Have you ever thought about how to make an organization more efficient?  At this point you are probably going yawwnnn, been there done that with:

• Doing more with less (how many decades have we been doing this?)
• Lean [Whatever] remove waste from a process.
• Business Process Re-engineering
• Total Quality Management
• Lean Six Sigma

A Measure of Productivity

Despite the ‘efficiency-fatigue’ you may be feeling, by any measure we humans have become more productive.  Take a look at the following graphic from the United States on labor productivity.  American workers produce more than five times what their great-grandparents did in the 1920s.  While you could argue this has come at a high cost for the environment, climate change, labor rights, etc.; you have to admit this increase in productivity is impressive.  (Source: bls.gov/opub/…/labor-productivity-the-economy.).

Labor Productivity (US) 1947-2012

A Little Dab Will Do You

Do you notice the line?  It relentlessly increases decade over decade.  There are very few spikes or drops but the ascent continues.  Technology is one factor but another is the competitive process of organizations to be more productive/efficient.

Squeezing Out Your Family

Which leads us to the central model I want to propose.  Focusing on output-efficiency is fine up to the point when your workers go strike or stress leave. Alternatively, perhaps you cut one control too many and the auditors or the police are at your door.  In other words, organizations must balance improving their processes, their people and their need to govern and/or control everything.  These three factors form the Organizational Control and Efficiency Model:

Organizational Efficiency and Control Model

OEC Forces

• Explicit efficiency seeks to reduce the cost of an output through better use of inputs and improved conversion of the inputs.  Six Sigma, lean manufacturing or Total Quality Management can help with this objective.
• Implicit efficiency is the ability of resources (staff, contractors, etc.) to work effectively together toward a common objective.  Resources can be efficient despite poor systems and processes.  Alternatively, the poorly trained, disengaged or unmotivated resources can negate/thwart the most efficient process. Most business models acknowledge this through concepts such executive buy-in or proper change management.  Implicit efficiency is subtly bigger than these concepts, it is how well does your organization play together?
• Controls ensure organizational objectives are achieved. This may be through governance, automated controls, segregation of duties, etc.  Controls protect the organization but are often a drag on explicit efficiency or can negatively affect staff morale (implicit efficiency).

More Important than Corners is the Middle and the Lines

While the three corners of the triangle are important, more important is the stuff in the middle and lines between the forces.  Organizational objectives ask strategic question such as:

• Should we still be in this business?
• Do we invest, hold or divest of a product, business or service line?
• Are our people working on the right things?
• How can we become more agile and responsive to our clients/customers/citizens?
• Do we have the right infrastructure to accomplish our goals?

The lines represent both support and tensions between the three forces.  Some organizations have discovered that by focusing exclusively on explicit efficiency they have alienated their staff or run afoul of their internal processes.

Too many controls will impede an organization’s explicit efficiency and make the organization a death march to work for.  However, too little control can co-opt or corrupt people or processes.

Finally, implicit efficiency can give you a competitive advantage (google southwest airlines steward announcements; these are people following procedures to ensure good control of the passengers while having fun).  Disengaged or unmotivated staff can derail the best quality management program or find ways around the most elegant controls.

Building a Strong Triangle

What are your thoughts?  Should this be a triangle, square or an even more complex geometric shape?  How well is your organization at balancing these 3 forces?  Does this model help when talking about efficiency and organizational effectiveness?  Drop me a note with your thoughts.