The efficiency paradox
Focusing on efficiency makes you less efficient — Niklas Modig
Focusing on efficiency makes you less efficient — Niklas Modig
What do you see as the most common misunderstandings of efficiency and utilization when it comes to knowledge work?
I’m reading a delightful book (This is lean — Niklas Modig and Par Ahlstrom) and there’s a corresponding TED talk to go with it.
Only making teams independently more efficient (higher utilization) makes the overall customer experience worse, not better. Solving problems from a customer perspective allows organizations to focus on flow efficiency rather than resource efficiency. Whilst related, it is different to local vs global optimization. They often interact but there’s many other ways of optimizing outside of efficiency.
In all cases it should never be one over the other but both, however starting with flow efficiency will lead you to better outcomes than resource because it is focused on the customer. Niklas Modig refers to this as changing the camera's perspective from the person doing the work to the customer.
Visualizing work across in a value stream or a customer journey is crucial to having an adult conversation with teams and leaders if you want to improve ‘the system’. Just don’t fool yourself into thinking one and done, there’s always hidden work and what Dave Snowden calls Dark Constraints that you can’t see but impact you anyway.
Visualizing bottlenecks and calculating the flow efficiency can be a conversation starter, beware that many of the tools out there will give you misleading data. Digital tooling doesn’t really help you differentiate between active work in a queue and the active work that you are currently doing. (Thanks to Nick Brown for that insight!)
Flow efficiency calculation — percentage of amount of active work / amount of total elapsed time the customer is waiting.
Resource efficiency — focusing on the individuals or functions independently, how do you maximize utilization. e.g. Four teams passing work between them to deliver something of value.
Flow efficiency — focusing on efficiency from the perspective of a customer, how long does the customer have to wait and how many steps are involved to get value out of the experience. e.g. a cross-functional team with all the necessary skills to deliver something of value.
How can efficiency be bad?
Lately I’ve been curious about how some people think of efficiency. They act like more is better. That has never really sat well with me, it doesn’t feel very efficient to make more of anything than you need.
“It’s possible to make an organization more efficient without making it better. That’s what happens when you drive out slack. It’s also possible to make an organization a little less efficient and improve it enormously. In order to do that, you need to reintroduce enough slack to allow the organization to breathe, to reinvent itself, and to make necessary change. “
— Tom DeMarco Getting Past Burnout, Busywork, and the Myth of Total Efficiency
Toyota and other companies had that realization, long before I started to think about the topic. Ideas like just in time, building quality into work, pull-based work systems, and thinking about value and waste from a customer perspective are far more helpful frames in thinking about the ‘efficiency problem’.
Given the state of our tiny blue planet, creating more of anything as a flex, just doesn’t sit well with me. This is even pronounced when you learn about things like intentional obsolescence which prevents your products from being repaired and maintained (e.g. instead of replacing the battery in your phone when it dies, the manufacturer makes you buy a new phone).
This type of understanding still seems to perpetuate large companies who are stuck in the industrial era thinking cost savings, resource utilization over customer value and flow efficiency. The difference between Henry Ford having all cars produced quickly in black but full of defects vs. Toyota being able to produce cars in any color with fewer quality defects.
It is easy to see how organizations can think that producing more of a thing benefits from increased (resource) efficiency. Being efficient often impacts your ability to respond and adapt to market conditions (a similar goal to agility).
I hear people say ‘that is fine for traditional goods and services’ — what about products that are partially or fully digital? Similar work challenges exist, but manifest in different ways. If you see work piling up in a queue, it is likely that you have identified a bottleneck and they are someone else's dependency. Check out the Theory of Constraints for more on this topic.
From the perspective of the team’s manager — that large queue may mean that they are ‘busy’ with high utilization. From the perspective of the teams or customers depending on them, they can be seen as causing huge delays and incredibly inefficient. That leads to failure demand — people generating more work to find out the status of the work and causing more context switching.
There are multiple ways to approach this, typically you can throw more people at the problem or be clever and suggest automation, so that the services provided by the team can be consumed as self-service, but this is hard and requires capacity to do so. When will people get that capacity if they are always fully utilized? This being stuck in a hole and digging your way out…
Is it good to be busy all the time?
That depends on what you mean by good
If you care about having people as busy as possible, yes.
If you care about something from a customer perspective, no.
You cannot respond to unplanned customer demand, if your teams are fully utilized. You need to have capacity for unplanned work (known as slack), if you want to be able to respond to change. Without spare capacity, where and when is that work going to happen? This situation makes teams feel helpless, disempowered, and likely to burn out.
Having slack for un-planned work is critical if you want to improve and have enough time to learn and adapt. When you have the next Log4J critical vulnerability occur, when are people going to be able to respond to that? If your only choice is to have people work over time or on weekends then we have a problem!
Perhaps a better analogy is spending money on your credit card and maxing it out each month. What happens when an emergency happens, and you need your credit card for that? That is an expensive experience, and the banks know that.
When you have separate teams for various tasks e.g. analysis, development, and testing / quality assurance. You end up with teams optimizing for their own needs rather than the customer. Every team is preoccupied with their own work, metrics, and priorities so they aren’t ready and waiting to take the baton when another team is ready to hand over work. This is the reason cross-functional team's work.
Taking things one step further, when individuals in the team have a good overlap of skills and they work together you get the best results. That way you aren’t handing over work, you are collaborating on work together. This is how you build quality into what you do and eliminate handovers. Team members get to learn from each other and gain new skills. I recommend checking out Skills Liquidity from Chris Matts.
Conflating efficiency with effectiveness
As we move away from focusing on resource efficiency and ween ourselves off the drug of ‘being busy is a good thing’. It would be wrong to talk about efficiency and not talk about productivity and effectiveness.
This can occur at all levels of work too — individual, teams, systems, and organizations.
If you are emphasising being busy over being effective (getting the right work done) you are likely to be taxing your people with context switching, cognitive load and the feeling that they are just cogs in a wheel. In knowledge work, you cannot be effective if you don’t have time to think. The highest performing organizations are often the calmest and not busy. People need time to learn, think and do deep work. Constant meetings, fire drills and instant messages are all incredibly disruptive and prevent people from doing great work.
This is often why you see people super early or late in the office. Not because they are busy working with other people. but because that is the only time they get to do deep / uninterrupted work.
As you move from the individual to the team, to the teams of teams, think about how frequently the other teams are being interrupted by you and others and how inefficient they will be because of context switching. So that means plan and collaborate your interactions, agree to scheduled time for collaboration and interaction (meetings where you do work rather than talk about status) and visualize the work so that everyone knows who is doing what and how work contributes to a larger goal. If you do this, it allows people to see and appreciate the bigger picture.
Visualizing a congested system of work is a powerful way to have a conversation with leadership. They should be helping with impediments and blockers, enabling the elevation of bottlenecks, and avoiding the need to escalate. If your leadership are flooding your system of work, they need to see the impact of that. How many pieces of work are the teams working on and how would they like a team to finish a given piece of work before they start another.
I find escalation to be the anti-pattern for collaboration, yet I see it happening all too frequently. How often does the xyz team get blamed for preventing a team from getting work done, whilst at the same time the team has had that piece of work in progress for months. It is only now that someone is asking about it that the blame game starts happening.
This is a bit like running to the teacher on the playground and telling them someone else won’t let you play with them. Then, having the teacher make the other person involve you in their activity.
Collaboration over escalation!
Internal competition between teams is incredibly unproductive if you are trying to work together on a common goal for the organization!
Recommended resources
Chris Matts — the IT Risk Manager
Johanna Rothman (checkout the whole blog series)
Books
This is Lean: Resolving the Efficiency Paradox by Niklas Modig, Par Ahlstrom
Slack: Getting Past Burnout, Busywork, and the Myth of Total Efficiency by Tom DeMarco
The Mythical Man-Month by Fred Brooks
Thinking, Fast and Slow by Daniel Kahneman
The Goal: A Process of Ongoing Improvement by Eliyahu M. Goldratt
Deep Work by Cal Newport