Booz Allen and Hamilton consultants at Enrico Mattei’s ENI (1956-1965)Daniele Pozzi*

The aim of this paper is to illustrate the specific processes of assimilation of some

managerial innovations within ENI (Ente nazionale idrocarburi, the Italian state-owned

oil company) in the 1950s and 1960s. More in detail, my insight will cover the period

1956-64, when ENI hired the American consultancy Booz Allen & Hamilton (BAH) for

advisory services. This circumstance is significant as it allows to study the introduction

of elements of the American managerial practice into a relatively backward context,

such as Italy was at that time, and into a company with a strong and specific

“personality”, such as ENI under the direction of Enrico Mattei in those years.

ENI was the first Italian company to sign a contract with an American consultancy, in

this case BAH. Yet, this did not imply the passive acceptance of an external model, but,

rather, a process of adaptation and hybridation of the American innovations into the

company’s philosophy and the national context. 1

* Daniele Pozzi, Ph.D. at Università Luigi Bocconi of Milan, is research fellow at Università degli Studi di Milano (Milan – Italy) . This paper is translated from Italian by Giovanna Arenare.

1 ENI was founded in 1953 as an evolution of “unitarian” Agip, the state-owned oil company set up in 1926 to manage both research (upstream) and refining-commercial business (downstream). ENI’s aim was to merge and coordinate into a single holding of all the oil-related companies in which the state had a share. The more important subsidiaries of ENI were AGIP MINERARIA (mining), AGIP SPA (commercial branch), SNAM (methane transport facilities) and ANIC (chemicals). The growth of Agip in the natural gas business and the creation of ENI were made possible by the technical capabilities gathered from the thirties onward and by the entrepreneurial skills of Enrico Mattei – who led Agip from 1945. He was ENI’s chairman until his death, at the end of 1962. About ENI and Mattei, see Charles R. Dechert, Ente Nazionale Idrocarburi. Profile of a state corporation, Leiden, E. J. Brill, 1963; Paul H. Frankel, Mattei. Oil and power politics, London, Faber & Faber, 1966, and Marcello Colitti, Energia e sviluppo in Italia. La vicenda di Enrico Mattei, Bari, De Donato, 1979.The psychologist Edwin G. Booz founded his company in Chicago in 1914; James Allen, a former accountant and economics teacher joined the company in 1929 and led its growth starting from the thirties. The assignments of Bah in the Us increased from 400 in 1930 to 1,500 in the years between 1946 and 1960. During this period the company started working abroad, often cooperating with Us government agencies (in Europe but also in other countries, for example in the Philippines, where the consultancy had a 3ml$ assignment). Bah was mostly specialized in manufacturing control systems. See Matthias Kipping, American Management Consulting Companies in Western Europe, 1920-1990: Products, Reputation and Relationships, in «Business History Review», n. 73, Summer 1999, pp. 207-209.

1

Firstly, I am going to present the context in which the American consultancy was

called to operate, as well as its main guidelines for action since 1956. Secondly, I will

discuss the reactions and resistance of the Italian management to the changes introduced

by the American advisors, while the last part of this paper will focus on the original

process through which ENI’s executives, during the 1960s, succeeded in assimilating a

more up-to-date managerial culture.

The contextThe recourse to American advisors in Europe had had a first moment of expansion

around the 1920s and 1930s, and had been connected, in the main, to the diffusion of

the “scientific management” of Taylorian origin (often in the version of the French,

naturalised American, Charles Bedeaux). Some operators, active before the War, had

managed to re-establish their relationships with their European clients after the end of

the conflict, but what resulted of utmost importance were the new contacts opened

within the American programs of support to Europe (for example, the US Technical

Assistance and Productivity Program, activated in parallel with ERP). Through this

channel Europe let in not only more up-to-date versions of scientific management in

terms of shop floor, but also the first elements of the “human relations” theory and the

first considerations on the organisational issue. 2

Italy, too, had known a phase of diffusion of the scientific management during the

period between the Wars (mostly thanks to the contribution of ENIOS – a national

association for scientific management - and of the Italian branch of the Bedeaux

company). Also, in the immediate post-war period, the National Committee for

Productivity, an organ of the Italian Government and connected to USTAPP, had been

founded. Among its aims were the updating of the Italian industrial practices according

to the American mass production standards, as well as the attempt to fill in the social

and psychological gaps in the specific version of Taylorism that had been applied in

Italy during Fascism.

The Committeehad recourse to some American teachers, while other contacts with

the American management culture were directly sought by some Italian companies. For 2 For consulting companies in Europe, see Matthias Kipping, American Management Consulting Companies in Western Europe, cit., pp. 190-220; for the specific national cases, see Management Consulting. Emergence and Dynamics of a Knowledge Industry, Matthias Kipping and Lars Engwall (editors), Oxford, Oxford University Press, 2002.

2

example, in 1952, Olivetti and Fiat founded IASOA (later called IPSOA), based on the

model of Harvard Business School, and 1955 saw the foundation of the Franco Angeli

publishing house, oriented to the diffusion of a modern management culture in Italy. 3

IRI too, the big state-owned industrial holding, started using, from the mid 1940s, the

technical co-operation programs, and preferred these to the recourse to a contract with a

private consulting company.

ENI, which shared this atmosphere of cultural renovation, found its own, autonomous

way to approach the American managerial model, outside of the co-operation programs

connected to the Marshall plan, and without having previously had any officially

established contact with the other Italian companies active in this respect.

In the mid 1950s ENI was about to face the organisational problems connected with

the internationalisation and the diversification of activities. The chairman of the

company, Enrico Mattei, was particularly sensitive to the need to align ENI’s

management practice to the standards of its competitors and international partners. Yet,

up to that moment, the state oil company had mostly grown by aggregating pre-existing

activities or by aligning its structures to the needs of internal development according to

entirely empirical guidelines.

ENI had been born in 1953, following the success of AGIP in the exploitation of the

natural gas of the Padan plain. The holding had been placed, hierarchically, above AGIP

(in the meantime subdivided into two companies, a commercial and a mining one) and

some other subsidiaries, previously independent companies – partly state-owned –

runninig related businesses. ENI was essentially a very light co-ordination organ,

working almost exclusively with the offices directly inherited by AGIP.

Co-ordination was in fact assured not by a specific distinction of responsibilities and

tasks among the group’s companies, but by a particularly strong central power, held by

Enrico Mattei. The fact that all the leading positions in the operating companies were

held by Mattei and his closest collaborators made it possible to co-ordinate activities

3 For scientific management during the inter-war years, Giulio Sapelli, Gli «organizzatori della produzione» tra struttura d’impresa e modelli culturali, in id., Economia, tecnologia e direzione d’impresa in Italia, Torino, Einaudi, 1994, p. 226 and passim; Paolo Viani, Progettare l’impresa: Francesco Mauro e il dibattito europeo tra le due guerre, in Storie di imprenditori, Duccio Bigazzi (editor), Bologna, Il Mulino, 1996; for the first penetration of the American managerial theories in Italy, see Giuliano Faliva e Ferdinando Pennarola, Storia della consulenza di direzione in Italia, Milano, Edizioni Olivares, 1992, pp. 30-43; about IPSOA and the other “managerial schools” set up in Italy in the fifties-sixties, Giuliana Gemelli, Scuole di management. Origini e primi sviluppi delle business schools in Italia, Bologna, Il Mulino, 1997.

3

even in a situation where managerial resources lacked. For similar reasons, the top

management continued carrying out many strictly operating functions, directly dealing

with daily activities too.

Since 1945, first AGIP and then ENI had experienced a phase of intense growth,

during which no formal organisational structure managed to gain ground in the

company. Still deeply rooted were some important personal contacts, the leadership of

single executives and a strong sense of belonging, typical of the early AGIP, which led

to the adoption of a series of heterogeneous solutions resulting from day-by-day

working needs.

Yet, a further expansion of the activities in Italy, and, for the first time, abroad, were

making it necessary to overcome the “volunteerism” which characterised the mining

activities of the “pioneers’ times”. Moreover, there were some parts of the group less

touched by the “sense of mission” on which Mattei had based the exploration and

exploitation of hydrocarbons, and these parts of the group showed some degree of

bureaucratic inefficiency. However, the company’s philosophy in the commercial

branch and in the administration offices was still completely different from the one

followed by the technical organs. 4

The consultancy assignment Similarly to what was in the meantime happening about the transfer of technical

competences, the model to imitate was identified in the managerial practice of the

American oil companies. Through his personal relationships 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 was unable to

provide.

Even before 1945 AGIP had had some contacts with the Us oil industry, contacts

which had stressed not only the need to introduce in Italy the American technical

innovations, but also the opportunity of imitating the organisational solutions applied at

international level.

The technological transfer had taken place rather quickly (with the introduction, for

instance, of reflection seismic survey before 1940), while the imitation of organisational

4 See, Mr. Paolo Cella, Milan, interview with the author, 29 Jan. 2003.

4

practices was met with more resistance on the part of the company and of the national

context, and could only be partially implemented. 5 Only after the creation of ENI was

the issue of the company’s organisational philosophy explicitly faced again.

Mattei went to the United States in 1954 and 1955 (to visit plants for the production

of synthetic rubber, to meet suppliers and sign an agreement with Standard Oil New

Jersey concerning STANIC) and this is probably when he became interested in the

organisational systems adopted by North American enterprises. Some of them were

already experimenting, beginning from the early 1950s, with highly sophisticated forms

of co-ordination, collaborating with university departments and external consultants. 6

Following the example of America’s major operators, Mattei, too, decided to hire a

consultancy, to be entrusted with the updating of ENI’s organisational structures. 7

BAH had already had some contacts with IRI, but the relationship with ENI was much

tighter, and was carried out through ordinary forms of sale of advisory services, without

any connection with the co-operation and assistance programs that had been, on the

contrary, connected with the IRI experience. 8

5 In 1938, at the end of a trip to the Usa, the geophysician Tiziano Rocco noted: «[In America] We did not perceive superiority in intelligence, in culture, in techniques or in industriousness, but clever organization, coordination in operating, rational division of labor, straightforward administration and accounting». Archivio Storico Agip (hereafter As Agip), sc. 553, doc. 47781. In 1943, Roberto Passega, an advisor geologist who had previously worked for Shell, suggested – without any success – that the organization of Agip’s exploration branch should be updated to the international standards. See Archivio Storico ENI (hereafter As ENI), Anic, Jacobini, b. 10, f. 3, Osservazioni sui metodi tecnici e sui criteri organizzativi del servizio ricerche e sfruttamenti dell’AGIP.6 For example, see the Standard Oil New Jersey case in Henrietta L. Larson, Hevelyn H. Knowlton, Charles S. Popple, New Orizons, 1927-1950: History of Standard Oil New Jersey, New York, Harper & Row, 1971, p. 597-5987 See As ENI, presidenza Mattei, Viaggi, b. 33, f. 2 e 3. Both Giorgio Ruffolo and Eugenio Cefis argued that it was Mattei himself to make the decision of hiring a consultancy to imitate the American best practice. Mr. Giorgio Ruffolo, Rome, interview with the author, 14 Feb. 2003; Mr. Eugenio Cefis, Milan, interview with the author, 21 Feb. 2003.8 In 1956 Iri and ENI organised a joint seminary for their executives, held by American teachers, but this remained an isolated episode in the following years. In 1959 Bah carried out a preliminary study about Iri’s organisation and worked for the state-owned holding until 1961. During that year, Iri started its own management school, IFAP, and began to prefer the advisory services of an Italian firm (PGA). Aldo Cangiano, at that time HR Director of Agip Mineraria, was among the participants of the first (and only) Iri-ENI course, see Mr. Aldo Cangiano, Rome, interviews with the author, 11 June 2002; about BAH and IRI, see G. Faliva and F. Pennarola, Storia della consulenza, cit., p. 83; Ferruccio Ricciardi, Lezioni dall’America. L’IRI, il Piano Marshall e lo «scambio» di esperti con gli Stati Uniti durante gli anni Cinquanta, in «Imprese e storia», n. 27, gennaio-giugno 2003, p. 50 and passim; Ruggero Ranieri, Remodelling the Italian Steel Industry: Americanization, Modernization, and Mass Production , in Jonathan Zeitlin and Gary Herrigel (editors), Americanization and Its Limits. Reworking Us Technology and Management in Post-War Europe and Japan, Oxford, Oxford University Press, 2000, p. 258 and passim.

5

The ENI group had some familiarity (rather unusual for Italian companies) with co-

operation with foreign service companies. contractors would, for example, provide

some indispensable resources to AGIP MINERARIA, as far as perforation and geophysics

were concerned. In the latter field, the co-operation with 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 (for example, the training of AGIP’s technicians

would take place within Western’s teams, while some of Western’s technician had been

part of AGIP’s organs). ENI defined the terms of its co-operation with BAH similarly to

the modalities used by AGIP with its partners in the mining industry, that is by an

initially very tight collaboration, subsequently replaced by the creation of internal

resources.

Starting from 1956, BAH, whose only European branch was in Paris, settled into

ENI’s office by a rather unusual procedure, operating as an internal organ through an

expressly created unit, the Servizio Tecnica Direzionale (in the company’s internal

documents called TEDI). TEDI had its own central office (directed by the consultant

Thomas C. Quackenboss) in the holding’s headquarters, since 1956 in Via Tevere in

Rome, and a corresponding office in each of the operating companies (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 to the chairman (an analogous structure was also reproduced in

the operating companies).

6

Table 1: Eni in the 1953

Sources: As ENI, Ods ENI, 1, 10 luglio 1953

7

No documentation concerning the negotiations with BAH could be tracked in ENI’s

archives. It is therefore difficult to precisely define the terms and conditions of the

contract with the consultancy. It is likely that ENI, or, to be more precise, Mattei, aimed

at a general update according to the “American model”.9

The first months of work of BAH at ENI consisted of collecting interviews (often

hardly tolerated by the executives and perceived as a “distraction” from work), through

which the organisational structure of the group was inferred. 10 The consultants then

identified a series of rather generic principles, which would lead to an adaptation of

ENI’s structures to the best practice standards. In the seminars subsequently held by

Quackenboss to the Italian managers, the passages of the re-organisation were outlined

in thirteen points:

- Recognition of functions: recognize all the Functions. Overlooking essential function leaves the problem unsolved. Somebody must do them.- Grouping Functions: group similar function into several balanced groupings. These several grouping become “centers of responsibility”.- Span of Control: don’t make too many functional grouping under the chief executive, otherwise he has too great load of coordination problems.- Levels of Functional Responsibility: functional grouping directly under the Presidente may be too big for one man to handle alone. So, subdivide at the next lower level. But avoid any more levels than necessary.- Doing versus Planning: avoid mixing doing functions and planning functions in the same responsibility center [… ]. Another way to put it: avoid, also, mixing high-level and low-level work in the same job.- Keep it simple.- Separate “line” from “staff” functions.- Delegate Authority with Responsibility: closely allied to delegations is decentralization.- Provide for decisions to be made at the lowest effective level: this is know as “decentralization”. Elaborate plans are often worked out for decentralization; often violating the principle “keep it simple”. But, nevertheless, what this does is to let little men making little decisions, so the big men at the top can have time to make big decisions well.- Don’t think in terms of people when you do organization planning: don’t tailor the job to fit an executive unique talents.- Check to make sure each man has only one boss.- Spell it out in writing, to everybody.

9 In a similar case, Ludovic Cailluet stressed the high degree of standardisation of the offer coming from the American consulting companies and the generality of the request from the top management of the European customers. See, McKinsey, Total-Cfp et la M-form. Un Exemple français d’adaptation d’un modale d’organisation importé, in «Entreprises et histoire», n. 25, October 2000, p. 36-37.10 Mr. Giorgio Ruffolo, Rome, interview with the author, 14 Feb. 2003; Mr. Eugenio Cefis, Milan, interview with the author, 21 Feb. 2003.

8

- Plans for perpetuation of the enterprise by developing managers.11

The documents produced by TEDI also mention the need to abandon the functional

structure used up to then by the group’s companies. The term “functional” was most

likely used with a rather generic meaning (that is, to refer to a structure grown day by

day, by following merely empirical principles), while there is no evidence of any

attempt to implement an actual multi-divisional structure. Partly, the ENI group structure

(holding and industry sub-holdings) was somehow similar to a system based on semi-

independent divisions. Moreover, the “M-form” had not become, yet, the most

characteristic product of the typical “package” offered by management advisors. 12

The theoretical novelty the consultants most referred to was, on the other hand, the

separation between line and staff, and an improved process of delegation and of power

division. Quackenboss stressed the necessity to clearly distinguish between directive

channels and assistance, advice and specialised analysis channels, explaining that “the

growth of the companies from small to large size requires this refinement of concepts”.

Among the principles introduced by BAH were also the unique hierarchic line and the

limitation of the number of personnel under the responsibility of each executive. 13

From the operating point of view, the BAH consultants adopted three main

guidelines, strictly connected to one another: a re-definition of the organisation charts of

the companies of the group, the training for executives and the implementation of a new

job evaluation system (and, as a consequence, an adaptation of the retribution system).

The re-organisation of the group would take place with, as a background, the

development plan of the years 1957-1961, which included the expansion of activities

abroad, the first entrance into the petrol-chemical industry, and the exploration of new

business areas, such as nuclear energy. 14

Actions implemented by BAH

11 As ENI, IAFE, b 8ad (859), f. Seminari preposti attività IDET 1958, The ENI Management and Techinical School Seminar Series, Session I – First Day (23/03/58),12 The hypothesis of organising the firm by «business logical divisions, each responsible for its own business» was taken only as a theoretical example of division of powers in As ENI, IAFE, b 8ad (859), f. Seminari preposti attività IDET 1958, The ENI Management and Techinical School Seminar Series, Session I – First Day (23/03/58). About the diffusion of the M-Form in Europe, see M. Kipping, American Management Consulting Companies, cit., p. 209 and passim.13 The ENI Management and Techinical School Seminar Series, Session I – First Day (23/03/58), cit.14 For ENI’s evolution in the mid-fifties, see C. Dechert, Ente Nazionale Idrocarburi. Profile of a state corporation, cit.

9

On the basis of the interviews collected from 1956, the BAH consultants outlined the

new organisation charts of the group, which were supposed to officially establish a clear

distinction between “line” and “staff” functions, as well as a more rational grouping of

tasks. The new structure of the holding became effective in the April of 1957, and was

presented as the practical application of the new American theories. 15

ENI’s offices were re-organised to better serve the new needs, thus differentiating

themselves from the structure inherited by pre-1953 AGIP. Yet, ENI was still an

essentially light superstructure, a sort of enlarged secretariat of the chairman. In the

intentions of the consultants, 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 its translation into operating directions. The chairman and deputy general

director were the only “line” executives in ENI’s top management: the former was in

charge of the elaboration of the group’s general strategies and the dialogue with the

main external counterparts, while the latter was responsible for the enforcement and

application of such strategies within the operating companies. The documents

presenting the new organisational chart stressed the importance of having clearly

defined the hierarchic channels:

The lack, in the past, of a Deputy general director at ENI had created a sort of gap. The result was that the various “staff” functions were used – an attempt which was good in the intentions but inadequate – to meet the needs of a “line”. Now there is a better solutions, that is a strong “line” and a strong “staff”.16

The Presidente superintended a group of staff services and consultants in the

technical, economic and legal fields, as well as services related to the organisation and

top-level training (among which TEDI), while the deputy general director supervised the

administrative, financial, personnel, public relations and marketing policies, working

with some staff units which would help him «to enforce [in the operating companies]

the observance of the approved policies and decisions».17

As far as the operating companies are concerned, the re-organisation was

implemented through the same general guidelines set up for the holding, but it did not 15 As ENI, Ods ENI, 33, 5 aprile 1957.16 As ENI, Vincenzo Russo, b. 756, f. 25, Organigramma 5 aprile 195717 Ivi.

10

lead to radical changes in the practical management of the activities. As for AGIP

MINERARIA, the most important company and with the strongest identity, the new

organisation chart of 1958 was the occasion for replacing some executives with other

managers closer to Mattei, and to eliminate some of the activities which were alien to

the company’s mining core-business. 18 The re-organisation was led by the TEDI office

set up in AGIP MINERARIA, now directed by Dante Cavalli, a technician who did not

belong to BAH but had had the chance of independently establishing contacts with the

American managerial culture. 19 From the testimonies of former executives, it even

seems to turn out that the BAH consultants had never actually been at AGIP MINERARIA,

whose headquarters were in Milan.

18 The biggest change was the appointment of three new deputy general directors, Tiziano Rocco, Cesare Gavotti and Egidio Egidi. Marco Trisoglio, who had been deputy general director since 1946, was forced to resign. As AGIP, Ods AGIP, 75, 23 dicembre 1957; Mr. Egidio Egidi, Milan, interview with the author, 16 May 2002; Mr. Giuseppe Fassina, Monza (Milan), interview with the author, 14 April 2003.19 Dante Cavalli, at the time thirty-three years old, was a mechanical engineer, trained in Finsider (Iri’s steel-works sub-holding). He worked for the Ministry of Industry and for the Commissione indagini e studi dell’industria meccanica (CISIM, an inter-ministerial survey commission on mechanical industry). Working for CISIM, Cavalli collaborated with the Stanford Reaserch Institute Advisory Group and could specialize in organisation in the Us. Before joining ENI, he worked for Alfa Romeo, Necchi, Olivetti, and for Admiral’s Italian branch. See As ENI, ENI, Direzione relazioni col personale, b. 951 (1138a), f. Schede personali dirigenti AGIP Mineraria. About CISIM, F. Ricciardi, Lezioni dall’America, cit., 37 and passim.

11

Table 2: Eni at 1957-58

Source: As ENI, Vincenzo Russo, b. 756 (f25), f 2626a

12

AGIP MINERARIA remained a very centralised company, as did, on the other hand, the entire

group. The operating companies continued to be connected to the holding through a mechanism of

accumulation of offices (the most important of ENI’s executives held at the same time also the first

positions in the subsidiaries), so that the companies of the group remained, essentially, the

executive arm of the strategies outlined by ENI’s top management.

For example, it is remarkable that AGIP MINERARIA lacked almost any staff unit, and the offices

meant for the negotiation of research contracts abroad – a strategic function in the late 1950s – had

been entirely transferred to the holding in 1958. 20

Subsequent actions (in 1959 and 1961) were limited to a re-distribution of responsibilities among

the main executives, with no significant alteration, though, of the structures defined in 1957. What

can be remarked, in this context, is the appointment of Cefis to co-ordinator of the financial

strategy, the accounting and the organisation of the group. 21

Together with the creation of new organisation charts, BAH tried to define a new job evaluation

system for the position of each employee, and to renew the personnel management techniques at

ENI by introducing the theories of the human relations school, which had started to spread in the

United States in the last few years before the War. 22

A first aim was to get to an objective definition of roles and tasks, irrespective of the personal

qualities of the employees. Eugenio 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 […]. In fact, there were no functions, there was no organisational philosophy […]. 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… 23

The outlining of specific, rational organisation charts was to be accompanied by the introduction

of a new job evaluation system. A census of all positions in the company would allow to identify,

for each role, the required competence, the width of responsibilities, and the degree of risk. The

system would offer a method to verify whether the employee possessed all the characteristics and 20 After ENI was set up, Agip mineraria did not have a legal office yet, and “Special Section E” (handling negotiations with the oil-producing countries), too, was transferred to ENI, as a part of the Chairman staff. As AGIP, Ods AGIP, 123, 15 ottobre 1959; 128, 6 novembre 1959.21 See ENI, Ods ENI, 69, 3 March 1959; As ENI, Ods ENI, 104, 6 settembre 1961. Other documents present some minor chronologic discrepacies, see As ENI, Dipers/Org (1956-1958), b. 10B2 (2346), f. Assistente del Presidente per il Coordinamento, dott. Eugenio Cefis.22 See Giuseppe Bonazzi, Storia del pensiero organizzativo, Milano, Franco Angeli, 1989.23 Mr. Eugenio Cefis, Milan, interview with the author, 21 Feb. 2003.

13

skills considered to be necessary for the task he was handling (or could be promoted to handle),

and, at the same time, would re-define the hierarchy of salaries on the basis of an objective

evaluation of the position. Before, two employees with the same position could carry out even very

different tasks, depending on their personal skills (which implied that a rather arbitrary bonus

scheme existed, to reward employees on the basis of the tasks actually carried out by each).

Starting from the end of 1958, the BAH consultants ratified 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. 24

Speaking in more general terms – setting aside the specific technical tools – the BAH consultants

aimed at renewing the relationships within ENI’s personnel, not only by establishing objective

criteria for evaluation and retribution, but also by promoting relationships based on more effective

communication and a higher participation of all employees to the company’s goals.

When presenting the principles underlying the new organisation to the group’s executives,

Quackenboss would stress the connection between a good system for delegation in decision-

making, communication tools both up- and down-directed, and the involvement of all personnel

degrees within the company:

- The Top Manager controls the enterprise by certain techniques. We found that delegation and decentralization meant decision-making at lower levels. How can the Top Manager be sure that his people make correct decisions?

- Good control requires good organization, with responsibilities made very clear, so each man knows who should make the decision.

- Next comes clear, definite policies, spelled out- Next comes good communications so the subordinate managers know what the Top Manager

says and wants.- Finally comes good personnel, men who are developed and trained to do the job right. They

have the brains, drive and character to do the job right.25

The “team work system”, as it was often called by the consultants, was completed by the

planning of specific and verifiable results, as well as an efficient reporting system.

The tool which would allow the implementation of the innovations progressively introduced by

the Americans were the courses for executives, organised starting from 1957. During the first

months of 1958, ENI expressly established a Managerial and Technical Institute (IDET, Istituto

direzionale e tecnico), entirely run by the American consultants, with the collaboration of some

24 As ENI, b. 2626a, Quinta riunione “tecniche direzionali”, 26 settembre 1958. 25 As ENI, IAFE, b. 8ad (859), f. Seminari preparatori attività IDET 1958.

14

Italians. Its aim would be to «legitimate, theoretically and professionally, the big organisational

revolutions designed by BAH, so as to allow their actual application».26

IDET started its activities on April 4th, 1958, with a series of twelve one-week seminars,

addressed to all ENI’s executives and meant to illustrate the new organisation plans and the

principles on which they were based. The director of the school was Quackenboss himself, with

Morris Hurley as dean – that is, basically, responsible for didactics – and engineer Severo Mosca,

from ANIC, in charge of logistics (also mentioned among the teachers was Morton Backer, in charge

of accounting and control). 27

The opening seminar consisted of some meetings about the organisational reforms introduced in

the group (the lessons were held by the consultants themselves, Quackenboss and J. Addoms), the

analysis of a case study held by R. Macchi, and a lesson on the technical aspects of ENI’s activities,

held by the petroleum engineering expert A.T. Woods. Some specific contributions on the group’s

activities were, on the other hand, given by ENI’s executives (Dino Dinelli, Domenico Palombo,

Aldo Fabris).28

IDET started its regular courses in Septeber 1958: the executives of the whole group, as well as

managers to be soon promoted to executive level, attended a seven-week full-time course,

subdivided into three sessions with intervals. Although we do not have the program of this first

module, we can suppose, on the basis of the testimonies and the courses held in the following years,

that the topics of the 1958/59 seminars included the company’s organisation, a quantitative analysis

of costs, and personnel management with the new “human relations” techniques. 29

IDET courses were therefore the occasion on which the whole of ENI’s executives confronted the

consultants and their innovations. The considerations of participants during the first executive

seminars allow to understand the distance between ENI’s philosophy as a group and that of BAH,

and the modalities through which the changes were perceived by the Italian company.

The reaction of the Italian managementThe balance of the first cycle of IDET coursed was definitely negative, to the extent that the dean,

Hurley, was dismissed in December 1958, even before the end of the last group of seminars. The

discontent about the themes of the courses and, most of all, the teaching modalities even brought

26 As ENI, Ods ENI, 55, 21 febbraio 1958; Massimo Faggiani, La formazione dei dirigenti negli anni Settanta, in Francesco Venanzi and Massimo Faggiani (editors), ENI un’autobiografia, Milano, Sperling & Kupfer, 1994, pp. 336-337.27 As ENI, Ods ENI, 55, 21 febbraio 1958,28 The program of courses, participants lists and the transcription of some lessons are in As ENI, IAFE, b 8ad (859), f. Seminari preparatori attività IDET 1958.29 For the seminars in the following years, see As ENI, IAFE, b 8 ad, f. seminari speciali 1-2 and Mr. Aldo Cangiano, Rome, interview with the author, 11 June 2002; Mr. Gian Piero Francalanci, San Donato (Milan), interview with the author, 27 June 2002.

15

about some resounding episodes, such as the official complaint of some executives about the

teaching methods used by the Americans. Participants expressed, in an open letter to Hurley, their

request to integrate the case studies system, typical of American business schools, with other tools,

more familiar to Italian didactics.30

The teaching methods adopted by the Americans were accused of being too abstract and remote

from the reality in which ENI operated. According to the testimonies of some former ENI

executives, these objections to the massive recourse to case studies were shared by almost all

participants, and had thus the result of de-legitimating the consultants. 31

The younger managers, more interested in the single innovations introduced by BAH, wanted

more specific information about the management tools still little known in Italy («marketing, job

interview procedures, psychological tests, staff-line relationships»), and a teaching method capable

of explaining the fundamentals of each technique, leaving case histories, if anything, an illustrative

function. Among the executives’ requests there was also a bigger reference to the specificity of the

Italian context. 32

Even some executives from ENI’s human resources management heavily criticised IDET, accused

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».33

The duration of courses for the following years was revised, and programs were better adapted to

the needs of the oil industry and the Italian context. Yet, the sense of BAH not belonging to the

company’s reality was still strong: during the 1960 courses some problems were raised again, due to

BAH’s lack of sensitivity with respect to the esprit de corps of the company’s executives, while it

was also evident that the relationships among the teaching consultants themselves were extremely

bad. 34 A course evaluation report, though on the whole rather positive, stressed once more the need

30 «The case history and panel method, which forms the 80% of the Institute’s didactics, does not satisfy group B participants’ need to be introduced to the discussion and analysis of practical cases through a historical premise. Such premise, to be held as a traditional teacher-to-student lesson, should concern the scientific-industrial evolution which led to the current organisational systems for personnel relations in the economically more developed countries». As ENI, IAFE, b. 8ad (859a), f. preparazione corsi direzionali 1958-59 (A-E), Lettera del 21 novembre 1958, Gruppo B al dean Hurley.31 Mr. Aldo Cangiano, Rome, interview with the author, 11 June 2002; Mr. Egidio Egidi, Milan, interview with the author, 11 March 2003. See also the criticism of the French managers against «les indiens» from McKinsey in L. Cailluet, McKinsey, Total-Cfp, cit. p. 37-40.32 «The analysis of case histories (preferably Italian) should replace, in the thus revised course, the illustration and concrete evidence of the principles and methods, explained in their historical genesis and theoretical consistency». Cases should, therefore, be presented «as the practical evidence of the principles, and not, as they are at present, as sources of dialectically inferred truths». Cfr. As ENI, IAFE, b. 8ad (859a), f. preparazione corsi direzionali 1958-59 (A-E), Lettera del 21 novembre 1958, Gruppo B al dean Hurley.33 As ENI, IAFE, b. 8ad (859a), f. preparazione corsi direzionali 1958-59 (A-E), Appunto per il Gen. Palombo.34 A note by Fabris on April 30th, 1960 reported that «during the lazy lessons held by Professor Morton Backer, the stress was put, on several occasions, on ENI’s non-economic policy [as state-owned company] and on the fact that this led, in Professor Backer’s view, to the formulation of new investment plans of no profitability […]; always denied, however, by the participants». Moreover, «during the courses, the personal hostility between Professor Backer and Mister Quackenboss was evident. Also the other teachers of the Institute, as a whole, feel clearly incompatible with

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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 to collect information about

other training systems adopted by management schools in Italy and Europe. 35

The implementation of a more up-to-date managerial practice was opposed not only by the BAH

consultants’ inability to adapt their product to the Italian context, but also by the extremely strong

company culture at ENI.

The entrepreneurial idea which had led to the success of AGIP and made it possible to create ENI,

was embodied in the person of the holding’s chairman and of a very small group of his closest

collaborators and technicians. The values that had become most relevant, in the developing phase of

the company connected with the exploitation of methane, had all to do with technical know-how,

devotion to the company, and personal loyalty to Mattei. 36 This crusade atmosphere, fuelled by

AGIP’s and ENI’s competitors, had also fostered a strong esprit de corps, as well as extremely close

ties among the executives of «the beginnings».

The management immediately approved of the BAH program of reforms, promoted by Mattei.

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 the managerial practice.

For example, the actual repercussions of the introduction of the new organisation charts designed

by the consultants should not be exaggerated: in many cases the new charts were nothing but

formally juxtaposed to the well-established network of relationships between the executives, which

ensured co-ordination of the activities. Even an executive like Eugenio Cefis, always interested in

managerial innovation, never accepted to identify with one of the numerous positions he was

formally assigned, but did his job more as a friend and collaborator of Mattei’s than as an officer of

the company. 37

Mattei himself was a character hard to be framed into the schemes suggested by BAH.

Significantly, the Americans were unable to find an English term which would translate Mattei’s

position, «the Presidente» (Mattei, in fact, acted at the same time as a chairman, a chief executive

Mister Quackenpass. A comment by Professor Turcot [Turcotte], criticising and mocking Mister Quackenboss in front of other members of the Institute, has stressed this incompatibility». in As ENI, IAFE, b 8 ad, f. seminari speciali 1-2, Appunto. Corso per Dirigenti a Corte di Cadore dal 19 al 28/4/60.35 The suggestions was that of taking as models one of the other Italian business schools (IPSOA and ISIDA), or another European experience (as IMEDE in Lausanne); As ENI, IAFE, b 8 ad, f. seminari speciali 1-2, Appunto sul corso tenuto a Corte di Cadore dall’Istituto Direzionale e Tecnico ENI dal 23 al 31 marzo 1960.36 See also Richard Normann, Le condizioni di sviluppo dell’impresa, Milano, Etaslibri, 1993, pp. 29-30 (citare edizione inglese)37 Mr. Aldo Cangiano recalled that when Zanmatti received the new organization chart for AGIP Mineraria, he immediately thought of dismissing Dante Cavalli and AGIP’s organizational unit, which, in his opinion, had already completed their function. Mr. Aldo Cangiano, Rome, interviews with the author, 11 June 2002 and 13 Feb. 2003. Mr. Egidio Egidi confirmed the feelings of the top management about the the novelties introduced by Bah. In his opinion, Agip’s not formalized means of co-ordination were better, Mr. Egidio Egidi, Milan, interview with the author, 11 March 2003.

17

officer and a general director). BAH’s documents would later acknowledge that, at ENI, strategic

decision were never made collectively, through teamwork, but only through delegating some

operating functions. 38 Mattei’s influence was not limited to the strategic level, but also extended to

detailed issues concerning the activities of the operating companies (such as personnel management

or the supervision of the commercial branch). 39 Finally, the “Presidente” represented the only

connection between all group’s companies, which would otherwise have very poor formalised

communication channels. A few years after the events, some commentaries remarked how, in spite

of BAH’s work, ENI had preserved its «one-man show» character until the death of the founder of

the company.40

This “personalisation” of relationships ran top-down through the whole hierarchy of the

company, making “objective” personnel management rather ineffective, while some forms of

“community” co-ordination between technicians and executives seemed to work more efficiently. 41

Moreover, the human relations theories did not particularly adapt to a context where personnel

management was still prominently perceived as a matter of discipline.

Domenico Paolombo, personnel director at ENI (not by chance a former high officer in the

Carabinieri corps) took part to the BAH seminars, trying to integrate the new terminology

introduced by the Americans with his almost “military” attitude and practice. In a contribution he

presented during one of the IDET seminars, Palombo summarised the activity of the manager –

whom he always referred to as il capo (the Chief) – as that of comandare (being in command). This

term summed up all the concepts more subtly expressed by the consultants as «to manage» or «to

organise the work», while no room was left to the possibility of decentralising decision-making.

38 «The key manager is the Presidente. All power and authority in ENI is in his hands. He uses it to direct the enterprise. But as a manager, he directs the enterprise through others. The Presidente delegates most of the doing functions, to leave himself more time for planning. He is concerned with both doing and planning. The concentration of these two types of functions in the Presidente is unavoidable but he separates them by delegation»; As ENI, IAFE, b. 8ad (859 a), f. seminari preparatori attività IDET 1958, The ENI management and technical school. The seminar program series. Section III – Second day.39 For example, Mattei himself took care of inspecting some of the service stations of the company, see Mr. Egidio Egidi, Milan, interview with the author, 11 March 2003.40 In the opinion of «Management Today», «The American advisors completed the reorganization, and some of their suggestions were carried out. Bur they could not change the fundamental fact that Mattei’s group was a one-man show. The one man, into bargain, had no intention of delegating any of his tasks and powers or of accepting any kind of check on those powers. He was reluctant to have anyone with any real stature too near the throne»; ENI after Mattei, in «Management Today», Oct. 1966, p. 89.41 The personnel who participated to the run for Padan hydrocarbon preserved a strong sense of unity and proudly felt themselves to be a close community of “pioneers.” Among them evolved a network of informal coordination, based on the tight-knit relationships shaped in the hazardous years of post-war Agip. They could be described as a “community of practice”, see John S. Brown and Paul Duguid, “Organizing Knowledge,” in California Management Review 40, no. 3 (1998): 90-111. The job evaluation system had little practical consequences in its first years of application, except for the discontent of the employees, who perceived the new positions as not corresponding to their actual relevance (they started calling themselves “jobbati” – meaning someone who has been labeled by a job, and at the same time a pun with the Italian word “gabbati”, an informal term which means “deceived, framed”). Mr. Eugenio Cefis, Milan, interview with the author, 21 Feb. 2003; Mr. Luciano Davanzo, San Donato (Milan), interview with the author, 27 May 2002; Mrs. Maria Adelaide Chierici, San Donato (Milan), interview with the author, 9 April 2003.

18

Similarly, the concept of «control» (that is the planning and verification of the goals), was reduced

to mere disciplina (discipline).42 The active participation of the personnel to the goals of the

company was therefore intended as something close to the military corps spirit, strengthened by the

charismatic role of the “Chiefs”.43

Probably, Palombo’s vision of the company was more effectively representative of the actual

reality of ENI’s operating companies than the models of the American managerial theories: AGIP

had succeeded in prevailing in the competition for methane in the Padan plain thanks to its

“military” character (particularly strong in the mining division of the group). These elements still

deeply permeated the group of executives who had been the protagonists of the first phase of

growth. Yet, ENI’s management, and particularly the younger executives, were aware that an update

of their own management practice was necessary. What they expected, though, was a compromise

between the mere reproduction of the intrinsic character of the company and the acceptance of a

completely alien model.

The assimilation of the managerial innovationThe top management choice of a top-down revision of the managerial practice was hardly

applicable at the operating level, and was therefore de-legitimated as not responding to the real

needs of the company. 44 Even out of the technicians’ circle, BAH’s methods were heavily criticised.

The heads of ENI’s office for economic studies, Giorgio Fuà and Giorgio Ruffolo, criticised, for

instance, the superficiality of the «manias of an artificial, fictitious managerial school» proposed by

the Americans:

They would come for interviews, and would interview us for hours, asking all sorts of questions, but there was no relationship. The office for economic studies was an object, and this is what was rather frustrating, the fact of being regarded as coleopters, as objects, even though their external attitude was based on patting you on the back and being as friendly as ever. I remember I had the final report of Quackenboss and his people: after a huge, huge treaty where they presented all the theories and criteria of advanced management, they closed with this great sentence, a sort of a pay-off: «To use common sense». Then I told Mattei that if this was worth a

42 «The action of command in its explication, that is in the way it is exercised, defines what is called “the art of command”: that is, “the art of governing by keeping good discipline relationships”. To be loved and feared»; As ENI, IAFE, b. 8ad (859 a), f. seminari preparatori attività IDET 1958, Il governo del personale da parte dei capi di linea.43 «The Chief who is capable of presenting issues with a positive attitude and of developing enthusiasm, strengthens the spirit of loyalty in the group and prevents each member from deviating from the track to the goal»; ivi, p. 9.44 As Ludovic Cailluet argued about Total in the early seventies: «Le discours théorisant séduit le sommet stratégique qui y voit la fourniture de grands principes utiles à la résolution de problèmes généraux qui le préoccupent. À l’échelon non plus stratégique mais opérationnel, la «mise en réalité» des principes théoriques ne correspond plus aux attentes des utilisateurs. Ils ont alors tendance à nier la pertinence des solution proposées du fait de leur caractère standard et ‘préfabriqué’. La critique faite au consultant est très typique: elle tient dans son ignorance des réalités sectorielles, locales voire nationales»; L. Cailluet, McKinsey, Total-Cfp, cit., p. 41.

19

billion – this very sentence – then perhaps we could have done that ourselves. All this machinery sounded to me like re-inventing the wheel.45

The rejection of an unconditional acceptance of a rigid scheme was also motivated by the need,

expressed by the younger executives, to get an insight, independently of BAH, into the debate on

management theory which was at that time open in Italy and abroad. In the same months of their

criticism of the consultants’ work, Mattei sent Ruffolo and Fuà to the United States with the explicit

goal of studying the practice of the big American companies; Dante Cavalli, on the other hand, had

independently studied the organisational techniques in the USA, while Aldo Cangiano – personnel

director at AGIP MINERARIA – had attended the courses of the National Committee for Productivity

before ENI set up its own courses for executives (and he attended, later, similar courses in Geneva,

organised by the Bureaux International du Travail). 46

Even the technicians at AGIP MINERARIA, the most reluctant to accept theoretical innovation,

autonomously experimented with updating their own practice. An important contribution came form

the frequent contacts abroad, through contractors and foreign suppliers. In a context which had

always been strongly connected with a philosophy of “doing”, some managerial innovations could

only be introduced by the mediation of someone who was perceived as highly competent at

technical level, rather than by the imposition of external consultants. 47

The technicians’ frequent trips to the United States were also a good opportunity to study the

organisation of partners and competitors, and try to transfer to AGIP the organisational methods

which seemed to be most efficient. This process grew more and more important after Mattei’s

death, when the need to be up to the international reality became urgent, and was somehow ratified

by the opening of AGIP USA, which, in the mid 1960s, besides being in charge of purchases in the

United States, was also meant to work as a sort of a local “observatory”.48

In addition to the introduction of innovations from abroad, the company enhanced some

elements of the Italian management tradition. As far as accounting is concerned, for instance, the

introduction of a consolidated accounting system was entirely managed by the Italian experts

working for the group (mostly Fuà), while the issue of recruitment was entrusted at first to

Università Cattolica of Milan, and subsequently to ORGA, an entirely Italian consultancy with a

45 Mr. Giorgio Ruffolo, Rome, interview with the author, 14 Feb. 2003.46 The trip to the Usa was the basis for the volume Giorgio Ruffolo, La grande imprese nella società moderna, Torino, Einaudi, 1971. Mr. Giorgio Ruffolo, Rome, interview with the author, 14 Feb. 2003; Mr. Aldo Cangiano, Rome, interview with the author, 11 June 2002. 47 For example, Roberto Passega worked for Agip mineraria as geology advisor in the mid fifties, after working for Shell and other multinational companies. He introduced both new geological techniques and a new system of standard reporting which imitated the one used in the Anglo-Saxon companies. See Mrs. Maria Adelaide Chierici, San Donato (Milan), interview with the author, 9 April 2003. 48 Mr. Egidio Egidi, Milan, interview with the author, 11 March 2003.

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well-established tradition. 49 It is significant that, in addition to IDET, ENI had opened in 1956 another

training centre, the Scuola di Studi Superiori sugli Idrocarburi (meant for the training of young

graduates, not employed in the company yet), where the study of technical subjects was integrated

with modules in economics and management. Among the teachers were some of the BAH

consultants, but especially many Italian scholars, the protagonists of the economic and managerial

modernisation of those years: Paolo Sylos Labini, Pasquale Saraceno, Siro Lombardini and Giorgio

Enriques. Other subjects were taught by some executives and consultants from ENI, who were

carrying out innovative experimentation independently from BAH: Angelo Aldrighetti, Giuseppe

Ratti, Aldo Fabris and Giorgio Fuà. Next to IDET, therefore, ENI was somehow creating another

training experience, independent of the main reference model of the American business schools. 50

At the time of Mattei’s death, at the end of 1962, the managerial culture of ENI was therefore a

mix which included the most traditional elements of the Italian entrepreneurial practice (rigid

centralisation of power, importance of personality and personal relationships), some specific

characteristics connected with the history of the company (the “mission spirit”, the sense of

belonging, personal loyalty to Mattei), a formal acceptance of the American model introduced by

BAH, as well as some single elements of innovation inferred either from the contacts with

consultants or from independent updating channels.

ENI’s progressive adaptation to the international management standards could only be completed

after the death of its founder, in a new phase of growth started in the second half of the 1960s under

the leadership of Eugenio Cefis. The big crisis which followed Mattei’s death forced the company

to adopt better planning and cost control systems. Moreover, the first joint-venture contracts with

foreign partners made it crucial to overcome a sort of provincialism which still characterised ENI.

Finally, the diversification of the activities as well as the increasing internationalisation made it

impossible to reproduce the forms of “personal” control of Mattei’s ENI, inducing a bigger

delegation of powers and responsibilities (which also brought about an increasing independence of

the operating companies and a weakening of the group’s identity). 51

49 Mr. Giorgio Ruffolo, Rome, interview with the author, 14 Feb. 2003; Mr. Aldo Cangiano, Rome, interview with the author, 13 Feb. 2003; for consolidated accounting systems in ENI group, see As ENI, AGIP Servizio amministrazione, b. 1688 (984a), Formazione dei bilanci di gruppo, norme ed esemplificazione; Antonio Bandettini, I bilanci consolidati nei gruppi dell’IRI e dell’ENI, Pisa, Editore Colombo Cursi, 1969.50 For the Scuola studi superiori sugli idrocarbuti and its approach to the modernisation of the Italian managerial culture, see Giulio Sapelli, Competenze, crescita e cultura d’impresa, La Scuola Superiore Enrico Mattei, Studi e ricerche 3-96, San Donato, Scuola Superiore Enrico Mattei, 1996.51 «Cefis, since 1962, has built up an up-level staff to censure that ENI will never again become entirely dependent on one or two men […]. The days of one-man rule are over. Although the general manager, Raffaele Girotti, holds the key post, the executive committee seem to be keeping the managers on a fairly right rein». ENI after Mattei, in «Management Today», Oct. 1966, pp. 82-89 and 132.

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In this new context of the early seventies, ENI faced again the issue of managerial training, by

creating a new centre, the Istituto di Aggiornamento e Formazione ENI (IAFE), absolutely

independent of the previous IDET experience, which was over by 1965. 52

The actual efficacy of BAH’s intervention was therefore rather limited, but its importance goes

beyond the immediate practical results. The re-organisation started in 1957 meant the

acknowledgement of the need to update the managerial practice adopted up to then at ENI, and

legitimated the introduction of a series of innovations which would deeply alter the original

character of the company.

It is important to remark that the process of “Americanisation” was formally supported by the

whole group and received at least some collaboration as a direct order of Mattei’s and, as such,

indisputable; also, the new management terminology, initially juxtaposed to the traditional practice

of “personal” management, did obtain a sort of legitimacy, which later acquired more significant

contents as the young executives refined their acquaintance with a modern managerial culture.

On the whole, Enrico Mattei’s ENI seems to be a sort of an enlightened absolute régime, where

the very autocracy of power allowed the introduction of a series of reforms which would in the end

replace the traditional practice.

52 M. Faggiani, La formazione dei dirigenti, cit., p. 339.

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