A Post On, Egads, Effort

images-5Regular readers of this space will know I am not a fan of the cult of efficiency that enraptures most businesses today. In my project management classes I stress that duration is the more important metric both the the professional and the customer.

That said, I would like to update the idea of comparative advantage as originally put forward by economist David Ricardo, but updated for the knowledge worker, especially the small firm. This idea seems to be about efficiency, but if one looks deeper, one will see that it is truly about effectiveness.

Adam Able is the owner/operator of a small IT consulting firm. Adam has been working in his industry for over 20 years and has a wealth of knowledge and domain expertise with the products with which he works. Because of this Adam, can slam out a new customized report in an average of two hours. He can also do an average migration of data in one hour.

Igor Egit is relatively new his profession; he has been at it a little over a year. Igor is not the brightest bulb in the drawer. On average it takes him three hours to deliver a new custom report, 50 percent more than Adam. While Igor does not suck at reports, he is a migration moron and it takes him four hours to develop a workable data migration, 400 percent longer than Adam.

This table shows the comparison.

  Igor Adam
Report 3 2
Migration 4 1
Total 7 3

 

If each does one report and one migration the total is 10 hours and the yield is two reports and two migrations.

Comparative advantage says that while Adam is better at both, and could theoretically do it himself in six hours, he is better off specializing in migrations and allowing Igor to do the reports, even though this runs counter to the idea of efficiency.

This table demonstrates the results of specialization.

Igor Adam
3 1
3 1
6 2

 

Notice again, that the yield is still two reports and two migrations, however, each received an hour of additional discretionary time. In addition, the total effort decreased to eight hours.

Now, some may argue that from an efficiency standpoint, it would be better to have Adam do both, since the total would be six hours not eight. What would that do to Adam’s leisure time? It would reduce it by four hours.

Looked at in this light, we can see that the question is: does it make sense for Adam to trade four hours of discretionary time in exchange for two reports from Igor. This is a value tradeoff that only Adam (and in a sense Igor) can make.

The trap is set, however, if we introduce the idea of a billable time rate to this example. Since it is unlikely that Adam’s rate would be three times that of Igor’s. Adam’s customers will either a) insist that they pay a reduced rate for Igor, or worse, b) insist that Adam himself do the work.

The traps is sprung! Adam, in the name of good service, will acquiesce to the customer. Likely, Igor will be out of a job; and Adam will miss more Little League games.

Too Many Notes

VeraSage Founder, Ron Baker has often used Snow White and Seven Dwarfs to illustrate the problem of applying efficiency to knowledge work.

“A LEAN six sigma guru would have advised Walt Disney to make Snow White and the Three Dwarfs as it would have improved efficiency by over 50 percent,” he intones.

Recently I was reminded of a scene from the Academy Award winning film Amadeus where the Holy Roman Emperor Jozef Franz (or was it Franz Jozef) criticizes Mozart’s opera for having, “Too many notes.”

 

Unfortunately, the clip cuts off before Mozart’s brilliant response, “Which few did you have in mind, Majesty?”

Knowledge work cannot be LEAN six sigma-ed. Once again, effectiveness trumps efficiency!

Profit Is NOT the Problem

I had an interesting exchange this morning with Bill Kizer, founder of the Sage Partners, Employees and Alumni Networking LinkedIn Group.

He posted, “Want to know what’s wrong with business today? The prioritization of profit over principle is built into American corporate culture.”

I disagree, at least partially.

Pursuit and prioritization of profit is not a bad thing per se. The problem occurs when the pursuit of profit is driven by an over focus on efficiency and cost reduction rather than innovation and satisfaction of customer needs and wants.

The problem comes when the question, "How are we to be profitable?" is answered primarily by saying, "We will need to cut and recover costs." Yes, short term thinking as Bill points out is part of it, but it is the loss of the entrepreneurial spirit (or as some would say – purpose) that is the real problem.

I believe all companies begin to die when more energy is spent on creation of profit through cost reduction (efficiency) than on the creation of profit through innovation for customers (effectiveness).

Yes, this is a derivative of the Eff’ing debate.

ET HORA LIBELLUM DELENDA EST

I am NOT Against Efficiency!

There, I said. I hope everyone is happy now.

Once again the subject of effectiveness and efficiency has created some buzz among the friends and follows of VeraSage especially in the legal world. It began when VeraSage Fellow, Michelle Golden, replied to a tweet by Valorem Law’s Patrick Lamb. Patrick responded with a blog post. To which newly minted VeraSage Fellow, Jay Shepard replied.

I will try, once again, to clarify my position on efficiency.

  1. Efficiency does not kill innovation per se, rather an over focus on efficiency kills innovation. Too many people and firms worry too much about efficiency at the expense of thinking about being innovative. That is the problem. Also, efficiency happens naturally. It fact biologist call it parsimony. We humans call it, “the learning curve.” You need no efficiency expert to tell you the best way to load the dishwasher. After you do it a few times, you get better at it.
  2. RescueTime (Automated Time Tracking Software)Efficiency is a personal judgment. Thomas Sowell says it this way, “There is no such thing as generic efficiency.” He is right, but I think understanding it as a personal judgment is easier to understand. Peter Drucker never said, “If you can’t measure it, you can’t manage it.” He did say, “Reports and procedures should be the tool of the man who fills them out. They must never themselves become the measure of his performance.” For example, I came across this tool yesterday called RescueTime. I have no problem if someone thinks this will help them, personally, be more efficient. However, I draw the line at allowing to be used by management in any way. And, by the way, I would not use this tool personally. I prefer to just make a judgment.
  3. Efficiency is always a ratio of outputs over inputs and is always a measurement. Effectiveness is the quality of the output itself. Therefore, improving efficiency cannot, by definition, improve effectiveness. Since efficiency is doing the thing the right way. The thing (result) is always the same. If you change the value of the result or the result itself, you are changing its effectiveness, not its efficiency.
  4. Efficiency gains are never a competitive advantage. Despite what many experts opine cost reduction is not a sustainable competitive advantage. In fact, even efficiency gurus, Michael Hammer and James Champy authors of Reengineering the Corporation, believed that the only sustainable competitive advantage is out innovating the competition. True innovation is customer (outwardly) focused. Efficiency gains are always inwardly focused.
  5. Focusing on effectiveness (or more precisely efficaciousness) ALWAYS and EVERYWHERE trumps focusing on efficiency. I used to think this was only true of knowledge work, but the more I think about it, the more I believe it is true about everything. Think about farming. Improving the efficiency, perhaps the speed at which you sow the seed or harvest the crop, does not increase the yield. Developing a seed that would allow for the reduction in distance between seeds, might actually reduce your efficiency (it will take you longer to sow and harvest). However, it will increase your yield, that is, it will be more effective.

Let me try to close on a statement that upon which I hope we can all agree – The only way efficiency helps you become more effective is if you invest the efficiency gains into being innovative.

Your thoughts?

Forget Being Effective, Be Efficacious

Most of you, I am sure, are familiar with the scene in the classic movie Spinal Tap, in which Christopher Guest as Nigel Tufnel utters the immortal words, “These go to 11” about his beloved Marshall Amp.

“It’s one louder,” he intones.

 

As foolish as Nigel appears, he is making an important philosophical point. He is seeking the maximum total benefit from his amp and for his fans in the audience. In short, he is striving to be efficacious. This desire, to seek the maximum total benefit for a customer, supersedes in my view our desire to be effective – seeking to produce a benefit or result for a customer.

The problem is that if you are focusing on just being effective (seeking a benefit/result), there could be a perception on the part of a customer and temptation on the part of a consultant to see fixed price agreements as a way to maximize your profit and not on your customer’s profit. Focusing on efficacy (seeking maximum total benefit) removes this perception and temptation.

As an aside to those of you still mired in the efficiency v. effectiveness debate: you are now behind by two generations in thinking!

I am sure that there are those of you who believe I am taking this debate of semantics to the nth degree. I am, but I am just being efficacious.

How is your product/service/knowledge efficacious?

Timesheet free child rearing

I am so opposed to billing by the time unit, that I refuse to pay the $0.50 for those two minute mechanical rides to nowhere near shopping centers.

In this video, you see how my kids completely enjoy themselves (effectiveness) even though the ride never moves at all (not efficient), plus I don’t pay anything!

As an added bonus they make their own sounds and it qualifies as creative play!

Efficiency Gone Wild

Many readers will note that I am not a big fan of the so-called efficiency experts. OK, I am down right hostile in some cases.

Sage Partner and friend Tony Chiodo of Axis Global Partners passed along the following story last week.

Thanks Tony! Enjoy!

“The opposite of love is not hate, but efficiency.” – Pittman McGehee

A lesson on how six sigma can make a difference in an organization.

Last week, we took some friends to a new restaurant, “Steve’s Place,” and noticed that the waiter who took our order carried a spoon in his shirt pocket.

It seemed a little strange. When the busboy brought our water and utensils, I observed that he also had a spoon in his shirt pocket.

Then I looked around and saw that all the staff had spoons in their pockets. When the waiter came back to serve our soup I inquired, “Why the spoon?”

“Well,” he explained, “the restaurant’s owner hired a six sigma black belt to revamp all of our processes. After several months of analysis, they concluded that the spoon was the most frequently dropped utensil. It represents a drop frequency of approximately 3 spoons per table per hour.

“If our personnel are better prepared, we can reduce the number of trips back to the kitchen and save 15 man-hours per shift.”
As luck would have it, I dropped my spoon and he replaced it with his spare. “I’ll get another spoon next time I go to the kitchen instead of making an extra trip to get it right now.” I was impressed.

I also noticed that there was a string hanging out of the waiter’s fly.

Looking around, I saw that all of the waiters had the same string hanging from their flies. So, before he walked off, I asked the waiter, “Excuse me, but can you tell me why you have that string right there?”

“Oh, certainly!” Then he lowered his voice. “Not everyone is so observant. That consulting firm I mentioned also learned that we can save time in the restroom.

“By tying this string to the tip of our you-know-what, we can pull it out without touching it and eliminate the need to wash our hands, shortening the time spent in the restroom by 76.39%.”

I asked quietly, “After you get it out, how do you put it back?”

“Well,” he whispered, “I don’t know about the others, but I use the spoon.”