We all know that American business needs fixing, and there is no shortage of prescriptions: imitate the Japanese, or follow the example of successful firms, or practice right-sizing. But these approaches do not work very well, says Russell Ackoff, because they only attack the problem piecemeal—and it is the entire system of American business that is flawed. In this revolutionary new book by a widely respected business thinker and pioneer in the fields of operations research and systems thinking, Ackoff underscores the urgent need to overhaul the kinds of systems found in America, from our business schools to our boardrooms. And he shows how firms can break out of the mold—and leapfrog the competition in today's volatile economy.

To give managers insight into the concept of organizations, Ackoff shows how they have been viewed since the Renaissance: first as machines, later as organisms, and today as social systems. As social systems, companies produce and distribute wealth and raise our standard of living. They are also responsible for facilitating and encouraging the development of the larger systems that contain them and all their stakeholders. The quality of worklife within an organization is key. Work has to be challenging and enjoyable if workers are to give it their full commitment, and Ackoff outlines major ways to achieve this goal. Along the way, Ackoff explodes a number of fashionable business notions. He asserts that firms that try to imitate successful competitors are doomed to play catch-up forever. He attacks the idea of continuous improvement, showing that it has failed to make quantum leaps in quality, and he demonstrates how to re-orient the pursuit of quality. After revealing the weakness in many current practices, Ackoff describes three organizational schemes that will lead to success. In the Circular Organization, a democratic hierarchy, everyone participates directly or indirectly in decisions that affect their work. In the Internal Market Economy, organizations treat their different parts like a collection of firms doing business with each other—which promotes cooperation and eliminates wasteful internal competition. And with the Multidimensional Organization, a company becomes so powerful and flexible that continuous adaptation can happen without reorganization.

Ackoff caps off the book with an incisive critique of business schools, describing how they must be transformed to turn out the leaders we need for the competitive American organization of the 21st century. Enabling managers to understand the profound interrelationships in the American economy and to tap into them for success, The Democratic Corporation is a major work by an innovative thinker that is certain to cause ripples throughout the business community.