Within some organisations there seems to be a management mantra of “pursuing ruthless efficiency”. On the face of it, other than sounding like something that ought to appear on a “buzzword bingo” sheet, this seems like a sensible thing to aim for—I mean if we can hit the “sweet spot” of being more efficient (i.e. incurring less costs) whilst also being effective and delivering what our customers want, that has to be a good thing, right?
Well yes, this statement is probably true—to an extent—but there are some important nuances that are easily overlooked. Efficiency is crucial, but like most things in life, it becomes problematic when taken to an extreme. Balanced efficiency can be an excellent thing to aim for—it can actually mean you exceed customers’ expectations (“You can deliver quicker than I expected? Awesome!”). Ruthless efficiency, on the other hand, where an organisation cuts, cuts, cuts without looking and thinking holistically at the impact is far more problematic.
An example of Ruthless Efficiency: A Gym
I was mulling this over recently when working out at my gym. I’ve been a member of this particular gym for over 15 years, and I’ve seen managers and gym staff come and go. The gym itself has changed ownership in that time, and in the past five years it’s pretty obvious that they have been cost cutting presumably with the aim of being “ruthlessly efficient”. In fact, a few years ago they even lowered their monthly subscription charges, to make them more in line with their competitors. Something that is pretty rare! So how has the drive for ruthless efficiency affected them (and their stakeholders)? Read on….
Example 1: Reducing Staff
One efficiency measure that they introduced related to the door entry system. In the old days, there would be a person at reception who would scan you in, and check your photograph. Then, presumably in the name of efficiency and reducing the number of staff needed on-site at any one time , the gym moved to a card-entry system. Unfortunately, this introduced a new problem that anyone with the card could enter… I suspect a few ‘enterprising’ individuals may have been sharing their memberships :). Finally, to overcome this problem they settled on facial recognition. Sounds sensible? Here is a picture of the set-up:
Those of you that are perceptive will notice that there is a major flaw in the security… the door to the left hand side is left wide open! Why? Well, the facial recognition isn’t 100% accurate. If it doesn’t work, you have to push a buzzer and page a member of staff. Yet, presumably due to ‘ruthless efficiency’ there are fewer staff available… so at busy times they respond by leaving it open. You therefore have a situation where nobody really has to pay to enter—it’s a trust based system at best. I wonder how many subscriptions they’ve lost because people decide to chance it and just wander in unchallenged? An example of ‘creating’ a new issue by ‘solving’ an existing one.
Example 2: The Illusion of Efficiency: Reduced Maintenance
One other typical pattern for organisations that are seeking ‘efficiency’ is to cut down on seemingly ‘unnecessary’ maintenance. After all, maintenance isn’t ‘sexy’ is it? It’s important but not urgent—it can wait—and whilst things are still working, nobody will even know. In the case of this gym, the water heating system has been intermittent for months (or possibly years), which I assume is down to years of insufficient maintenance. All those years of saving a few quid (Pounds/Dollars/Euros) on maintenance will have given the illusion of a low cost, lean, efficient operation… but it was really building up a debt that at some unknown point in future will need to be repaid tenfold.
This led to a complete breakdown of the hot water system:
The trouble is that ‘important but not urgent tasks’ have a habit of becoming urgent, and once some kind of catastrophic incident occurs, the choices that are available (and the timeframe that the decision has to be made in) are vastly reduced. Perhaps you’ve seen similar patterns in your organisation: “Let’s defer this ‘IT upgrade’ project and focus on something else; it’s worked for 20 years, just because it’s going out of support soon doesn’t mean we need to do anything yet!”. Just cross your fingers and hope there’s not a catastrophic failure or ransomware attack.
You Need Slack to Adapt
The examples above showed that chasing cuts cuts cuts in the name of “ruthless efficiency” can backfire. There are many other issues besides this, but three factors that warrant particular mention are that there will be:
- Less capacity to absorb unexpected ‘shocks’ (e.g. new competitors, unexpected events)
- Less capacity to look to the horizon and see, predict (or shape) what is coming
- Increased risk that revenue will start dropping, gently at first, and then accelerate as competitors that can adapt do, and as new entrants challenge existing players
With everyone desperately ‘fire-fighting’, people don’t notice that customer trends are changing. Even if they did notice, there would be little capacity to actually think through what needs to change, and even less capacity to execute on that. So how do companies in this situation respond to new pressures? There’s a danger they do what they know best: They make further cuts, set middle-management further blunt “efficiency targets” and so the doom-loop and the race to the bottom continues.
So when it comes to efficiency, we need to tread carefully. Balanced efficiency (when considered with efficacy and effectiveness*) can be useful. Yet so often organisations end up achieving the illusion of efficiency—and as business analysts and practitioners of change it is for us to call this out when we see it happening.
(* See Checkland’s work on the 3/5 Es. There are so many good sources of this information, including Checkland, P. & Scholes, J. (1999), Soft Systems Methodology in Action, Chichester, Wiley)
Also, a massive thanks to those of you that have pointed out there is a book called ‘Slack’, by Tom DeMarco which I can’t believe I hadn’t yet come across but have immediately added to my reading list! I have added the reference below for anyone else interested, as it sounds like it covers similar topics:
DeMarco, T. (2002), Slack: Getting Past Burnout, Busywork, and the Myth of Total Efficiency, Broadway Books
What are your views? Please add a comment below, and let’s keep the conversation flowing!
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About the author:
Adrian Reed is Principal Consultant at Blackmetric Business Solutions, an organisation that offers Business Analysis consulting and training solutions. Adrian is a keen advocate of the analysis profession, and is constantly looking for ways of promoting the value that good analysis can bring.
To find out more about the training and consulting services offered at Blackmetric, please visit www.blackmetric.com