Efficiency is considered an important goal by many companies. It is driven by the frame of reference that maximum utilization of resource capacity drives lowest cost and therefore maximum profitability and gains in market share. Our conviction is that this frame of reference now results in inevitable corporate destruction. This is driven by the shift in the global business landscape stemming from the advent of big data. With data deployment transitioning from a substitute for paper recording to that of driving artificial intelligence and machine learning.
In the new world, customers expect on-demand response, customized deliverables and maximum optionality – in other words, maximum effectiveness to meet increasingly unpredictable demand, shorter response windows and in-process changes in deliverables. This is exactly the opposite set of requirements that an efficiency-focused organization strives to achieve. The more efficient the business systems become the less effective the company becomes. Market share decreases, profitability decreases and operating expense decreases as the conflict between sub-systems increase. USA companies that are prime examples of this dynamic are General Electric and Procter & Gamble.
Building an effectiveness-focused organization requires a wholesale reset of the fundamental frame of reference about achieving business success. The core differences are contrasted below:
Efficiency is priority one
Local optimization measures are important
Systems are subordinated to local efficiency measures
Desynchronization between systems
Effectiveness is priority one
System throughput and flow measures are important
Local measures subordinated to system velocity and agility
Synchronization to rapid response and volatility
Instead of utilization and productivity performance measures, companies like Amazon are obsessed with flow and responsiveness performance measures. We have deep experience in designing and implementing business system performance measures such as:
System dwell time and inventory flow
Decision cycle time
If you are concerned about your company’s lack of responsiveness, functional conflicts and declining performance then...
What You Will Gain
What Your Company Will Gain
Ability to configure business systems to be more flexible, more responsive and operate at lower cost.
Gain in market share and sales by leveraging responsiveness and reliability.
A strong reputation for driving top-line growth.
Increased profitability through top-line growth far in excess of cost reduction gains.