Why efficiency is overrated

Efficiency, often, isn’t the right goal for me. It probably may not be the right one for you either.

When I say this, I’m clearly not talking of lap times in a car racing game, or how quickly you can stack and unstack cups. Routine tasks beg for optimization – and consequently create a critical difference between productivity and efficiency. I’m not going to dive into the differences here (that’s altogether a different post for later). For now though, I want to talk about why efficiency can’t be an unquestioned, revered goal. Before incredulity slams the window of attention shut, let’s consider this. What does efficiency mean to you?

Mantra for success

Shane Parrish in his blog, Farnam Street, addresses this head on. His provocatively titled post, Getting Ahead By Being Inefficient, is worth the 5-minute read. But if you only want a taste, here is the extract defining efficiency:

Many of us feel constant pressure to adapt perfectly to our environments, especially our workplaces. Don’t waste time, we’re told. Maximize the output of your moments. Minimize your energy expenditure. If you aren’t getting great, someone else is, so before you collapse into a heap of perceived failure, take stock and improve your efficiency. We assume this is the ticket to success—to continually strive to be the best at whatever we are doing.

Efficiency = Least amount of time + effort = Best way to complete a task = Success

If this mantra sounds familiar, it is because we’ve all heard it repeatedly. And for what it’s worth, we’ve had tips (“How to be the most efficient you”) handed out regularly too: look at this Inc article or this Trivago blog post.

Local vs Global

Within a work environment, it’s easy to understand why efficiency is considered a virtue. It is linked to dollars. We want our organizational processes, our teams to be as efficient as possible, as fast as possible. If we don’t plan to always sprint towards efficiency, we as entrepreneurs and the organizations we start/lead are destined to burn cash and ultimately fail. Right? (Spoiler alert: Wrong.)

What then is the problem with efficiency? In Parrish’s words:

Efficiency is great in an unchanging environment, but to expect an environment to remain static is unrealistic. Environments change all the time. When workplaces value efficiency in a changing environment, they become fragile.

At its core, in our preoccupation with efficiency, we aim for a local maximum, climbing the hill nearby. The true goal instead should be to find the global maximum – a mountain that is some distance off – since this pursuit better answers the needs of the market in the long run.

Applied narrowly to our hospitality industry, this local vs global maximum translates into the hotel operations team determinedly chasing efficiency targets by asking fewer staff to keep up with more guest communications through an unprecedented number of channels (in person, phone, text, email, reviews, etc.). This is what I call the “help staff help guests” mode of operations. Based on millions of guest conversations, it’s clear: guest needs have evolved far beyond the physical realm of towels and room service. Today’s most common guest requests are now bite-sized and informational, where we have to get truly productive before we turn our attention to efficiency.

And ay, there lies the rub. Yes, improving the status quo a bit (say, 2-3%) creates more efficiency. But would that be the best possible outcome?

Innovation = inefficient?

If we travel further down the path of chasing efficiency, we will tend to see innovation as inefficient and expensive. I agree completely – innovation is inefficient. After all, innovation requires experimentation, time, and resources to find a potential solution beyond the local maximum. We risk facing failures as we pursue a global maximum, a more perfect solution.

When things didn’t change as quickly as they do now, efficiency and local maximums were more important. It made sense to charge up the nearest visible hill, gather resources, and plot a course for the next mission.

With the exponential rate of change we now experience, technology is enabling entirely new ways to produce desirable outcomes in our business and personal lives. If we choose to pursue efficiency in the existing production model, we leave the door to disruption wide open for anyone else with the right risk appetite to walk in.

If you are an entrepreneur, or have an entrepreneurial mindset, say hello to inefficiency – even if it is for a while.

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A few weeks ago, I wrote a post about why I think authenticity is overrated. Read it yet? Do you have any other concepts in mind that we need to revisit?

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