From: John Conover <john@email.johncon.com>
Subject: Intransitives of Determination of Priorities
Date: Tue, 16 Aug 1994 19:23:42 -0700 (PDT)
If all would be so kind, I would like to start a discussion on the
determination of priorities in the business environment. Specifically,
I would like to address the work done by the economist Kenneth
Arrow[1][2][3] in 1952 (using game theoretic methodologies) on the
intransitive nature of the determination of priorities in
groups. Although his original work was focused on the determination of
national economic priorities, the formalities are extensible into the
corporate environment. I would like to discuss the relationship
between the determination of corporate priorities, and BPR, in view of
the implications of Arrow's work.
What Arrow's so called "Impossibility Theorem" states (in a nut shell)
is that there is no logical process that can be used for determination
of priorities in groups. (Note that this does NOT state that Congress,
Parliament, or Democracy will not work. Only that it can not be
expected to work in a logically consistent fashion-and the same holds
true for the other social architectures, ie, totalitarian, socialist,
etc., also.) But it does seem that the premiss (paradigm) of most
"management tools" is to address the issues of priority determination
through a logical process (particularly, MBO,) and this seems
contradictory to the work done by Arrow (which is pretty formidable in
its formality.)
During 25 years of business management*, I have been MBO'ed, Time
Managed (TM), TQM'ed, (and an etc. of other combinatorics from
alphabet soup.) It does seem, IMHO, that the issues of determination
of corporate priorities are THE central agenda of a corporation
(particularly at the executive level,) and these issues are not
addressed by the methodologies ("management tools") listed above. (Is
BPR different? How does BPR, specifically, address the issues of the
intransitive nature of determination of corporate priorities?) I
would venture to state (although some/many will probably disagree)
that the major reason for corporate failure can alway be traced to an
inability to come to terms with the issues of determination of
corporate priorities-I think that this is self evident, IMHO. (As
pointed out by Robert Padulo in BPR-L digest 135, referencing de Geus,
most companies have less than a 40 year life span. A full one-third of
the Fortune 500 Industrial Companies listed in 1970 had vanished by
1983.)
If we assume that determination of priorities is a central agenda in a
corporation, and there is no logical process or construct that can be
used to resolve these corporate intransitives, some significant issues
arise:
1) Since priorities can not be determined in a logically self
consistent fashion, how do we determine them? (And most
organizations DO determine them well, at least for a while.)
Is this a rationalization for corporate politics? If so, how
do we channel politics to be constructive, as opposed to
destructive. (Perhaps "statesmanship," or "consensus making"
would be a better choice of words.) I think BPR addresses this
issue, IMHO.
2) How does informatics enter into the issues of determination
of priorities. Obviously, the executive staff must have access
to adequate information in the decision making process, but
can informatics be used to address the issues of determination
of priorities in an environment that can not operate on a
logical pretext (what I mean here is that can informatics be
used to abet the "concensus making" process-perhaps through
sophisticated email systems, etc.? What is the relation of
this type of informatics to a traditional "content data"
system?) Likewise, I think BPR address this issue, also, IMHO.
3) Since priorities can not be determined by any logical
process, why do we use logical processes at all in business?
I think this is, also, addressed by the BPR paradigm, IMHO.
The reason for this posting is that I think it important to establish
a formal basis for our management and structural methodologies, like
BPR, (if that is not intransitive in itself.)
John
*Most of my tenure has been in technical management, Director of
Engineering, VP of Technology, VP of Information Technology, CTO, and
now, COO, at no less than 7 companies, ranging in size and revenues
from startups to the Fortune 100 companies.
References on the intransitive nature of determination of priorities
in groups, eg., the "Impossibility Theorem:"
[1] For a light, informal presentation, I would recommend "Archimedes'
Revenge," by Paul Hoffman, Fawcett Crest, New York, New York, 1993,
ISBN 0-449-21750-7, 213-262, Section IV, entitled "One Man, One Vote,"
Chapter 12, entitled "Is Democracy Mathematically Unsound?"
[2] For an informal presentation on the historical perspective of the
subject, I would recommend "History of Mathematical Programming,"
edited by J.K. Lenstra and A. H. G. Rinnooy Kan and A. Schrijver, CWI,
Amsterdam, Holland, 1991, ISBN 0-444-888187, 1-4, entitled "The
Origins of the Impossibility Theorem," by Kenneth J. Arrow.
[3] For a formal presentation of the subject, I would recommend,
"Games and Decisions," by R. Duncan Luce and Howard Raiffa, John Wiley
& Sons, New York, New York, 1957, 327-370, Chapter 14, entitled "Group
Decision Making."
--
John Conover, john@email.johncon.com, http://www.johncon.com/