Thoughts on Excellence Free E-Newsletter Series
Volume 18, Issue No. 3b
July 15, 2019
By Dan Coughlin
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Productivity and efficiency are critically important management topics. Let’s begin by talking about what they are not.
Productivity does not equal busyness, and efficiency does not equal moving faster.
I’ve known people who were constantly busy all day long and who moved incredibly fast. They were in meetings all day long. They talked fast, they wrote fast, and they drove fast. Yet they were not very productive.
Productivity and efficiency also do not equal innovation. Productivity and efficiency are about the value customers currently pay for, and innovation is about improving the value you deliver to customers. They are both important, but they are two different things.
What is Productivity?
Productivity is the speed and cost of creating and delivering the value your customers currently pay for.
There are three parts to that definition so let’s look at each of them.
First, what is the value your customers pay for?
This is the essential question. You have to know from your customers’ perspective what they actual pay for. Blockbuster thought customers were paying for the ability to rent dvds. Netflix understood that customers were paying for the ability to watch a film whenever they wanted to watch it. Netflix was unbelievably productive in delivering films to consumers whenever they wanted to watch them.
Take some time to really think about this question. What is the value your customers pay you for?
Second, how fast is your organization able to create and deliver that value to your customers?
This might be more complicated than you realize. It forces you to think about the actual value you deliver, the time it takes to create that value, and the time it takes to deliver that value. This involves thinking across your whole organization and considering all the things that affect the speed of creating and delivering that value. It potentially involves vendor performance, customer service, purchasing, supply chain, and much more.
Basically, you want to know how much time from start to finish does it take for your organization to create and deliver the value your customers pay for.
Third, what is the short-term and long-term cost of creating and delivering the value your customers pay for?
The short-term costs include all the compensation packages, equipment, financial loans, and facilities that your organization invested in in order to create and deliver the value your customers pay for. Knowing this is an important step in order to improve productivity in the future.
Long-term costs include the ramifications of short-term decisions that might keep your organization from being able to deliver value to customers in the long term. This includes burning out resources and making long-term commitments to approaches that might not be viable in the future. If you burn out your employees with ridiculous workloads and/or an extremely toxic culture, then your organization probably won’t be around to deliver value in the future. If you damage natural or physical resources, you might very well kill the goose that lays the golden egg.
My family went to South Haven, Michigan for a family vacation. One day we drove to the Sand Dune Rides in Saugatuck, Michigan. We learned about the ghost town of Singapore, Michigan. It had been a booming lumber town from the 1830s through 1875. When the great Chicago fire of 1871 occurred the lumber mills in Singapore became incredibly productive in cutting down trees and shipping lumber to Chicago. However, they cut down all of the trees in a specific area, which caused the top soil to run off. The lumber mills were moved out of Singapore, and the people left. Today the entire city of Singapore is covered under sand.
Don’t be productive in the short term in ways that ruin your long-term ability to deliver value to your customers.
What is Efficiency and How Can You Improve It?
Efficiency is what your organization does to impact its productivity. When you increase efficiency, you increase productivity. When you decrease efficiency, you decrease productivity. The overall objectives of efficiency are for your organization to create and deliver the value your customers pay for at a faster pace with a lower cost and without damaging long-term sustainability.
That is so easy to write, and so hard to implement. Efficiency is the great daily challenge that every organization faces. It affects every single part of your organization.
I encourage you to step back from the doing of the work and begin to answer these two questions:
- What can happen that would decrease efficiency in our organization?
- What can happen that would increase efficiency in our organization?
Here are some of my answers based on the organizations I’ve worked with over the past 22 years.
What can happen that would decrease efficiency in an organization?
- No Repeatable SystemsWhen each employee creates his or her own way of doing the work, it slows down the work of an organization. Look for systems that can be repeated throughout an organization. The challenge in doing this is not robbing individuals of all their autonomy and creativity.
- Right Roles, Wrong PeopleSome roles need people who are very logical and very detail-oriented, and other roles need people who are very creative and big picture-oriented. If you put the wrong type of person in a role, you will slow down productivity. Each role is important. If it’s not important, then get rid of the role. However, make sure you have the right type of person in the role.
- Overly Complicated ApproachesIt’s easy to make an approach very complicated. It’s much harder to make it simple. However, the implementation of a complicated approach takes much longer and makes things much harder than implementing a simple approach.
- Too Much Internal DramaOrganizations are made up of people. People will get into disagreements that will result in some drama. Ideally, that drama/emotional conflict will not exceed 10% of the organization’s time and energy. What percentage of your organization’s time and energy are eaten up by drama and gossiping and backstabbing? If you’re talking 50%, then you’ve lost a ton of efficiency.
- Toxic Work CultureIf people truly hate coming to work because of the culture, you have a problem. A big problem. No matter how much you pay them, they simply are never going to be as efficient as they could be if they enjoyed the culture more. Too much of their energy is going to be sapped away in negative emotions.
- Poor Bench StrengthIf you lose a key performer in your organization, are you ready to fill that person’s role? If you’re not, then your organization’s efficiency is going to suffer for a long time.
- Massive EgosTo me, a massive ego is when a person needs to have control over every decision and get the credit for every good thing that happens in an organization. This one connects to drama and a toxic work culture. Individual great performers with massive egos are still a great drain on the organization’s efficiency. No matter how bright the person’s star shines, is their negative impact on efficiency worth it?
- Poor StrategyStrategy defines the business you are in, the goals you want to achieve for your customers and your organization, and what you will do to achieve those goals. If your definition of the business you are in does not connect with the value your customers are paying for, you will end up working hard to deliver something that your customers don’t want. That’s a tremendously inefficient use of your organization’s resources.
- Planning that Lacks ClarityEven if you have an effective strategy, you will be tremendously inefficient if you have not clarified who is going to do what by which deadline. You will have some people doing the same work multiple times, and you will have other work that is not being accomplished by anyone.
- Too Many GoalsThis is an incredibly common problem of efficiency. You have a set amount of resources, and you try to deploy them over a vast number of goals that dilutes the impact of those resources. I’m a big fan of “It’s better to go an inch wide and a mile deep than to go a mile wide and an inch deep.”
- Too Many TangentsExecutives often reached their lofty positions because of their intelligence and creativity and hard work. The challenge is that intelligence, creativity, and hard work can often lead to many, many new ideas that can take an organization off on many, many different tangents. The attitude becomes, “We can do this strategy, and we can do five more as well.” And the organization starts heading down six different roads simultaneously, and efficiency goes out the window.
What can happen that would increase efficiency in an organization?
- SimplicityTry these rules:
- Every process has between two and four steps.
- Avoid fancy words, and if there’s any doubt define what you mean by a word.
- Every meeting has no more than three agenda items.
- Every job description can be explained on a half sheet of paper.
- Your strategy is so clear every person in your company can repeat it without looking at a sheet of paper.
- ReasonablenessReasonableness is a first cousin of simplicity. Reasonableness means that the scope of the work fits within a realistic lifestyle where you can actually raise a family and enjoy life in addition to doing great work. Over the long term reasonableness can have an exponentially high impact on efficiency. The 24/7/365 People tend to be the rabbit that loses to the tortoise. They seem hyper-efficient at first only to generate self-inflicted wounds that slow them down.
- FocusWith a reasonable set of clear objectives in mind, do your work in a focused way. This focus will generate better quality of work in a shorter time than if you are trying to balance 10 goals, a Fantasy Football League, and your kid’s four different sports schedules all at the same time.
- Healthy Work EnvironmentAs the old saying goes, culture eats strategy for lunch. A culture is what people across an organization believe is so important that it drives their behaviors on a consistent basis. What are those consistent comments and behaviors in your organization? Are they comments and behaviors that people want to be around on a daily basis? Are they comments and behaviors that are causing people to wish they could be anywhere else in the world right now? Your culture affects your efficiency as an organization.
- True Sense of TeamworkA team is a group of individuals who support one another toward fulfilling a meaningful purpose and achieving important outcomes. When people are a part of a true team, things just move with greater efficiency. There’s less focus on drama, and more focus on accomplishment.
- Repeatable SystemsIt’s so much faster to walk into a system that works and follow the steps than it is to have to create your own system from scratch. Plus everyone knows where you are at in the common system and knows when they can step in to help you or be helped by you.
- Relevant StrategyWhen the business you have defined your organization to be in matches up with the value customers want, every effort that is made contributes toward productivity. You’re not just spinning your wheels.
- Clear Action PlanWhen you take the time to have a clear action plan, you end up with each person doing work that contributes toward the objectives rather than having people duplicating effort or arguing over who is responsible for what. You also end up not having important actions fall through the cracks where no one does them.
Make Some Progress on Efficiency Every Day
Earl Nightingale had this great saying: you become what you think about.
I love that saying. Whatever you focus on is what you generate. I encourage you to focus every day on what your organization can do to become more efficient. Answer this question every day, “What can we do as an organization, or even as part of an organization, to deliver the value our customers pay for in a faster and less costly manner?
And then put your answers into motion.
If you do that every day, or even every week, throughout your organization, you can become a steadily more productive organization.