MNC Consulting Group Newsletter
June 2016
The Fallacy of Efficiency

In a corporate world where efficiency is the father of productivity, there is a startling counter-effect: The most efficient die early. Perhaps what is even more surprising is that organizations hell-bent on making all of their practices efficient do so at the expense of common sense. It was Peter Drucker that said: "There is surely nothing quite so useless as doing with great efficiency that which should not be done at all."
 
The problem with being too efficient is that it may hinder creativity and innovation. If your organizational teams are very efficient, it is likely that they are doing the same things in the same way. This repetitiveness (while efficient) stifles adaptability and exposes the organization to risk of obsolescence.
 
This is an interesting dilemma, since thriving organizations thrive because of their superbly crafted and efficient systems and processes. But it is these very systems and processes that may see their demise.
 
Perhaps the gravest problem of super-efficiency is the potential lack of resiliency. This "potential" may never happen. Also, if something is working well right now, why does it need fixing? It doesn't, but there is a flip side: A production system that is working well on the shop floor may be exactly what the company needs, but applying that same process to another part of the company (like strategy development) may lead the company to stagnation.
 
Experimentation and innovation are key factors in thriving companies. These generally come at the expense of efficiency and effectiveness. This is not to say that efficiency and effectiveness are not important. On the contrary! A balance is required between experimentation and innovation on the one hand and efficiency and effectiveness on the other.
 
Successful businesses like Google, Amazon, IDEO, General Electric, Cisco, and others are successful because they have found the right balance between efficiency and innovation. A slight reduction in efficiency in favour of experimenting with creative ideas is an excellent tradeoff for long-term success.
How Real Leaders Lead
 
Innovative companies have more than just great leaders. They have leaders who empower decision-making across the organization - they have let go of controlling every minutiae - to enabling their staff to decide, manage, and implement great ideas.
 
Effective leaders do not focus on controlling behaviour; rather, they implement principles that empower decision-making. Companies such as Google and Amazon have embraced these principles. It is perhaps because of this bold move that these companies are so successful.
 
The principles are easy in principle (pardon the pun), but they may not be obvious for implementation. Empowering people to make decisions is not about delegating decision-making. It's about working with others to enable them to have the courage to make decisions that are in the best interest of the organization. Empowerment is a distributed governance model with decision-making disbursed through all levels of the organization.
 
Here are the key steps to empowering decision-making in your organization (adapted from How Leaders Can Let Go Without Losing Control by Mark Bonchek):
 
  1. Mission and Vision - Is your mission and vision only yours? Or is it a shared mission and vision in your organization? To be a shared mission and vision, input from all staff is essential.
  2. Values and Principles - While values are important to the organization, principles are what enables decision-making. For instance, "customer service" is a value and "the customer is always right" is a principle. Empowerment means that employees understand these terms and are able to implement the principles without leader oversight.
  3. Champions - Champions are the "change agents" or "catalysts" in your organization that can help staff implement the principles. Checking in with your champions regularly to ensure they have all the training and other support needed to enable them to evolve principles is key to continued organization-wide empowerment.
 
For more information on how to be a strategic and empowering leader, check out Ten things smart business people do in The Globe and Mail.
In My Humble Opinion (IMHO)
Are you a great leader? Would your colleagues and staff say that you're a great leader? In my experience with great (and not-so-great) leaders, I have discovered that the key to being a superb leader is to manage emotions. Great leaders don't let their emotions get in the way:  They remain calm even in the worst-case scenarios. They don't hold grudges (even though they won't forget the double cross!) and don't let grudges cloud their decision-making. They are not selfish - they act in the best interest of the entire organization even if it means putting themselves at the bottom of the list! And, their heart is always in their work - they love what they do! However, once emotions start to get in the way of effective leadership, that's the time that true leaders recognize it's time to take a break or move on. The same can be said of any work that any of us do - if our hearts are not in it or if we start letting our negative emotions take control, it really is time to let go and move on. That's what smart leaders and smart people do. IMHO.
 
"A man who wants to lead the orchestra must turn his back on the crowd."
- Max Lucado

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About MNC Consulting Group
Our goal is to help you to dramatically increase efficiencies that immediately boost your profit margins.

 

ISSN 1925-8941   

Extreme Profits is a monthly electronic newsletter discussing how leaders can be more efficient and areas where organizations can save more money. 

 

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