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 / Fall 2003 / Issue 32(originally published by Booz & Company)


The Paradox of Charles Handy

Vicar and visionary, modern management’s most eminent philosopher says it takes a village to build a company.

Past the village, down a country road, off a gravel path sits a 17th-century farm laborer’s cottage: an unlikely set of directions to one of the world’s most admired management thinkers. Yet it is here, in this home nestled among the wheat fields of England’s East Anglia, that Charles B. Handy has written some of the most influential, and prophetic, works of business literature.

But the choice of such a tranquil setting to unravel vexing and stressful questions about the present and future of corporations is far less incongruous than it appears. Indeed, Mr. Handy finds in the village a metaphor and a model for human organization that is all the more striking for its simplicity and cohesiveness. He suggests that the current form of shareholder-dominated corporate capitalism, with all its complexity and conflict, is not sustainable, and will give way — must give way — to a simpler and more flexible form of private enterprise. This new form would promote greater collaboration and understanding among multiple constituents who share in the benefits and challenges of being part of one company, but who have distinct roles and different stakes and expectations, and are rewarded differently, depending on their purposes and contributions.

“A company ought to be a community, a community that you belong to, like a village,” Mr. Handy says. “Nobody owns a village. You are a member and you have rights. Shareholders will become financiers, and they will get rewarded according to the risk they assume, but they’re not to be called owners. And workers won’t be workers, they’ll be citizens, and they will have rights. And those rights will include a share in the profits that they have created.”

In The Age of Unreason, Mr. Handy describes a community-oriented, front-line-led “federal organization,” in which power and responsibility devolve from a small corporate center to business units and, ultimately, to those closest to the action. In federal organizations, he writes, “the initiative, the drive, and the energy come mostly from the parts, with the center an influencing force, relatively low in profile.” Still, the center “holds some decisions very tight to itself — usually and crucially, the choice of how to spend new money and where and when to place people.”

Furthermore, people have lived and worked in villages since the dawn of civilization. The corporation, notes Mr. Handy, is a young concept, little more than a century old. One could argue, too, that the notion of a lively village — with its unabashed humanity — is a more appropriate way to look at what the corporation should be in the 21st century than the constrained and impersonal entity it has been. As the author wrote in Gods of Management: The Changing Work of Organizations: “Villages are small and personal, and their inhabitants have names, characters, and personalities. What more appropriate concept on which to base our institutions of the future than the ancient organic social unit whose flexibility and strength sustained human society through millennia?”

If this vision of the future organization sounds far-fetched (and even some of Mr. Handy’s most ardent admirers believe it does), consider that he has made similarly provocative predictions for the past 25 years, and more often than not, time has proved him right. The rise of nontraditional work practices such as outsourcing, telecommuting, and “portfolio careers” (a term he coined in the 1980s to describe people who work for themselves and serve a portfolio of individuals and entities) seemed just as remote when Mr. Handy first began writing about them.

Mr. Handy is also widely recognized and revered for his contributions to furthering our understanding of business in the context of personal and ethical questions. “If Peter Drucker is responsible for legitimizing the field of management and Tom Peters for popularizing it, then Charles Handy should be known as the person who gave it a philosophical elegance and eloquence that was missing from the field,” says Warren Bennis, himself one of the most prominent scholars and writers in the discipline of leadership and management and a close friend of Charles Handy and his wife, Elizabeth.

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  1. Joel Kurtzman, “An Interview with Charles Handy,” s+b, Fall 1995; Click here.
  2. Charles Handy, “Balancing Corporate Power: A New Federalist Paper,” Harvard Business Review, November 1992; Click here.
  3. Charles Handy, “The Search for Meaning: A Conversation with Charles Handy,” Leader to Leader, Summer 1997; Click here.
  4. Charles Handy, “Tocqueville Revisited: The Meaning of American Prosperity,” Harvard Business Review, January 2001; Click here.
  5. Charles Handy, “What’s a Business For?” Harvard Business Review, December 2002; Click here.
  6. Charles Handy, The Age of Paradox (Harvard Business School Press, 1994)
  7. Charles Handy, The Age of Unreason (Harvard Business School Press, 1989)
  8. Charles Handy, Beyond Certainty: The Changing Worlds of Organizations (Hutchinson, 1995)
  9. Charles Handy, The Elephant and the Flea: Looking Backwards to the Future (Hutchinson, 2001)
  10. Charles Handy, Gods of Management: The Changing Work of Organizations (Souvenir Press, 1978)
  11. Charles Handy, The Hungry Spirit: Beyond Capitalism: A Quest for Purpose in the Modern World (Hutchinson, 1997)
  12. Charles Handy, Inside Organizations: 21 Ideas for Managers (Penguin, 1999)
  13. Charles Handy, with photography by Elizabeth Handy, The New Alchemists (Hutchinson, 1999)
  14. Charles Handy, Understanding Organizations (Penguin, 1976)
  15. Charles Handy, Understanding Schools as Organizations (Penguin, 1986)
  16. Charles Handy, Understanding Voluntary Organizations: How to Make Them Function Effectively (Penguin, 1988)
  17. Charles Handy, Waiting for the Mountain to Move and Other Reflections on Life (Arrow, 1992)
  18. Elizabeth and Charles Handy, Reinvented Lives: Women at Sixty: A Celebration (Hutchinson, 2002)
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