As you learned in the Challenge Case at the beginning of this appendix, a large company such as Ford Motor Company is involved in many different kinds of activities. Managing such an enterprise is a complex process. Over the years, scientists and observers of management have proposed various ways to understand what managers can and should do to help their organizations achieve their goals. Considering this history of management theory can suggest practical ideas for how Ford’s managers can help their company succeed in a challenging environment.

The classical approach to management recommends that managers continually strive to increase organizational efficiency and production, so it would likely be of great use to CEO Alan Mulally in his quest to improve efficiency at Ford. At the lower level, scientific management seeks to identify the one best way to perform tasks as efficiently as possible. It may involve the selection of tools and the design of tasks that will allow workers to produce the maximum amount they can without sacrificing safety and quality. Applications of scientific management may include motion studies, scheduling charts, and rewards for innovation.

Another classical approach involves the comprehensive analysis of management, notably the work of Henri Fayol. Fayol defined the manager’s job as a combination of planning, organizing, commanding, and controlling. He also specified many principles of effective management—for example, that work should be divided so that individuals can specialize and that authority should be delegated along with the responsibility for completing tasks.

Most modern organizations, including Ford, would be interested in the behavioral approach to management, which emphasizes increasing production through an understanding of people. It requires the application of human relations skill, or the ability to work with people in a way that enhances organizational success. This approach stresses the importance of treating people humanely and motivating them by setting up a rewarding work environment in which employees care about achieving work-related goals. For example, Douglas McGregor emphasized his finding that employees can be self-directed, accept responsibility, and consider work as natural as play.

The management science approach suggests that managers can best improve the organization by using the scientific method and mathematical techniques to solve operational problems by observing the system, constructing a model of it, deducing how the system will behave under new conditions, and testing the model with experiments. Today’s widespread availability of computers makes management science techniques readily available. Popular applications include inventory control and probability models for decision making. Ford uses such methods to make complex decisions such as which features to include in the vehicles it manufactures each week and which new products to introduce.

The contingency approach to management emphasizes that what managers do in practice depends on the circumstances in which managers are acting. It reminds managers that they must consider practical realities when deciding how to act. At Ford, if Alan Mulally expects management and workers to be partners in operating plants efficiently, he has to consider practicalities such as costs and union members’ willingness to change work rules. For example, if it is possible to operate profitably and if union representatives trust the process, then Mulally can move forward with his plan to assemble vehicles in the United States.

The system approach to management regards each organization as a system in which interdependent parts function as a whole. A business is an open system because it continually interacts with its environment. When managers such as Mulally want to make a change in their department or company, they need to consider the impact of the change on all parts of the system. A change in product design, for example, will affect the materials that need to be ordered, the way the product is produced, and customers’ opinions of the product, among many other elements of the Ford “system.”

A new approach to management is the learning organization approach. A learning organization excels at creating, acquiring, and transferring knowledge and in modifying behavior to reflect new knowledge. For Ford to be a learning organization, its management needs to build systems thinking, create a shared vision, challenge the organization’s mental models, cultivate team learning, and get all employees committed to personal mastery of their work.