

Excessive focus on efficiency gets you...

DisasterI've written about the common focus on efficiency several times here. This time it's inspired by an HBR blogs article by Casey Haksins and Peter Sims, The Most Efficient Die Early

Too much efficiency can be just as deadly as too little, if it leaves an organization unable to cope with change — either because it's too fragile to survive a crisis or too rigid to adapt to industry changes. So the goal should not be greater efficiency, but rather efficiency where it makes sense.

They use the 2011 tsunami in Japan and ripple effects on various supply chains as their framing device. I'm not convinced that businesses should plan their supply chains around that kind of devastating disaster.  But supply chains (and projects and manufacturers) should be able to handle changes and minor disruptions as a matter of course.  Variation (uncertainty, unpredictability, customer whims, weather) exists, and the point of the article is that hyper-focus on efficiency tends to drive out the ability to handle variation. 

There is variation in the world. Thinking that you can drive it out entirely - or ignoring it - are not the best options.  In the first case, you spend ever increasing sums of money to ever-diminishing returns.  And variability still crops up.  In the second case, you design the system for the ideal world and then get slapped in the face with reality.  

One of my favorite suggestions in Theory of Constraints, when dealing with variability is to "be paranoid, but not hysterical." Design your system to withstand variation and uncertainty, but don't design your operations-level systems for every possible doomsday scenario.  That said, there are larger organizational / system design elements that CAN look at doomsday situations, and I believe that is what Nassim Nicholas Taleb is talking about in his new book, Antifragile (on my to-read list).

The other thing I learn from Theory of Constraints thinking is that good operations management practices need mechanisms to continually evaluate how they are doing.  How effective is the system at delivering the desired results? What are the frequent causes of problems? (And don't just blame people - look for the systematic causes!) Those causes are where money and effort should be spent on making improvements.  This is also know as continuous improvement. Multi-loop learning. Getting better. Ongoing improvement.

[Photo: "Disaster" by Vintaga Posters]

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