsibility and competence.
However, in Organizations, March and Simon place more emphasis
on the discoveries of the school of human relations relating to the
unfavourable effects of centralisation on motivation; they emphasise
the fact that motivation is determined by factors other than the type of
hierarchical attachment.
Communications
The school of social systems bestows particular importance upon
communications, above all informal communications, 14 which are over-
looked by the other schools. From the beginning, Chester K. Barnard,
the founder of the movement, considered communication as an essential
element and laid down the following rules:
I. The line of communication should be as short as possible;
2. The line of communication should habitually be used throughout
its length;
3. All information should be authenticated.
Decision-making. It is above all in the study of decision-making that

the school of social systems proves its originality, and it is in this
domain above all that it has influenced the other schools of organisation.
In the fundamental book already quoted: Organizations by March
and Simon (Dunod, 1964), the authors show that decision-making is
related not only to more or less rational criteria of choice, but also to
the state of motivation and of perception of the environment. Simon
distinguishes three stages in problem solving:
I. Understanding: What is the problem?
2. Design, that is, the conception: What are the solutions?
3. Choice: Which is the best solution?
Soelberg (Unprogrammed Decision Making) suggests a table of
seven stages:
I. Participation, that is, situating the problem in the environment;
2. Recognition and definition of the problem;
3. Understanding;
4. Conception and evaluation of the different solutions;
5. Choice of a solution;
6. Implementation: insertion of the chosen solution into the environ-
ment;
7. Feedback and control.
So.elberg recognises, however, that this table is an unrealistic view:
often, one solution has the preference of the 'decider' from the start,
and he seeks to confirm it by all available means (cf. the processes of
cognitive dissonance studied by Festinger). Frequently also, the choice
is reduced to one alternative by the arbitrary elimination of the other
solutions, and this binary choice is finally settled by emotional motives.
However, a formal expression of the process of decision-making enables
the manager to reduce part of the arbitrary element in his own decisions
and those of his subordinates.
But here we have a fundamental discovery - perception of the en-
vironment is subject to considerable distortion, apart from the loss of
information and the 'noises' already studied by other schools. These
distortions depend, of course, on the state of motivation at the moment
of making the decision, but also on the ' role' and the position that the
'decider' occupies in the structure. Thus, a worker who has become
foreman will perceive the environment with new eyes, without realising it.
The school of social systems has thus shown what was guessed earlier
by Sheldon and Mary Parker Follett: conflicts do not necessarily leave
'bad human relations', frustrations and incompatibility between
individual motives and the objectives of the organisation. The most
dangerous conflicts, and the most difficult to resolve are due to differ-
ences in perception of the environment. This explains how each party
can be within its right and accuse the other of' bad faith', the perceptual
deformations being invisible and difficult to make explicit.
The Schools 69
3.5.3 Assessment of the school of social systems
It is very difficult to make an objective assessment of the school of social
systems in its present state.
First it must be noted that, while conducting a fairly discerning
socio-psychological analysis in the domain of individual relationships,
it has rather neglected the material aspect of the firm, the problems of
procedure, of integration and engineering which constitute an important
part of the domain of organisation.
In addition, on the sociological level itself, it may be regretted that
this school was ignorant of the work on individual psychology and
semantics which, as will be seen later, has considerably modified the
classical conception of communications.
The school of social systems has indeed emphasised the importance of
perceptive differences as a cause of conflicts, but it has attributed them
essentially to differences in hierarchical or social position. It has not
taken sufficient account of other factors such as cultural habits and the
language used. It has been followed in this direction by other movements
which are attached to formal grammars, such as the mathematical
school, or the general systems theory. The authors of the latter move-
ment are beginning to show interest in the typology of professional
languages; they are at present aware of semantic problems (H. Simon).
Harold Koontz, acting as the interpreter of the empiricists and the
classicists, questions whether the work of the school of social systems
belongs to management or to applied sociology. It is incontestable that
a first reading of the works of Simon or Cyert may give the impression
of an intellectual game and one is tempted to wonder whether their
premises are in fact inspired by the concrete reality of business. It is a
criticism which has also been levelled at the mathematical school and it
is probable that it contains an element of truth. But this criticism does
not go to the heart of the matter. In fact, taking a long view, it seems
that, if the classical and neo-classical doctrines are more usable and
above all more used at present, it is because they are more accessible.
In reality the new theories have the future before them and, in the next
ten years, developments from them will doubtless radically modify the
aspect and structure of business firms. Their influence will be felt all
the more because it will be strengthened by the secondary effects of the
spread of computers. These will basically alter the thinking of managers
and will thereby represent a powerful factor for change.
Even now, the models of Simon and Cyert have given considerable
service in trade union relations and the prevention of labour disputes.
Certain directors would have been well advised to make use of them,
in order to avoid excesses in that field.
We would also draw attention to the economic aspect developed by
Simon, Cyert, etc. The theory of the firm of Cyert and March is a theory
of economic decision-making inside the firm. Note that Barnard,
Simon and Cyert are particularly explicit about the hypotheses which
they put forward. They must be appreciated for the efficiency of their
practical applications (pragmatism), for the truth of their hypotheses
and the coherence of their theories (rationalism), and not in relation to
the idea we have of management (Koontz).
In addition, the school of social systems has already put forward the
problem of the harmonisation of the over-formalised zones which are
invading business (automatic processing of information) and the under-
formalised zones represented by the mass of directors and employees
whose demands and susceptibilities increase in proportion to technical
progress.
3.6 THE NEO-CLASSICAL SCHOOL (OR EMPIRICAL

MOVEMENT)
3.6.1 The evolution of the schools

When we consider the succession of different schools (in chronological
order): classical, behaviourist, mathematical and socio-psychological,
we cannot help being struck by the increasing elaboration of the con-
cepts and tools. Formed under Taylor and Fayol from a body of
principles imbued with good sense and accessible to any head of a
firm, the science of organisation has become, with Churchman (mathe-
matical school), Cyert or Simon, a highly formalised discipline, endowed
with a university jargon and practically incomprehensible to the un-
initiated. It would be impossible to claim that this tendency is receding.
Quite on the contrary, the recent schools of management seem to be
still accelerating this apparently irreversible process, which leads to
cliches and quantification.
It is against this divorce between practice and theory, or rather
between the business manager and the organisational specialists, that
the empiricists or 'neo-classicists' have rebelled.
Among them can be counted today a great number of directors of
important firms, and a large proportion of organisational advisers. The
exponents of this school consider their science as a product of experi-
ence, and sometimes set out to generalise from it; but most frequently
the objective of this generalisation is to transfer this experience to the
practicians and students of management. 1 his explains the success they
have met with managers of large firms and professional organisations.
Harold Koontz, who does not claim attachment to any school, as far
as I know, nevertheless adheres to the foundations of the neo-classical
school. He advocates: 15
(a) Establishing a distinction between operational research, soci-
ometry psychology, etc., or tools, and the subject of management;
(b) Clarification of the semantics of management (the author prob-
ably means symbolisation and language). He proposes to adopt the
The Schools 71
' semantics' [sic] of intelligent practicians, unless they are inaccurate
or ambiguous. He recommends that a barrier should not be estab-
lished between the practician and the theorist by using academic
or scientific jargon;
(c) He expresses the desire to analyse and test the invariables (funda-
mental laws of the firm), which involves the formulation of a theory.
However, this theory must:
I. be applicable to a given field;
2. be useful ;
3. not be lost in jargon;
4. be situated in a broader theoretical framework.
Among the most eminent members of the neo-classical school can be
named Alfred P. Sloan Jr (who was chairman of General Motors),
Professors Ernest Dale, Chandler (M.I.T) and, in France, Octave
Gelinier.
Peter Drucker is perhaps the most illustrious representative of this
school. He goes beyond the limits of the movement, however, like
H. Simon in the social systems. In fact, while being the leader of an
essentially pragmatic movement and denouncing the sterility masked by
mathematical elegance, he has felt the inadequacy of an exclusively
empirical approach. He was to welcome Industrial Dynamics with
enthusiasm and take up a position in favour of more advanced methods.
3.6.2 The principles and the basic hypotheses of the neo-c:lassical school
As its name indicates, the neo-classical school sets itself resolutely
in the framework defined by the classicist: on one hand, its approach is
empirical and clearly asserts the autonomy of its doctrine in relation to
the sciences close to organisational theory; on the other hand, it adopts
a tendency towards generalisation and attempts to work out rules of
action which are explicit in Drucker or implicit in the case studies of
Chandler.
Empirical approach. The empiricism of the early classicists was due to

the recent birth of scientific organisation and the insufficient develop-
ment of neighbouring disciplines: mathematics, sociology and psycho-
logy. The reasons which justified neo-classical empiricism are the
contrary.
To fight against the intrusion of outside disciplines which compro-
mised its independence (operational research, group dynamics), the
neo-classical movement has firmly marked the frontiers of ' business
science' and has attempted to reconquer the lost autonomy.
However, the neo-classical schools cannot be considered as a return
to the early stages of management. It is more a question of a further
development from the original point of departure of the classical school,
but with changes caused by revision- often drastic- of the assumptions.
Whatever the pragmatism of the neo-classical school may be, it has

not escaped the influence of the schools of human relations and
social systems, an influence which is reflected in an acute awareness
of the role of man in his environment, and of the importance of
conflicts.
Tendency towards generalisation. The neo-classical school inherited

from the classical movement a taste for concise principles, drawn from
experience. According to Peter Drucker,l 6 to establish a science of
management, it is necessary first, to define one's sphere - here it is the
business firm, excluding university influences [empirical approach];
and second, to establish the following postulates:
I. The business enterprise produces neither things nor ideas but
humanly determined values ....
2. Measurements in the business enterprise are such complex ...
symbols as 'money' - at the same time both highly abstract and
amazingly concrete.
3. Economic activity ... is the commitment of present resources to an
unknowable and uncertain future- a commitment ... to expectations
[forecasts and predictions] rather than to facts. Therefore risk is of
the essence ... of the enterprise .... This risk is something quite
different from risk in the statistician's probability; it is the risk of the
unique event, the irreversible qualitative breaking of the pattern.
4. Inside and outside the business enterprise there is constant irre-
versible change.
The principles of the neo-classical school rest on a few postulates:
(a) the maximisation of profit;
(b) the decentralisation of responsibilities and decisions;
(c) the broadening of the span of control;
(d) management by objectives;
(e) control by exception and the so-called principle of autocontrol
of autonomous units;
(f) motivation by competition.
(a) Maximisation of profit

In neo-classical thought, profit has a markedly different colour from
that prevailing in European countries, particularly in France.
The concept of profit is cleared of any ideological connotation and is
associated with an 'organic' conception of the firm. Profit is above all
a guarantee of survival, and the reserves which it permits to build up,
against the hazards which are more and more numerous in the economic
life of today, ensure for this social organisation the security which is
indispensable for it to envisage the future.
It is only after ensuring this security that profit contributes to the
development of the firm, by autofinancing or the attraction of capital.
The Schools 73
The staff benefit from the resulting expansion through higher salaries
and the chance of promotion.
This is therefore very far from a certain theological image of money.
Profit is not an end in itself, but it is the essential factor for the survival
and development of the firm. The whole organisation should strive
towards its maximisation, which involves:
-The measuring of the efficiency of the structures by batteries of
ratios;
-The detection of elements which favour or discourage productivity;
-The implementation of effective methods of increasing the actual
or potential profits.
These methods are not solely structural, organisational or financial
(Sloan); they must also rely on the workers' incentives (Drucker and
Gelinier).
The principle of maximisation has served as a basis for the concept
of profit centre, developed by Alfred Sloan Jr, starting from the auto-
nomous sections already known in industry. It leads to the creation of
autonomous units, each having its own equipment, its line organisation
chart and its supporting staff, with a view to the maximisation of profit
and the monetary assessment of utility. The decentralised accounting
system itself makes possible the evaluation of the cost centres.
The principle of maximisation is present everywhere and underlies
all the main principles of the neo-classical school.
(b) The principle of decentralisation

We shall quote some of the ten principles of decentralisation enumerated
by Ralph J. Cordiner (President of the General Electric Company,
1956) 17 :
' I. Decentralisation places authority to make decisions at points as
near as possible to where actions take place.
3. Decentralisation will work if real authority is delegated; and not

if details tlien have to be reported, or, worse yet, if they have ta be
' checked first '.
4. Decentralisation requires confidence that associates in decentral-
ised positions will have the capacity to make sound decisions in the
majority of cases; and such confidence starts at the executive level.
Unless the President and all the other Officers have a deep personal
conviction and an active desire to decentralise full decision-making
responsibility and authority, actual decentralisation will never take
place ....
6. Decentralisation requires realisation that the natural aggregate of

many individually sound decisions will be better for the business and
for the public than centrally planned and controlled decisions.
7. Decentralisation rests on the need to have general business objec-

tives, organised structure, relationships, policies and measurements
known, understood and followed; but realising that definition of
policies does not necessarily mean uniformity of methods of exe-
cuting such policies in decentralised operations.
8. Decentralisation can be achieved only when higher executives
realise that authority genuinely delegated to lower echelons cannot,
in fact, also be retained by them. We have, today, officers and man-
agers who still believe in decentralisation down to themselves and
no further. Such officers keep their organisation in confusion and
prevent the growth of self-reliant men.
10. Decentralisation requires personnel policies based on measured

performance, enforced standards, rewards for good performance,
and removal for incapacity or poor performance.'
The postulate of maximisation of profit involves the decentralisation
of responsibilities towards the lower grades and departmentalisation
according to products (Drucker). This principle can be stated as follows:
Decisions should be taken at the lowest level compatible with the
collection of all the necessary and usable information.
Nevertheless, it is obvious that 'all the necessary information' for
a decision can never be collected exhaustively. So the gaps 18 are gener-
ally filled by a risk element, suitably reduced by the knowledge acquired
in the course of apprenticeship.
Resolutely opting for the lowering of the 'centre of gravity' of the
firm by the adoption of a flat structure and centres of decision close to
the base, the neo-classical school advocates training at the basic level.
People must be prepared for risk, research and handling of useful
information. Such measures can only have a favourable effect on
creativity and promotion of staff.
Andre-Brunet has upheld the creation of decentralised centres of cost,
in which he sees both an effective procedure for increasing productivity
and the means of giving back the meaning and the measure of the final
aims of his work to the modern worker (whom he describes as a' piece-
worker'). 19
(c) Span of Control

This concept, which already caused a great deal of ink to flow in the
time of Graicunas, is one of the pivots of the neo-classical doctrine.
As soon as the major part of information related to decision-making
no longer has to travel up the organisation structure, a considerable
easing of communications can be achieved. The following consequences
stem from this:
I. Relieved of all detailed technical supervision. the chief can cover
heterogeneous activities at a glance;
The Schools 75
2. The span is enlarged and the structure can be spread out, which
corresponds to the decentralisation advocated by the doctrine;
3. The hierarchical chief can then devote himself to his real job,
which is to formulate objectives and foresee risks.
(d) Management by objectives

The firm being divided into autonomous management centres, it is
appropriate to ensure this autonomy and to make it real by giving
freedom to those responsible for all the decisions which come under
their jurisdiction. This freedom necessitates, of course, an increased
sense of responsibility among the staff, and also a considerable rein-
forcement of the bonds of integration, without which the organisational
structure would dissolve into anarchy.
The needs of integration lead to a distinction between principal and
secondary objectives. The secondary objectives concern the autonomous
centres exclusively. The principal objectives govern the different base
units and their common charter. To integrate is therefore to obtain
recognition of the principal objectives dictated by the general good, and
to ensure the acceptance of the permanent arbitration of the higher
hierarchical grades, who alone command enough of a comprehensive
view to formulate the principal objectives.
In an organisation chart which resembles a complex interlocking of
responsibilities rather than a two-dimensional tree around which
authority flows, a capacity for creating unity is more appreciated than
a gift for leadership. The directors, and, little by little, the employees
too, are asked to make a considerable effort towards clarity and the
definition of the vocabulary in use. The combination of the principle of
decentralisation, and the hierarchical formulation of clearly defined
objectives, creates an original 'style of command·. The form of manage-
ment which results from it is generally called management by objectives.
A variation of it has been suggested by 0. Gelinier under the name of
participatory management by objectives (1968).
(e) Control, autocontrol and the exception principle

The decentralisation of responsibilities can lead to disorder, in the
absence of adequate control.
The ideas of autonomy and control may seem contradictory at first.
However, it is possible to imagine a mode of control compatible with
the independence of the decentralised units. If we consider that control
is the natural complement to decision, it is sufficient to set up a system
of control parallel to that of responsibility.
This means that the decentralised units, in agreement with the higher
grades, must themselves assume control of the achievement of standards
derived from the predetermined objectives. So long as the latter are
effectively achieved, the superior authorities must avoid interfering in
the' internal affairs' of the autonomous unit. It is only in the case of an

exception, that is, in rare and well-defined circumstances (abnormal
results, temporary incapacity of the chief of the autonomous unit to
achieve the fixed objectives or exercise his control normally) that
intervention will be made from above.
This condemnation of · remote control ' is characteristic enough of
the doctrine for it to be called sometimes: management by autocontrol,
or management by exception. Unfortunately the two terms lead to
confusion, the first referring to the control of an agent by himself (zero-
defect method), the second calling to mind the classical principle of
exception which is quite different.
In fact, we recall that, in the classical schools, the routine tasks are
entrusted to the subordinates while the chief takes charge of the excep-
tional decisions, that is, those that are out of the ordinary or are of
particular importance. In the neo-classical doctrine, on the contrary,
the allocation of decisions is made by degree of scope in space and time,
the superior grades taking charge of decisions relating to broader
sections of the firm and more distant future events, the higher they are
in the hierarchical pyramid, and intervention in the tasks of a lower
grade being exceptional.
(f) Competition and motivation

We recall that the classicists earned severe criticism by limiting men's
motives to a very restricted range: fear of sanctions, the lure of gain, the
satisfaction of accomplishing duties in a well-defined setting, security
of employment. The exponents of the human relations movement have
added the need for integration in the group and for social co-operation.
It is rather remarkable that the needs taken into consideration in these
diverse doctrines belong to the category which Herzberg calls dissatis-
fiers or maintenance needs. These needs engender conflicts if they are
not satisfied and, if they are satisfied, they do not give rise to any further
motivation. One of the merits of the great neo-classical authors (notably
Peter Drucker and Gelinier) has been to insist, above all, on positive
needs, those which prompt the individual and the group to excel them-
selves.
Drucker shows that once the maintenance needs are satisfied, the
principal motives that can lead a man to improve his work are: on the
one hand, the interest he has in it and, on the other hand, his desire to
extend the field of his responsibilities incessantly. The creation of these
motivations necessitates:
I. The participation of the worker in the definition of the tasks which
are allocated to him;
2. A clearly-defined objective and interesting work;
3. An objective measure of the results which permits the assessment
of individual efforts and the arousal of a spirit of competitiveness;
The Schools 77
4. The establishment of means capable of developing successful

initiatives;
5. Promotion proportional to the successes obtained, without a
decreasing scale destined to limit rewards;
6. Sanctions for failure, with a certain tolerance however (allowance
for mistakes).
The two great positive motivations 20 are therefore:
(a) The personal interest given to work for which one is responsible;
(b) Ambition and the need for achievement;
The negative motivations are:
(a) Fear of failure;
(b) Strain caused by competition.
Management by objectives, which is built on these motivants, puts
the firm 'under tension'. This does not necessarily result in conflict,
but it is undeniable that the spirit of personal struggle threatens to
dominate the group spirit. The maintenance of good social relationships
in fact prevents the self-destruction of the group under the impact of
personal ambition. From the external point of view, the firm gains a
certain' aggression', and a very characteristic keenness and dynamism
from this style of direction.
3.6.3 Assessment of the neo-classical school

The empirical school is deeply imbued with a typically American moral
idea and social concept, which exalt the qualities of individual ambition,
of group spirit and of advancement exclusively based on results. Without
any doubt, these qualities favour the adaptation of the firm to a changing
and strongly competitive environment. This explains the success which
the works of Drucker or Sloan have had with business managers.
This school has contributed to the dissemination of original ideas:
management by objectives and motivation by work and ambition. It
has taken up others which are less original but which have appeared in
a new light when presented with conviction: decentralisation, manage-
ment by results, flat structure, product management.
No other school has obtained the results of the neo-classical school
in the field of individual efficiency. However, it seems that a significant
contribution cannot be expected from it for some years.
When a firm is not yet organised according to the style of management
advocated by the neo-classicists, it can doubtless do without the refine-
ments of operational research or systems theory. But the conflict moves
to a different field when the marginal advantage to be expected from
increased decentralisation becomes negligible. The competitiveness of
the great companies, which have reached an advanced stage of develop-
ment, is beyond the concepts of the neo-classical theories.
Drucker felt this when he insisted on the 'serious element' to be
introduced into the disciplines of organisation and on the need to
synthesise the latter. That is the aim of the latest to date of the great
schools of organisation: that of systems.
Not all the authors of the neo-classical movement have been so
perspicacious. A considerable proportion of them, adopting the opposite
course to the movements which have an academic nature, devote
themselves mainly to the study of failures and successes experienced in
real life. This tendency refuses to accept the possibility of drawing
general principles from a domain in which everything is changing and
where special cases abound. It does not miss the chance to deride those
who claim to do this. It has believed it possible to transmit a minimum
of experience to business managers through the case-study method
considered as a 'flight simulator'.
There is no longer a place for criticisms of this part of the neo-classical
movement, since Koontz, Forrester and many others have reduced its
postulates to their rightful value.
In fact, says Koontz (1961), if management is not governed by any
law other than chance, it is difficult to see what profit can be drawn from
a past experience which will not occur again. And if there are conclu-
sions to be drawn from these experiences, whether these conclusions are
rediscovered by students or suggested by professors, it results as before
in the elucidation of constant principles. Moreover, a writer like Chand-
ler does not refrain from advocating solutions and drawing up lessons
which have no less tendency towards standardisation than the principles
of Fayol.
Forrester shows that a 'flight simulator' is appropriate for learning
to control a device of which the operational sequences are stabilised,
but could not lead to the least progress in the improvement of a proto-
type.
Finally, I shall restrict myself to pointing out that theory is not
necessarily synonymous with unreal opinions or formalist obsession.
There are hazy theories just as there are theories which are firmly
anchored in reality. Practitioners cannot be too strongly warned against
this idealisation of theory, which makes it a magic object to be fought
or to be captured.
Formalised language says no more or less than everyday language;
it says it differently. What the symbolic form loses in accessibility is
largely compensated by the speed and flexibility of movement. The
translation of certain theoretical concepts into everyday language would
be too heavy to offer any utility.
The case-study method is an excellent complement to teaching,
provided that all the necessary time is available; it stimulates the stu-
dents, out risks giving an illusory impression of. contact with reality'.
There is more difference between a good case-study and real experience,
than between the summary of a play by Racine and the play itself- and
who would think of judging the author solely on the plot?
The Schools 79
Finally- and this applies to the whole neo-classical movement- al-
though appreciable progress can be expected from empirical research,
a state of knowledge can already be foreseen in which everyday language
and good sense will not be sufficient in order to advance. This does not
mean that one should take refuge in esoterism; but rather than main
taining the science of organisation at the present inadequate level of the
business manager, it is time to educate the latter so that he can learn
to manipulate a more powerful language with ease. That is one of the
aims put forward by the systems theory.
This assessment of the neo-classical school cannot be concluded
without mentioning the excesses following upon the rigorous and
exclusive application of the principle of maximisation of profit. Certain
practitioners of this school would be well-advised to grant more im-
portance to psychological factors, to the 'disinterested· motives of
people- and of firms (extrinsic domain), to raising the cultural and
moral level of the staff and to increasing their knowledge of the environ-
ment, all of which are frequently overlooked in favour of strictly utili-
tarian training. Finally, it has been observed that the regime of constant
tension, and the impression of being constantly judged, lead fairly
rapidly to the attrition of the creative faculties, and the physical and
moral strength of businessmen. The example of certain American
companies is significant in this respect. The expectation of life of the
higher grades is often below average and it is commonly thought that
individual potential declines after the age of thirty-five.
Nevertheless, it is wrong to generalise as is done too often. There are
some managers who know how to apply the principle of maximisation
of results with flexibility and to introduce the necessary tolerance into
personal relationships.
3.7 GENERAL SYSTEMS THEORY AND ITS DEVELOP-

MENTS
3.7.1 Birth of the idea of system

The impact of cybernetics on human sciences, and the universal appli-
cations for which its founder has shaped it, are too well known to need
recapitulation here. However, it is useful to clarify the differences
between cybernetics and general systems theory.
The greatest confusion reigns in the nomenclature of systems theory.
J. Klir and M. Valach (lliffe, 1965) quote no less than seventeen defi-
nitions of cybernetics, grouped in five classes. I quote the. definition they
suggest themselves, which attempts an approximate synthesis:' Cyber-
netics is a science which deals, on one hand, with the study of relatively
closed systems, from the point of view of their exchanges of information
with the environment, and on the other hand, with the study of the
structures of these systems from the point of view of'the exchange of
information between the elements. According to these authors, cyber-

netics includes the theory of systems giving out information, the theory
of information processing systems and finally the theory of control.
These distinctions have no interest at all in the organisation of busi-
ness firms, where all these elements are inextricably intermingled.
Moreover, it is remarkable that in the long list of the applications of
cybernetics, each endowed with an appropriate name, from neuro-
cybernetics to psychocybernetics, 'business cybernetics' have been
omitted.
The principal aim of cybernetics is the study of the interaction between
governing systems (or systems of control) and governed systems (or
operational systems), in settings regulated by retroactive processes (or
negative feedback). The characteristics associated with such so-called
auto-regulated complexes - scanning, Larsen effect, etc. - form the
subject of important chapters on.this branch.
Scanning is a process of communication of images, which consists of
transmitting every point of the image. The latter is therefore scanned
by a beam like television cameras.
The Larsen effect is easily understood by referring to acoustical
notions: Let us imagine the microphone of a tape-recorder placed near
a loud-speaker connected to the same tape-recorder. The slightest noise
emitted by the loud-speaker will be picked up by the microphone,
amplified by the amplifier of the tape-recorder and then transmitted
by the loud-speaker. The microphone then picks up a considerably
louder signal than the first, and a positive feedback -.oircle is produced
(see 3.7.5) which rapidly ends in saturation of the system. In the same
way, we speak of a Larsen effect when a noise or an error is fed by its
own cause, leading to a stoppage in the system (physical or sociological
reactions which have an explosive growth).
In other terms, cybernetics can be defined as the science of self-
regulated mechanisms. It is therefore applicable to the homeostatic
processes of the biological world just as much as to the automated
processes of the auto-control of computers.
Homeostatic processes have an opposite character to the Larsen
effect and tend to minimise divergences from the mean automatically.
This is the case particularly in biological regulating processes which
maintain the great constants such as the level of salt in the blood or the
internal temperature.
A remarkable property of the cybernetic approach- a property which
Ross Ashby has greatly emphasised - is its indifference with respect to
the nature of the elements observed. It is not concerned with the parts,
but with their interaction. In the same way, the components of systems
do not matter very much, only their global behaviour being taken into
consideration.
Although this approach, involving the so-called 'black box', existed
The Schools 81
long before a writer like Wiener gave it formal expression (behaviourism

made it its fundamental methodological principle), it is nevertheless
characteristic of the cybernetic method which took it to its ultimate
consequences.
The general systems theory makes great use of it. In fact, this theory
can be considered as a typology of systems in which are included, among
others, the self-regulated mechanisms of cybernetics. Entitled the
systematic movement by O'Shaughnessy, this theory is still not well
known in France.
Although its true inventor was Ludwig von Bertalanffy (1951 ), it was
revealed to economists and organisational specialists by an article by
K. Boulding (General Systems Theory, 1959), which later inspired the
work of the Seattle school (R. Johnson and others).
The investigators of systems theory (ST) attempt not only to fill the
gaps which widen incessantly between the various movements- quali-
tative (socio-psychological), quantitative and empirical (neo-classical)-
but also to break down the barriers which separate them from the other
sciences of human activity- business economy, information science,
operational research, macroeconomics, ergonomics, industrial engin-
eering, industrial psychology, etc.
Kenneth Boulding (1956) had already decried these barriers among
economists, when writing in The Image: 'The economists have mis-
takenly overlooked the repercussions which structures of information
and knowledge are causing in economic processes and behaviour.'
Johnson, Kast and Rosenzweig, all three of the University of Wash-
ington (School of Seattle), in a work of which the interest appeared at
first to be mainly didactic but whose historic importance is becoming in-
creasingly accepted, aimed to combine- in a first attempt at synthesis-
the classical and socio-psychological principles on one hand, and on
the other hand, the technical principles of industrial engineering,
stripped of all mathematical paraphernalia and reduced to a conceptual
skeleton. Their resolutely cybernetic approach remains close enough
to everyday business practice to satisfy the demands of the empiricists.
Their work was to throw light on some very important ideas. Let us
mention in particular the importance given to positive feedback (see
3.7.3) and the 'pump' effect, which are at the centre of Forrester's
preoccupations, as is the integration of financial, physical and transport
flow, from the creation of the product to its discharge on to the market.
This latter concept gave rise to a neologism: rochrematics, or science
of flow, which had little success but which gives a good idea of the work
of Forrester.
The important works of Stafford Beer on cybernetic control and the
numerous works which appeared in the period 1950-8 are situated in the
same perspective.
The principal merit of the systems theory was- to quote Forrester's
terms ( 1965) - to encourage 'formal recognition of the interaction

between the parts of a system. Systems engineering aims to study
interconnection, compatibility, the effect of one part on another and
the objectives of the whole group of relationships between systems and
users. It also sets out to study interconnections between accountancy,
production, marketing, finance, human relations and business economy,
which are no longer envisaged as separate doctrines, but are integrated
in a single system.'
Such a programme diverges as much from the conception of the
school of social systems, which is less formalised and does not take
account of industrial engineering, as it does from the abstraction of
management science, in its early meaning of operational research.
As Forrester declared at a conference of the M.l.T. (Massachusetts
Institute of Technology) (1966): 'It is more fruitful to concentrate on
the fundamental structure of systems than on the mathematical methods
of operational research.'
Drucker (I 959) expressed the same opinion in his criticism of the
gadgets of operational research and' cookery recipes' for organisationa-
lists. Without integration, the interdisciplinary approach runs the risk
of being an undisciplined approach. Drucker wrote: 21
' ... as with medicine, management and managers- especially the most
highly endowed and most highly accomplished managers - will
become the more effective as their foundation of organised systematic
knowledge and organised systematic search grows stronger, and as
their roots in a real discipline of management and entrepreneurship
grow deeper. That such a discipline in possible, the work already done
in management science proves ....
The potential is there but is in danger of being frittered away.
Instead of a management science which supplies knowledge, concepts
and discipline to manager and entrepreneur, we may be developing
a 'management gadget-bag' of techniques for the efficiency expert.'
Drucker continues
'The main bulk of the work today concerns itself with the sharpening
of already existing tools for speGific technical functions ... But there
is almost no work ... on managing an enterprise- on the risk-making,
risk-taking, decision-making job. In fact, I could find only two exam-
ples of such work: the industrial dynamics programme at M .I.T. and
the operations research and synthesis work done in some parts of the
General Electric Company. Throughout management science- in
the literature as well as in the work in progress -the emphasis is on
techniques rather than on principles, on mechanics rather than on
decisions, on tools rather than on results, and, above all, on efficiency
of the part rather than on performance of the whole.
However, if there is one fundamental insight underlying all man-
agement science, it is that the business enterprise is a system [under-
The Schools 83
lined in the text] of the highest order: a system, 'parts' of which are
human beings contributing voluntarily of their knowledge, skill and
dedication to a joint venture.'
Like Drucker, Simon 22 considers that there is an urgent need to
formulate and teach a science of systems:
'I suppose that, as automation progresses, heads of firms will increas-
ingly be expected to think in terms of systems (systems thinking).
To work efficiently, they will need to envisage their firms as large
dynamic systems, encompassing several types of interaction of man/
machine and machine/man.
For this reason, people familiar with domains such as servo-
mechanisms, or mathematical economics, accustomed to handling
dynamic systems and possessing the conceptual tools to understand
them, will have an advantage in the new world, at least initiaily.
As no science of complex systems exists at the present time, the
universities and engineering schools are legitimately perplexed as to
the type of training which will prepare students for this new world.'
The systems theory therefore seems to make good the delay described
in such a pessimistic way by H. Simon. It is now time to demarcate its
limits and to analyse the assumptions.
The expression 'systems theory' does not describe a homogeneous
reality, any more than the name of the other movements. It results more
from a compromise than from a consensus.
Numerous authors, who do not always cite it, have made a notable
contribution to it. That is the case of Stafford Beer who is placed at the
extreme spearhead of systems theory by the ecological systems described
in Decision and Control, far from the algorithms of operational research
with which he claims adhesion. The same applies with W. Churchman
and A. Rapoport.
Systems theory is certainly best differentiated from operational
research, whose mathematical style it occasionally adopts, by its field
of action. As Drucker has clearly shown, operational research belongs
to the technique-language, while systems theory is part of business
theory. Operational research produces algorithms, such as programmed
information, in order to resolve this or that problem in the optimal
manner; systems theory however, while proposing a formulation of the
problems, deals above all with the structures and general policies of the
firm considered as an indissoluble whole. It uses mathematical language
less as a tool for calculation and more as an efficient and convenient
means of expression.
Systems theory appears to achieve a synthesis of the movements which
have preceded it, particularly the three most recent: the socio-psycho-
logical movement, the mathematical movement and the empirical move-
ment. Like the socio-psychological movement, it gives pre-eminent
importance to decision-making. Like the empirical movement, it
comprehends the business firm in its entirety. Finally, it borrows lan-
guage and precision from the mathematical movement and above all
from information science.
The approach of systems theory is descriptive rather than generalised,
(though some, including Meh'!ze, consider it a praxiology); it is learned
and deductive rather than empirical. In fact, it is concerned with de-
scribing reality through models which are as faithful as possible, more
than with stating principles whose arbitrary nature arouses suspicion.
Of course, this does not prevent it from drawing conclusions, but its
effort is directed towards perfecting methods of analysis and learning,
rather than towards the formulation of more or less arbitrary principles.
The field of action of systems theory goes far beyond the business
firm. Attempting to deal with every organised entity, it applies to the
firm- which is only a special case- laws drawn from domains which
are completely foreign to it. This is why Forrester makes a great deal
of use of the principles of hydraulics or electro-acoustics, and Stafford
Beer refers to biology. This orientation makes systems theory an open
theory, unlike the classical and neo-classical theories, which limit their
domain to the business firm.
3.7.2 The postulates

Like the preceding movements, systems theory rests on a certain number
of postulates. Some are common to all tendencies in the movement,
while others are particular to certain authors, doctrines and models.
(a) First postulate: Existence of a logic of systems and existence of

homomorphic systems.
It should be noted that the notion of homomorphism envisaged here
and to be discussed later, is not that of the mathematicians. It is inspired
by the idea proposed by Stafford Beer in Decision and Control. What is
more, the definitions given here are provisional and err through excess
of simplification. It is not intended to explain the theory of models here,
but to allow an intuitive understanding of it.
Systems theory is founded, in a more or less explicit way, on the idea
of a logic of systems applicable to any organised combination, whatever
it may be. Although this logic still has a relatively improvised character,
an attempt can nevertheless be made to give an account of it in a more
or less deductive manner, in the form of a coherent collection of defi-
nitions and propositions.
DEFINITION I : A system is a combination of interdependent parts, set up
in relation to an aim.
DEFINITION 2: The combination of purposeful relationships linking the
parts with each other, and with the whole, is called structure.
PROPOSITION I: Each part of a system possesses properties of which
certain, called internal, result from the nature of that part, that is to say,
The Schools 85
from its internal configuration, and others, called external, are a function
of the place which the part occupies in the system. For example, the
experiments of Leavitt and Bavelas have shown that the behaviour of
a man in an organisation depends largely on the structure of the organi-
sation, a hypercentralised organisation chart prompting submissive
and dictatorial attitudes or revolt; a collegiate organisation, on the
contrary, favours fellowship, creativity and general satisfaction.
PROPOSITION II: If the internal structure of the parts is more complex
than the external structure (structure of the system), the properties of
the parts are conditioned more by their 'nature' than by the configur-
ation of the system; the inverse is also true. 23
In this way, the behaviour of a man depends mainly on his past and
his individual characteristics, when the social group to which he belongs
is tolerant and loosely organised and when this man is endowed with
profound culture or a high level of creativity (simple social structure,
complex individual structure). At the other extreme, when a less well-
developed personality is thrust into a strongly hierarchical society,
whose relationships are complex (tradition, level of culture- that is,
knowledge acquired informally and often unconsciously, conformity,
community of interests) and in which the ideological religious or cultural
pressure is homogeneous and effective, then his behaviour will depend
more on his role and social status than on his personal tastes and
characteristics.
American life offers striking and well-known illustrations of the
second proposition. We know how much social status influences the
home, the social and political attitudes, the religion, the type of car,
the make of cigarettes, even the eating habits (cf. Lewin) and style of
dress of the average American. This effect is fairly widely attenuated
among intellectuals and certain directors, whose level of culture or
creativity endows them with enough mental complexity to fight against
the weight of organisational restrictions (cf. Whyte, 'The Organisation
Man'). There is no need to emphasise that these phenomena are not
only found in the United States.
PROPOSITION III: When the complexity of a system increases, the proper-
ties which characterise it depend more and more on its structure
and less and less on the nature of its parts (corollary of Proposition II).
This explains how strictly organised complex systems lend themselves
well to simulations. Here it is necessary to avoid confusing complexity
(number and diversity of internal relationships) with complication
(redundance of the structure).
(b) Second postulate: Homomorphism of systems

After stating, in a more or less explicit way, the logic of systems whose
fundamental propositions have just been briefly deduced, systems
theory concentrated on comparing systems belonging to different
domains of reality. For this, it has tried to take advantage, on the
practical level, of the notion of homomorphism originating in mathe-
matics.
For the sake of convenience, the next passage will follow the same
stages as the preceding subsection.
DEFINITION I: Two systems with one identical part in their structure are
homomorphic.
The idea of homomorphism, which is provisionally introduced here
and will be discussed in more detail later, is drawn from that defined
by Stafford Beer in Decision and Control. It does not have the precision
of the concept of homomorphism used in mathematics. In this connec-
tion it is appropriate to emphasise that algebraic structures manipulated
by mathematicians (groups, bodies, vectorial spaces, etc.) are very
much more simple than certain structures encountered in reality. In
dealing with real structures, one cannot therefore expect definitions as
clear-cut as mathematical definitions.
DEFINITION 2: Two systems with the same structure are isomorphic.
For example, a hierarchical organisation chart and its Boolean matrix
are isomorphic. On the other hand, a boat and a model of it are homo-
morphic, because the model only has dimensional proportions and
suggested relationships in common with the boat. The internal fittings,
the hydraulic and electrical machinery are not represented in the model.
A B C 0 E
e-• A A 0 1 0 0 1 0
l c
B
0
0
0
0
0
1
0
1
0
0
0
0
ea 0
c•/ "-•o
E 0 0 0 0 0 0
F 0 0 0 0 0 0
'
Boolean matrix
Hierarchical
organiutioo.l chart
DEFINITION 3: When a system is the homomorph of a more complex

system, it constitutes a model of the latter.
On the basis of the comparison of two or more systems which justify
the concepts of homomorphism, isomorphism and model, systems
theory has implicitly founded two propositions whose significance is
considerable from the methodological point of view.
PROPOSITION I: If two structures have similar structures (isomorphism),
the external properties of the respective elements (parts) will be com-
parable.
These elements can be elementary behaviour, given that the abstract
The Schools 87
model represents the real system from a particular point of view deter-
mined by the aim of the model-builder. For the same elementary
behaviour, there is the same structure.
PROPOSITION II: These properties will be all the more comparable, as the
internal structure of the parts is weaker.
This second proposition springs directly from proposition II in the
logic of systems which was outlined above and constitutes the funda-
mental axiom of simulation.
Let us suppose that two systems present the same configuration; one
is physical (a line of goods waiting on a delivery platform, for example),
the other electronic. It is possible to deduce the behaviour of the waiting
packing-cases from the observation of the electronic model. The latter
being easier to manipulate than the ' real' system, it will be possible to
vary the number and the length of the platforms, their arrangement,
etc. on the model, and to apply the results observed to the real system.
That is the principle of analogue computers.
The operation will however be much more subject to chance if the
internal structure of the elements of the real system plays an important
and unknown role. For example, it is much more difficult to simulate a
queue of clients outside a cashier's office (unpredictable impatient
reactions) or at the entrance to a cinema (strictly individual balance
between the desire to see one film or another and the waiting time for each).
PROPOSITION III: The observations carried out on a complex system,
belonging to a certain domain, allow the behaviour of an isomorphic
system, belonging to a totally different domain, to be forecast as long
as the internal structure of the component elements does not play too
great a role. The question therefore arises of finding out at what level
of aggregation the behaviour is to be forecast, and at what level of
complexity the isomorphism is established. It may then be necessary
to dismantle the original model.
This proposition is the corollary of proposition II, and its significance
is considerable. Proposition II showed that it is possible to construct
artificial systems or models which are convenient to handle, for the
-purpose of studying real systems. Proposition III permits us to think
that there is an advantage in looking for natural systems with great
complexity which are isomorphic to the real system to be studied, rather
than manufacturing cumbersome models. In this connection Marcel
Bourgeois points to the specific character of natural systems. He recog-
nises, however, that even slight homomorphism justifies an interdisci-
plinary approach. Even partial analogies are fruitful.
This last proposition is at the origin ·of the formation of closer
interdisciplinary links of a particular type. Multidisciplinary teams have
been set up in the technical domain for many years. But the principle
behind them was to bring together various skills to achieve a particular
objective (organisation of an aerial defence system, creation of a
network of public transport, etc.). Research into systems has made the
interdisciplinary team into a means of fundamental research, and no
longer a means of technical studies only. In the United States it is
common to see biologists and psychologists on courses in computer
companies while computer experts or organisation specialists acquaint
themselves with neurophysiology in hospitals or research laboratories.
In short, the second assumption is completely contained in the
aphorism: Comparison is reason. The whole of this theory is, in fact,
founded on the study of analogies. Of course, this does not refer to
those spectacular resemblances which so often disappoint hasty
observers, but to hidden structural identity, the invisible but stable and
omnipresent bone structure of fluid and many-sided reality. An attempt
is being made to develop an analysis of systems in general and to draw
from it a typology which can be Ysed by the whole group of disciplines
which work on complex structures. We should also note that operational
research sets out to isolate real algorithms in order to make them into
universal tools.
(c) Third postulate: If systems belonging to several domains of know-

ledge have the same structure, it should be possible to express this
structure in a common universal language, which is capable of being
translated into a particular technology.
General systems theory aims especially to formulate such a lan-
guage. 24 This language would not be able to deal with elementary systems
or phenomena. It has been shown above that every simple system gives
predominance to the parts over the whole. At the level of the parts,
physical determinism takes the lead and the language of the physical
sciences is adapted to describing them. But at a higher level of organi-
sation, the concepts of physics prove inadequate. In particular, they
do not express complex phenomena of interaction and retroaction which
are encountered at these levels. Vogel's theory of evolutive systems, 25
for example, which deals with the evolution of physical phenomena
with all the precision of the exact sciences, is totally inapplicable to
biological or social organisms.
On the other hand, the language of systems theory is particularly
suited to collective or individual psychology; to sociology and to
neurophysiology; it is quite naturally suitable for the study and scienti-
fic organisation of business firms.
This language which is at present in full evolution, was not formulated
at one time. It was anticipated by the topological studies of Lewin
(cf. regression, retrogression), 26 and it has absorbed successively
concepts drawn from the scientific organisation of work, from oper-
ational research and cybernetics. Certain Lewinian constructs (or
concepts artificially constructed for the needs of the theory) have been
incorporated in numerous simulation languages, such as DYNAMO
The Schools 89
(Forrester) or General Purpose Systems Simulator GPSS III of IBM
(see 3. 7.3, 3. 7.5). It is interesting to note that the first works of K. Lewin
themselves sprang from Gestalt theory which, as we know, studies the
reciprocal relationships between the parts and the whole. Nevertheless,
Gestalt theory is a static theory of structure and it is Lewin who, by
placing it in a dynamic context, opened the way to systems theory.
In the limits of this historical note, it is not possible to give an account
of the tools perfected in the framework of systems theory. I shall
restrict myself to mentioning two business models which, though
opposite in certain aspects, nevertheless adhere to its fundamental
postulates. These are Forrester's Industrial Dynamics and the GPSS III
of IBM. Although they are put together here, the two models are not
entirely comparable: Industrial Dynamics puts forward an original view
of the firm; it is a doctrine; GPSS is a simulation language and can
only be used for the simulation of any organised system. Industrial
Dynamics describes the formulation of policies and strategies; GPSS Ill
.is limited to operations which can be automated (on the same lines as
other tools of operational research, for example, the PERT system).
Industrial Dynamics simulates supposed continuous flows; GPSS III
follows discontinuous operations step by step. To sum up, Industrial
Dynamics is a business theory; GPSS is an information tool.
These differences, which are well known to the specialists, become
blurred in the far-reaching perspective of methodology. Operational
research, cybernetics, systems theory, control theory, value theory, etc.
are simply neighbouring and often identical approaches of the same
methodology of action taken in different aspects. They share the same
concepts of reality and the same original postulate (which are in fact
more fundamental than those set out here).
Industrial Dynamics is a doctrine but it has nevertheless led to the
DYNAMO compiler, which is running and functioning in domains as
varied as GPSS III. On the other hand, though GPSS is an operational
research worker's tool, it reflects a fairly elaborate concept of the
business firm, which is as stimulating in many ways as Forrester's
concept.
3.7.3 J. Forrester's contribution and the foundations of Industrial

Dynamics
The work Industrial Dynamics, preceded by an article in the Harvard
Review, holds a central place in the evolution described by Forrester
and in systems engineering- to use the expression of this author (in this
connection, see Drucker's appraisal 3.7.1 ). Its success stems, in my
opinion, from its numerous qualities and its balance.
Forrester's doctrine is, in fact:
(a) More compact and more coherent than the work of Johnson,
Kast and Rosenzweig, although it is more limited concerning organi-

sational methods;
(b) More imaginative, stimulating and accessible than most works on
operational research;
(c) More precise than the models of Stafford Beer;
(d) Better known and more widely disseminated than the business
simulators with which it has affinity.
Industrial Dynamics is based on the two fundamental postulates of
systems theory, on to which is grafted a more or less explicit collection
of specific postulates.
I. The fundamental postulates of Systems Theory adopted by Forrester

First and second postulates (systems logic and homomorphism). Forrester
made interdependence the central idea of his theory and maintained
that every type of flow (of money, of staff, of goods, etc.) is only signifi-
cant in relation to all the others (Proposition 1).
He applied to the business firm the observations and knowledge
largely accumulated in the course of his experience as an electronic
engineer. In his programme for the Sloan Business School at M.I.T.,
electronics, dynamism of fluids and servomechanisms play an essential
part (Proposition II).
On the other hand, in Industrial Dynamics, we note the difference
between physical systems comprising few variables and complex econo-
mic systems whose models must carry up to 3000 variables. Finally,
the author has never made a secret of the interdisciplinary purpose of
the doctrine (Proposition V; see Forrester, 1966, p. Ill).
Third postulate (common language). It is enough to glance at the flow

diagrams of DYNAMO, to be struck by the intensive use of analogies
with hydraulics. It deals with flow, output, levels and reservoirs, valves,
etc. This code seems just as well adapted to the expression of decision
functions as to biological or psychological mechanisms, and the expo-
nents of the doctrine are attempting to develop its universality (note also
the numerous references to psychology, and the necessity for a common
systems language).
2. The postulates, axioms and hypotheses peculiar to Industrial Dynamics

While none of these very numerous postulates is original, their associ-
ation is characteristic of the orientation of Industrial Dynamics. Some
of them are clearly explained and sometimes their source is quoted
(that is the case with the postulate of immediate action, attributed
to Lewin) while others form the basis of an implicit agreement with the
reader.
The Schools 91
(a) Postulate of states-movements duality (static/dynamic dichotomy of

the phenomena studied)
The states-movements duality is familiar to all organisation specialists
who find the reflection of it in their most everyday tools: flow diagrams
or critical path analyses.
For a long time, classical organisational methods have made a
distinction between position documents and liaison documents. Position
documents, attached to fixed working areas, record the state of certain
of their characteristics, a state which is modified by the orders or
operations represented in their turn by the liaison documents.
More generally, every organisation chart or flow diagram includes
static entities - boxes or blocks- and dynamic oriented entities, which
link the blocks together and are represented by arrows or direction
lines.
Finally, in the flow diagrams belonging to the PERT, CPM or Poten-
tials methods, the blocks represent events (states) and the arrows repre-
sent activities (movements) or reciprocally according to the system
(activity on node, or activity on arrow).
The dynamic aspect of management, which occupies a large place in
the works of Andre-Brunet, prompted him to conceive 'dynamic' or
·kinetic' balance-sheets, and to imagine a 'temporal' measurement of
economic and financial phenomena. As early as 1951, 27 he thought
of new models of financial documents to which he gave the suggestive
names of 'dynamic balance-sheet' or ' kinetic' balance-sheet, for
example, to express their original features. More recently he has im-
agined a 'temporalisation' of physical or monetary flow, suggesting the
use of complex units (Franc/day, specific unit/day .... ) to measure them,
similar to the units used in scientific or technical work. In the same way
as calculations are made in the domain of electrical energy in kilowatt-
hours, so, according to this conception, counting in B.R.U. would
make it possible to measure very different phenomena in 'business
economy' or in the· whole of economics, and also to take away the
traditional static presentation of statistical and accounting data and
restore to them their true' dynamic' or' kinetic' aspect. The DYNAMO
simulation language, derived from Industrial Dynamics, is unlike flow
diagrams in that it makes it possible to simulate cyclical phenomena.
The loops and circuits which represent them are at the heart of the
symbolisation and conception of the system.
From this point of view, the states depend on input and output
movements and, reciprocally, the movements are subordinated to
decisions conditioned by the knowledge of the states of the system.
Following the hydraulic analogy dear to Forrester, the states are
likened to reservoir levels, the movements or 'flow' to the channels
which connect the various reservoirs and the decisions to the valves
which regulate the rate of flow. The reservoir levels depend on the rate
of input and output, and the rate of this flow is regulated by valves
governed by the reservoir levels.
For example, let there be a stock of goods of a single type. The level
of the stock at the moment t is 1000 units.
If the firm is inactive, the stock level is static. When it is functioning,
the reception of goods raises the stock level, dispatches and deliveries
lower it. If the input exactly balances the output, the stock will be in a
stationary state. The equations which make it possible to calculate the
stock according to the entry flow and the outgoing rate are called level
equations. The level is linked to a single sign, J, K, or L, indicating
either the present time t 0 = K, or the past J = t 0 - DT, or the future:
L = t 0 + DT. Now movement links two tenses, J and K if it is a past
moment, J reaching the present K; or K and L, if it is an order modi-
fying the present K to transform it into the future L.
The equation of level is of the following type:
Level K = Level J + (DT) (Inputs JK - Outputs JK)
1 he rates of input and the rates of output are calculated in units/DT
DT being the minimal interval of time used in the simulation.
Here is an example:
ASR.K = ASR.J + (DT)(DRR.JK- DSR.JK)7, 1 L
ASR = Actual stock of retailer (at the moment K or J)
DT = Minimal time for evaluation (in weeks) separating J from K
ORR = Deliveries received by the retailer (input) and units per week
DSR =Deliveries sent by the retailer (output) and units per week
If ASR.J = 1000
the outputs DRR.JK = 100 units per week
DSR.JK = 200 units per week
and the interval DT between J and K: 4 weeks
ASR.K = 1000 + 4(100- 200) = 600
The symbol corresponding to the level equation is 7,, L. It designates
the reference of the level equation (L for 'level')
ASR
7_ 1 L
DSR
The Schools 93
If the level of stock is determined by the variations of the rate of

input and output, the latter are reciprocally dependent on a certain
number of factors, expressed by rate equations or functions of decision.
These decisions are taken, in fact, according to the stock levels. If the
level falls below the safe stock, there will follow an increase in orders.
If, on the contrary, the stock goes above a certain ceiling, orders are
reduced and sales effort is intensified, in order to raise the rate of
output.
In the hydraulic analogy of Forrester, decision functions are repre-
sented by valves, whose functioning is defined by equations of which
the following is an example:
SPS.K
OUT KL =DELIVERY TIME 7 - 2 R
OUT= Rate of delivery between K and L (in units per week)
SPS = Stock at present in the shop at time K
DELIVERY TIME: Number of weeks necessary to deliver all the
SPS stock: fixed or average size
(b) Axiom of the pre-eminence of structure 28
The vicious circle of the chicken and the egg is broken by Forrester in
favour of the egg: it is by the equation of state that simulation begins.
In the same way, the static structure exists before the dynamic behaviour.
As Forrester says: 29
'It may be helpful to distinguish two aspects of a system investigation
-that relating to structure, and that relating to dynamic behavior.
The two are intimately interwoven because it is the structure which
produces the behavior. However, one's interest in the two aspects is
sequential. There must be structure before there is a system that
can have behavior. It is in the absence of a unifying structure that
management education and practice have been particularly weak'.
Or,
'There must be a structure before there is a system endowed with
behaviour. Structure is primordial, and industrial dynamics sets out
to deduce the behaviour of it.'
(c) Postulate of the continuity of flows
The anteriority of the variable of state is in accordance with everyday
experience and with the principal theories of perception. In fact, we do
not perceive movements directly, but we deduce them from static
observations which are more or less close together. When we speak
of a rate of dispatch of I0 parcels per minute, that has no concrete
significance; by that we simply express the fact that an hourly count
marks a reduction of 600 parcels at each fresh observation.
It is therefore the comparison of two separate observations, at the
moments K and K - DT, which makes it possible to conceive a con-

tinuous flow of dispatches and, by excessive simplification, we imagine
that the rate is not only continuous, but homogeneous (10 parcels every
minute).
In the same way, the orders which will open or close the valves
governing the output, depend on two levels: the level observed at the
present moment K, and the level desired at the moment L = K + DT.
The psychology of time elsewhere confirms that the perception of
movement is formed from the comparison of discontinuous images
which follow each other in our field of conscious:ess. The immediacy
and psychological continuity of movement are only a perceptive illusion.
Extending and generalising the second postulate, it can be admitted
that movement is concrete and continuous. This temporal continuity
corresponds to a physical reality, but it can only be perceived through
the separate units of the states, measured by the reservoir levels.
When the observations are made sufficiently close together, the
instantaneous images run into each other to reconstitute the illusion of
continuity, according to a fusion threshold which, of course, depends on
the speed of functioning of the system studied. If the functioning is rapid,
the images will have to be very close; if it is slow and uniform, they can
be more widely spaced. (The interval of simulation DT can be compared
to the rate at which cinematographic pictures run through. If the system
functions very slowly, diapositives faded into each other will be satis-
factory; if, on the other hand, the functioning is rapid and a high degree
of precision is required, the rate will be high. In other words, the tem-
poral interval of the shots will be reduced.)
The preceding interpretation of movement leads to a particular
conception of evolutive systems, where every present state springs from
the immediate past and begets the immediate future. The DT intervals
depend on the precision of the observation system and the rhythm of
the system studied. They are short enough not to let significant modi-
fications escape, but long enough to avoid multiplying the collection
of information unnecessarily.
The necessities of construction of the models should logically lead to
the adoption of the axiom of immediate action, drawn up as postulate
by Lewin. Let me quote Forrester 30 :
'The same concept of level and rate variables, cast in a different
terminology, can be found in the field of psychology where we might
quote from the foreword by Cartwright to a book of papers by
Lewin. "The most fundamental construct for Lewin is, of course,
that of 'field.' All behavior (including action, thinking, wishing,
striving, valuing, achieving, etc.) is conceived of as a change of some
state of a field in a given unit of time ... in treating individual psy-
chology, the field with which the scientist must deal is the 'life space'
of the individual ... it is the task of the scientist to develop constructs
The Schools 95
and techniques of observation and measurement adequate to charac-

terize the properties of any given life space at any given time and
to state the laws governing changes of these properties ... Lewin's
assertion that the only determinants of behavior at a given time are
the properties of the field at the same time has caused more contro-
versy than any of his other systematic principles. This principle asserts
that the life space endures through time, is modified by events, and
is a product of history, but only the contemporaneous system can have
effects at any time," [II, Foreword]. The field or life space of Lewin
seems clearly to correspond to the level variables which we here use.
The 'behavior' and the 'laws governing changes of these properties'
correspond to the rate variables.
The system therefore builds up moment by moment following an
incessant process of integration on which Forrester (1961) in~isted very
strongly. 'The processes of integration', he said, are the only real ones
and differential processes should be omitted from teaching.
The axiom of continuity has proved convenient in use for the con-
ceptualisation and simulation of systems. There are however two
categories of cases where it seems inapplicable: the processes of decision
and the discontinuous types of flow quite frequently encountered m
commerce and service industries.
(d) The discontinuity of the processes of decision and flows
The processes of decision. The decisions which regulate the variations
of flow through the intermediary of the valves, depend essentially on
the preceding states: consequently, on continuous flow. They should
therefore be continuous, by definition.
Now, decisions often seem like sudden mutations or radical changes
of direction, not like gradual steps. This objection is easy to refute: it is
sufficient to consider the act of decision, not under its apparent or
superficial aspect (signature or verbal declaration of a decision), but in
a more analytical way.
The point of decision is then seen to be the logical culmination of an
uninterrupted but hidden chain of causes, extended by a second chain
of consequences. It is only through a sort of illusion, for which we can
blame our perceptive habits and an excessively general point of view,
that we consider decision to be an act which can be pin-pointed, when
in reality it is a process spread out in time.
L. Festinger confirms this hypothesis by showing that every important
decision is generally prepared by a multitude of previous decisions which
often pass unnoticed because of their insignificance, but which lead to
sudden and irreversible attitudes as surely as an insuperable wall can
be built brick by brick. Doubtless it is the same illusion which makes
decision seem like a choice at the present moment,' whereas it is a
progressive synthesis.
The multitude of previous decisions therefore constitute so many

breaks in continuity and the problem of continuity does not disappear
but is simply brought down to a lower level.
Flows. A more serious objection concerns the very nature of flows.

As their name indicates, flows are likened to liquids moving in the
channels whose rate is regulated by valves and raises or lowers the level
of a reservoir.
This image has no meaning when it is applied to concrete operations.
It is sufficient to go on to the platform of a road transport station, for
example, to observe that flow movements are fictions; there are only
parcels, all quite distinct and each following a different route.
A detailed examination is necessary to discover the continuity under-
lying an apparently isolated and discontinuous decision; on the other
hand, to perceive the continuity of flow it is necessary to take a long
view. It is only when the units in movement are numerous and do not
entail very individual decisions that they can be considered as the
molecules of a continuous flow.
The axiom of continuity is only applicable to high numbers and
homogeneous materials. This is the case of monetary movements or the
flow of rather uniform products, such as food and petroleum products.
This axiom is on the other hand frequently found wanting in the
distribution and service trades or anywhere based on the most concrete
operational level. Only the aggregation of the variables creates the
illusion of continuity.
(e) The postulate of immediate action and the axiom of the independence
of decisions
Simultaneous decisions are independent of each other because a certain
time is required to transmit information from one point of decision to
another. In fact, it is usually more a question of the independence of all
the simultaneous events. Note that the hypothesis of the independence
of simultaneous decisions is opposed to the very idea of integrated
management.
Two events cannot therefore both be independent and coexist at the
same moment. As Forrester says :31
'In principle, present, instantaneous rates are not available as
inputs to the making of other decisions. In fact, present rates are in
general unmeasurable. If we shorten sufficiently what we mean by
the 'present' time, we have no knowledge of other action rates
occurring at the same time. We do not know the sales rate of our
company at precisely this moment; in fact it would be meaningless
to us in view of the normal short-run fluctuations that occur. What we
usually mean by 'present' rates are really averages (levels) such as
average sales for the week, or the month or last year.
The Schools 97
By making the time span sufficiently short, we can in principle
establish the impossibility of having a particular decision dependent
on some other present decision (or rate) that is being determined at
the same instant in another part of the system .... The principle of
independence of decisions is applicable in practice and is effective as
a cornerstone of model formulation .... It makes possible a formula-
tion that is free of simultaneous algebraic equations with their com-
putationally expensive requirements for matrix inversion.'
(f) The postulate of the division of.flow into six interconnected networks
Following the direction of systems theory, Forrester gives his concepts a
completely general application (cf. op. cit. p. 104). A flow can just as
well represent the transporting of goods as the passage of a nerve
impulse in a physiological network. Nevertheless, for the purpose of
clarification, the flows which circulate in the firm have been differentiated
into six main categories, circulating in the same number of networks:
I. Materials network comprising the flow of stocks of physical
products: materials, goods, etc.
2. Orders network. This is the result of decisions that have not been
executed into flows and, writes Forrester, it is a link between the
overt and implicit decisions.
3. Money network. Money is taken here in the sense of cash, not
credit on paper.
4. Personnel network. It comprises men as individuals and not as
man-hours of work, as is made clear in Industrial Dynamics. It is
however difficult to imagine a continuous flow of individuals, except
perhaps in certain large organisations in which all individual charac-
teristics are blurred.
5. Capital network. This includes the factory space as well as the
machines and power.
6. Information network. This is the most important network 32
because, like a true nervous system, it carries the links between the
differen~ networks and constitutes the co-ordinating agent .pf the
whole of the system. Information must not be identified with the
object which it represents. For example, it is important to avoid
confusing the balance sheet, which is a monetary state belonging to
the money network, and the debtors account, which is part of the
information network. The debtors are in fact information, even if
they can be sold like goods; they inform us about our rights to
receive money.
The preference for not expressing the flow of personnel or goods in
monetary units springs from the same prmciple.
(g) The postulate of the privileged role of the information network
The limitation of flow is not a postulate, it is a simple working
hypothesis, and Forrester is not opposed to envisaging other categories,
if necessary, or to differentiating the flows belonging to the same category
if they obey different laws. On the other hand, the difference between
the flow of information and the others constitutes one of the foundations
of Industrial Dynamics.
(h) The postulate of the dichotomy of decisions

Decisions are divided into those which are overt and those which are
explicit.
The overt decisions result automatically from the state of the
system: restocking, for example, depends on the level of stocks and the
supplier's lead time.
On the other hand, overt decisions take place outside the system and
depend essentially on more or less subjective or arbitrary assessments
by business agents - clients or executives. That is the case when a client
makes a purchase at the novelties counter, or a buying committee
modifies the stocks.
This list of postulates, axioms and hypotheses is not definitive. The
reader will be able to complete it by referring to the original works,
which I strongly recommend him to read. Nevertheless let me point out
a few attitudes characteristic of Industrial Dynamics:
I. The integrated conception of flows, on the model of rochrematics
of Brewer and Rosenzweig (cf. Koontz and O'Donnell, 1964, p. 473)
and conforming to the fundamental postulate of systems theory.
2. The search for a general synthesis, common to several branches of
knowledge, and the building of a science of structures (stemming
from the second postulate of systems theory).
3. The polarity of feedback. This is a concept characteristic of the
cybernetic approach (cf. De Latil, 1953). Feedback loops (retroaction)
constitute a basic element of the business firm. The loops of positive
feedback are the centre of non-linear mechanisms of expansion - or
even explosion, if inverse mechanisms of involution do not come into
play and halt them; whereas negative feedback loops play a stabilising
role (Forrester, 1966, p. 12).
Negative feedback loop or homeostatic

loop, enabling the objectives to be
attained.
The Schools 99
Positive feedback loop, underlying

growth phenomena.
x =Variable
N = Normal or objective
{J = Algebraic value of the difference
4. Non-linearity: contrary to certain economic theories and mathe-
matical programming, Industrial Dynamics studies mainly non-linear
processes: exponential delays, oscillations, 'pump' effects (hunting),
braking effects (damping), distortions, etc. The importance conferred
on these phenomena, due it seems to Forrester's early training,
played a decisive and favourable role in the formulation of his doc-
trine. Industrial Dynamics energetically denounces the unreality of
linear models and advises teachers of organisation to replace the
study of the classical mathematics of operational research by the
study of cybernetics and servomechanisms.
5. Accessibility of language: 33 Industrial Dynamics is free of any
mathematical jargon. All that remains is a limited symbolisation
inspired by reality. Flows and processes are designated by the initials
of their everyday name, for example: GRS =Goods Received into
Stock, MEMS = Men Employed to Maintain the Stock in store,
CORP= Clients' Orders Received by Post, etc.
3.7.4 The limitations of Industrial Dynamics
These limitations reveal two types of inadequacy: some are fundamental
and affect the postulates of the doctrine; others are transitory and are
linked to its state of development.
Among the fundamental inadequacies are:
(a) An incapacity to deal with the discontinuous processes studied
by classical organisation theory (the process of linking printed papers,
documents, etc.). Although the domain of Industrial Dynamics lies
at a high level of aggregation, bridges should have been engineered
with discontinuous models. At present, there is an awkward gap
between the continuous flows and the concrete, discontinous reality
which faces the analyst who must arrange the working layout.
(b) The fact that it deals with a simulator, and not a descriptive model
of the firm. But this fault is also a quality of the cybernetic approach.
I 00 A Critical Introduction to Organisation Theory
Forrester never claimed to analyse past or present systems; he set out

to build' models·, in order to test their behaviour, and then to create
new models (feedback - if we admit that there is a perfect model
which could be adapted to all domains).
(c) The difficulty in differentiating certain flows. For example, the
difference between the flow of information and the flow of orders is
poorly explained. The difference between a debt and a crossed cheque
is surely artificial.
(d) The impossibility of taking charge of overt decisions: the same
arbitrary quality is shown in the separation between implicit and overt
decisions. Forrester is aware of this when he writes that orders form
a bridge between these two types of decision: in fact, they depend
both on exterior factors (cognitive 34 and psychological state of the
client) and on internal factors: level of stocks, stock delays, etc.).
Forrester believes he has avoided the difficulty by extending the
frontiers of the system. However, he has only moved the problem
elsewhere.
Furthermore, the aspirations of the doctrine of Industrial Dynamics
are far from being satisfied. While the model is suitable for the repre-
sentation of flows of money, orders and power, it cannot yet incorporate
psychological flows- even if the latter could be clearly defined.
As Forrester has explained to the author, this inadequacy cannot
be imputed to the model which seems remarkably well-adapted to the
representation of psychological mechanisms, but rather to the absence
of specialists in semantics, perception and motivation from his team.
As soon as the integration of semantic and perceptive models into
Forrester's general model is achieved, the making of explicit decisions
and the much hoped-for unification of flows will naturally result.
Forrester's model and the corresponding DYNAMO compiler are
applicable to continuous flows. These flows are regulated by valves or
decision functions and enter or leave reservoirs whose state is defined by
level equations.
The ideas of exponential delay, type of delay, of output and level,
are only valid at a high degree of aggregation of the variables, that is,
when the trajectory of each particular event is indiscernible, or when
it is too costly to establish it.
The behaviour of Forrester's model is therefore statistical, and does
not make it possible to describe or forecast with precision the course of
this or that particular event. For this reason, it is only suitable for the
simulation of high levels of management and for the study of micro-
and macroeconomical balances.
3.7.5 An example of simulation language: the GPSS of IBM

Unlike DYNAMO, the General Purpose Systems Simulator lll (GPSS
II I) lends itself to the study of discontinuous phenomena. Each particu-
The Schools 101
Jar event is identified by the encounter of a 'transaction' (which repre-
sents a movement) with a 'block' (which represents a state).
The manufacture of a part, for example, results from the passage of
raw materials (whose movement is called a transaction) through oper-
ational stations which modify their characteristics (blocks), each
operation constituting an event. In the same way, an order (action) will
pass through the blocks of reception, dating, checking, reading, tran-
scription and filing, before being destroyed. Each of these stages is an
event accompanied by a delay of varying length. It is evident that the
order is followed individually and it is only through the aggregation
carried out by calculators that the 'flows of orders received' are recon-
stituted.
Being more analytic than DYNAMO, the GPSS comprises more
symbols and each symbol is more complex. In the DYNAMO model,
there are only five principal symbols of which the most complex- the
boxcar- has only a few elements, while the GPSS possesses 37 symbols
divided into sub-symbols or fields.
(a) Structure of GPSS III
GPSS III comprises transactions and blocks. The transactions corres-
pond to movements of objects or information; the blocks correspond
to operations which are performed on these movements. Every event
necessarily results from the confrontation of a movement with a block.
In fact, if it were possible to imagine a cycle which only included
transactions without blocks, these transactions would not be percep-
tible, since they would not pass through counting or distribution blocks;
moreover, they could not act on the system because they would lack the
operational blocks. Conversely, a system of blocks through which no
transaction passes is empty of events.
Four principal types of event can be distinguished:
I. The creation and destruction of a transaction;
2. The alteration of the numerical value of an attribute. (The attribute
is precisely a part of the information carried by the transaction, or
which characterises the block: if the transaction is represented by a
bill and if this bill passes from state one (to be paid) to state zero
(paid), there is a change in the value of the attribute);
3. Delay of a transaction: that is the time a transaction takes to pass
into a block; certain blocks do not add any delay to the transaction
(such as the exit block or certain logical operations blocks); on the
other hand, operational blocks (facilities) or the 'reserve' blocks
(storage) always take a certain time;
4. Alteration of flow; these are events which influence the path of a
transaction from block to block.
(b) Representation of the model
Like DYNAMO, the GPSS III can assume two forms. The first can be
directly assimilated by the machine: it consists of writing in the appro-

priate formulae, in 80 columns, symbols coded in GPSS III language,
one after another. The second form lends itself to intuitive reasoning
and expresses the model in a convenient visual form. This is in flow
charts, that is, graphs whose peaks represent the blocks and whose
curves represent the transactions. The system possesses an internal
clock which uses separate units of time; the unit of time will therefore
always be chosen in such a way that it is only expressed by whole
numbers. A screening process is adopted- as in all simulation models.
It can be described briefly as follows: at a time ti all the blocks are
screened by the computer and all the operations intended for that time
ti are carried out. When there are no more transactions to move from
one block to another, the time of the clock moves on to t i + I, and the
operation begins again. The system reaches the end of the run when
there are no operations left to be carried out, whatever the time on the
clock.
(c) Statistics
The simulator contains two types of calculator, enabling all the statistics
to be carried out on the model studied. On one hand, each block can
contain a calculator making the total of all the transactions which have
passed through the block during a given period; on the other hand, it is
possible to know the path along which a transaction has passed. These
last statistics are used for control purposes.
(d) Classification of the blocks

The blocks can be classified in six main categories.
I. Facilities These blocks represent machines, instruments, manipu-
lations, all the particular treatments which a transaction can undergo.
It results from this that the operators take a certain time on the clock
higher than 0. It is agreed that they can only accept one transaction
at a time. ·
2. Storage. These are all the blocks where concrete objects and
information are stocked: reservoirs, depots, archives, etc.
3. Logic switches. These regulate the circulation of transactions.
They can take up three positions: yes (on), no (off) or reverse.
4. Save values. These blocks contain information which is not being
used in the course of the calculations of the simulation, but which is
nevertheless wanted as a reserve, for later use.
5. Queues. These blocks represent the transport of concrete objects
and infotmation at the entry to a block and which cannot yet be
admitted.
6. Tables. They serve to introduce statistics and distributions into
the model. Generally, they are presented in the form of a matrix.
The Schools 103
Axioms and rules of functioning of GPSS III

GPSS III is an information tool, and not a business theory. One must
therefore not expect to find postulates or principles of action in it.
Nevertheless, its axioms, its rules for functioning and its structure
implicitly encompass a· strong conception of organised systems, which
is very close to Industrial Dynamics. In fact the following characteristics
recur in it:
I. Duality between the static/dynamic aspects. Transactions and
blocks can be likened to flows and levels respectively, although this
analogy is limited to the static/dynamic aspect. A transaction is much
more detailed than a flow; a block passes through a much greater
variety of states than a reservoir.
2. Principle of immediate action. The principle of immediate action,
according to which only present states act upon the future, is put
forward as a postulate by Lewin, who makes it a natural law; it
becomes an axiom with Forrester in order to facilitate the apprehen-
sion of phenomena. In GPSS III it is only a simple rule of the func-
tioning of the scanning or electronic sweeping device.
3. Integration of the variables. Like DYNAMO and all the digital
compilers 35 of this type, GPSS III operates by successive integrations
of variables, and not by differential processes.
4. Cybernetic structure. GPSS Ill lends itself well to the analysis and
simulation of the phenomena of negative or positive feedback; it also
makes possible the establishment of open chains or transport flows
without loops of interactions.
The limits of GPSS III

As we have seen, GPSS is only a tool. It cannot therefore be criticised
for not covering more than a partial field of both quantitative and
informal constraints, nor for not recognising non-formalised psycho-
logical structures.
Nevertheless, on its own purely operational level, GPSS III is not
exempt from certain omissions, which are moreover inherent in all
similar models. The flow charts used give a good picture of the structure
of the information, the circuits of information and the algorithms of
transformation; but they give no information either on the way in which
this information is reported on whatever material is used, or on the
physical nature of the material.
For example, an invoice appears as a collection of distinct items:
number of the bill, name and address of the client, quantity ordered,
date, etc. linked by definite functions. It is represented by a transaction
or a group of transactions, including a certain number of waiting
periods. But whether the bill is set out on white or mauve paper, whether
the items are set out in this or that order, whether they are hand-written
or typed, or on punched card, on a magnetic card or in CMC 7 charac-

ters, the symbolic representation is the same.
On the logical plane, all these variants are equivalent, but it is quite
different in practice, where delays in handling, errors in transcription,
difficulty in transport, safety in filing and ease of access all depend
closely on the quality of the material on which the information is given.
The items are simplified; comprehension of them is facilitated by
their presentation and their grouping. But these primitive procedures
are outdistanced by the complexity and scope of modern systems of data
processing. Whenever people have to handle information, attention
must be given to its material presentation. Most simulators, of which
GPSS III is a representative example, do not take this into account
at all.
Finally, GPSS III only deals with flows of information and does not
establish any distinction between the latter and physical or psychological
flows. This is particularly troublesome in man/machine systems, where
there are numerous points of 'overt' decisions. Nevertheless, the
flexibility of GPSS III should make it possible to construct models
which take account of the nature of the material, of regrouping and of
simplification of the items.
However, it is the role of other models such as AUTOSATE or
MODSIN, which will be discussed later, to fulfil these requirements.
3.8 FURTHER DEVELOPMENTS OF SYSTEMS THEORY
3.8.1 The current situation

Current research is too close for us to be able to summarise it. Its
variety and profusion gives the impression that, after being concerted
for a time in a unifying theory, the different approaches of business
science are once more diverging and dispersing.
We have simultaneously the prodigious development of business
languages and of teaching machines the birth of a discipline devoted
to the study of needs (chreiology), and heuristic programmes full of
imagination and initiative. At the same time, systems theory is still
being developed, particularly in the hands of Greniewsky and his
collaborators at the University of Warsaw, and also of the American
teams at Seattle, Stanford and M.I.T.
From the riches and multiplicity of the work that has been done,
we can pick out at least one tendency which is fairly homogeneous and
representative of the most advanced fringe of the science of organisation,
in the absence of a single movement. It would be tempting to call this
tendency the linguistic movement, in so far as the attempt to resolve
the thorny problem of integrating man/cybernetic model/firm have
culminated in a conception of the firm which owes a great deal to
The Schools 105
linguistics and its associated disciplines: semantics, symptomatology,

psycholinguistics and the theory of automatic machines.
We have seen that, in spite of the numerous successes of the cyber-
neticians and the achievements of systems theory, the aim to unify the
parts of the firm has not been achieved. The progress of automation and
information science has liberated the organisationalist and the manager
from the classical duties of establishing tasks, organising printed matter,
scheduling or setting up of plant, but they have not resolved the difficult
and sometimes distressing problems, which all schools have encountered,
namely, the integration of men to the systems, the formulation of
guidelines, the creation of automatic machines endowed with discern-
ment, etc.
In their efforts to resolve these problems, research workers have
logically been led to call on linguistic disciplines, on the psychology of
perception and on structural anthropology (Bruner and Levi-Strauss are
quoted by the principal representatives of systems theory, including
Forrester).
The influence of these disciplines has resulted in a very individual
concept of the firm which characterises the linguistic movement: the
structural approach.
3.8.2 The structural approach

The hydraulic and homeostatic imagery of the early system theorists is
giving way to a structural representation of reality, influenced by form-
alised linguistics which is reflected in the search for new instruments:
syntactic analysers and semantic analysers.
(a) Syntactic analysers

The body of information circulating in a firm is considered to be part
of a language characterised by a vocabulary (the items in printed matter,
the 'substantives': clients' names, designation of goods), by axioms
(the objectives, values and criteria of choice), by a syntax and rules for
transformation.
A phrase may be well or badly written according to whether the
words which it contains are really part of the vocabulary and are
correctly combined. Error is detected less by a quantitative deviation
from the standard (cybernetic approach) than by errors of syntax and
vocabulary. That is the case of a bill bearing the reference number and
price of a product while the quantities are not mentioned, or else an
address composed of the street number and the floor number, but omit-
ting the town.
Syntactic analyser is the name given to a program which makes it
possible to detect errors of syntax in a language, that is, badly written
or undefined words (which are not part of the vocabulary), incomplete
figures, the introduction of unwanted data and, of course, wrongly

formulated questions.
(b) Semantic analysers

Unlike syntactic analysers, semantic analysers are preoccupied with the
significance of data, automatically discarding the unnecessary details
which encumber lists, useless information, meaningless ratios, faulty
figures. In addition, they evaluate data according to criteria of value,
these data being previously identified by programs of recognition and
form. Such tools are precious, since they save people from consulting
the enormous mass of data provided by computers. Most of the infor-
mation which remains after printing is identified and evaluated and
serves to formulate significant ratios (demonstration of a relationship or
correlation between time of reception of goods and type of goods),
and to taking automatic decisions.
The semantic analysers represent the most advanced point of research.
They presuppose an exact knowledge of the mechanisms of meaning
and it is in this respect that the contributions of semantics and psycho-
linguistics play a part of primary importance. Their number is increas-
ing, from the GOAL of A. McDonough (1963) to MODSIN by F.
Peccoud (1967).
Unfortunately, these disciplines are not yet sufficiently widely known
among information scientists and organisationalists, and it is to this
ignorance that the rather slow advance of research in this direction can
be imputed. For example, Osgood (one of the most famous psycholo-
gists in the United States) has discovered the semantic differential which
can 'measure' the meaning of words, but his works are still practically
unknown to specialists in marketing, publicity or sales promotion.
(c) Intelligence simulators and heuristic programs

Semantic analysers must allow the significant data to be sorted from
the harvest of raw information. However, they do not allow automatic
decision-making in the absence of exhaustive information. This in fact
presupposes precise qualities of initiative and imagination which are
possessed by some new tools called intelligence simulators or heuristic
programs. Solutions such as Ross Ashby's homeostat, Simon's General
Problems Solver, and the Perceptron of Rosenblatt, were inspired by
the study of perceptual and learning mechanisms in man.
These instruments allow modifications in the programs which are
given to them initially, in response to the demands dictated by circum-
stances, and in such a way as to reach an optimal or final point. Unlike
computers whose program is fixed and whose behaviour is totally
predetermined, these machines are equipped with 'evolutive' programs,
with autocorrection mechanisms and behaviour which is partially
dependent on contingencies. In particular, the search for a solution can
The Schools 107
be pursued by 'trial and error' - the classical method of experimental
psychology.
Programs such as these create a link between individual psychology
and 'business grammar·, which studies the syntactical relationships
between the concepts used by the firm. Cybernetic models therefore
seem to be placed between men, whose mental processes they imitate,
and firms, to which they apply on a large scale.
Fogel, Owens and Walish distinguish three approaches to the prob-
lem of artificial intelligence:
I. The biological approach aims at a simulation of biological pro-
cesses of information. It is limited as a result of our imperfect know-
ledge of the structure of the human brain.
2. The heuristic approach (for example: Simon's General Problems
Solver) aims at a simulation of human processes of· problem solving·.
It pursues two objectives: (a) Entrust machines with tasks usually
undertaken by men; (b) Simulate these tasks on a computer. The
approach is limited to knowledge of human problem solving and to
the machine's built-in capacity for repetition and symbolisation.
3. Evolutive programming. The programme can function even in the
absence of complete information on the environment: it can work
out its own rules for 'problem solving' (which are not necessarily
human rules). There is no hypothesis concerning the structure of the
environment or the structure of the problem studied, unlike Forrester's
hypothesis which postulates the pre-existence of the structure.
It is not unthinkable that, in the near future, there will be instruments
whose structure will be modelled on the structure of our psychological
apparatus, our values, our objectives, even on our temperament and
our prejudices and that these instruments will really contribute towards
taking decisions, instead of being limited to preparing them. What are
the boundaries· separating the possibilities of action of man and those
of the cybernetic model within the firm? Will the simulator finally
replace the employee or the director? And if not, what will be the limits
of its domain? An attempt will be made to reply to this question later.
I was told not long ago that robots cannot possess imagination or
initiative. Since the famous original demonstration of a theorem
of Euclidean geometry by Simon's intelligence simulator (General
Problems Solver), we know that this is false. Today, it is claimed that
machines do not reproduce themselves, that they are more costly than
men and less effective in creative operations, that they do not suffer or
feel happiness, and are not motivated. But tomorrow, what may hap-
pen? In his famous and controversial book The Mind of Robots ( 1963),
Culbertson has in fact perfected models of machines which he claims
are capable of feeling emotion.
That such questions arise today is enough to show the progress of
these techniques and the distance they still have to cover.
It is no longer a question of the increasingly rapid production of a

quantity of less and less meaningful information. To hasten the creation
of the new· tools' which we need, we must try to reach a better definition
of our own systems of reference, of value and of needs; in short, we
must make an effort to know ourselves better.
Reproduced below is a table of the principal representatives of
management theory, as set out by Massie; it is completed by Figure 12.
Human
Accountancy Mathematics
Theory of Organisation Relations Industrial
and and and
the Firm Theory Quantitative Engineering
Operation Behavioural
Sciences
Statistics
1960
Schlaifer R. Schlaifer
A. Liken H. Raiffa
Argyris C. Argyris C.W. Churchman
R. Bales L. Savage
Drucker...,.__. P.Drucker- I--- Drucker
M. Haire J. Marchak
E.Dale Dale Von Neumann
Dean- J.Dean Bakke E.Bakke and Morgenstern
M. Dalton G. Dantzig
G. Shackle 1960
K. Boulding Boulding P. Seiznick
Simon- Simon- f-H. Simon- ~-Simon- ~Simon- •Simon
A. Gordon- ~Gordon W.F.Whyte A.Wald E.Grant
A.Bavelas R.Barnes
G.Terborgh R.Menon
L.Warner
1940
W. Paton
A.L•ttleton A. Davis F .Roethlisberger
C. Barnard- ~Barnard J. Neyman
L. Urwick Urwick
K.Lewin
T.Parsons
E. Cammon Mooney and J.Moreno
Reiley E.Mayo
1930
M.P. Follett L. Tippett
J. McKinsey McKinsey W. Shewhart
J. Bliss 0. Sheldon
1920
H. Foyol (1916) Gantt .L. Gantt
H. Emerson
1910
F. Gilbreth
L. Gilbreth L. Gilbreth
W e b e r - M. Weber
Taylor T o y l o r - F. Taylor
Pociolo( 14941 A. Marshall H.R.Towne
(1990) (1886)
A. Smith (1776) C.Bobbage
(1832)---.Bobbage
FIGURE II. Representatives of the principal trends of management

theory (after Massie, 1965).
The Schools 109
c:::::::::::>Affiliations Organisation
___....~=~j~rr!n ,of-work
--
_..,External
influences
'
CLASSICAL MOVEMENT
INDUSTRIAL
ADMINISTRATION ENGINEERING
Max WEBER TAYLOR
FAYOL GILBRETH
MOONEY H.L.GANTT
and
REILEY H. EMERSON
HALDANE R. BARNES
ELTON MAYO
E. DALE
R.LIKERT
A. ZALEZNICK
C.ARGYRIS
Mathematical
movement
P.DRUCKER
O.GELINIER
Industrial engineering CHURCHMAN

Business langu.ge
FIGURE 12. Relationships between the principal movements of business science.

4 Operational Division of
Flows
4.1 INTRODUCTION
A certain degree of confusion exists today in the terminology on the
subject of the concepts concerning the flows of physical and psycho-
logical elements, of power and of information, described by Forrester
and Rosenzweig.
The exponents of systems theory, who have elsewhere given the
greatest care to the formulation of their concepts, have left the differen-
tiation of flows without clarification. Most frequently, the problem is
avoided: it does not matter so much what is circulating- whether it is
digital information in an automated network or fluid in a set of chan-
nels - if the laws which regulate the output and the levels have been
grasped. This neglect of detail is doubtless the result of the unifying pur-
pose of the cybernetic approach, which is too much centred on the study
of interactions and retroactions to attend to the heterogeneous nature
of the elements of the system.
For example, McDonough ( 1963) deals only with the information
networks to the exclusion of all the others. He defines them more
clearly than Forrester (1961). But the latter takes the credit for estab-
lishing the first differentiation of the networks into physical, monetary,
informational, etc. Moreover, he goes further and attributes a privileged
place to the information network as it has special liaison properties.
In fact, only information can connect the elements of the network
together, in particular, the decision functions to the level equations.
To make a decision, we need to know the present and past state of
a certain number of points, and to deduce the new values destined to
serve as norms. Unfortunately, Forrester does not give a clear definition
of the criteria which differentiate the ' physical' networks from the
110
Operational Division of Flows 111
information network. A bill of exchange, for example, belongs to the

information network, since it informs us of our 'right' to a sum of
money, but it does not itself cause the money to materialise. On the
other hand, coins are 'physical' entities with an objective value. The
distinction is however invalid in so far as we pass imperceptibly from
the bank-note to the state of credit, by means of the accepted draft and
the bank cheque.
Moreover, how can the personnel networks be defined? Forrester
states that this is not a question of man-hours, but of individuals whose
personality is significant, in other words, of psychological flows. But
what operational criterion can be used to distinguish the information
which circulates in the administrative networks from that which is
handled by people? Recent socio-psychological discoveries have given
the answer: man is an information processing agent. That being so, his
activity cannot be separated from that of the information network
except by considering him as a physical handling agent, which Forrester
refuses to do.
Finally, the means by which the information flows act upon the other
flows are not analysed precisely enough. A fact is merely observed and
formulated in a decision equation, without concern for its deeper nature.
Now it would only be possible to establish general laws on the
interaction or retroaction of the flows- laws valid for ·total' systems-
if the intrinsic nature of these flows were already known. Either the
networks are perfectly interchangeable and can be expressed by flow
diagrams which depend solely on their structure and the problem is then
resolved; or, and this is what Forrester implies, differences appear
which need to be defined in their scope and size. We may suspect, for
example, that non-formalised information does not behave like digital
(computer) information, that it does not accumulate in the same way,
and that it does not show the same dynamic characteristics (augmen-
tation or reduction in intensity) in evolving from one stable state to
another; it may even be that the channels are not watertight and that it
is changed and contaminated by information outside the model network.
In the same way, psychological flows are subjected to factors which are
still partly unknown: for example, suggestion or projection, which are
not represented by any model, as far as I know.
Perhaps this criticism is exaggerated, since a great number of research
workers (among them Professors Hoggat and Bonini) are giving their
attention to the definition of the characteristics of flows; but no general
law seems to have emerged so far from this research.
In this study I shall attempt to clarify these criteria of differentiation,
and for that purpose I shall refer to a case which has been simplified
to the utmost: at the beginning, only physical and monetary flows will
be studied. Information and psychological flows will only be introduced
progressively.
4.2 OBJECTS TREATED BY A BUSINESS SYSTEM
4.2.1 Introduction
Let us take an extremely simple and even rather naive example. Let us
consider the situation of a merchant, in an age when double entry
book-keeping did not yet exist. He constitutes in himself an open
system, an almost steady state. He is in contact with the concrete
external world, with which he exchanges merchandise and money.
An implicit frontier defines and regulates the passage in and out of the
patrimony.
A starting point is arbitrarily given to the system (creation of the firm
or beginning of a sales round) and there is a basic float composed of a
stock of goods and a cash balance. A detailed examination of this float
is beyond the limits of our study; let us simply note that part of this
money served to create the initial stock, the rest being reserved for
maintenance and travelling expenses. The stock of goods may be
evaluated at its cost, or according to the anticipated product of its sale.
From the start of its activity, this system will exchange merchandise
and money with the outside world.
At first sight the exchanges seem to be extremely simple. They are

expressed in the first place by outgoings of merchandise and entries of
monetary units considered equivalent (sales cycle); in the second place,
by reverse exchanges for the purpose of replacing the stock: entries of
merchandise and outgoings of equivalent quantities of monetary units
(buying cycle). The relationships of equivalence of money/merchandise
are of course different in the two cases.
4.2.2 Physical and monetary flows (relationships between merchandise

and money)
Let us examine these relationships more closely. Apart from the buying
cycle (which permits the system to reach its normal functional state),
the merchant exchanges all his merchandise for money. The price is a
coefficient which expresses the relationship of equivalence between
these two objects.
The merchandise
The merchandise is a concrete object, which is 'consumable' by a
'client', that is, able to satisfy his needs. This merchandise has a value
which is a function of two variables:
(a) Utility of the merchandise. This depends on its capacity to satisfy
the needs of the consumer, on the importance of his need and his
degree of saturation. The price paid by the client is in direct relation
to the 'client-utility'. This is strictly individual and must be distin-
guished from the collective utility of property as sometimes envisaged
in economics.
(b) The specificity of the merchandise, inversely proportional to its
capacity for exchange and its convertibility into other property.
A packet of sugar has a high convertibility (low specificity), since in
any conditions, at any time, it will be able to satisfy any consumer.
We should not confuse low specificity with the specificity of the
product, which represents the degree of organisation of this product.
Product-specificity is an intrinsic specificity of manufacture (industrial
specificity); merchandise-specificity is relative to its sale and is extrinsic
(commercial specificity). A watch has a higher industrial specificity than
a pair of dog clippers, because its internal organisation is more complex;
but the clippers have a higher commercial specificity, because the
number of their potential users is more limited.
Again, a distinction should be made between commercial specificity
in time and geographical (topological) specificity in space. Perishable
goods are specific in time, as are objects governed by the fluctuations of
fashion. On the other hand, a surgical instrument of a special type will
interest many fewer consumers than a domestic iron. In fact, surgeons
are part of a fixed and specific class of consumers (specificity in space).
Specificity in space is a valid concept particularly for the merchant
who wishes to sell his product. It is inversely proportional to the number
of potential transactions on the product. This concept has no meaning
for the individual consumer who generally makes only one transaction
concerning the product: buying for himself and for a definite purpose.
Money
It seems evident that it is difficult to exchange objects of high specificity
with equal utility. In this respect, coins and notes have a remarkable
role as objects with very low specificity since they are capable of inter-
esting everyone, at any time, in so far as they are unchangeable, at least
in the scope of the systems which interest us. In addition they possess
the advantage of being divisible into equal separate (that is, discontinu-
ous) units, which can therefore be added up and are capable of forming
a scale of values.
It was the same for other concrete monetary standards: animal skins,
diamonds, jars of wine or oil, used by ancient civilisations. It is only
recently, according to a process described later, that the concrete

standard has been replaced by an abstract symbol: coins with an intrin-
sic value lower than their nominal value, or paper-money with no
intrinsic value.
Merchandise-cash exchanges.
To obtain his stock, the merchant exchanges cash with low specificity
for merchandise with high specificity.
Utility Specificity
Merchandise
Cash
He hopes that his activity will reduce this specificity, either by finding
a 'specific' clientele, or by making the merchandise more easily assim-
ilated by a larger clientele (launching of a fashion, alluring packaging,
attractive presentation, etc.). This fall in specificity (reflected here in a
greater accessibility to his potential customers) is equivalent to a value
added to the product, offset by the expenses inherent in the merchant's
activities.
Utility Specificity
Merchandise bought
(input)
Money (output)
Merchandise sold
(output) xl s2
Money (input) y2 S ~0
x 1 represents the potential utility of the merchandise and therefore
does not vary in buying or selling. y 1 represents the utility of the cash
exchanged for the merchandise bought, and y 2 the utility of the money
received on the sale of the merchandise. The specificity of the money
being invariable, if y 1 # Y2, then the quantity of cash varies. (Note that
in the framework of this exposition, cash is considered as merchandise
with an intrinsic value, and not as a symbol. It could be replaced, in
different circumstances, by uranium, rice or ivory tusks.)
The result of each transaction can be expressed as follows:
The difference between the buying price and the selling price (or
quantity of cash exchanged for one unit of merchandise) therefore
represents the exchange value of the fall in commercial specificity.
In addition, if y 3 represents the total expenses involved in the activity
related to the transaction (travelling expenses, business lunches, etc.),
and y 4 is the 'noise' or expense inherent in the maintenance of the

system (including remuneration for the work of the transaction), the
result becomes:
To simplify:-
d1 = Y2 - (y 1 + y 3 + y 4 ) (gains)
ds = S 2 - S 1 (fall in specificity)
y 3 = f(dS) (expenses involved in the fall in specificity)
y 4 = f(dS) (expenses involved in the maintenance of the system
and linked to its complexity, which is itself partly a function of the
desired fall in specificity)
Y2 is used to restock the merchandise sold. If dY = 0, the system is
stationary. If dy > 0, dY will be either accumulated (constitution of a
fund), or transformed once more wholly or partially into merchandise.
If the hypothesis d1 = f(x) is retained, withf(x) = increasing function
of x (the gains in absolute value are proportional to the stock), d1 will
be transformed into merchandise (x), producing positive feedback
(see 3.7.3). If this hypothesis is verified, the system will be in growth.
If d1 < 0, the float of merchandise cannot be replaced. The merchant
has a loss.
There are several ways of working out the result of activity. Our
merchant can count the cash taken at each transaction and convert it
mentally into merchandise sold. Expressed in units of merchandise
(the stock is increased or diminished, with an equal float of money), or
in units of money (with an equal stock of merchandise, the float in the
fund is increased), the difference indicates the result of the transaction
and reflects the tendency of the system towards growth, towards decline
or towards the stationary state.
For numerous reasons, it is not practical to calculate a result at each
transaction. On the one hand, the time spent counting could be better
employed in selling; on the other hand, the result is not significant at
this level: it does not reveal the tendencies of the system, or permit
decisions to be taken with full knowledge of the facts. Taking a balance
at the elementary level is not justified unless one wishes to make sure
that neither losses nor errors have been able to slip in during the course
of a given transaction. That is a 'control' operation (in the narrow
sense of the term) and the cost it involves is a verification cost.
To reduce the cost of calculating the results, the merchant will be
obliged to 'aggregate' the data, that is, to add up the inputs and outputs
during a set time, or control interval. This calculation will be made at a
fixed date (every week or every month) or else this date will, on the
contrary, be conditioned by the state of the floats or transactions.
Faced with an expected series of important purchases, the merchant
counts his money and inspects his stock before setting out on a sales
campaign.
However, if the control intervals are large (annual balance-sheet),
he will find he cannot attribute losses to this or that transaction, and
thereby draw a lesson from past actions. The result only gives a statistical
view of the system. To assess the effect of his sales effort, the merchant
must then call on his memory and remember the most important
transactions: in a certain town, for example, he sold a stock of Genoese
cloth at a profitable price or, at the beginning of the season, he was
unable to meet the demand for spices. However, with the growth of
his activity, the merchant can no longer rely on his memory or his
capacity for aggregating the transactions which are too numerous to
permit the observation of a 'general line'.
It is to compensate for these inadequacies that a system of symbols
has been created from which accountancy has developed.
4.2.3 Symbols and signs (abstract objects)

Without describing the birth of accounting mechanisms here, I should
like to show that these mechanisms (in the form of written signs) possess
the properties characteristic of symbolic languages (homomorphism).
I. Each symbol represents a physical object, or class of objects
(merchandise, tools and, here, money) or an object derived from the
processing of other symbols. A symbol representing one or more
concrete symbols will be called a denotative symbol and the symbol
derived from other symbols will be called a connotative symbol. 1
2. The relationships between symbols are parallel (that is, every
relationship in the real system has its equivalent in the symbolic
system, and vice versa) to the 'significant' relationships between the
objects represented. (By significant relationships we mean those which
influence the behaviour of the system: quantity, weight, state of
preservation of the merchandise, etc.)
3. The symbols are easier to handle and to manipulate than their
objects.
4. The processing of the symbols is isomorphic to processes existing
at the level of the objects: addition for aggregations due to inputs
and for accumulations, subtraction for the outputs, 'recording'
for stock-keeping, etc.
5. Finally, operations which have no equivalent on the concrete level
can be carried out on the symbols. These operations anticipate pro-
cesses (forecasting functions), formulate new relationships within
existing processes (analyses, comparisons, balancing, etc.) or quite
simply create new processes (imaginative or heuristic function).
These symbols are abstractions which have no intrinsic significance.
There are other abstract objects: signs, analogous to symbols with which
they are sometimes confused, possessing properties (I) and (3). Signs,
like symbols, represent a concrete object (I) and permit the convenient
manipulation of it. However, unlike symbols, the relationships which
link these signs together, though they are not always devoid of interest,
do not correspond to those which link the concrete objects. Let us quote,
for example, the designation of a product and its accepted nomenclature.
Although number 1567 is near 1569 and far from 2570, it is possible that
the corresponding article may be' closer' to the article bearing the more
distant number, if it possesses more characteristics in common. From
the numbers of two articles, it is impossible to deduce anything about
their degree of similarity. No. 1567 is therefore a sign.
In the case of analogical or symbolic nomenclature, on the other hand,
the concrete object bearing no. 156 7 is close to object no. 1568 (it is part
of the same class 156) and has no points in common with the article
no. 2570. No. 1567 is therefore a symbol.
4.2.4 Psychological objects

We have before us an open system, making exchanges with the external
environment of' physical flows' composed of' abstract objects' having
no intrinsic value but intended to manipulate concrete objects con-
veniently. In semiological terminology, it can be said that the signs and
symbols are denotative signifiers, and the merchandise, money or tools
which they represent are the signified.
A knowledge of the physical or symbolic objects, whether they are
static (states, balance-sheets) or dynamic (movements, operations), is
not however sufficient for the purpose of defining the behaviour of the
firm. We must also take into consideration the psychological state of the
clients or the merchant. Two salesmen placed in identical situations,
with the same state of goods, money and equipment, and with the same
clientele, will act differently. It is even plausible to imagine that where
one will prosper, the other will fail. In order to take these differences
into account, it is necessary to introduce psychological variables such
as character factors or scales of value.
From the point of view of this study, we shall say that the merchant is
not directly in touch with the external world, but is submerged in a
psychological universe composed of symbols and signs, with relatively
narrow contact with external reality. These psychological symbols and
signs maintain connections with the external world analogous to the
links between the abstract objects and the concrete objects.
Economists and specialists in organisation have felt a certain reluc-
tance to study these psychological objects, for a great many reasons,
one of which is the impos.sibility of describing them in a perfectly
objective manner. Nevertheless, it is beginning to be recognised today
that such powerful factors in the behaviour of firms cannot be over-

looked on the pretext that they do not obey the rigid conditions of
objectivity and measurability required by contemporary techniques.
For example in economics, homo aconomicus, who is rigorously
conditioned by concrete flows and their symbolic image, is giving way
to the economic agent who is capable of interaction with his environ-
ment.
What do the psychological objects of a system represent? By which
we mean the elements of the fields of consciousness of the men who
work in the system.
When our merchant makes a decision, he acts:
I. According to the observed state of the concrete objects (physical
situation), or of their symbolic equivalent, whether these objects are
within the firm (state of stock, funds, etc.) or external (contingencies,
current prices, etc.).
2. According to value judgements which are internal and partially
linked with his professional experience.
Scales of value are associated with these judgements; among them,
the scale of utility is easily quantified and conveniently coupled to the
scale of monetary values. The overriding importance and intensive
use of this scale in economic systems should not make us forget the
role of other scales: the aesthetic, hedonistic, ethical scales which
play a part in decision-making in an unobtrusive and sometimes
invisible but effective manner.
3. According to conscious or unconscious motives which have a
strong influence on the scope and congruence of the scales. Decisions
produced by the psychological system and translated into concrete
events, exercise an effect on the situation of the firm, and this effect
is once more transmitted to the field of representation in the form of
psychological objects, measured by the scales of values.
It is now appropriate to establish the relationships between concrete
and abstract objects on one hand, and between abstract and psycho-
logical objects, on the other.
We know that an abstract object (symbo_I or sign) is not the physical
object which it represents. Not only is it not identical to it, it is not even
homomorphic with it. That is a well-known fact in general semantics:
signs and symbols only designate certain attributes of the object or
certain arbitrarily determined characteristics. In fact a minute part of
reality is represented by symbolic language. If this language is suitable,
this fraction is adequate for the needs of the firm; if not, a more or less
important portion of reality (and its rationale) will escape the field of
consciousness.
The object will appear in different ways according to the mode of
symbolisation. Thus, an article can be represented by a number code,
by a technical docket, a qualitative description or a more or less explicit
designation. Also, symbolisation may be considered as a filter of reality
which limits it (diaphragm effect) and colours it (effect of selection of
the attributes). We must therefore be careful to avoid attributing the
properties or dimensions inherent in the filter to the physical object.
Similar remarks may be made when we pass from physical objects
and abstract objects to psycliological objects. Before reaching the field
of consciousness (or field of representation), physical and abstract
objects undergo new transformations.
The field of consciousness, also called field of representation (see
below, 4.3.1), therefore contains psychological objects (which will be
called representations from now on), issuing from the external universe.
The field of representation is called perception.
The perception of objects introduces 'noise', distortions and losses
analogous to those caused by the abstraction of concrete objects into
symbols. The analysers or sensory organs filter reality; and all along
the psycho-physiological channels the signals undergo various modi-
fications which can alter the homomorphism between the field of
representation and the external reality.
The errors related to the disparity between the perceptive structures
and the external world are not always apparent. They are revealed when
expectations formed on the basis of representations are not satisfied.
Let us give a simple and well-known example of this (Lyer-Muller
effect):
A B
c D
AB=CD
Let us consider the segments AB and CD, and R1 (AB, CD) the relation-
ship "between these segments AB and CD. If the fit environment js
homomorphic with the concrete environment, the representations
r AB and reo will be in the same proportions as the concrete objects
AB and CD:
Now, observation leads us to believe that CD is larger than AB, in other

words, that R 1 is an inequality, expressed as CD> AB. If our supposi-
tion is correct, the object CD is larger than the object AB.
This conclusion can be checked experimentally. For example we can
draw on tracing paper the marks A' B', obtained by going over AB,
then compare A'B' with CD:
(A'B' = AB)= {(AB >CD)::::. (A'B' >CD)}'
and if A' is placed on C, then D should be beyond the point B'. Now,
this operation shows that D corresponds exactly to B', hence AB =CD.

Our expectation concerning the result of the experiment has proved
false.
We can then question the validity of these two experiments: the
'phenomenological' experiment which consists of relying on appearances
and the so-called denotative 2 experiment which consists of establishing
a comparison by means of a series of physical manipulations or opera-
tions. At first sight, the denotative experiment certainly seems more
suspect than the phenomenological experiment, since it carries a greater
number of potential sources of error (operations of superposition and
of transference). However, though it does not completely suppress the
role of the phenomenological experiment (since AB, A' B' and CD must
be perceived in order to be compared), the denotative experiment has
the effect of relying on physical anp concrete operations which can be
verified by a great number of observers and if necessary can be carried
out by a machine.
It is a reasonably objective experiment, whereas the simple phenom-
enological judgement is subjective and is governed by a personal
equation.
In the above example, it is therefore possible to state without great
risk that, contrary to appearances, the relationship which links the
distances IABI and ICD I is a relationship of equality. The psychologi-
cal environment is therefore not homomorphic to the physical environ-
ment and the correspondence (AB, CD)~ -+ is marked by perceptual
errors. These perceptual errors have been studied at length by the
theorists of perception and particularly by Piaget. 3 They concern not
only distances but also all possible relationships between external
concrete objects.
The gravity of these errors can be measured by considering that
decision-making rests principally on the estimation of differences, as a
result of the comparison of concrete objects among themselves, or of
concrete and abstract objects. We shall return to this topic.
Before giving a diagrammatic representation of the relationships
between the physical, abstract and psychological environments, it will
be necessary to set out some definitions.
4.3 THE DIFFERENT PHASES OF THE FIRM
4.3.1 First definitions
(a) Physical phase P

The term phase is used here in the chemical sense of change of state,
of non-miscible media (gaseous phase, liquid phase, oil-water phase,
etc.). The physical phase is therefore the whole body of concrete objects:
merchandise, tools, property including equipment and factory space,
manual-workers, sources of power and money. (Certain authors call this

the concrete sphere, or real system). The value of the objects of this
phase resides in their physical characteristics: mass, dimensions, chemi-
cal composition, power, etc.
(b) Abstract phase A

This is the body of objects having no intrinsic signification but repre-
senting (or being linked with) concrete objects, classes of objects or
psychological objects. These objects- symbols or signs, as distinct
from their representations - are carried by a concrete agent in the
physical phase, called the vehicle. They can be processed in a number of
varied ways which are more economical than the processing of the
corresponding concrete objects (stock-keeping or memory-record,
moving, logical or arithmetical orerations, etc.).
1 he elements of the abstract phase are called information when they
reach the field of representation (or consciousness) of man. However
this term has been enlarged by extension to include any abstract object
capable of being used in the firm. The processing of the signs and sym-
bols is then fused with the processing of information in the sense used
in information science.
With the exception of the field of representation, the psychoneuro-
logical system can be considered as being in the abstract phase. The
nerve impulse plays the role of the vehicle of the information. It is
linked with external physical objects (stimuli, in the case of perception)
or with psychological objects, which are therefore internal (in the case of
responses).
(c) Psychological phase

This phase includes the field of representation and the intermediary
system defined below.
The field of representation 9l is the centre of conscious phenomena,
whose representations are the elements. (Representation here designates
the body of images, ideas, percepts and sensations present in the
consciousness at a given moment.) The representations are very varied,
and are linked to the external world (perceptions) as well as to the
internal stimuli. They are at the base of every decision that is formulated,
even though the decision processes are not contained exclusively in this
phase.
The field of representation f?t plays several important parts in the
activity of the firm.
First, monitoring - the field of representation permits the comparison
and control of complex operations. In fact, numerous authors, including
Culbertson, 4 have shown that consciousness plays an active 'econo-
mising' part in the operations of memory, of acquisition of reflexes, of
imagination and in learning processes in a heterogeneous and uncertain

environment.
However, these operations can if necessary be performed without the
field of representation. Automation, numerical control and electronic data
processing have partially replaced~. with the help of electronic processes.
Second, the generation of scales of value and of concepts (signifies).
It is within the field of representation that scales of value appear, with
all the judgements of an ethical, aesthetic or utilitarian order which
stem from them.
While some of these scales correspond approximately to the external
environment (logical and utilitarian scales), others are practically
independent (scales of ethical or aesthetic values). It is in the field of
representation that aims, objectives, duties, sanctions, fears, demands
and motives all appear. They result from the application of the internal
scales of value to psychological objects from the external environment.
Owing to these multiple scales and the value judgements which are
derived from them, the field of representation participates in decision-
making by dissipating uncertainty in the face of numerous alternatives.
It is a powerful anti-entropic agent (that is, an agent of differentiation,
as opposed to the entropic tendency of levelling). The idea of specificity
stems directly from this conscious choice, however arbitrary it may be.
Note that all 'signification' also refers to the field of representation,
signification being the linking of an object with a referential. The
referential can be an element of the collective consciousness (or the
whole collective consciousness if this is not fractionable). It can be
made objective and taken out of the field of consciousness (as in the case
of measurements). Whether the referential is in the field of consciousness
or is objective, the reference which is made to it can be operational or not.
The word semantics designates any projection of a concrete or abstract
object into the field of representation, although many authors use it in
an exclusively operational sense, which is too restricted.
Third, the chreiological role (relating to needs). The field of repre-
sentation is the centre of phenomena which are peculiar to it. In this
third role, the field of representation is not limited to reflecting mental
operations (monitoring) or percepts (reflecting role); nor even to
creating objects (the scales of value); it possesses its own needs. These
can be divided into two opposing classes:
(a) The search for minimal information;
(b) Stimulus-hunger.
The first class includes the entropic tendencies of the field of repre-
sentation towards the reduction of the variety and the number of its
representations (boredom, fatigue, distraction, etc.). This entropic
tendency corresponds to the Hamiltonian principle of least effort, and
to the search for minimal tension (Freud, Hull, etc.).
In the second class, on the contrary, are included aesthetic needs,
scientific curiosity and in a general way, all intellectual and creative
motives (anti-en tropic tendency). It can be admitted that these tendencies
are in evidence as long as we have not established satisfactory links
between the observed elements of the real world, as long as our model
is not complete. As soon as it is complete, we reduce all reality to the
model until a stimulus which we seek or do not seek calls the model
into question again.
Fourth, the intermediary system 1/1. We have seen that the field of
representation is a function of the physical state of the external world
(concrete or abstract objects), and of the physiological sphere (nature
of the sensory analysers and the channels of the nervous system).
It is also a function of various processes: motives, drives, logical
operations or aggregations of data, perceptual activities, etc., which
cannot other than arbitrarily be equated with neurological mechanisms
(although certain 'reductionistic' psychologists have not hesitated to do
so). We recall that reductionism consists of explaining complex processes
on the basis of the investigation of more simple processes; for example,
the reduction of the mental system to a combination of 'engrams'
situated in the cortex.
It will be admitted here that these processes are in the province of
psychology although they do not belong to the field of representation :Jt
(since they are unconscious). This implies that there are unconscious
psychological objects or latent representations, and that cognitive or
affective representations (desires, drives, etc.) can exist at an unconscious
level, nevertheless without being identifiable with neurological processes.
This is only a working hypothesis adopted by numerous research
workers such as Tolman and Osgood, and by the depth psychologists.
It is in fact easier, with the present state of our knowledge, to express
unconscious events in a language of conscious objects than in neuro-
physiological terms.
The processes appear as intermediary variables which play a part
of primary importance in the behaviour of the whole psychological
system. This intermediary phase encompasses the psychological func-
tions of memory, learning, intelligence, affective processes, perceptual
activities, as well as the dynamic mechanisms of depth psychology which
play a considerable role in the formation of scales of value.
The relationships between the different phases are illustrated by
Figure 13 which represents the hypothetical case of a 'firm' in which
the power of decision belongs to one person only (single field of repre-
sentation). In this mechanistic figure, the employees of the firm are used
only as a function of their energy potential (manual-workers) or their
executive quality. They could be replaced by machines without disad-
vantage. That is why they are classified with concrete objects (d).
Liquid money is considered as having an intrinsic value by definition.
It is also a concrete object.
ABSTRACT PHASE
N
PHYSICAL PHASE
""'
E e-.,
~ Mtrc:l\lndl\t m..... 2
SemHin•shecl t::tt.U
ptod«U. £·
Raw ~n~tentll I\.
$liqutd~Jh "!) ::;-
-...
ti
~
""
~·
2 S..On-$ 0
Retererw::e po.nu
$pt~1ll C:o-ofdtNl*S J"+-a: 0
Wel~nt INC:hiMI ~
tl'lt.uun'lefntof §
mttwr~1
~·
Input of 1nf011T'\ttlon
Symbol•gtiOtl Dtcod•ng
0ei"'It•t~ ~ CodiAg ~ fl'nC)IICil R•Uu \ ~ Cot'IK•OU• •SteSUMf'lt ~·
Tr•l"'$il'hSJIQn dec:1t.1t>f'l~ Pc-1~hon ::
Dec:odilng ~ E)(fCUI.lon dec:1NOft' ot Otdrlr1 ..,_Cod..-.g ..,_. C.nll·l>t..• ~
~
REAL SVSTEM AOMINISTRATIVE ANO INFORMATION $V$TE:M PHVStOLOGtCAl --1 :~~ I
SYSTEM ~
~
FIGURE 13. Systems theory. Model of man-firm communications.

The model of Figure 13 is not specific to the firm. The function of the
organism (in the firm it is an economical function) determines the tasks,
the subsystems, the content and the frequency of information. In other
ways, the model is not suitable for the sociological level. Man is not only
a subsystem of the organisation system. It is necessary to take into
account the plurality of roles, the external contributions and the
multiplicity of roles in the organisation, from which spring tensions,
conflicts and innovations.
4.3.2 The physical phase P

The flows of materials and energy constitute the real sphere as a function
of which the aims and policies of the firm must be established. In the last
resort, it is the evolution of the real sphere which sanctions the action of
the head of the firm.
The decisions, objectives and forecasts which are not based on the
real sphere are unrealistic and illusory. The decisions and objectives
which are not translated into action on this sphere are ineffective and
useless. They constitute a dead weight for the firm.
The concrete objects are divided here into five classes (based on
Forrester's division into flows):
Class E : Energy (hydraulic or electrical power, etc.);
Class d : Men (as executive agents or manpower);
Class 0 : Capital (equipment, bui:dings, instruments, etc.);
Class Et3 : Raw materials, products and merchandise;
Class $ : Liquid money (except effects and credits).
These objects can never be directly apprehended by the field of
representation .qt. At least one intermediary abstract phase exists between
the latter and the concrete phase: the psychological system.
4.3.3 The psychological phase {t/1, 9f}

Stimulus-objects can be directly in contact with the sensory organs or
analysers (proximal stimuli); but in the majority of cases they are
distant (distal stimuli). A liaison vehicle is therefore needed to trans-
form them into proximal stimuli. This is the function of light for the
visual analysers, or of sound waves for the auditory analysers.
The stimuli are then transformed by the analysers into digital infor-
mation (excitation of , he neurons) which is processed by the neuro-
physiological networks of association (Figure 13- 2, 3, 4) and either
reaches the intermediary system, where it is transferred into the psycho-
logical phase, or reaches the effector organs (5). The effector organs
play the part either of transformers of neurophysiological information
into energy, by which it acts upon the external environment (operational
movements, actions), or of transmitters of information (words, expres-
sive or symbolical gestures).
The intermediary system t/1 which corresponds to the psychologists'
I 26 A Critical Introduction to Organisation Theory
unconscious and subconscious, is the centre for complex processes of

integration and handling of information. Here it is not the digital
information of the abstract phase which is manipulated; it is psycho-
logical information: images, desires, sensations, etc.
The intermediary system 1/1:
-Stores information and returns it at will (memory and learning);
-Aggregates it according to logical or apparently fortuitous opera-
tions (associations, intelligence);
- Synthesises and formulates it before transmitting it to the field of
representation;
-Forms invariants on the basis of continually changing stimuli
(perceptual activities);
- Generates scales of value and combines them;
-Formulates orders transmitted to the physiological system and
from there to the external world.
The field of representation :Jt, centre of conscious phenomena,
receives the flow of latent representations, formed in the intermediary
system, at a variable rate. These representations differ fundamentally
from the abstract phase which precedes them; in particular, they are
mostly qualitative, and difficult to quantify or aggregate. The wave-
length of the colour blue (abstract phase) only differs from the wave-
length of the colour red by a higher frequency, and it is possible to
establish objective and quantitative relationships between these two
frequencies. The corresponding representations 'blue' and 'red', on
the contrary, cannot be reduced one to the other; it would be absurd
to assert that blue is equal to red multiplied by a coefficient; it is simply
different, and any attempt at measurement only ends in a more or less
arbitrary classification of objects, without producing the cumulative
effects encountered in the abstract phase. On the contrary, the central
nervous system functions in a discontinuous and digital manner:
heterogeneous stimuli, received by various analysers, are translated
there by messages which only differ from each other by their amplitude,
their frequency and their channel.
In the field of representation, the representations such as auditory,
olfactory or visual sensations, are once more of different quality. The
extreme heterogeneity of the psychological phase, such as we see it in
the field of representation, is contrasted with the relative homo-
geneousness of the abstract phase. This heterogeneity could be in the
image of the concrete world around us. Thus we could say, with Warren
McCulloch, that perceptual activities construct a microcosm on the basis
of abstract neurological information which is a model of concrete reality.
These psychological considerations would be very far from our
subject if the head of the firm's most important decisions- those that
do not follow automatically from a set state of the system- were not in
fact determined by this psychological model and formulated in terms
of representation. (The determinists put forward the hypothesis that
the model is determined by the state of the system, the latter being,
however, much larger than the system considered here.)
Certainly, the information scientists' ideal director will consult the
tables, establish rel~tionships between the series of figures provided by
the computer and take his decisions according to certain algorithms
which, though they are not yet completely formalised, are none the less
governed by coherent logic. But, at the level of creative imagination,
the real director hastens to convert these monotonous sequences of
figures into images which are as varied and life-like as possible. He
tries to visualise reports and to reconstitute the concrete reality which
they express. He transforms quantities of money into levels in the funds,
business figures into condensed visions of shelves or racks full of
merchandise, stock rotations into handling movements. Mentally he is
on the spot, or at least he tries to transform the figures into lengths in
order to be able to compare them better. Imagining the future state of
the system, he projects his objectives or his forecasts on to the theatre
of the field of representation; scenes strongly coloured by factors,
drives, motives, will represent to him the future which he grasps, sees
and feels ahead of him and which determines his decisions in the present.
For Pounds, a problem is defined by a difference between the object
and the model. The resolution of the problem (problem-solving)
consists in reducing this difference. For his part, Johnson points to the
use of the context as an operator to formulate a (functional) signification
of an object. Perception then seems like a process of participation of the
subject in the object.
4.3.4 The abstract phase

However, man mistrusts raw phenomenological experience such as it
appears to him in his field of representation. He has learnt to his
disadvantage that his assessment can lead to series errors in estimation.
So he employs instruments which allow him to manipulate reality and
to verify the expectations formed on the basis of the conscious model.
Thus he calls on denotative experiments of which an example was de-
scribed in section 4.2.4 in connection with Lyer-Muller illusions. This
denotative experiment can be broken into several stages (see Figure 14):
(a) Observation, calling on the sensory analysers;
(b) According to the apparent initial state of the system discovered
by observation, creation of a method to be applied to reality, formu-
lated by the psychological system;
(c) Forecast of the apparent state of the system after manipulation;
(d) Observation of the new apparent state, compared with the
expected state;
(e) Correction of the hypotheses, culminating in a more operational
perception of reality (restructuring of the model).
SYSTEM<» SYSTEM ; It
FIGURE 14. Model of denotative experiment.
We have learnt to construct instruments for observation, for measure-

ment and for information processing, in order to extend the action of
the analysers and effectors proper to the business firm. We can also
support and strengthen its internal information processing system
(memory and logical operations).
These instruments refine observation by multiplying the descriptors,
which determine the choice of characteristics of the concrete objects
selected for transmission and processing, and bring new sensory
receptors into use; for example: ultrasonic receivers, X-ray receivers,
special ultra-violet glass, seismographs, piezodynamographs, etc. They
thus put within our reach events which, because of their scale, their
position and their nature, would escape our sensory analysers. In
addition, they permit us to act upon objects which, because of their
scale, their position or their nature, would be inaccessible to direct
manipulation by our effector organs (that is, our muscles and glands).
Finally, they relieve the psychological system of the routine work of
comparison and forecasting.
Thus man projects his nervous and psychological system beyond his
natural boundaries, thereby extending his hold on reality (see Figure
No. 15).
The differences between the systems of the abstract phase (adminis-
trative and neurophysiological) are less profound than it may seem at
first sight. The outputs of one are the inputs of the other, and vice versa.
On the other hand, it is important to separate clearly:
l. The sources (or environment of the system) in the physical phase,
where the stimuli S are formed and on which the responses R of the
system take effect;
2. The end-points of the system, in the psychological phase, com-

prising the field of representation and possibly the intermediary
system, where the stimuli S provoke perceptual responses R' and
from which stimuli S' or 'psychological orders' set out;
3. The intermediary abstract sphere, centre of communications and
information processing, which is administrative as well as physiological.
At intervals along the route there are numerous feedback loops.
Every time that the decision arc S-+ R is new and complex, it tends to
be situated at the highest level f:Jt. The learner-driver is aware of his
slightest movement: the movements of engaging or disengaging the
clutch, turning the wheel, etc., are the subject of so many conscious
decisions (called overt). With practice, little by little the decisions
disappear from the field of representation; the arc then falls in the
intermediary system (unconscious decisions) and later in the psycho-
logical, cortical or sub-cortical level (reflex decisions).
It is possible to go further by constructing servomechanisms which
replace the driver by an 'abstract' device, exterior to man, to whom the
arc of decisions will have been transferred by means of a programme.
The decisions are then called implicit (cf. decision theory). Assignments
and administrative processes are also 'implicit decisions', and our
familiarity with them must not lead us to forget that at a certain mo-
ment they were all born in the field of representation, which here plays
an extremely important integrating and creative role.
Every decision taken at man's level, in the framework of the pro-
cedures in use in the business firm, or within computers, has its origin
in a field of representation and is governed by the laws which rule this
field (deformation, distortion, value judgements, etc.).
ABSTRACT PHASE A PSYCHOLOGICAL PHASE ;

PHYSIC AL
PHASE p Trans·
Analysers miners Analysers <l>
- ..
Abstract Neuro-
1 ad minis· 5 1 physio- Intermediary
il
logical system
-
trative
s ~ system • system -
~, \
\ \
~
----~
UnconsciOUS
Canerete Implicit or Conscious
Unive rse decisions arcs subconSCIOUS decisions
r-- I act•ons
I
- • / I -
~
R r-
5 (routine) 1
... - 5 (overt)
Effectors Receptors Effectors
FIGURE 15. Interphase relationships. The analysers (I) of the administrative

system are the peripheral inputs, or data recorders; the effectors (5), are the human
or mechanical power. In the neurophysiological system, the analysers are the
sensory organs and the enteroceptors; the effectors are the muscles and the glands.
Instruments of measurement and control

Apparatus for observation and measurement (concrete objects) can be
considered as an extension of our peripheral organs: our analysers and
effectors. In the same way as these organs are adapted to capturing a
particular attribute of reality (for example, a certain range of frequen-
cies), so instruments are specifically linked to a particular descriptor:
the colorimeter records the differences in wavelength in the light
spectrum; the balance establishes weight equivalences and the gauge
selects a certain shape.
Scales and time-keeping mechanisms are remarkable examples of
instruments for measurement and observation. Time-keeping mechan-
isms are physical systems whose states vary in a regular way with time,
and never reproduce themselves in an identical way during the interval
of time defined by the measure: thus, the hands of a clock never occupy
the same position during a period of twelve hours. These systems can
therefore serve as time-scales. The physiological system has its own
time-keepers or ' internal clocks' such as diurnal, respiratory and
cardiac rhythm, etc.
These instruments make concrete a concept created on the psycho-
logical level: the concept of co-ordinates. The instruments are the
applications of a space-time or numerical grid to the whole body of
concrete objects in the external environment, which makes it possible
to locate, classify, reclassify and recognise these objects within the
system.
It is important to remember that the instruments and time-keeping
mechanisms have no intrinsic significance; they are only the translation
into the concrete phase of a body of psychological scales, supposedly
homomorphic with reality, within the limits of our needs and the field
of our descriptors. The same concrete event is expressed completely
differently according to the descriptors (weight, value, duration, surfaces
and the precision of the scales (units of measure, division into hours,
years, square metres or acres, etc.). Experts know how much decisions
depend on the choice of scales and descriptors.
4.4 RELATIONSHIPS BETWEEN THE DIFFERENT PHASES

AND THE CIRCUITS
4.4.1 The passage from the physical phase to the abstract phase
First case: The abstract phase is reduced to the neurophysiological

system
Concrete objects act directly (proximal stimuli) or at a distance (distal
stimuli), as we have seen, on the 'sensory organs' or analysers of the
organism which generates certain specific attributes dependent both
on the type of analyser and the object. In addition, the stimuli are
filtered by undergoing selection: certain of them are retained and

provoke a response from the effector organs. These are the signals.
Others are rejected; these are the ' noises '.
This distinction between signal and 'noise' is important, because it
implies the idea of choice which is at the basis of the concept of speci-
ficity :5
S = H0 - H1
H 0 : variability-entropy before the choice
H 1 : variability-entropy of the choice
S: specificity-entropy
At the level 9l, the signals become meaningful information, and the
'noise' becomes representations bereft of meaning or excluded from
the decision. The attribution of meaning is an operation which depends
largely on the level in which the decision arc occurs. For example: if
the decision is overt, it is the field 9l which separates the signal from the
'noise'. What is a signal at one moment for one individual may only be
'noise' the next moment, or for another individual.
At the physiological and unconscious level, it is learning which
conditions the separation of the signal from the 'noise'.
Second case: The abstract phase includes the administrative system of

the firm
The administrative system functions in a similar way to the neuro-
physiological system which it separates by a fraction from reality.
It comprises, similarly, analysers, information which is always abstract
(or symbolic) if not always digital, implicit decision centres or reflex
arcs and, finally, effectors.
The homomorphism between the administrative system and the
neurophysiological system has been revealed by the development of
integrated data processing (IDP). The sensory analysers correspond
here to the information input receptors: electronic balances, gauges,
photo-electric cells, microphones, clocks, etc.; the effectors correspond
to the command mechanisms of automatic machines: tabulators,
cathode tubes, loud-speakers, etc. Transmission is performed by the
passage of impulses through relays functioning, like neurons, on the
principle of all or nothing; finally, the memory stores, the programmes
and the logical units complete the analogy.
These remarkable analogies must not hide the fact that they
existed earlier in classical administrative systems which include all
these functions and perform them by rather unsophisticated means:
manual or electromechanical devices.
The part of the receptors is played by the scribe with the job of
making manual transcriptions of the pencil and paper type; the effectors
employ the strength and skill of the workers; the organs of transmission
and calculation are embodied in a whole variety of intermediary and
tedious jobs (couriers, assistant-accountants, etc.) which still subsist in
many modern firms. The memory-stores are represented by the files or
registers, the programmes by the more or less explicit procedures and
instructions and the machine languages by the innumerable jargons
that are found in every profession and in very firm.
4.4.2 The interphases

In Figure 15 (page 129), the man-firm couple exchange only concrete
flows with the external environment, to the exclusion of all information.
Let us now introduce transmitters of information into the environment:
men, firms or various organisms. This information can represent
concrete flows (denotative information), and also psychological events
(affective relationships, complaints, recommendations, value judgements,
inferences, arguments, etc.). It is assuming a growing importance in the
economy, and motivation studies have shown that a firm does not only
satisfy the concrete needs of clients (sale of alimentary or maintenance
products, transport vehicles, etc.), but also psychological needs (com-
pensation for certain frustrations, satisfaction of hedonistic or aesthetic
desires, etc.). For example, a manufacturer of beauty products does not
only offer' cosmetics' to his client; he sells her beauty, youth, saving of
time, dreams, hope, etc.
It has been suggested that the concrete value
vi =f($)
of a product is increased by its abstract value, relating to its capacity
to satiate psychological needs:
V2 =.f($){1/1}
(Here ($) ~ represents the exchange-value in money of merchandise,
services or physical flows, as opposed to ($)1/1 which represents the
exchange-value in money of the satisfaction of a desire or a need.)
A classical example illustrates the distinction between V 1 and V 2
very well: the value of a car is the sum of V 1 and V 2 • In the extreme case
where V 2 ·is cancelled, the car has no prestige, no beauty, no sales
appeal; it serves exclusively for the transport of people and objects.
The Americans have called this type of car a transportation car.
The reverse example is provided by those cars which are often in-
efficient in normal conditions of daily life, but which correspond to the
self image of their owner (racing cars, prestige or vintage cars with a
'historic' value, which give him the illusion of prestige, stability,
respectability or dynamism).
Information coming from outside penetrates directly into the admin-
istrative system of the firm which is in the same phase (abstract). As

soon as it enters, it is subjected to the operations of coding or selection,
to the exclusion of any denotation. Denotation, in fact, only applies to
the abstraction of concrete objects. Let us remember that denotation
consists of choosing, from the indefinite collection of attributes of the
concrete object, a definite group, and applying this group in abstract
language. The 'denotative' symbols or signs obtained in this way
therefore represent' abstract objects'. In addition, the operation which
consists of receiving abstract objects and transforming them into other
abstract objects is called connotation and the signs or symbols which it
produces are called connotative. This terminology is borrowed from
general semantics (Hayakawa).
Denotation marks a change of phase. This change of phase only
exists for symbols which as a result present a low risk of alteration when
they enter the administrative system. It is easier to punch the items of
a printed list on to a card than to write out a description of the corres-
ponding concrete object on a stock card.
Figure no. 16 (p. 134) represents the interphase relationships and the
following notations are used in it:
P: Physical system of the firm (merchandise, buildings, etc.);
P: (Complementary to P): physical environment (merchandise
ordered, buildings on loan, etc.);
A: Administrative system of the firm (or of a service studied separ-
ately);
A: Administrative systems of suppliers, clients (or of other services
of the firm);
r7t: Whole combination of the psychophysiological systems of the
members of the firm (or of the service under consideration);
r7t: Whole combination of the psychophysiological systems outside
the firm (potential clients, competitors, suppliers, etc.).
4.4.3 Definition and symbolisation of interphases and interfaces

DEFINITION. Interphases is the name for operations which permit the
passage from one phase to another, in contrast to interfaces which
maintain communications between distinct systems, 6 without change
of phase. Denotators and effectors are interphases, as is rhe psycho-
physiological frontier +-+ 1/1. Transmitters and receptors of information,
on the contrary, are interfaces in the broad sense of the term which
encompasses the more restricted meaning adopted by information
scientists.
(a) lnterphases and interfaces of an administrative system

Every administrative system A or A comprises two input-output pairs;
the first pair comprises the denotators and effectors, which are the
interphases.
nA
w
.J:>.
~~==--===--=~;--=~~--~;:;;;;·:::;;;-~
I 7
~-~
~· I 'I • };--<-
.,.---------------":>--..~- __, - -------
' ................ ,- '
! ~-=-:,--tftt--;7-.. i 5 .,... ' /" ~---~1
\ ' '\, ::t...
t®
l
@:1= ')8(@):f® ®+
/',.,"" ',, \' I Q
J _.... ...
~~-----tit---.!- ~,_....
~'@.tr:3 ~@~ 1 ::::;.·
)o~..
·--+1----::A
.............. -<___+')' ___ t >-- /-~@-, ~~
. .·(-~- • 11 :/\'~
------------- 1 ., 12./.
i:;-
~ 'l' . ~"'t/)
_____________ ~
u ...~
A, §·
~ Concrete flows 9i Field of representation Input of concrete information/ (!) Psychic representations @ Neurophysiological network
c
(field of consciousness) (knowledge of the internal and 0
---~ Flows of information CD external physical sphere) @ Research orders (memory) Unconscious decisions (latent)
(abstract. administrative
® ~
olio Memory stores,
Execution-action ~':";\ Action on the Unconscious formulation §
or physiological) processing org~ns G) @
\!:J external environment (latent)
--~Psychological flows Output of information ~-
1•1 Association notworks @ Transmission of symbols
0 Network of psychological
{i; A,n} Firm ~ Denotator Input of information @ associations ~-
Concrete flow
P. A,ft' Environment 1:::::7""-(generator of information) 0 (orders. directives) @ (modifications of the Conscious associations and
-
P Physical sphere ~ Receptor physical system) @ overt decisions
Sensory receptors ;;2
A Pr~~ing ~f . . L::::7'"-- (of information) ® @)Implicit decisions
adm1n1strat1Ye 1nformat1on @ Effectors (motor org~ns. glands) I@ Note: The generation of scales :5
Effector (agent) of value and of systems ~
n: {~. 'P.Ji} psychophysio- -8-· Direct denotative @@@ Administrative
logical system of objectives takes place
0 representations r 5 formulation of data
~ Transmitter
(J) Physiological system at@and@
~-(of information) Direct connotative @Reflex arcs
lJI Intermediary system ® representations r5
(unconscious-subconscious)
FIGURE 16.
8Denotators. These operators (or organs) transform the concrete

phase P or P into the abstract phase A or A. In other words, they
generate information (symbols or signs) from concrete objects.
The transfer function P ~ A depends on the group A of descriptors b.
It is called denotation, and corresponds to the description of objects,
to their indexing and to their denomination.
GE.ffectors. These operators (or organs) convert abstract phase infor-

mation, received from A or A, into concrete flows in P or P (in the
physical sphere of the firm or the environment respectively).
The effectors generally represent executants (maintenance workers,
labourers, workers) but can also represent automated machines.
The transfer function A v A ~ P v P corresponds to a certain
extent to execution, and information A v A to orders received.
The second pair comprises receptors and transmitters which ·are
simple interfaces.
8 Receptors. These operators receive abstract information and intro-

duce it into the administrative system of the firm (A) or into the admin-
istrative systems of the suppliers, clients, etc. (A} In other words, they
generate symbols or signs from symbols and signs.
The transfer function A ~ depends on the information selectors
v S. It is called reception. If it corresponds to the logical function of
identity, the transformed object is identical to the operand and the
symbol (or sign) is transmitted as it is. In other cases, the reception
introduces noises, losses or various codings. The operand here is
information entering the system; the transformed object is information
coded in suitable manner for transmission to the interior of the system.
8 Transmitters. These operators transmit abstract information destined

either for the receptors of other administrative systems or for the sensory
organs of the members of the firm or the environment.
The transfer function A ~ A is called transmission.
(b) Interphases and interfaces of a psychological system n{, 1/1, 9P}

It comprises several levels of input and output, of which two will be
mentioned:
the input to/and the output from/the physiological system ;
the input to/and the output from/the field of representation 9P.
Inputs and outputs of . The input organs or sensory analysers play
the parts both of denotators and of symbol receivers. In the first case,
it is a matter of the making of contact with the external physical sphere
(proximal stimuli); in the second, it is receiving information (reading
symbols, interpretation of signs and images, etc.).
The output organs or effectors (glands and muscles) play the part of
effectors in the true sense of the word (agents of execution). This is the
case with balancing movements, with acts destined to supply physio-
logical needs, etc. In addition they are transmitters of information
(transmission of verbal or written messages, facial expressions, express-
ive gestures, etc.).
The organs 8 and 8 receive information either from the physical
sphere, or from human or administrative transmitters; they may poss-
ibly transmit it to the field of representation:
PvPf2Y,vi/i
AvAvi/i~l/l
The output organs 8 and 8 receive information from the inter-
mediary system 1/1 (the unconscious and subconscious of psychoanalysts)
and possibly from the field of representation gt; they transmit it to the
external environment:
1/Jvi/I~PvP
1/!f;}l/lvAvA
Inputs and outputs of gt. Denotators, receptors and transmitters:
ICl>l/l I ~ gt
Like the external environment, the field of representation gt can be
divided into the signified (representations with intrinsic value) and
signifying (symbolic and abstract representations, without the intrinsic
value of the signified).
For example, the perception or memory of a dog is a signified repre-
sentation; the perception of the word ' dog' is a signifying representa-
tion. J. Bruner ( 1966) classifies signified representations as iconic or
enactive as opposed to symbolic representations (signifying).
Iconic representations result from perception of the external or
internal physical sphere; this perception is direct or indirect according
to the bias of the memory. Enactive representations are operational
representations carrying external orders affecting the physical environ-
ment. (Examples: vision of a sunset, feel pain - iconic representation;
dig a hole, tighten a bolt-enactive representation, which could be called
operational.)
Denotator. Certain representations are generated on the basis of events

in P, transmitted directly or with a certain delay from the external
environment, by the intermediary of the physiological system. Others
come from internal stimuli issuing from the internal physical sphere.
These are percepts and the corresponding function is perception. The
perceived object being in the physical phase, the corresponding repre-

sentation is a denotative representation (example: vision of a dog).
Receptor. On the other hand if the representation issues from objects

in the abstract phase, it is called symbolic. (Example: reading of the
word 'dog').
Transmitter. Other representations are generated on the basis of

information which has its source in the system (ideas, invariants,
McCulloch's universals, scales of value, etc.). They are called psychic
representations r P •
Figure 16 (page 134), drawn up with the help of the preceding
definitions, illustrates the links between the different phases in a hypo-
thetical firm with a single field of representation (one decision-maker).
The input and output organs appear there as frontiers between phases
and systems. They can be likened to the selective membranes of cells,
and K. Lewin drew on this analogy in his work on the organisation of
the psychological system. 7
Let us arrange in a series the systems, P, A, «1>, 1/1, 9t in the following
order (or phase order):
System p A ct> 9t.
Phase order I 2
"'
3
The paths which pass from a system of order
3 4
i to a system of order
j > i, are channels of informational communications, since they are
moving away from the physical sphere and direct information towards
9t. The reverse paths, on the other hand, tend to move away from 9t
and to approach nearer to the physical sphere; they transmit information
for execution. They are operational channels carrying orders.
The channels of communication can run through all the systems from
P to 9t or in the reverse direction, but they often change direction on the
way: coming from a level of order i, they return to it after reaching a
level of order [ + n.
Thus they give rise to circuits which will now be studied.
4.4.4 The circuits

Circuit is the name for any path which, leaving a sphere or a system of
phase order i, returns to this sphere (or system) after passing through
spheres of a different order i + n. These terms will be extended to
intersystem relations (called interfaces). Thus when a path leaves a
system of order i and goes to a system of order i + I, then to i + 2, and
comes back to the system from which it started, this is a circuit even if
these systems all belong to the same phase.
The point of departure of the path at i is called the origin. The point
of arrival is called the terminal. It is obligatory for there to be one or
several points in a circuit where the path changes direction (after leaving
i, it returns to i); this portion of the path will be called an inflection.
These inflections correspond to the physiological arcs. The latter word
has been avoided because of the risk of confusion with the corresponding
term in the theory of graphs. The paths which lead from an end-point
to an inflection are called branches. The sphere of departure and arrival
i of a circuit is called the base.
It is possible that the terminal of a circuit has no action on the sphere
in which it is situated, although this is the same sphere as its origin.
The circuit is then called open. In the reverse case, there is some inter-
action and we speak of a closed circuit (feedback loop).
Here are some examples which illustrate these preliminary ideas
briefly.
The head of a firm makes his research policy dependent on his sales,
by allocating a percentage of the trading figure to the research and
development department. The circuit is made up as follows.
Origin in P (stock and money in hand, in the physical phase): output
of merchandise from stock and corresponding receipt of money.
Rising branch (of increasing abstraction): it passes through the
administrative system A, where numerous operations of aggregation
transform the group of transactions from the sphere P into an abstract
symbol or the trade figure for the period X. This trade figure crosses
 and 1/1 and reaches the field of representation 9t of the head of the
firm, loaded with additional information drawn from the systems
through which it has passed (scales of value, preoccupations, prejudices,
criteria, ratios, images, etc.). The complex of resulting representations
is then processed in 91, which generates operational representations
directed towards the physical sphere.
The descending branch is therefore started at the level of 9t where
the inflection of the circuit is situated. The inflection at 9t is called the
decisional inflection, as opposed to the inflection of execution (or
operational inflection) in the physical phase or the abstract phase.
The latter lead to a modification of these respective spheres.
The terminal lies in the physical sphere and causes expansion in the
range of instruments or in the research staff. There is no connection
between this terminal and the origin; the circuit is therefore open in so
far as the increase in the research and development budget does not
have an effect on current or immediately reckonable sales.
Open circuits are awkward and the study of them is unrewarding;
most attention has been given to the closed circuits which abound in
firms and economic systems, and even more in the models supposed to
represent them. As a reminder, let us quote the relation between sales
promotion and trade figure, volume of stocks and volume of sales, etc.
(cf. J. Forrester, Stafford Beer, R. Johnson, etc.)
It often happens that one vaguely senses- and wishes- the closure
Decisional inflect•on
Client 7f
Cl> if! il
[MemEJ __t__.,
---L-- -.., I
Scales--- 1 1 ~
of value 1 1 1 '1)
I I 1:)
Interaction I I
(Inflection of execution) I I Percepts ~·
nferences
,I II :::
IJudgements
11
1:>
~~~ I --
I I I i:::l
• II
;:;·
<::;·
' : I
1 I l cs·
;:::;
Q!~rs E2~~!!i.2.nJ-~1 Operationa~
representations
~
c~
~
P : Physical phase of the firm

P: Physical phase outside the firm
A Administrative system in the abstract phase.
FIGURE 17. Note: The connection to the base may be considered as an inflection of execution, the inflection at
t)le highest level of abstraction being a decision inflection. w
\0
Decisional inflection Decisional inflection
.91 1i
Expected connection
., ii Client
Transmission
CA of symbols
-Efj
- $ Raw materials
+$
Base
Execution inflection
~ ii: Psychophysiological system of the clientele

.91 rr: Psychophysiological system of those responsible for the firm
FIGURE 18.
of the cycles, that is, the existence of closed circuits with execution
inflections, without being able to demonstrate them. Let us take the case
of the allocation of funds for publicity. As the origin and the terminal
are rooted in the physical sphere (receipts and paying out) a connection
between the end-points is expected. Almost all the cycles pass in this
way through systems which are independent of the system which makes
the initial decision. That is the fundamental problem -which is only
mentioned here - of the relations between the physical system and the
psychological system.
In fact, the only certain connection lies at the level of the decisional
inflection f!l, where we pass arbitrarily from a trade figure to publicity
credit. The circuit can be shown diagrammatically as in Figure 17
(see p. 139). We should note that when the decisions are implicit (pre-
determined ~elation between the volume of sales and the publicity
budget), and programmed on a computer for example, the decisional
inflection is situated in A.
This circuit could be shown with more precision as in Figure 18,
although it seems that this model is not completely representative of
the relations between individuals, since this would mean that these
relations passed obligatorily through objects, which has not been
proved.
Circuits with base P and inflection f!l

These are all the inputs of information needed for conscious control
of the physical environment . .rJii therefore has a correcting effect on the
physical environment: it is the role of the driver with his machine.
When the circuit is closed in P, there is interaction (or operational
inflection) governed by fJf, that is, control of the control which has been
carried out.
Circuits with base fYt and inflection P

Here we are dealing with the conduct of investigations and enquiries.
It is not a question of modifying the external environment according
to the constraints formulated in 9t but, on the contrary, of adjusting
the field of representation fJf to the external physical environment. If the
circuit is closed, the inflection in fJf has the purpose of continual adjust-
ment of hypotheses and percepts, in order to adapt itself as well as
possible to the sphere which is being studied. This is what happens in
studies of markets, of motivation or in any fundamental research. The
organisational expert does not want to start by modifying the firm to
adapt it to his abstract concepts but, on the contrary, to improve the
latter by modelling them according to the sphere studied, in order to
obtain the maximum significant information from them. Here, the
inflection in fYt is subordinated to the inflection in P.
Circuits of interaction P- 9t
The two circuits often alternate in the course of a process or study.
What Piaget showed admirably in his studies on the development of
intelligence in the child, also applies to firms undergoing expansion:
both pass through alternating stages of assimilation (in which the
physical sphere P is modelled on the abstract concepts of !Yi), and of
accommodation (in which the concepts of.~ are adapted to the external
physical constraints of P).
4.4.5 Incomplete circuits

The circuits which we have described pass through the three phases:
physical, abstract and psychological.
But other cases can be envisaged:
I. Circuits having their inflection or base in P, and their base/or
inflection outside fJf (in A, or in<!) or in t/1): they will be called extraverted
(or operational) circuits;
2. Circuits having their base or their inflection in 9t and their in-
flection/base outside P (in t/1, <!) or A): they will be called introverted
(or semantic) circuits;
3. Circuits having their base and their inflection in the abstract phase,
or floating circuits (if they are linked to non-floating circuits), and
phantom circuits (totally isolated from P and from Yt).
It would be outside the limits of this introductory chapter to embark
on an analysis of these cases. Nevertheless a few interesting character-
istics of these incomplete circuits can be mentioned:
Extraverted circuits
The circuits having their base in P are operational, wherever the inflec-
tion may be situated.
If the inflection n is found in A, the sphere is modified by implicit
decisions (numerical control); if the inflection is in <1>, it is there because
of reflexes (the car driver), and because of unconscious motivations;
if n is in rjJ (purchases on impulse, with late control of fJt, without a
decision made at the conscious level), the inflection is turned towards
the exterior; hence the name of extraverted given to these circuits.
Introverted circuits
The circuits having their base in fJt answer the needs for significant
information at the level of the field of representation.
Significant or semantic information is here used in its non-operational,
gratuitous sense. This information is either hedonistic and amusing
(to know 'for pleasure' or as a game), or logical (to know something
in order to reinforce one's mental apparatus), or ethical (knowledge
for its own sake, even if nothing can be changed in the situation), or
aesthetic (to find out something to satisfy artistic needs).
The: circuits of this type are invested with great importance, since they
act upon psychological flows just as much at the level of the firm
(enjoyment of work, team spirit, for example) as at the level of the client
(motives for purchases, image of the firm, etc.).
When the inflection is in at, there is a call for the symbols of the
administrative sphere (reflection on data) or of rjJ (consideration of
concepts and ideas or memories). The process of consideration is
conscious.
When the base is in !Jt, fJt is modified by the symbols originating in
rjJ and/or A on which it calls, and it is at the preceding level that the
process of formulation occurs. If the inflection is in A, the formulation
is at the administrative level; for example, simulation by computer.
If the inflection is in rjJ, the work is unconscious and the concepts are
already formulated when they present themselves in fJt. In this case, fJt
plays the part of a control, and the inflection is turned towards the
interior. The circuit is truly introverted.
Floating circuits.
When a circuit has no links either with P or with fJt, the information
which it carries causes no modifications in the physical state of the firm,
or in the psychological state of its members. Nevertheless it can modify
its abstract state in such a way that it may be capable of affecting other
circuits, either introverted or extraverted, in the future. If this is not the
case, the floating circuits become phantom circuits carrying dead infor-
mation. These phantom circuits are a useless weight for the firm and a
source of noises or losses without compensation. The ritual operations
which are encountered in certain great organisations are well known-
data are manipulated without meaning (the corresponding concepts

having evolved or disappeared) and without effect on the environment.
They sometimes include elaborate data collection services, statistical
processing or filing services whose existence has been forgotten for
years and which are only discovered by chance during reorganisation
or an inspection.
Phantom circuits are not as rare as may be thought: they generally
pass through the intermediary state of floating circuits (comprising
information which it is thought will possibly be needed). They include
dead files as well as purposeless controls, unused forms, statistics that
are never consulted, etc.
Half-circuits
These are circuits, one branch of which leaves P or Yt and arrives at
Yt or P (complete half-circuits) or in an intermediary system, but the
other branch of which does not end either in P, or in Yt.
The complete half-circuits leaving P are informational, without
operational consequences. The half-circuits leaving Yt can be likened
to orders without feedback.
4.4.6 Man/environment relationships

The need for human workers and their role in the firm have been the
subject of passionate controversy which is growing in importance.
Machinery has replaced men with advantage in physical work;
automation today deprives them of certain prerogatives which were
reserved for them, such as logical reasoning, solving of complex prob-
lems, preparing decisions, even decision-making. Unnecessarily disturb-
ing a situation which was already delicate, certain authors have played
on the ambiguity of the terms memory, logic, artificial intelligence, even
brain- as if to establish the Go/em myth even more firmly. Eminent
authors such as Ross Ashby started the trend with Design for a Brain.
Only one more step was needed to reach the point of asserting that the
machine can replace man completely; this step was cheerfully taken by
Culbertson with The Mind of Robots, followed in the same path by many
other eminent authors.
The incautious excesses of the most active partisans of artificial
intelligence have driven to exasperation the exponents of the pragmatic
movement and the human relations specialists, who maintain that:
'The machine can never totally replace man; it is stupid and can only
carry out work according to the objectives provided by man', etc.
One postulate will be put forward at this point, and should be gone
into in another volume, namely:
A machine can possess an abstract structure, homomorphic to the
nervous system or any other abstract or physical system which can or
could be conceived. A machine cannot have a field of representation

9t or- by inference- an intermediary system 1/1.
This is the equivalent of saying that, contrary to the suppositions of
Culbertson and the 'naive' reductionists, a machine will never feel,
love, mope, enjoy, etc. The use of such terms is an abuse of language,
playing on the ambiguity of the current vocabulary. A machine can
present an informational structure identical to that of the system 
of' the-man-who-feels', who loves, who is angry; it will be able, in the
more or less near future, to provide the same responses to comparable
stimuli. It will present analogous behaviour to that of man, but not the
same conduct, to use Janet's term. The term conduct is moreover
inapplicable to machines, as it implies states of consciousness and scales
of value proper to the psychological system.
Misuse of the S-R (StimultJs-Response) model, developed in the
United States by behaviourist psychologists, was the origin of this error
which will seem obvious to some people; we shall say a few words about
it.
s-{
R __:box
---1'--------'
In this model, which has played a preponderant part in the training
of two generations of research workers and theorists, the individual is
considered as a black box, into which the stimuli S enter, and from
which the responses R come out.
The aim of behaviourist psychology is to analyse and discover the
laws between Sand R. The whole body of S-R relations thus defines the
personality of the individual; and it is in terms of S- R (or behaviour)
that ideas such as memory, pleasure, motivation, etc., are formulated.
Reflexologists of the Soviet school have gone even further in asserting
that the centre of behaviour was necessarily anchored in the physio-
logical system, and in particular in the central nervous and reticulated
systems.
These two systems justify the equating of a man and a machine

presenting the same behaviour {S-+ R} and, provided that a system A
homomorphic to is constructed one day (and it is only a question
of time and means), the problem of artificial thought will be considered
as solved from that point of view.
However, three important facts crack the structure:
1. The existence and the properties of the field of representation;
2. The activities of contemplation;
3. The creative activities.
The existence of the field of representation is so obvious that we pay
no attention to it. Now, it is not possible to equate the field of repre-
sentation with the underlying nervous system. It is not enough to say,
with Razran, that the states of consciousness are a superior form of
physiological energy, in order to resolve the serious problems of psycho-
physiological relations (cf. Piaget).
There are stimuli without corresponding responses (see the figure
below). All the informational half-circuits are in this group (Stimulus
S, Response R' in ~). When we contemplate a beautiful landscape, or
a painting by Velasquez or when we listen to a Beethoven symphony,
the stimulus S is well defined, but the corresponding response R is not.
It can consist of vague expressions of pleasure, in descriptions which
have nothing in common with the message received, or it may be totally
absent (silent contemplation). There is no semantic link between S and
R; the true response to the stimulus S is found in the field .~ (R')
The aesthetic rules of certain schools asserting that every work of art
must have a definite response which is useful for organisational, social
or political purposes (functional music, patriotic paintings, etc.) cannot
change the simple fact that a response to artistic stimuli cannot be
shown in a satisfactory way.
The field of representation in this case plays the part of the consumer
of information that the art historians know well. This part may be
frequently hidden but is none the less important in salaried workers,
directors and clients of the firm.
Although we are not always clearly conscious of it, the stimuli
tending to satisfy this 'information-hunger' will be favoured in com-
parison with the others. One machine will be preferred to another,
which is more useful, for aesthetic reasons: 'It is more attractive to
look at'. For the same reason, a well-presented project will attract more
attention; we will buy a perfume because of the bottle, etc.
The information needs of the field of representation are at the basis of

people's incentives to work, their behaviour and the formulation of their
scales of value and their decisions. Whole industries produce and sell
symbols for consumption by fJt. This phenomenon has no equivalent

in the physical and abstract phases. It is pointless to have poetry com-
posed for people asleep (t/1), or for machines (A).
There are, reciprocally, responses R without S in P. Here again, the
most striking facts spring from the artistic domain, which explains why
they are not well known to specialists who are not generally familiar
with aesthetic behaviour.
We are speaking of creative activities. A man transmits symbols which
cannot be explained as a function of stimuli received. Thousands of com-
posers have assimilated the rules of harmony and counterpoint but
it needed Beethoven or Schonberg to introduce new elements of organi-
sation into them, and nothing enables us to know in what way their
training conditioned their discoveries.
Here again, there has been a play on words and a comparison of the
generation of highly organised forms with the 'creation' resulting from
a deliberate random series, combined with certain algorithms. An
attempt has also been made to explain the genesis of works of art
through the historical or ecological circumstances, which may condition
the external aspect of the work but have nothing to do with its inner-
most originality.
The transmission of original responses R on the basis of stimuli S'
generated at the level of the field of representation and of t/1, is not only
at the origin of ethical, aesthetic, hedonistic and logical value systems,
but also of all ideas of creativity. Here again, man is irreplaceable as a
producer of concepts. A machine will formulate or perfect complex
and significant works, provided that it has received algorithms and
value systems previously generated by the field of representation. It will
define objectives with precision, provided that it is supplied with the
moulds, that is, a body of aims and a priori scales of value, based on 1/1
and fJt. A machine does not generate aims, and does not set original
objectives.
The aims and objectives which activate business firms cannot be
defined without referring to the idea of scales of value which are in their
turn linked with needs and incentives and spring from the innermost
mechanisms of the psyche. The same can be said of the processes of
decision which cannot be reduced to simple weighing of criteria or to a
catalogue of methods of optimisation.
Human decisions (overt decisions) are doubly linked to incentives:
directly to the laws governing choice and the operational phase of the
decision; indirectly through the channel of perceptual deformations,
at the moment of apprehending situations and checking results.
It will therefore not be surprising to find below, as was promised
in the' note to the reader', a psychological model of unusual importance
in a work dealing with the business firm.
Appendix: Method of
Evaluating the
Organisation of
Business Firms
In collaboration with Christian Feuillette (from European Business,
Winter, 1971)
1 Aim of tbe method

A practical trial has been made of the methodological procedure which
will be described here and of which certain basic elements have been
studied in the course of the present volume. Before describing the trial,
the aim of the evaluation will be made clear and the conception of the
method will b~ analysed.
In the domain of management, one question has often been asked:
What are the characteristics of a 'good manager'? Can he be sized up
on the basis of homogeneous criteria, and is it possible to sketch a
composite portrait of him? Many psychologists and committees have
tackled this question in search of even a partial answer.
Among original research, there has been the famous 'Managerial
Grid' by the American sociologists Robert Blake and Jane Mouton;
Frederick Herzberg and Rensis Likert have also tackled this problem
from various angles and have picked out certain features or qualities
expected of an efficient manager.
On the other hand, it seems that no parallel attempts have been made
to define the structure of a firm which has an organisation compatible
with efficient management. It is often assumed that management
depends on men alone, but those who are familiar with business firms
know how much their structure weighs upon efficiency.
Few works are to be found on the firm and its structure. Of course,
147
writers like L. Ansoff, Joan Woodward or Ernest Dale have attempted

to formulate methods of evaluation, or to draw up statistical tables of
the organisation of business firms as a basis for classification, but with-
out achieving a real synthesis, for want of a means of comparing
heterogeneous data.
We have set out to devise a means of representing the structure of a
firm's organisation in a form which can be compared with others to
reveal their respective salient characteristics; we aim to build an instru-
ment for research and analysis which gives the consultant and the
manager the means of situating his firm more accurately and of identi-
fying its position (and that of each of its functions) in relation to the
great traditional and modern concepts of management.
This is not a work of mathematical quantification, but of simple
formalisation to facilitate the analysis of the level of organisation of a
firm. However, this approach cannot become a really useful tool
without a great deal of experimental work.
2 Conception of an analysing instrument
(a) Construction of the preliminary grid. Constituent elements and devel-

opment
Drawing on the work of Blake and Mouton, we considered that one of
the best methods of formalisation would be a grid which would match
the aims of our research if it represented both an organisational cata-
logue and a division of the firm into functional sectors.
For this purpose we have set out (Table I) on one side the great
doctrines of management and their message, and on the other side, the
basic functions of the firm, giving less attention to the functions which
correspond to domains where organisation has little to do: that is why
the functions of' Finance' or 'Accounting' correspond to the adminis-
trative sector and the function of' Marketing' is included in the com-
mercial sector.
Six schools of thought, chiefly based on the work of American
writers, share the favour of European business managers: the classical
school (Henri Fayol, 1900), the human relations school (Elton Mayo,
1930), the operational research school (Oskar Morgenstern, 1945), the
social systems school (Herbert Simon, 1950), the neo-classical school
(Peter Drucker, 1955) and systems theory (West Churchman, 1965).
The functions of the business firm have been grouped in three cate-
gories:
- the first includes the functions which have a determining influence
on the objectives and philosophy of the firm, that is, the functions
whose role is to decide general policies, tactics, procedures, structures
and distribution of functions;
-the second category is composed of the functions concerning relations
Method of Evaluating the Organisation of Business Firms 149
between individuals and with the firm, the aim of the firm being in
most cases to integrate the individuals with the system. Here again,
three main tasks emerge: communications and liaisons (decision
circuits); personnel policy; and human relations (considered not only
as the technique for reducing or avoiding conflicts but also as the means
of improving the working atmosphere).
The commercial, administrative and technical sectors form the third
of the 'functional' categories which all apply the principles advocated
by the six schools of management, in varying degrees.
Although it is limiting, this division into three 'functional' sectors
offers the advantage of more detailed differentiation between the
different schools in respect to their application within the firm.
After identifying the doctrines and functions, we compared them in
an initial table (Table 2) which makes clear the attitudes and funda-
mental principles relating to a given task within the general organisation
of the firm.
The blank squares indicate that a particular school of thought was
not concerned with a certain function, as for example, the school of
operational research with the definition of organisational structures.
(b) Coding of information

Once this comparison had been completed, the problem was by no
means solved. How should a given firm be assessed? How should it be
situated function by function in relation to body of management con-
cepts and techniques?
Acting as a management consultant, we drew our information from
three different sources:
I. An official source including all the annual reports, brochures,
pamphlets and booklets for new entrants, that is, all the company
literature produced for internal use (by collaborators and trainees)
and for external use (the public and clients): all raw data.
2. An unofficial source which produced 'decoded' or 'interpreted'
data. This was obtained from interviews at all levels of the company:
this shows the organisation as it is perceived by its members.
3. Finally an experimental source from direct observation of the
behaviour of individuals in the firm. This observation can be directive
(placing the members of the organisation in a given situation) or
non-directive.
These three types of information project very different images
representing what is said, what is perceived and what is actually done!
(c) Presentation of the final form of the instrument

Once this information has been collected, the first table ' Functions-
Doctrines' can be considered from three different angles, taking three
TABLE I FUNCTIONS/DOCTRINES
Mo"'""~'tro'P'
:
doctrtne.<
of pollcv
company
fi .
G"•ml
.
Tactics and
procedures
Structure
and distribution
Liaisons,
Communications
uncttons · offunctions
Classical school Conservation •Exceptional Unity of command •Principle of

(1900) of profit procedures •Staff and line the officialisation
•Principle Determination of of relations
of authority a spread of subord. •Centralisation
•Control on •Centralisation of information
all levels Close definition
of tasks
Neo-classical school Maximisation Secondary Decentralisation •Shortest

(1955) of profit objectives Wider decision information
ensuring redistributed areas toward chains all the way
survival over the profit the upper part to the user,
centres of the hierarchy to prevent losses
Auto-control and inflation
School of human Favours human Adaptation Participatory The superior

relations and professional of groups command is more like
(1930) full employment to the objectives 'Bottom up' an agent of inter-
to be attained principle and intra-group
communications
School or social Maximum •Definition •Unity of •Consideration

systems satisfaction of institutional command limited given to informal
(1950) of the individual missions to cases of conflict communications
•Personalisation •Principle •Consideration
of objectives of the area given to
of influence environment
•No settled:
centralisation/
decentralisation
School of operational Optimisation of •P.P.B.S. Quantified

researdl quantitative method information is
(1945) results •Rationalisation preponderant
of budgetary
choices
Systems theory Coordination •Complete Each job All the liaisons

(1965) of potentials cybernetic is a black box, are considered
to achieve regulation and then becomes in the form
system objective •Simulation a subsystem of flows unified
by a language
150
Personnel Human
Commercial Administrative Production
policy, relations,
sector sector sector
Motivations Training
•' Carrot/stick ' •Security •Hierarchic and •Chains

principle stability officialised system of production
•Importance •Principle of communications •Rationalisation
of financial of objectivation •Memoranda of jobs and tasks
incentive systems •Control of output
•Financial •Delicate balance •Commercial

interest between positive aggressivity
•Delegation and negative •Public
of responsibilities motivations relations
•Competition •Importance •Marketing
•Promotion of training
proportionate
to results
•Creating •Committees •Employee

a favourable climate •Exchange attitudes favourably
•Well-being, of views conditioned
comfort
•Friendly coopera-
tion. Group has
priority over
individual
Models Short
of re5olution communication
of internal lines used in
conflicts their full length
•Authentification
of information
Sophisticated Programmed •Mathematical • Mathematical •Mathematical

career apprenticeship studies and models studies and models studies and models
management training •Decision •Decision •Decision
chambers chambers chambers
•Intensive use •Intensive use •Intensive use
of computers of computers of computers
Studies and Studies and Studies and

simulation leading simulation leading simulation leading
to the designing to the designing to the designing
and producing of and producing of and producing of
'made to 'made to 'made to
measure' tools measure' tools measure' tools
151
TABLE 2 EVALUATION GRID OF THE FIRM STUDIED
Classical
School (1900)
Neo-classical
School (1955)
School
of Human
Relations ( 1930)
School
of Social
Systems ( 1950)
School
of Operational
Research ( 1945)
Systems
Theory (1965)
Human
relations. Commercial Administra- Production
Training
!54 A Critical Introduction to Organisation Theory
' photographs' of the firm at the same time in order to reveal the coher-
ence or incoherence of the data. By grouping these three images in a
second table, it becomes possible to compare them.
For this purpose we have divided each square of Table I into three
zones each corresponding to the three images one can have of the firm.
In each of the zones a 'curtain' with five positions can be drawn;
the more the firm adheres to the principles of the doctrine, the more the
curtain covers the zone (see Table 2).
The whole table is completed as a result of a questionnaire comprising
'open' questions, the interview being at first directive and later non-
directive. This questionnaire is given to the members of the different
services, from the typist and storekeeper to the executive grades and
heads of departments. At present, the method is not quite complete and
remains confidential; also, the quality of the analysts is a preponderant
factor in the homogeneity of the results. The interviews have to be quite
thorough; we intend to compile a guide for interviewers and also a
panel for various types of firm.
An example of the analysis table is offered by Table 2. From this
example it can be seen that the complexity of the firm can be represented
quite adequately. The different schools of thought do not constitute an
exclusive choice, and even a whole sector can draw on two of them;
it is easy to imagine the difficulties which will arise within such a sector,
at the slightest tension.
(d) Use of the grid

As intended, this grid can be read in three ways:
-to observe the firm's general tendencies,
- to compare the images two at a time,
- to observe each function in particular.
The grid is not exhaustive, of course, and the comparison is somewhat
rudimentary. It is therefore imperative to shape the interpretations of
the analyst, and it is impossible to build up a definitive value judgement
on the quality of the management. Reality is far too complex to be
reduced to a mere table. However, this approach reveals certain signifi-
cant tendencies.
3 From theory to practice: the use of the grid in a large electronics

company
The grid has been tested in a large French company which is a subsidiary
of a well-known multinational group, in a study of its information and
communication system.
Within the framework of this company, the double grid enabled us
to detect the following tendencies and as a result to assess its level of
management.
(a) At an initial level of overall analysis, we note a significant grouping

of the 'curtains' towards the upper part of the grid, with no noticeable
scatter effect. To an uninitiated observer, the organisation of this
company may seem particularly united and consistent.
Concerning the' official image', there is a clear neo-classical tendency.
Only the 'Liaisons-communications' sector and the 'Production'
sector reveal the existence of a twofold conception of these two functions.
It therefore seems that the organisational policy of the firm is vigorous
and influenced by the ideas of management by objectives.
It is not quite the same with the 'perceived image'; there no longer
seems to be a clear tendency. In fact there is conflict between neo-classi-
cism and classicism, with three isolated points - 'Tactics', 'Human
relations' and 'Communications'.
As for the ' real image', it shows a very different aspect of the com-
pany. A twofold tendency emerges: on the one hand, classicism (every-
where except in the commercial sector); on the other hand, a scattering
of the schools in 'Tactics', 'Personnel policy', 'Human relations',
'Administration' and ' Liaisons-communications'. A tendency to the
social systems school can be observed, particularly in the domain of
general policies and structure. The 'Commercial' and 'Production'
sectors appear specially privileged.
(b) We were able to make the following assessment. The comparison of
the official image with the perceived image shows that, apart from the
'Liaisons-communications' sector, there is no serious disagreement.
On the whole, the personnel has understood the official directives and
claims to follow them.
However, there is total discrepancy between the official image and
reality: a significant rift is revealed everywhere, which suggests that
there are two types of organisation - a ' proclaimed' official organisa-
tion, and a real, latent organisation which is implicit but effective.
At the functi<mal level, the analysis brings out certain more precise
conclusions:
General policy: the official policy is understood, but is not applied.
Tactics and procedure: in the face of official adherence to the neo-
classical doctrine, more classical schemes are sometimes followed.
Structure: considerable disagreement on the stated conception of the
structure, which does not seem to be adopted in practice.
Liaisons-communications: each person seems to have his own idea of
their importance and the way in which they serve the company. Al-
though the transmission of quantified information gives no problems,
the requirements of informal communications seem unsatisfied.
Personnel policy: the importance of the 'motivating' values in the
official image is the reverse in the real image. This is disturbing, since
what motivates the staff is no longer what the management believes it
to be.
Human relations: the conceptions are very different. The 'human

relations' tendency of the official attitude is not followed in practice.
It is classicism which largely prevails and which, moreover, meets with
no opposition.
Commercial sector: this is the only area where the reality is as 'dy-
namic' and 'progressive' as it is claimed to be.
Administrative sector: the lack of a theory in this area does not seem
to satisfy the demands of informal communications.
Production: the official image is that of a very advanced technology.
In practice, with rare exceptions, the strictest Taylorism provides the
guiding principle (division of labour, specification of tasks).
What conclusions can be drawn from these various analyses? That the
commercial sector seems particularly favoured, to the detriment of the
functions of 'Liaisons-communications', 'Human relations' and
'Motivations', where misunderstandings and disagreements are striking.
(c) Detailed discussions with the company's top management made it
possible to cross-check these items of information and to highlight the
existence of a 'real' organisation parallel to the 'official' structure.
Certain problems were known, others were not.
The surest way of reducing these problems to acceptable dimensions
would have been to undertake an analysis of communications. But
unfortunately this company's overriding emphasis on commercial
activity prevented the development of such a study.
The information we collected showed us that, faced with a tendency
towards recession, the company we studied was going to suffer from its
internal difficulties - these had been unimportant during a period of
expansion but were now going to be loaded with consequences. But
would the company agree to devote its time and its reduced resources to
this problem?
However that may be, the a posteriori interviews with the management
enabled us to test our approach. Although it is not yet perfect, the
method can be an extremely useful instrument for evaluation.
4 Preliminary conclusions
Even if it seems obvious that reality is much too complex to be reduced
to a table, this study seems worthwhile because it constitutes an instru-
ment both for analysis and for comparative research.
As a method of analysis, it is still perhaps rather arbitrary and
theoretical; the choice of the six schools of thought and the distribution
of the propositions within the table may be criticised. But it should be
considered as a language which can be refined. The triple view of the
firm according to our interpretation certainly corresponds to something
real. In the course of its first application, we could see that this grid was
a good instrument of analysis, easy and practicable for use with the
management of a firm to detect certain inconsistencies and to avoid
certain organisational problems by the identification of discrepancies.
But the time required for the collection of information is too long: each
interview lasts at least an hour and 50 to 80 interviews are needed,
depending on the size of the firm (more than I ,000 employees).
However, this seems to us to be a useful instrument for making a
comparative study of the organisation of companies belonging to the
same branch of industry, or having the same size (expressed in business
figures or man-power), or being of the same type (holding company,
subsidiary, parent company, co-operative). In fact it makes it possible
to highlight similarities and tendencies, while avoiding the pitfalls of
statistical methods. By pursuing this route it might be possible to arrive
at a synthetic and practicable image of that little known and misunder-
stood living organism - the business firm.
Notes
CHAPTER 1
Kurt Lewin in Psychologie dynamique (Dynamic Psychology) (Paris: Presses
Universitaires de France, 1964). ·The conflict in the Aristotelian and Galilean
modes of thought in contemporary psychology.'
2 Cf. • La normalisation comptable au service de l'entreprise, de Ia science et de Ia
nation' ('Standardisation of accountancy at the service of business firms, of
science and of the nation') (Paris, 1951).
3 Cf. B. Lussato (1970).
4 Cf. B. Lussato (1971).
5 A few titles will be found in the bibliographical appendix, but this has many
omissions which are made good by the specialised works.
CHAPTER 2
Borges • quotes a "certain Chinese encylopedia" in which it is written that
"animals are divided into: (a) belonging to the Emperor, (b) embalmed, {c) tame,
(d) sucking pigs, (e) sirens, (f) fabulous, (g) stray dogs, (h) included in the present
classification, (i) frenzied, (j) innumerable, {k) drawn with a very fine camelhair
brush,(/) etcetera, (m) having just broken the water pitcher, (n) that from a long
way off look like flies". Michel Foucault, The Order of Things {Tavistock, 1970)
p. x.v.
2 See A. J. Greimas, Shnantique structurale (Structural Semantics) (Paris:
Larousse, 1966) p. 13.
3 Greimas, op. cit., p. 14. For example, let us set out hierarchically: 'I realise that
I say that it is cold.' The three segments are linked together by relationships of
presupposition.
4 We have only to think of those rough • sketches', dear to all organisers making
their first foray in the study of job distribution!
5 See Harold Koontz, ·The Management Theory Jungle' in H. Koontz and
C. O'Donnell, Management: A Book of Readings (New York: McGraw-Hill,
1964) p. 473.
6 S. I. Hayakawa, Language in Tlwu.qht and Action (Allen & Unwin, 1965). · Lan-
guage is a system of agreement on symbols.'
7 In metamathematics, a theory I is defined by the inventory of its signs and
symbols (letters, logical signs, abbreviating and specific signs) as well as by its
axioms and mechanisms for working out proofs.
8 0. Sheldon, The Philosophy of Manage me/If (Pitman, 1923).
9 L. Gulick and L. Urwick, Papers on the Science of Administration (Columbia
University, Institute of Public Administration, 1937).
10 H. A. Simon, The New Science of Management Decision (New York: Harper &
Row, 1960) pp. 49-50.
159
11 R. A. Johnson, Kast and Rosenzweig, The Theory and Management of Systems
(New York: McGraw-Hill, 1962, 1967).
12 H. Koontz and C. O'Donnell, Management: A Book of Readings (New York:
McGraw-Hill, 1964) p. 28.
13 Due to lack of understanding of the principles. For Koontz, the tendency to
attempt to explain failures in practical experience by obstacles in the path of the
principles is sometimes false. Often, it is the principles which are wrongly
interpreted and badly adapted ... and then to quote Argyris (1957). See H.
Koontz and C. O'Donnell, op. cit.
14 J. -M. Sedes, 'L'Homme' (1957).
CHAPTER 3
R. C. Davis,' A Philosophy of Management' Academical Management (1958-1)
37-40.
2 See the mathematical formulation of the hierarchical principle by W. Starbuck,
'Mathematics and Organization Theory' in Handbook of Organizations, ed.
James G. March (Chicago: Rand McNally, 1965) p. 379.
3 J.-P. Simeray, La structure de /'en/reprise (The Structure of the Firm) (Paris:
Entreprise Moderne d'Edition, 1966) p. 26.
4 Cf. R. A. Johnson, Kast and Rosenzweig, The Theory and Management of
systems (New York: McGraw-Hill 2nd ed. 1967). These authors distinguish
three systems: the internal system (giving rise to internal tensions), the ecological
system and the competitive system.
5 Urwick and Metcalf have particularly highlighted the bridging position occupied
by Mary Parker Follett in the succession of the different schools.
6 H. Koontz,' The Management Theory Jungle' in H. Koontz and C. O'Donnell,
Management: A Book of Readings (New York: McGraw-Hill, 1964).
7 Operational Research Society of Great Britain, quoted by Stafford Beer,
Decision and Control (New York: John Wiley & Sons, 1966) p. 92.
8 Cf. Stafford Beer, op. cit., p. 72, no. 6.
9 The following points are summarised from Stafford Beer, op. cit. pp. 17-32.
10 Johnson, Kast and Rosenzweig, op. cit.
11 Jay Forrester, Industrial Dynamics (Cambridge, Mass.: M.I.T. Press, 1961)
p. 101.
12 P. F. Drucker, 'Potentials of Management Science', Harvard Business Review,
vol. 37, no. 1, (1959).
13 E. Wight Bakke, Bonds of Organization (New York: Harper & Row, 1961).
14 'When no arrangements have been made to supply a group or a grade with
information, the people in the group organise an informal network themselves
to replace what is lacking and to obtain comparable satisfactions,' Guy Serraf,
Rivalittf de motivations et cloisonnement dans l'entreprise.
15 H. Koontz, op. cit.
16 P. F. Drucker, op. cit. The notes in square brackets are mine.
17 Ralph J. Cordiner, New Frontiers/or Professional Managers, McKinsey Foun-
dation Lecture Series (McGraw-Hill, 1956) pp. 40--79.
18 Cf. The 'decision gap' studied by A. M. McDonough, Information Economics
and Management Systems (New York: McGraw-Hill, 1963).
19 Adolphe Andre-Brunet, La normalisation comptable au service de /'entreprise,
de Ia science et de Ia nation (Paris: Dunod, 1951) p. 60 et seq.
20 'To motivate a man for his work is to identify the accomplishment of the work
with the satisfaction of one of his basic needs.' Octave Gelinier, 'La Direction
participative par objectifs ',Hommes et Techniques, special issue, 1968.
21 P. F. Drucker, op. cit., replying to Koontz and O'Donnell, p. 513.
22 H. A. Simon, Management and Corporations in 1985, 39-52.
Notes 161
23 Cf. also the comments of H. A. Simon on the subject of the distinction between
internal and external organisations in 'The Sciences of the Artificial'. The
external properties are often called 'systemic'.
24 To paraphrase from 'Industrial Dynamics - After the First Decade', Jay
Forrester wrote in 1967 that the teaching of management does not yet have a
theory which plays the same role as physics in relation to the technological pro-
fessions. In the future, the study of continuous systems will be more important
than statistics. Mathematics which deals with random events conditions us to a
vision of a capricious world, beyond control, in which we are more preoccupied
with knowing the standard deviations than with the causes of these deviations.
(Management Science vol. 14, no. 7, Mar. 1968.)
25 T. Vogel, Theorie des systemes evolutifs (Theory of evolutive systems) (Paris:
Gauthier-Villars, 1965).
26 Kurt Lewin, Psychologie dynamique (Dynamic psychology) (Paris: Presses
Universitaires de France, 1964).
27 Adolphe Andre-Brunet, Economie d'entreprise et Technique comptable (Business
economy and accounting technique) (Paris: 'Les Cours de Droit,' 1951). Also,
Techniques financieres et comptables des en/reprises (Financial and accounting
techniques for business); course given between 1955 and 1971 at the Conservatoire
national des Arts et Metiers, Paris.
28 A link can be established between the structure and the synchronic relationships
of the structuralists, and between behaviour and diachronic relationships.
29 Forrester, 'Industrial Dynamics- After the First Decade', op. cit.
30 Ibid.
31 Forrester, Industrial Dynamics (1961) p. 70.
32 Ibid., p. 71. 'The information network is itself a sequence of alternating rates
and levels. In this book it is raised to a position superior to the other networks
because it is the interconnecting tissue between all of them.'
33 This accessibility may be more apparent than real. Where Forrester deals only
with aggregated variables, it is sometimes difficult to recognise the content of
these variables. The so-called intangible variables are pure constructs and are
rarely defined.
34 Cognition: the term indicating any process creating awareness of any object.
35 Digital compiler: means of conversion to machine-language, designed to adapt
the user's more complex language to it.
CHAPTER 4
I These terms are used in the sense accepted in general semantics (cf. Hayakawa).
2 Floyd H. Allport, The Theories of Perception and the Concept of Structure (New
York: John Wiley & Sons, 1955).
3 J. Piaget, Les mecanismes perceptifs (Paris: Presses Universitaires de France,
1963).
4 James T. Culbertson, The Minds of Robots (Urbana, Ill.: University of Illinois
Press, 1963).
5 Cf. Francois Bonsack, Information, thermodynamique, vie et pensee (Information,
thermodynamics, life and thought) (Paris: Gauthier-Villars, 1961).
6 It would be more correct to write
p E P V p' E P ~a E A V a' E A
to be read: an object, flow or event from the internal physical sphere P or from
outside the firm P, gives rise to information in the administrative systems of the
firm A or of the environment A. This remark is valid for all transference functions
that are proposed later in the text.
7 Kurt Lewin, Psychologie dynamique (Dynamic psychology) (Paris: Presses Uni-
versitaires de France, 1964).
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A. ZALESNIK, 'Interpersonal Relations in Organizations', in Handbook of
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Index
Abstract phase, 121, 127, !30 Bourgeois, Marcel, 87
Activity, 29 Brewer Stanley, 98
Administration, 16 Bruner, Jerome S., 5-6, 136
Allport, Floyd, 10, 161 Business•, I 3, 24-5
Analysers, 119, 125-6, 130-1, 135 Business grammar, 107
semantic, 106 Business science, 19
syntactic, 105
Andre-Brunet, Adolphe, 7, 39, 61, Centralisation, 67
74,91 Chandler, A.D., 63, 71, 78
Ansoff, Igor, 65, 148 Channel, 137
Anti-entropic, 122 Chreiology, 104, 122
Argyris, Chris, 30, 34, 57, 58 Churchman, C.W., 70, 83, 148
Ashby, W. Ross, 80, 106, 142 Circuits
Authority, 67 incomplete, 141
functional, 48 of interaction, 141
hierarchical, 48 open, closed, 138
Autocontrol, 75 with base and,inflexion, 141
Classical school, 47
Bachelard, Gaston, 22 Close supervision, 51
Bakke, Wight, 66 Connotative symbols, 116-33
Barnard, Chester, 65, 69 Construct, 88-94
Barriers to communication, 58 Control, 29, 31, 75
Bavelas, Alexander, 26, 36, 53, 59, 85 Control interval, 115
Beer, Stafford, I, 26, 63, 81, 83-6, 90, Co-operative coalition, 54, 66
138 Co-ordinates, 130
Behaviourist movement, 57 Cordiner, Ralph J., 73
Bernard, Claude, 50 Culbertson, James T., 107, 121, 143,
Bertalanffy, Ludwig von, 81 144
Biddle, Bruce J., 30 Culture, 85
Black box theory, 80 Cybernetics, 79
Blake, Robert, 58, 147 Cyert, R.M., 14, 65, 70
Bonds of organisation, 66
Bonini, S.P., II I Dale, Ernest, 56, 71, 148
Bonsack, Francois, 4 Davis, R.C., 47, 49
Borges, J.L., 159 Decentralisation, 67, 73
Bottom up, 33, 52, 59 Decision theory, 60
Boulding, Kenneth, 81 Denotative symbols, 116, .127, 133
167
168 Index
Denotators, 135, 136 Haire, Mason, 2, 33
Descartes, 50 Haldane, R.B., 53
Descending branch, 138 Hamilton, Jan, 56
Descriptors, 128 Hardware, I 5
Deutsch, Karl W., 48 Hawthorne, 57
Diebold, John, 53 Hayakawa, S.l., 13, 19, 21, 58, 133, 161
Direction, 16 Herzberg, Fred, 76, 147
Discontinuity, 95 Hogatt, A.C., Ill
Domain Homeostat, 80, 106
extrinsic, 34 Homomorphism, 84-6
intrinsic, 32
mixed, 33 Immediate action, 94, 96, 103
of study, 32 Implicit decision, 129
Domanial equation, 39 fndustrial dynamics, 71, 89, 99
Drucker, Peter, 2, 17, 23, 56, 63-4, Industrial engineering, 81
71-4, 76-7, 82, 148 Inflexion, 138
Dynamic combination, 65 Information, 121, 131
Informational communications, 31, 137
Intelligence simulators, 106
Effectors, 129, 131, 135-6 Interface, 133, 135
Embryogenesis, 53 Intermediary system, 123, 125
Empirical trend, 41 Interphase, 132, 133, 135
Entropy, 4 Isomorphism, 86
Epistemology, 12
Execution, 32 Johnson, Richard, 20, 23, 26, 28, 63,
81, 89, 127, 138, 160
Fact language, 13 Kast, F., 20, 23, 26, 28, 63, 81, 90, 161
Fayol, Henri, 14, 23, 46, 47-8, 53-4, Key words, 14
51, 18, 148 Klir, J., 79
Feedback, 80-1, 98 Kohler, W., 65-6
Festinger, Leon, 58, 95 Koontz, Harold, 14, 15, 23, 35, 44,
Field, G.P.S.S., 101 45, 51, 59, 60, 70, 78, 98
Field, Lewin, 94 Korzybski, A., 13
Field of representation, 118, 122, 126
Formalisation (degree of), 36 La Barre, Weston, 5, 6
Forrester, Jay W., 14, 23, 62, 78, 81, Larsen effect, 80
84, 89-100, 103, 105, 110-11, 138 Lashley, K.J., 10
Foucault, Michel, 8, 159 Latil, Pierre de, 98
Friedmann, Georges, 57 Lawrence, P., 58
Functional sector, 29, 30, 42 Learned, E.P., 22, 23
Leavitt, Harold, 59, 85
Levi-Strauss, Claude, 5, 7, 105
Gantt graphs, 61 Lewin, Kurt, I, 2, 26, 65, 89, 91, 94,
Gelinier, Octave, 16, 35, 58, 63, 71, 103, 137
73, 15, 16, 160 Licker!, Rensis, 59, 147
General accountancy plan, 7 Life space, 94-5
General problem solver, 106 Line, 12, 48, 73
General systems theory, 60, 79 Lobstein, Jacques, 26, 57
GPSS Ill, 100-4
Graicunas, 49, 56, 74 McCulloch, WarrenS., 9, 126, 137
Greimas, A.J., 6, 58, 159 McDonough, Adrian M., 41, 106, 110,
Greniewsky, Henryck, 122 160
Gulick, L., 27, 50,51 McNally, Rand, 20
Index 169
Management, 16, 53, 70, 75, 107, 108 of decentralisation, 73
Managerial Grid, 58, 147 of detailed definition of tasks, 51
Managers, 17, 54, 147 of exception, 49, 75
March, J., 3, 14, 56, 65, 67, 69 of formalisation, 52
Massie, Joseph L., 23, 47, 51, 107, 108 functional, 53
Mathesis, 8 hierarchical, 53
Maximisation of profit, 72 of impersonality, 52
Mayo, Elton, 3, 57, 148 of specialisation, 52
Meleze, Jacques, 84 of top-downwards, 52
Merchandise, 113 Processes, 29
Metatheory, 12 Profit centre, 73
Methodology, 12 Psychological phase, 121, 125
Miller, Erich J., 58
Monitoring, 121 Qualitative trend, 40
Mooney, 53 Quantitative reductionism, 61
Morgenstern, Oscar, 148 Quantitative trend, 39
Morphogenesis, 53
Motivation, 77 Rapaport, David, 83
Mouton, Jane, 58, 147 Razran, Gregory, 145
M.T.M., 26 Receptor, 135, 137
Reductionism, 123
Natural laziness of man, 52 Reiley, 53
Neo-classical school, 70 Representations, 119, 121
Noise, 131 Rimailho, Col., 48
Rising Branch, 138
O'Donnell, C., 23, 44, 45, 98 Rochrematics, 81, 98
Operational division of flows, II 0 Roethlisberger, Fritz, J., 3, 57, 59
Operational research, 26, 60-2, 82, 83 Rosenblatt, F., 106
Organisation, 15, 16, 30 Rosenzweig, F. 20, 23, 26, 28, 63, 81,
Osgood, Charles, 8, 41, 106, 123 90, 98, 110, 160
O'Shaughnessy, J., 23, 56, 8! Russell, Bertrand, I
Parker Follett, Mary, 55 Saussure, F. de, 13

Parkinson, C. Northcote, 50 Scalar concept, 47
Peccoud, Franr;ois, 106 Scale of values, 113, 146
Pelz, D. C., 59 Scanning, 10, 80, 103
Perception, 119 Seattle school, 81, 104
Percept ron, I 06 Selznick, P., 66
Physical phase, 120, 125, 130 Semantic differentia tor, 41, 106
Piaget, J. 5, 10, 120, 141 Semantic enclosure, 12
Planus, Paul, 53 Semantics, 122
Postulate Sheldon, 0., 26, 27, 53
economic, 52 Signs, 117, 121
of closed system, 52 Signal, 131
materialistic, 51 Signification, 122, 131
mechanistic, 51 Simeray, J. P., 48
rationalist, 51 Simon, Herbert A., 3, 12, 23, 28, 37,
of specialisation, 52 54--6, 66, 67-70, 83, 106, 148
of university, 52 Simulation, 87
Pre-eminence of the structure, 93 Sloan, Alfred, 17, 71, 73, 77
Principle Software, 15
of centralisation, 52 Span of control, 49, 56, 67, 74
of co-ordination, 53 Specificity, 113
170 Index
Specificity-entropy, 131 Unity of command, 48
Staff, 12, 48, 67, 73 Urwick, L., 20, 159, 160
Staffing, 31 Utility, 113
Starbuck, William, 160
Structure, 30, 84 Valach, M., 79
Symbols, 116, 121 Value,113
Systematic movement, 81 Variability-entropy, 131
Systemic, 161 Vogel, T., 88
Systems analysis, 62
Systems engineering, 82, 89 Washington, (school of), 55
Systems thinking, 83 Weber, Max, 34, 53
Wiener, Norbert, 31, 81
Woodward, Joan, 58, 148
Taxinomia, 8, II
Taylor, Friedriech, Winslow, 46-50, 53
57, 67 Yaglom, A.M. and I. M., 4
Technique language, 14, 83
Teilhard de Chardin, P., 4 Zero-defect, 76
Terminal, 138 Zones
Theoretical language, 14 informal, 37
Theory, 14, 24 of formalisation, 36-43
Time-keeping mechanism, 130 qualitative, 47
Transmitter, 135, 137 quantified, 36

A Critical Introduction To Organisation Theory

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A CRITICAL INTRODUCTION TO ORGANISATION THEORY

Translated from the French by

All rights reserved. No part of this publication may be reproduced or trans-

First published 1972 by Dunod, Paris

Distributed in the United States

SBN 333 17894 7

This hook is sold subject to

Chapter 1 Man and his Artificial Aids

Chapter 2 Problems of Terminology: Different Approaches to the

Chapter 3 The Schools 46

3.6 The neo-classical school (or empirical movement) 70

Chapter 4 Operational Division of Flows 110

APPENDIX Method of evaluating the organisation of business firms 147

A company is' a legal-economic-social entity, which in order to achieve

managers' need for information. Speaking of information science, it can

Systems are precisely the subject of Professor Bruno Lussato's work

study in depth the idea of systems - which he defines as autonomous

business organisation in the form of phases and flows thus adhering to

error than nomenclature', nothing is more difficult than to rationalise

1.2 THE FIRM AS A 'LIVING' ORGANISM

1.3 VOCABULAR Y AND SYNTAX

Before embarking on any analysis, the organisational theorist will

1.4 MAN AND HIS ARTIFICIAL AIDS

selection which is everywhere incessantly removing and stifling ancient

1.5 THE HEAD OF THE FIRM AND HIS TOOLS

After undertaking a vast international investigation into the various

field of consciousness must be covered too, as it is the semantic universe

2.2 INTERDEPENDENCE BETWEEN VOCABULARY AND

the language selected. Words are in fact defined by classes created by

2.3 THE THREE LEVELS: FACT-LANGUAGE, THEORETI-

2.3.3 Technique-language and its instruments

The considerable development of these instruments of organisation

2.4 INTERACTION BETWEEN THE LANGUAGES, TRANS-

2.5 SEMANTIC DELIMITATION OF THE TERMS:

The direction does not concern itself with principles or techniques;

2.6 THE RELATIONS OF THE DOMAINS OF STUDY AND

FIGURE Ia. Relation between enuues (machines, techniques, theory,

FIGURE I b. Relationship of industrial engineering to management and other

contemporary era, as is shown by manuals such as the Handbook of

2.7 THE SCHOOLS OF THOUGHT AND THEIR ORIGIN

Orders, suggestions, modifie~~tions, complaints

means of investiption and concepts

~ Princi.-1 (dominant) relations

-..,effect of borrowing and transfer of words

FIGURE 2. The schools of thought; their origins.

2.7.2 Necessity for a knowledge of the schools of thought

2.8 RELATIONS BETWEEN BUSINESS*, THEORY, IN-

2.8.1 Relations between business* and theory

(a) Direct relations

(b) Retroactive relations

2.8.2 Relations between theory and instruments

(a) Direct relations

development of constantly improved equipment (here is a case of

(b) Retroactive relations

2.8.3 Relations between instruments and business•

(a) Direct relations

(b) Retroactive relations

2.8.4 Ecological relations

2.9 DIVISION OF THE BUSINESS FIRM BY NATURE,

First functional sector. (FS 1) formulation of aims

expansion or contraction, security or development, diversification or

Second functional sector. Organisation. FS 2

temporal structures, and that the establishment of a plan calls for