Abstract
Since the mid-1950s the national Italian oil company ENI has relied on Booz Allen and Hamilton for a wide range of organizational reforms, stimulated by its diversification strategy. This paper shows how national culture, corporate identity and entrepreneurship initially led to a conflicting relationship with the consultancy, and then set in motion a process of translation and enrichment of foreign labels that had previously been little more than empty shells.
Introduction
Studies on consulting companies became a relevant field in business history during the 2000s. The interest originated from the stimulus of the flourishing literature on Americanization (Schröter 2005: 7–8), as consulting companies appeared as carriers of new managerial knowledge that spread from one single centre, the USA, towards semi-peripheral countries, such as Japan and those in Western Europe (Djelic 1998; Kudo et al. 2004) and then to peripheral countries, such as those of Southern Europe and extra-European countries (Kipping et al. 2008).
At a theoretical level, more attention on consultants as carriers of managerial knowledge was a consequence of studies that recognized that organizational practices are localized in time and space. Following, for instance, the suggestion of Czarniawska and Jeorges (1996), Sahlin-Andersson and Engwall’s (2002) managerial ideas are no longer seen as well-defined monads spreading automatically through neutral channels, but organizational change becomes rather a complex process, to which producers, carriers and receivers of organizational knowledge take an active part.
Specific works have therefore analysed the distinctive elements of consultancy as an emerging knowledge industry bonded to the rise of managerial big business during the twentieth century (McKenna 2006). Another wave of studies has focused on the gap between the managerial culture encouraged by the American consultants and the national cultures and practices in the host countries or on the interaction between consultancies and the corporate culture characterizing single customers (Armbrüster and Kipping 2002; Kipping and Armbrüster 2002; Kipping and Engwall 2002).
This article – based on archival evidence and interviews with former managers – aims to add to the latter group of studies by considering the case of the organizational reform embarked on since 1956 by the Italian state-owned oil company ENI, thanks to the cooperation with one of the most prominent American consultancies at that time, Booz Allen and Hamilton (BAH). 1 The case is interesting because the importance of the partners involved; on an international scale, ENI was a middle-sized independent oil company, but it was one of the largest Italian industrial corporations.
Besides, the BAH contract with ENI in 1956 was a rather unusual case during a period when the transfer of managerial knowledge to Italy mostly followed the path of a ‘direct Americanisation’ (Schröter 2005: 58) within the US and Italian governments’ sponsored programmes. ENI, on the other hand, initiated an autonomous approach towards Americanization during the 1950s by establishing a strong relationship with a consultancy before the first significant post-war wave of development of this industry in Italy.
The evolution of management consultancy in Italy – considering both foreign and Italian companies – was surveyed first with a sort of memoirs approach by Faliva and Pennarola (1992), then it became a scientific topic in business history, thanks to the studies of Crucini (1999, 2010). Crucini and Kipping, who are interested mostly in the emergence and professionalization of the system of domestic consultancies since the 1960s, underlined the competitive advantage of national small consulting firms (SCF) in answer to some specific Italian structural and cultural constraints, becoming ‘translators of general consulting labels and models’ (Crucini and Kipping 2001: 582), and doing so more efficiently than larger international players.
Moving from these suggestions, this article will examine the relevance of elements such as trust, legitimacy and shared vocabulary beyond the case of SCFs, considering processes that have developed between the consultancy and its customer and the stimulus that has originated inside the customer itself. The article will show therefore an actual case in which new ideas about organization encountered the attention of an institution (or, at least, of its leaders), how the company interpreted or failed to understand new alien elements through its established categories and how, eventually, the labels proposed by the ‘others’ were legitimated and then adapted to the needs of the company (the process is described theoretically by Czarniawska and Jeorges (1996)).
The first section will summarize some of the elements of the national cultural background within which ENI’s experience was framed. Then the evolution of the company prior to the arrival of BAH will be presented as a crucial element in explaining some of the peculiarities of ENI in its relationship with BAH. The subsequent sections will describe the approach of the American advisers to ENI’s organizational issues, and then will consider the reaction of the company to the consultant’s suggestions for reforms.
The conclusion will suggest the need to integrate a vision based on the interaction between foreign managerial practice, and rather stable and uniform national characteristics relying on systems of institutions (Whitley 1992, 2007) or mental (cultural) programmes (Hofstede 2001; Hofstede and Hofstede 2005), with a more diversified perspective, integrating industry-specific elements (Nelson and Gopalan 2003) and, in addition, idiosyncratic company-specific cultures. From this perspective, elements such as the actual historical evolution of the company, the relationship among groups of managers and personal entrepreneurship become discriminating in our attempt to understand the controversial results of BAH’s activities with regard to the Italian oil company.
Considering the actual influence of the consultancy in terms of the customer’s organizational practices, as the most fruitful research topic, the article will eventually focus on Americanization as a process of change, instead of focusing on the evaluation of the phenomenon as one involving only a path of convergence or divergence towards a model proposed by the American company as a stable object.
Americanization, the Italian way
The recourse to American advisers in Europe had had a first moment of expansion around the 1920s and the 1930s, and had been connected, in the main, to the diffusion of Taylor’s scientific management approach, often in the version provided by the French, naturalized American, Charles Bedaux (Kipping 1999; Schröter 2005: 24–30).
In spite of its relative economic backwardness, Italy embraced very early on the new gospel coming from the USA. Scientific management deeply influenced some engineers – and, to a lesser extent, some industrial economics scholars – who created ENIOS, the national association for scientific management, in 1924. ENIOS, and its chairman Francesco Mauro, from the Milan Polytechnic, soon achieved an international stature within the European debate about scientific management (Viani 1996). Bedeaux’s company opened its Italian branch in Milan in 1927, helped by strong support from the Fiat automotive company (Faliva and Pennarola 1992: 11–2).
Italian scientific management remained mainly focused on the shop floor. Consideration of the rational organization of the firm or even of the whole of society in a new ‘scientific’ fashion was limited to a minority of thinkers. Outside this small group of technocrats, ideas such as ‘taylorism’ applied to the administrative function, the divorce between ownership and control on the basis of competence, or the perspective of a wide managerial revolution remained almost unknown until after the Second World War (Sapelli 1978, 1994).
Besides, Italian industrialists interpreted scientific management in a very restrictive way from 1930 onwards. From being a tool of modernization, it evolved as a mere cost-cutting instrument or, at worst, a means of exploiting the labour force. The loss of prestige on the part of American business culture after the Wall Street Crash in 1929 and the protests of the fascist unions against Bedaux’s and similar systems doomed the foreign consultancies that had gained a toehold in Italy. In 1935, unions and the Confindustria (General Confederation of Industry) reached an agreement that limited the possibility of applying Bedaux’s system in Italian factories, leading eventually to the closure of the company’s Milan office.
The reopening of the Italian business community to ideas coming from the US managerial culture followed a similar path to the rest of continental Europe during the second wave of Americanization (Schröter 2005). The US business culture enjoyed a renewed prestige as a consequence of the Allies’ victory, but the wide spread of American managerial knowledge was sustained also by a generalized favour towards the pair mass production/mass consumption, both as economic and social aims. Even at a level of general public opinion, everything that was coming from the USA was more modern, more efficient and possibly more democratic than traditional European equivalents (de Grazia 2005).
In terms of consultancy, pre-war relationships had some relevance – Bedaux reopened its office in Milan at the beginning of the 1950s, renamed the Società Italiana di Analisi e Misura del Lavoro – but of utmost importance were the new contacts opened as part of the American programmes of support for Europe.
The Comitato Nazionale per la Produttività (National Committee for Productivity), an organ of the Italian government supported by the US Technical Assistance and Productivity Program, funded international exchanges and courses held by American experts to improve Italian industrial practices according to the American mass production standards, introducing not only more up-to-date versions of scientific management in terms of the shop floor, but also the first elements of the ‘human relations’ theory and the first considerations of organizational issues.
The state-owned industrial holding IRI – deeply involved in the management of the international cooperation programmes – was particularly interested in a renewal of organizational practices and, from 1951 onwards, established relationships with American advisers, first with the Stanford Research Institute and then established a long-standing cooperation with Booz Allen and Hamilton (Ricciardi 2003, 2004–5).
Other attempts to influence the Italian managerial culture came from the private sector: in 1952, Olivetti and Fiat founded an institute based on the Harvard Business School model, IASOA (later called IPSOA), and, since its foundation in 1955, the publisher Franco Angeli translated English language handbooks and other foreign ‘manager-oriented’ literature (for instance, not even Henry Fayol’s masterwork existed in Italian until Angeli’s edition in 1961). Other experiences were more rooted in the national accounting tradition: before the war, Gino Zappa, professor at Bocconi University, promoted the idea of accounting as a tool for managing the enterprise as a whole and, during the 1950s, the Milanese consultancy ORGA enriched what it had to offer, shifting from accounting to general management (Faliva and Pennarola 1992, 30–43; Gemelli 1997).
However, the patterns of assimilation of the new managerial culture were influenced by many local environmental variables, and the innovators remained a tiny minority. Initiatives aiming to reform management education following American models remained outside the Italian university system – largely state influenced – and gained very little legitimation until the 1960s (Kipping et al. 2004). The situation was not better on the shop floor.
The first ‘missionaries’ visiting Italian machinery factories, for instance, blamed the backwardness – technical and cultural – of the country. The Italian managers, on the other hand, most of whom were trained as engineers, remained bonded to a vision of the organization biased towards technicality. Even the new ideas coming from Elton Mayo’s studies were interpreted within the mindset of a rather traditional paternalism, or as a tool to weaken left-wing unions (Sapelli 1994: 278–9).
In the Italy of the late 1940s, for instance, it was not strange that during a meeting of the Confederation of Italian Managers – a rather progressive and open-minded association – the official speaker would explain the human relations theory by referring to the workers as ‘childish’, suggesting the opportunity to frequently praise them and to ‘let them express opinions even about topics they feel as being bigger than themselves’, considering: ‘How worthwhile it is for the worker to have even the simple self-respecting satisfaction of having a word with his Director!’ (Confederazione Italiana Dirigenti di Azienda 1948: 180, translated from Italian).
The six-legged dog roaring
ENI shared the the Italian technically biased vision, adding to this some peculiarities, which were outcomes of its historical evolution. ENI was founded in 1953, after the success of AGIP, the state-owned oil company, which was established in 1926. AGIP was then merged into ENI (Dechert 1963; Pozzi 2010).
Due to unfavourable Italian subsoil configuration and to fascist regime influences, AGIP was rather unsuccessful until 1945, in terms of managing both its commercial and mining activities. However, during the pre-war years, the company gathered a critical mass of technical competences and knowledge, which allowed it to fulfil its potential during the post-war recovery.
Using autarchy-aimed research dating back to the mid-1930s, AGIP found huge reservoirs of natural gas in the Po Valley and, by the beginning of the 1950s, was using them to supply fuel to the most important Northern Italian companies (e.g. Dalmine, Fiat, Italcementi, Edison). Revenues from natural gas sustained investment in other areas of business including refining and retailing, the petrochemical industry and the search for oil abroad.
AGIP’s growth prompted a harsh debate about the right of a state-owned company to exercise a de facto monopoly on a whole industrial sector – AGIP did not face actual competition from private companies until it consolidated its results – and to retain the profits coming from it. The creation of ENI set the argument in favour of AGIP, and accordingly the Italian model of a mixed economy (Amatori and Toninelli 2011). At its beginnings, AGIP was a company subject to private corporate low, whose share capital belonged to the state. On the other hand, ENI was set up as a public concern, similar to IRI, the industrial state-owned holding; the parent company thus wholly owned the capital share of subsidiaries such as AGIP Mineraria (mining), AGIP Spa (commercial branch), SNAM (methane transport facilities) and ANIC (chemicals), which maintained their ‘private’ standing.
Enrico Mattei – the entrepreneur who led AGIP and then ENI from 1945 to his death, in 1962 – is accredited with inspiring the technicians during the difficult years of recovery, and for shielding the company on the political side, leading to the creation of ENI (Colitti 1979; Frankel 1966). 2 Mattei, even though he lacked any oil-specific technical knowledge, established a strong personal bond with some of the technicians who had worked for AGIP since the 1930s. The entrepreneur’s trust in them allowed an inflow of resources aimed not only at developing existing research, but also at improving and updating both equipment and personnel competences.
During these years, AGIP developed a strong corporate identity that the older employees transmitted to the freshly hired technicians and workers, employed to develop the natural gas business. It was also a product of Mattei’s personal charisma and of the feeling of operating ‘under siege’, a consequence of the exacerbated controversy about the role of the state-owned company.
The sense of mission and esprit de corp were strengthened by some typical traits that the oil industry shared with the army (but with few other industries): a long permanence in an all-male isolated community in the field, the constant presence of actual danger and a familiarity with machinery perceived as being powerful and sophisticated – so, requiring a sort of initiated knowledge (Bowker 1994; Lynch 1991; McKenna 1997).
The men who worked for AGIP and then ENI during Mattei’s chairmanship felt themselves to be pioneers – a term that retired ENI’s employees still use to refer to themselves – but also crusaders for methane, for the company and for Mattei himself. The six-legged dog, which the company used to brand its petrol from 1952 onwards, was, more than a commercial logo, a crest that was proudly displayed on helmets, flags, trucks, helicopters and in whatever was possible to shape into a large, flame-throwing, black dog (such as a dog-themed carnival parade float, an additional pair of fake legs for a refinery’s canine mascot, a dog-shaped aquarium and so on).
Nevertheless, AGIP’s corporate culture was not closed in on itself. Even before 1945, AGIP had contacts with the US oil industry that allowed it to introduce into Italy some American technical innovations that the company exploited as part of its post-war evolution (for instance, the use of reflection seismic survey imported from the Western Geophysical Company in 1940). After the war, the company initiated long-term cooperation with foreign service companies, an obvious practice in the oil business, but rather unusual for Italian companies in other sectors. In addition, AGIP established international relationships relying mostly on its own resources – economic and ‘diplomatic’– with a very small contribution from international cooperation programmes. (The Marshall Plan contributed to the recovery of AGIP’s refinery, but mining was not seen as a priority.)
Foreign contractors provided some indispensable resources, as far as perforation and geophysics were concerned. In the latter field, the cooperation with the Western Geophysical Company (from Tulsa) had taken the shape of an actual symbiosis between the two companies, to the extent that the border between AGIP’s and Western’s geophysical units had, on occasions, become blurred (e.g. the training of Italian’s technicians would take place within Western’s teams, while some of Western’s technicians had been part of AGIP’s technical board).
A difficult relationship
Season of change
The organizational practices that ENI inherited from AGIP were, in many ways, a legacy of the company’s overwhelming success in the natural gas business. During the phase of AGIP’s intense growth, no formal organizational structure managed to gain ground within the company. Some important personal contacts were still deeply rooted, as was the leadership on the part of single executives and a strong sense of belonging, all of which led to the adoption of a series of heterogeneous solutions resulting from day-by-day working needs.
ENI holdings had been placed, hierarchically, above those of AGIP, and some other subsidiaries, previously independent companies – which previously had been partly owned by AGIP – were running related businesses. ENI was essentially a very light coordinating organization, working almost exclusively with the offices directly inherited from AGIP. Coordination was assured not by a specific distinction of responsibilities and tasks among the group’s companies, but by a particularly strong central power, held by Mattei himself. The fact that all the leading positions in the operating companies were held by Mattei and his closest collaborators made it possible to coordinate activities even in a situation where managerial resources were lacking. For similar reasons, the top management continued to carry out many strictly operating functions, and also dealt directly with daily activities.
However, after the birth of ENI, a further expansion of company activities in Italy, and, for the first time, abroad, were making it necessary to overcome the voluntarism that characterized the mining activities of the so-called ‘pioneers’ times’. Moreover, the merged subsidiaries operating in other branches of the oil business were less touched than AGIP by the sense of mission on which Mattei had based the exploration and exploitation of hydrocarbons.
Similarly to what was happening with regard to the transfer of technical competences, the model to imitate was identified in the managerial practices of the American oil companies (Larson et al. 1971: 597–8). Through his personal relationship with the US oil industry, Mattei himself understood that ENI’s need to update its managerial practice could only be met by introducing external resources that the Italian environment seemed unable to provide. Finally, ENI needed to clearly distinguish itself from the small and frail pre-war AGIP. Besides, Mattei always stressed in his speeches and in his operative choices that the Italian oil company was young, bold, modern and efficient, while its competitors – first in the domestic market, then in the world – remained burdened by old habits and entrenched to defend anachronistic privileges.
Although, during the following years, many of ENI’s fierce adversaries came from the USA (Frankel 1966), it is impossible to ignore that the company and Mattei himself felt a fascination of the triumphant American way of life and systems of production (de Grazia 2005). An American imprint was evident, for instance, in the choices made by ENI in terms of technological devices, advertising, design of petrol stations and headquarters.
Mattei visited the USA for the first time in 1954 and then in 1955. During his first journey, he met some drilling equipment producers and officers of Standard Oil New Jersey. ENI senior officers agree that it was Mattei himself who made the decision to hire a consultancy firm to imitate American best practice and it is possible that one of these missions had offered an opportunity for a first direct approach with BAH and other consultancies (personal interview, Giorgio Ruffolo, 14 February 2003; personal interview, Eugenio Cefis, 21 February 2003). 3
The wave of Americanization that was storming Italy – and Europe – would clearly influence ENI’s decision to hire a consultancy firm; however, the path ENI followed seems more similar to the the modalities used by AGIP with its foreign partners in the mining industry than to the relationship established by other groups within the frame of the international assistance programmes.
The relationship with the consultancy was neither part of a wider international recovery programme, as happened in the case of IRI’s engineering subsidiaries (Ricciardi 2003), nor the result of a close cooperation with a foreign partner, unlike Italsider – one of IRI’s steelworks company – which began to rely on BAH to adapt its productive practice to the new plan built at Cornigliano, under ARMCO’s design (Amatori 2008). The ENI case more resembles the attempts of other European oil companies (Shell, Total, BP) to regain competitiveness and prestige from the American competitors, adopting modern and more ‘fashionable’ managerial practices during the 1960s (Bamberg 2000; Cailluet 2000; Howarth and Jonker 2007).
In fact, even if ENI chose to rely on BAH, the very same company that had already worked with IRI, ENI was an active and autonomous importer, and there is no evidence to suggest a correlation between the two experiences, and even episodic cooperation – such as a joint seminar organized by IRI and ENI in 1956 – remained without any long-term consequence (personal interview, Aldo Cangiano, 11 June 2002).
Starting in 1956, a BAH mission led by senior consultant, Thomas C. Quackenboss, begun to work in ENI’s central office in Rome. The consultancy, whose only European branch was in Paris, settled itself as an internal organ through an expressly created unit, the Servizio Tecnica Direzionale (Management Technique Service, TEDI). TEDI had its own central office in the holding’s headquarters, and a corresponding office in each of the operating companies – the latter, progressively run by Italian personnel, expressly trained or externally recruited. This service was considered equivalent to the high-function departments, and represented, within ENI, one of the staff organs answering to the chairman. An analogous structure was also reproduced in all the operating companies.
No documentation concerning the negotiations with BAH could be tracked in ENI’s archives. It is therefore difficult to define the terms and conditions of the contract with the consultancy precisely. It is likely that ENI, or, to be more accurate, Mattei, aimed at a general update according to the American model.
The vagueness of the customer’s requirements and the high degree of standardization of the offer coming from the American consulting companies characterize other similar cases. In fact, presenting themselves as carriers of a rational and universal truth – hence always and everywhere applicable – is a relevant instrument through which consultants gain legitimation as agents of organizational change and performance improvement. However, the high level of theorization, even if it ‘scientifies’ consultants towards the top level of the companies, would bring it almost always to a high level of conflict when theory is translated into practice and imposed on practitioners who have already developed their own operational tacit knowledge (Kipping and Armbrüster 2002: 205–7).
The interventions
The first months of BAH work at ENI consisted of collecting interviews – often barely tolerated by the executives and perceived as a ‘distraction’ from work, as almost all of them recalled – through which the organizational structure of the group was inferred. The consultants then identified a series of rather generic principles, which would lead to an adoption of best practice standards. In the seminars subsequently held by Quackenboss for the Italian managers, the reorganization process was outlined in thirteen points: 1) Recognition of functions: recognize all the Functions. Overlooking essential function leaves the problem unsolved …. 2) Grouping Functions …. 3) Span of Control: don’t make too many functional grouping under the chief executive…. 4) Levels of Functional Responsibility: functional grouping directly under the Presidente may be too big for one man to handle alone…. 5) Doing versus Planning: avoid mixing doing functions and planning functions in the same responsibility center…. 6) Keep it simple. 7) Separate “line” from “staff” functions. 8) Delegate Authority with Responsibility…. 9) Provide for decisions to be made at the lowest effective level: … what this does is to let little men making (sic) little decisions, so the big men at the top can have time to make big decisions well. 10) Don’t think in terms of people when you do organization planning: don’t tailor the job to fit an executive’s unique talents. 11) Check to make sure each man has only one boss. 12) Spell it out in writing, to everybody. 13) Plans for perpetuation of the enterprise by developing managers.
4
From the operating point of view, the BAH consultants adopted three main guidelines, strictly connected to one another: a redefinition of the organization charts of the companies of the group; the implementation of a new job evaluation system (and, as a consequence, an adaptation of the retribution system; and the introduction of training courses for managers).
The new structure became effective in the holding company in April 1957. Yet, ENI was still an essentially light superstructure, a sort of enlarged secretariat of the chairman. It was the intention of the consultants that the relationship between Mattei and the operating companies (up to then direct and absolutely personal) would be mediated by a new position, the deputy general director. The position – given to Eugenio Cefis, friend and collaborator of Mattei since the AGIP era – would combine the definition of general strategies with their translation into operating directions.
The outlining of specific, rational organization charts was to be accompanied by the introduction of a new job evaluation system. A census of all positions in the company would allow the identification, for each role, of the required competence, the width of responsibilities and the degree of risk. Starting from the end of 1958, the BAH consultants condensed the results of their work into management manuals (describing the positions) and procedure manuals (describing the relations between positions), for each company of the group. The actual application of the system started in the following months.
5
Cefis recalled, as the main merit of the consultants, the introduction of a new way of considering the position within the company: The idea that there was an organisation of tasks and functions, irrespective of people, was for us a completely new concept: at ENI, if one was capable, one would do everything…. [Previously] operating orders did not follow an organisational philosophy, they had a juridical function: to give powers which could be opposed to third parties…, but not the idea that in a company, starting from what are meant as the goals established by the statute, one could outline an organisation chart which includes down to third-level employees…. Consider this, we moved from the Abyssinian ras [tribal chief] with his warriors to a regular army going from sergeant-major to marshal, from second-lieutenant to general, with all due distinctions of degrees and powers. (personal interview, Eugenio Cefis, 21 February 2003, translated from Italian)
Together with the new job evaluation system, BAH tried to renew the personnel management techniques at ENI by promoting relationships based on more effective communication and a higher participation of all employees with regard to the company’s goals (the advisers usually indicate the human relations perspective as ‘team work system’).
The tool that would allow the implementation of the innovations introduced by the Americans were courses for executives, organized from the first months of 1958. ENI expressly established a Managerial and Technical Institute (IDET, Istituto direzionale e tecnico), run by the American consultants, with the collaboration of a few Italians. The director of the school was Quackenboss himself, with Morris Hurley as dean and engineer Severo Mosca, from ANIC. The teachers were Americans (among them Morton Backer, J. Addoms, A.T. Woods), with some specific contributions on the group’s activities made by ENI executives (Dino Dinelli, Domenico Palombo, Aldo Fabris).
Easier said than done
More than any other novelty introduced by BAH, the activities of IDET – and the reaction to them – are significant to understand the distance between the consultants and the Italian company. In fact, the actual repercussions of the introduction of the new organization charts designed by the consultants should not be exaggerated; in many cases the new charts were only formally juxtaposed to the well-established network of relationships between the managers, which ensured coordination of the activities. Job evaluation became effective only later, when it was managed by Italian consultancy ORGA (personal interview, Egidio Egidi, 16 May 2002; personal interview, Giuseppe Fassina, 14 April 2003).
IDET courses, on the other hand, involved all the managers of the group, establishing a sort of ritual that aimed to make concrete the idea that a radical change was happening. 6 IDET tried to ‘legitimate, theoretically and professionally, the big organisational revolutions designed by BAH, so as to allow their actual application’ (Faggiani 1994: 336–7). In fact, the controversial acceptance of its activities on the part of ENI’s managers is the best measure of the gap that separated the company’s organizational culture from the proposals coming from BAH.
After a preliminary cycle of short seminars, IDET started its regular courses in September 1958. The executives of the whole group, as well as managers soon to be promoted to executive level, attended a seven-week full-time course, subdivided into three sessions with intervals. The main topics included the company’s organization, a quantitative analysis of costs and personnel management incorporating the new ‘human relations’ techniques.
The balance of the first cycle of IDET courses was definitely negative: there was discontent with the themes of the courses and, most of all, with the teaching modalities. This even brought about some resounding episodes, such as an official complaint on the part of some executives. Finally, the dean, Hurley, was dismissed in December 1958, even before the end of the last group of seminars.
The teaching methods adopted by the Americans were blamed for being too abstract and remote from the reality in which ENI operated. According to the testimonies of some former managers, the objections to the massive recourse to case studies, typical of American business schools, were shared by almost all participants, and thus had the result of de-legitimizing the consultants (personal interview, Aldo Cangiano, 11 June 2002; personal interview, Egidio Egidi, 11 March 2003). 7
Even some ENI human resources executives involved in the courses heavily criticized IDET, accusing staff of integrating too little with the rest of the company and offering the Italian executives nothing more than ‘a seven-week compendium of a nine-months or longer business school program’. 8
During the following years, programmes were better adapted to the needs of the oil industry and to the Italian context. Yet, the sense of BAH not belonging to the company’s reality was still strong: during the 1960 courses, for instance, the hints made by Professor Morton Backer about a supposed lack of profit-seeking drivers in ENI’s strategy – because it was state-owned enterprise – unleashed a mutiny on the part of the Italian managers. At a more trivial level, the Americans were constantly targeted by the practical jokes of the ‘comedians’ inevitably present in each group of seminarians. 9
The ‘otherness’ that legitimated consultants’ intervention at the top level of the company became, in the middle and lower executive ranks, a barrier that stopped every possibility to communicate. A similar lack of a shared ground of experience was registered, 15 years after, at Total, where McKinsey advisers were targeted as ‘les Indiens’ by the men of Direction Centrale Exploration, Production, while they reacted aginst McKinsey’s solutions and method, labelled as ‘séduisante mais illusoire simplicité’ (seducing but illusory simplicity) (Cailluet 2000: 40).
At ENI, the acceptance of the other innovations introduced by BAH was also not more enthusiastic. For the older executives it was, in most cases, no more than a formal approval of the leader’s will, and not an actual change in managerial practice.
Mattei himself was a character who was hard to place into the schemes suggested by BAH. Significantly, the Americans were unable to find an English term that would translate Mattei’s position, and he remained, even in the official documents, the ‘Presidente’. In fact, Mattei’s influence – both as chairman and CEO – was not limited to the strategic level. His direct attention was also required in detailed issues concerning the activities of the operating companies – such as personnel management or the supervision of the commercial branch. Besides, the ‘Presidente’ represented the only connection between all the companies of the group, which would otherwise have had very poor formalized communication channels.
Moreover, the human relations theories did not particularly adapt to a context in which personnel management was still prominently perceived as a matter of discipline. It is possible to recognize the difficulties of the traditional managerial culture in the speech by Domenico Palombo, personnel director at ENI (previously at AGIP) during the first IDET seminar. In 1958 Palombo summarized his idea of the role of the line manager (‘the art of command’) in the lapidary slogan ‘to be loved and feared’. 10
The younger managers – many of them freshly hired by Mattei himself during the struggle for natural gas – showed a better understanding of the need for renewal, even if they often remained sceptical about the solutions proposed by BAH.
In the same documents they criticized the teaching methods used by IDET and, more widely, BAH’s approach and attitude. Younger executives required more specific information about topics and tools that were still little known in Italy, such as marketing, job interview procedures, psychological tests and staff-line relationships. Likewise, higher ENI’s officers, asked to evaluate IDET’s seminars, stressed the need for a closer connection with the context in which the company operated and the necessity to ‘not exclusively take into account the American experience’, and therefore stressed the need to collect information about other training systems adopted by management schools in Italy and Europe. 11
The suggestion of the need to overcome the exclusive relationship with BAH came also from Servizio Studi (Office for Studies), a think tank created by Mattei that gathered together young economics and social sciences scholars to renew the ‘ideological’ approach of the company with regard to topics such as the role of the state-owned enterprise, the relationship with producing countries, public relations and, broadly speaking, ENI’s vision of the world. The heads of this office, Giorgio Fuà and Giorgio Ruffolo, for instance, dismissed BAH intervention as ‘manias of an artificial, fictitious managerial school’ and emphasized the need to obtain an insight, independent of advisers, into the concurrent debate on management theory in Italy and abroad (personal interview, Giorgio Ruffolo, 14 February 2003).
Even the technicians at AGIP Mineraria, the group with the strongest identity and the most reluctance to accept theoretical innovation coming from outside, autonomously experimented with updating their own practices. Even before the war, some of them had underlined the fact that introducing new devices and survey techniques from the USA meant that the company needed to better focus on information management.
During the epic rush to natural gas, frequent contacts with contractors and foreign suppliers consolidated the habit of borrowing certain organizational innovations, legitimized by the mediation of partners who were perceived as highly competent at a technical level. After the creation of ENI and its diversification toward international business, the technicians’ frequent stays abroad were also a good opportunity to study the organization of foreign partners and competitors, and try to transfer the methods that seemed to be the most efficient. This process grew more and more important after Mattei’s death, when the need to match the international reality became urgent, and was somehow ratified also by the opening of AGIP US, which, in the mid-1960s, besides being in charge of purchases in the USA, was also meant to work as a sort of a local ‘observatory’ (personal interview, Egidio Egidi, 11 March 2003).
All these suggestions converged in the evolution of the Scuola di Studi Superiori sugli Idrocarburi, the school already opened by ENI in 1956. It was meant for the training of young graduates, prior to their employment in the company. During the second half of the 1950s, the school programmes begun to encompass modules in economics and management, alongside the study of technical subjects. Among the teachers for the latter topics were some of the BAH consultants, but Italian scholars prevailed. In addition, some of ENI’s executives who had been particularly critical of IDET’s approach, and who were carrying out innovative experimentation independently of BAH, delivered other modules on specific aspects of management (Sapelli 1996).
Next to IDET, therefore, ENI was somehow creating another training experience, independent of the main reference model of the American business schools. The company training centre has worked continuinously until the present day – as the ENI Corporate University – while IDET’s activities and the cooperation with BAH were dismantled by 1965. 12
Conclusions
IDET and BAH’s contracts were abandoned as part of the cost-cutting policy adopted by Cefis in reaction to the crisis following Mattei’s sudden death, in October 1962. However, in 1966 – when the company was entering a new wave of growth – the British magazine Management Today praised ENI for eventually adopting organizational practices that corresponded to international standards (Management Today 1966).
In fact, the introduction of new practice was the result of the need to keep costs strictly under control during the post-Mattei crisis and then a consequence of a wider level of internationalization of the company’s activities – ENI had begun to work in joint ventures with foreign partners from the end of the 1960s (Pozzi 2010: 270–2). The autonomous paths with regard to updating implemented both by the holding and by the operative companies had more relevance than the attempt to transform the company overnight, introducing a standardized foreign model. Eventually, the labels introduced by BAH as theoretical dogmas became part of ENI’s actual experience, while the company was becoming more similar to its international counterparts. During the 1960s, new patterns of managerial knowledge became part of the identity of a new generation of managers who were trained in a world wider than Po Valley.
The resistance of the national organizational cultures to foreign influence, which was perceived as alien, is well documented beyond the appearance of a widespread convergence of European companies towards an American model (Kipping and Engwall 2002; Kuisel 1993; Schröter 2005).
In Italy, for instance, BAH encountered a similar opposition from the technically oriented culture that characterized another important customer, Finmeccanica, the engineering sub- holding inside IRI. During the periodic meetings held by the higher executives of Finmeccanica’s operative companies, BAH intervention was often blamed for being too theoretical and not responding to the needs of the actual business. The managers – most of them trained as engineers during the 1930s – instead appreciated the re-styling of Bedaux’s system, offered by the Società Italiana di Analisi e Misura del Lavoro, which was hired by Finmeccanica as an adviser alongside BAH. In 1972 researchers from the Centre for Contemporary European Studies (University of Sussex) blamed the ‘delayed rationalisation’ of Finmeccanica during the 1950s and 1960s as the result of a management ‘of insufficient calibre to grasp the opportunities seized by private enterprise’ (Holland 1972: 107).
It is possible to explain the difficulties that consultants encountered in Italy during the 1950s considering that their distance from the dominant managerial culture was too wide to allow a dialogue. In fact not only the larger Italian corporations were still relying on their traditional managerial knowledge, but also other highly legitimated institutions – for instance, in education – contributed to marginalize stimuli for a radical change (Kipping et al. 2004; Sahlin-Andersson and Engwall 2002). In such an isolation from compatible systems of significance, the ‘otherhood’ embodied in BAH’s language and method became a provocative element of tension within ENI’s management instead of contributing to the legitimation of the American ‘gospel’ as a superior rationality (Meyer 1996: 248–9).
However, it would be distorting to postulate the existence of a rigid national pattern of evolution causing the acceptance or the rejection of stimuli coming from abroad. In fact – as shown by Nelson and Gopalan (2003) – the national organizational cultures, far from being overwhelming, are mitigated or exalted by the fact that a firm belongs to a cluster of industries that were more or less open to exogenous influences.
Since its birth, the oil business has been defined by its attitude towards internationalization. This refers not only to the need for companies to become multinational enterprises to manage different markets and sources of supply, but also to the flow of information and competences that ties together equipment suppliers, contractors and oil companies in different parts of the world.
Even a company like AGIP, operating in a domestic business (natural gas) in a rather peripheral country, could not do without a strong interaction with the international oil industry. In fact, AGIP’s success relied significantly on its ability to develop competences through long-standing cooperation with foreign contractors such as the Western Geophysical Company. This was also a relevant basis for shaping the attitude of ENI towards BAH; the unusual procedure that integrated the American advisers almost as a part of ENI’s management, for instance, suggests strong analogies with the path previously followed by AGIP when it came to hiring and integrating competences from mining contractors.
On the one hand, then, ENI demonstrated a higher degree of an internationally open attitude than the typical Italian company. On the other hand, the relationship with BAH was difficult because the company was proudly aware of its technical worth and refused as ‘theoretical’ every proposal that was not compatible with the ‘practical’ culture – even if internationalized – that dominated management. The ‘scientific’ generalization proposed by the consultants could be appealing for the top management, at least in its official stance. However, BAH’s proposal was doomed for its vagueness by the oil specialists who perceived themselves as a ‘technical aristocracy’.
ENI shared this experience with other oil companies, where technical competence and organizational practice consolidated by experience were praised more than radical or – worse – exogenous innovation. For instance, just after the Second World War, associate industrial consultants experienced similar difficulties at Anglo Iranian Oil Company, when it attempted to put mid-management at Abadan refinery under stricter control, undermining the position of the European expatriates who had previously been the backbone of the company (Kipping 2000: 21–3). In a similar way, during the 1970s, McKinsey had to face an intense barrage when the consultancy confronted itself with Total’s technical elite (Cailluet 2000: 37–40). Besides, the specific corporate culture ENI inherited from AGIP – shaped during the struggle to control natural gas – presented even more elements that strongly conflicted with the suggestions coming from BAH.
The ambiguity of the relationship between ENI’s corporate culture and BAH is pictured also in the approach of Enrico Mattei towards the organizational change. The BAH entry into the Italian company was the result of his decision, but his entrepreneurial style always remained very far from the model proposed by the consultancy (the same is true for Cefis and other higher executives who sustained the reform).
However, it is important to note that the process of Americanization was formally supported by the whole group, and received at least an element of collaboration because it was a personal order of Mattei himself and, then, indisputable. In addition, the new management terminology, initially juxtaposed with the traditional practices of ‘personal’ management, did obtain a sort of legitimacy, which later acquired more significant content as the young executives refined their acquaintance with modern managerial culture. On the whole, Mattei’s ENI seems to be a sort of enlightened absolute régime, where the very autocracy of power allowed the introduction of a series of reforms that would, in the end, replace traditional practice.
Eventually, the controversial relationship with the American consultancy firm was a powerful stimulus to rethink some of the consolidated practice, legitimated topics and a new language that previously had no place in the company and that, finally, set in motion a process of change.
The case of BAH at ENI suggests that interaction between different organizational cultures could not be understood by comparing different static models and focusing only on actual convergence or divergence between them. In fact, the final result of acceptance or, otherwise, refusal of suggestions coming from a different context is less relevant than the process of evolution itself, which is set in motion by the awareness of the mere existence of a different context (Djelic and Amdam 2007; Kudo et al. 2004).
Business history could therefore contribute by considering the process of assimilation, reaction, evolution or consolidation that happens inside a firm, every time that a consultancy is asked to introduce some elements that have matured in an outside environment. Even without considering elements such as the real content or effectiveness of ‘the world’s newest profession’, ENI’s case has shown how organizational change is the result of a complex interaction between management theory, national culture, industry characteristics, entrepreneurship and company idiosyncrasies, which is worth studing as a subject of interest in itself.
Footnotes
Acknowledgements
I would like to thank Matthias Kipping and the journal’s anonymous referees for their valuable comments and suggestions. I am also grateful to Stefano Lucchini and Lucia Nardi of the ENI Group’s Historical Archive for the help they provided.
Notes
Author Biography
Daniele Pozzi is Ph.D. in Economic and Social History at Bocconi University (Milan) and Lecturer of Economic History at Università Carlo Cattaneo - LIUC (Castellanza, VA). His previous research investigated the evolution of technical and organisational competences inside the Italian state-owned enterprise (Dai gatti selvaggi al cane a sei zampe, Venezia 2009; ‘Entrepreneurship and capabilities in a beginner oil multinational: the case of ENI’, Business History Review 84:2, 2010). He recently completed a project about the evolution of managerial culture in Italy during the second half of the Twentieth Century, which enlightens the constrains of family ownership and political interferences against the full development of managerial capitalism (Una sfida al capitalismo italiano: Giuseppe Luraghi, Venezia 2012). Alongside his academic activity, he works as consultant in the field of corporate heritage and he is also founder of the h-factor project.