The Myth of Efficiency

The Myth of Efficiency

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Efficient Organizations are a Danger to Themselves and Others

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Definition

Efficiency means to be productive without waste. To act or produce with a minimum of waste, expense, or unnecessary effort.

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 The History of Efficient Systems

The first scientific study of efficiency happened in the early 20th century. Frederick Taylor, often called the “Father of Scientific Management,” was called in to consult for a manufacturing plant to increase production. As he studied the workers on the assembly line, Taylor saw an inefficient system. The engine block would stop in front of a worker, and the worker would screw on a bolt, tighten a rod, insert an assembly, snap on a plate, and fold flap A into slot B; then, the engine would go down to the next person, who would do a bunch more things. Taylor, in his wisdom, realized that the production could be speeded up considerably if each worker did only one thing. So, he changed the production line. Instead of doing ten things to the engine, each worker only did one thing. So, the worker that used to do ten things to each engine, now spent his day tightening the same bolt on engine after engine after engine.

By making the system more efficient, production increased. Many more engines were produced in the new system than under the old. The plant owners were ecstatic. The line workers however, were furious. They had been changed from artisans to bolt-tighteners. They accused Taylor of wanting to turn them into robots, and they wanted to lynch him.

The system did indeed become more efficient… but there was a price to be paid for that efficiency. That tends to be the general principle with efficiency: it’s possible to be more efficient, but there’s a price to be paid.

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The S-Curve of Efficiency

Efficiency is a little like taking Vitamin A. If you take a little, it’s good for you. If you take a lot, it will poison you. A little efficiency may save you a little time or a little money. A preoccupation with efficiency is toxic to the organization.

The problem with efficiency is that more resources toward efficiency do not always add up to more productivity. This is illustrated in the graph. A few resources into efficiency will produce good results. But the more resources you put in to increase efficiency, the less productivity you’ll have.  The more energy you put in, the greater the diminishing results.

You lose productivity because so many other things come into play when the system grows in its efficiency. Making one motion on the assembly line is more efficient, but the newly efficient workers may form a lynch mob.

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Six Problems with Efficiency

1.  Efficiency Hamstrings Flexibility

Efficient systems are often faster than non-efficient systems, but as they grow faster, they become less flexible. As efficiency grows, the system grows less able to adapt. So, when an efficient system is instituted, things will go faster for 80% of the transactions, but the other 20% will take ten times as long.

For example, ATMs have increased the speed of most transactions. Now we can deal with a machine instead of waiting in lines for the bank tellers. And 80% of the time, that works really well. But what if you forget your password? What if the ATM is out of cash? What if the ATM doesn’t have any deposit envelopes? What about the extra price you pay if you get money from the wrong ATM. If the ATM is working perfectly, and if you do everything correctly, then everything will work out well. If not, you’ll be spending a lot more time, and paying a fee.

Let me give another example from a university where I worked. Some years back, the Student Accounts Office, the Registrar’s Office, and the Financial Aid office all had different software programs that wouldn’t talk to each other. None of the offices could access the other offices’ software. So, the Registrar’s office had no way of knowing whether or not a student paid before they registered for a class. It was a very inefficient system. So, the university paid a lot of money for an integrated system, that automatically accesses the other offices. So, if the student has not paid their bill, the Registrar’s office is not allowed to register them for their next class. It is a very efficient system. When they installed the new integrated software, the university was told it would save them time and money, because the system is so efficient. The university believed that they would need a lot less personnel, because of this wonderfully efficient system. The cost savings would be fantastic.

The software did work great for 80% of the students who do everything correctly. However, if the student does one thing different than the computer wants them to, they are kicked out of the system. So, the university spends less time with the 80% who do everything “correctly.” But they spend a massive amount of time with those who don’t do what the computer wants them to–usually, this involves finding ways to trick the computer into letting people do what they need to do. Plus, the software is so sophisticated that massive amounts of time are spent in training people to use it. The net effect? Now, the university has more people working in those offices than they used to, even though the student numbers are about the same.

Efficient systems are often faster, but stupider, than non-efficient systems. The loss of flexibility can become problematic.

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2.  Efficiency is Often Mistaken for Effectiveness

Many companies use “efficiency” and “effectiveness” interchangeably. They are not synonyms. Efficiency means cutting costs, or doing things faster. Effectiveness means “doing a good job at what you should be doing.” Organizations need to look for ways to be effective. Efficiency is fine up to a point–and sometimes, being efficient can help the organization be effective. But typically, effectiveness has to do with creating a good product (not creating a product quickly) and making sure that the customers are satisfied. Efficiency is one of the tools in the tool box of effectiveness. Too many organizations see it as the only tool for effectiveness.

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3.  You Can’t Shrink Your Way to Greatness

Efficiency only comes through doing things faster and cheaper. Budget administrators everywhere have the eternal hope of “doing more with less.” This can almost never be done, short of waving a magic wand. As Tom Peters says, “you can’t shrink your way to greatness.”

Efficient systems like to do things faster, better, and cheaper. NASA, you may recall, was using that for a motto in the late 1990s and early 2000s. They were using that for a motto when Columbia burned up on re-entry. They had moved too fast and too cheaply.

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4.  Innovation is Not Efficient

Innovation is a product of people having time to think. They think, they talk, they try things.

Innovators try a lot of things, and only a few of them work. Did you know we only play about 35% of what Mozart wrote, because the rest of his symphonies are crap? Innovators are not necessarily always more creative, they just try more things. Thomas Edison tried 800 times to create a light bulb (he finally hired someone to read the literature on the topic).

I would go so far as to say that innovation and efficiency are mutually exclusive. If you’re going to be preoccupied with efficiency, you won’t have much innovation going on.

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5.  Wasting time is important.

By wasting time, I don’t mean sitting at your desk playing solitaire. There has been considerable research on what successful managers do with their time. Research suggests that successful managers spend a lot of time in short, unplanned, seemingly disjointed conversations. Many of these chatty conversations are with people who are not direct subordinates. The topics of these conversations are extremely wide–from personal hobbies to events of the day to business matters.  While these are not efficient uses of time, the successful manager uses these conversations to understand trends, listen to organizational culture and mood, get a handle on organizational resistance, and to anticipate future opportunities and challenges. What they are doing is not very efficient. But it is critically important for successful organizations.

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6.  Efficiency Always Comes with a Price

We always pay a price when we make things more efficient. We may lose adaptability, flexibility, rationality, self-understanding, etc. There is no free lunch. Efficiency comes with a price.

My doctors office recently got new, integrated software. When I go to the front desk, they check me in with the computer, which automatically bills me and simultaneously lets the doctor and nurses know I have arrived for my appointment. The nurse clicks the menu items for each of my complaints, and the doctor does it again, clicking through myriad options for symptoms. Then the doctor can press a button and electronically send a prescription to the drug store. It’s a remarkable software system.

However, when I went to the doctor’s office, not a single person makes eye contact with me. The receptionists, nurses, and doctors are constantly staring at computer monitors. They are so attentive to putting in all the necessary information and finding the right menus, that I can go for an entire visit and not be seen by a single person. I have since switched doctors’ offices.

Is there a price to be paid for the efficient software? You bet. And, as one doctor said, “don’t ever come here when the computers are down.”

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The Bottom Line

Efficiency is simply one of many tools. If we get enamored with efficiency or treat it as a panacea, we will spend a lot of time and money with extremely mixed results.

Efficiency is not a bad thing. It’s one tool in your toolbox. However, it may not always be the most appropriate tool to get what you want.

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–Jim Ollhoff, PhD

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