The Hidden Cost Of False Efficiency

My friend and mentor, Lahat Tzvi, wrote one of the most fascinating posts on AI I’ve read. Be sure to read it!

In it, he coined the phrase, “The Hidden Cost Of False Efficiency.” It’s such an important concept–and at the root of many of the challenges we face in growing our businesses. I’ve written too often and whined too much about our continued inability to focus on effectiveness, outcomes, and continual improvement. I don’t want to reiterate those issues here.

Our obsession with efficiency has tremendous costs, not just financial. We are only starting to recognize these, but I’m not certain we understand the magnitude of these costs.

Let me step back a bit. Why have be become so obsessed with efficiency?

It’s pretty easy to understand, efficiency is the easiest and most obvious way to look at improving performance. The time to results in efficiency issues is incredibly short. I think, as we look at improvement, we have a natural bias to focusing on efficiency over effectiveness. Effectiveness is tough, it may mean we have to completely change what we are doing. Efficiency never demands this. It just demands we get more work done.

As a result, it’s so much faster and easier to focus on improving efficiency.

Now add in technology, particularly AI. The ability we have to scale activities by 1000s of times, at very low cost, naturally biases towards focus on efficiency. If 1000 outreaches no longer produces 10 meetings, we can, within minutes, ramp those outreaches to 10K, 20K, whatever it takes to produce 10 meetings.

While we, implicitly, know, “Something is crazy, why aren’t 1000 outreaches producing 10 meetings anymore,” is the issue we should be focusing on. It’s far easier to say, “let’s just increase the number of outreaches we do to get 10 meetings.” We don’t have to rethink what we are doing, reinvent our processes and workflows, we just have to figure out how to do more.

And, again, technology and AI is making the incremental cost and time of doing more virtually free.

And here’s where we start understanding the hidden cost of false efficiency.

We aren’t trying to understand, “Why aren’t things working anymore? Is there a different way we should be doing things? Is there a better way of doing things? Are we even doing the right things in the right way?” These are tough issues, they take deep understanding, and analysis. They take time. And they result in change–which has it’s own challenges, risks, and time to results challenges.

If we avoid or fail to force ourselves to address these issues, all our efficiency efforts eventually breakdown.

We find we aren’t doing the things we really need to be doing.

We produce less and less, despite doing more and more. Or worse, someone else creates a whole new way of doing things. They create a very different go to market strategy, doing things differently and far more effectively.

Or our customers and markets have changed, how they buy has changed, and however efficient we are, we are irrelevant.

Today, we see thousands of organizations scrambling. What used to work no longer works, is no longer meaningful, has been displaced by newer ways of doing things, or is simply irrelevant. And all these organizations know how to do is become more efficient.

And this is where the most profound hidden costs of false efficiency are!

We have lost the ability to figure things out. We don’t have the problem solving capabilities, we don’t know how to analyze and identify the root causes, we don’t know how to understand what has changed.

We simply don’t have the skills, experience, and sometimes desire to go back to fundamentals, to begin with a blank sheet of paper, and reinvent what we are doing. We don’t understand what to change and how to implement that change. We don’t have enough grounding in fundamentals to do these things.

Ironically, we are captured by the notion of disruptive innovation.  Yet we never get there by being more efficient.  How do we develop our own skills to innovate, how do we drive innovation within our organizations if all we know how to do is just do things more efficiently.

And the consequence of not changing is failure.

And today’s world brings other complicating/exacerbating factors. We live in a world of increasing uncertainty and turbulence. We have too many who have burned out or get no meaning out of the work they do. We have too many, for reasons, I don’t understand, simply don’t care (this exists at all levels). They just put in the hours but bring no curiosity, imagination, creativity, or drive to achieve.

As we look at all these factors stacking up, we can now start understanding the hidden costs of false efficiency are massive. These costs threaten the ongoing viability of thousands of organizations. These costs represent 100s of billions of lost opportunity.

Efficiency is important. But our obsession with false efficiency is devastating.

Afterword:  This is an outstanding AI based discussion of this post!  Enjoy!