Efficiency and Change

There is much to-do these days about shifting our focus from operational efficiency to putting more energy toward change management. Proponents of this would argue that efficiency is the enemy of change, meaning that time spent making current processes more efficient takes time away from advancing the business to keep up with market and technology changes. Admittedly, it is difficult to maintain an efficient operation in a continually changing environment. And so for one to embrace this position is not unreasonable. But it doesn't have to be a position that abandons efficiency all together.

In discussions about what is more important - efficiency or change - one could argue that the greater need in today's business environment is being able to change quickly and often. History seems to indicate that operations ran the business in the past when we had slower paced technology advances and production depended greatly on high volume output of less often updated product versions. The game was to get the most production volume with the highest quality in the least amount of time. 

But in today's marketplace where technology is advancing daily and customer demands are unrelenting, those who can change faster, although maybe not as efficiently and even with inferior products, are often the ones leading their industry. Products, inferior or not, have a shorter lifespan now than a generation ago because the next greatest version may already be in production. A generation ago we were only imagining the idea of sending a highly trained astronaut into space with a great number of unknown risks. But now, just this past week, we had untrained civilians in space and plans are already in motion to colonize other planets. How does this volume and speed of change happen without sacrificing efficiency or quality? 

In 1980 time spent in the business was about 75% dedicated to operations and 25% dedicated to projects. Today it's closer to 50/50. A good source of this trend is documented in a recent Harvard Business Review survey. This survey indicated that 85% of professional project managers and executives have seen an increase in the number of projects over the past 5 years, with 25% of them saying their project volume has doubled. We know that most projects deliver change to the organization. With the increasing volume of projects, it is quite evident that change is now beginning to drive the business in a much more influential manner than in the past. 

As mentioned earlier, this trend is partially driven by the advancement of technologies, which has increased speed to production, especially with the use of big data, artificial intelligence, and robotics, which typically reduces defects and requires fewer people - people who tend to present the greatest challenges to efficiency. Most businesses can't afford to ignore this accelerating rate of change; it is significant. 

This doesn't mean, however, that businesses should abandon efforts to become more efficient for the sake of being agile enough to change quickly. Efficiency drives down costs, increases productivity, and improves customer satisfaction. That hasn't changed. 

I challenge anyone to name a successful business that would abandon higher profits and better customer satisfaction for a nice change management program. 

Obviously, it's not good for business to pay no attention to efficiency. But if the changes brought about through projects increase efficiency, it's time to get smart on how to implement change. For instance, when a project introduces a technology that will make us produce more with fewer defects, the business needs to be ready and willing to make the change. The alternative is to lag behind competitors and eventually become irrelevant.

As always, these things are a balancing act. Determining how much time and resources should be diverted away from efforts directly dedicated to efficiency improvement and onto change process improvements is dependent greatly upon the type of business. 

Here are a couple of cases to consider:

Case 1: A service delivery consulting business. If consultants can't be efficient at what they do, it will directly impact margins and ultimately the life of the business. In consulting as in many businesses, time is money. The loser in the consulting sector is the one who delivers lower value at a slower rate. So, efficiency matters here. But it also matters with respect to change because the service industry evolves and must find faster and higher quality ways of delivering if they are to remain competitive. In this case, changes that are introduced must always involve measurable efficiencies, which brings value to the offering. Otherwise, what's the point? In this case one could argue that change is important only if efficiency is an element of the change. 

Case 2: A technology company. Keeping up with the growing demand for continually advancing capabilities should be at the center of the business. The greatest offering in this space is often the ability to change quickly, offering clients the capability to keep up with their industry and market changes. But if the technology changes don't offer efficiencies and value to the client, it's practically useless. In this case one could argue that the ability to change quickly is of greater importance than maintaining higher levels of efficiency. But again, if efficiency isn't part of the offering, the technology would be hard to sell. 

In both these cases, efficiency and change are interrelated. The consulting business must be able to deliver efficiently but must also be able to meet the demands of their customers who are trying to keep up with the swiftly changing marketplace. The technology business must always be pushing changes to the product offering to keep up with customer demands, but the offering must include ways for their customers to become more efficient at what they do; large profit-absorbing inefficiencies for the sake of being the leader in their changing industry could prove catastrophic in the long run. 

It is clear that a balance needs to be reached in every business. Each should consider the needs of the business and the needs of their customers when deciding this balance between efficiency and the ability to change. But be sure that no business can ignore the need to change in this quickly advancing world.