3 min read

The End of Efficiency

Efficiency has been the ultimate business goal. Production, distribution, synthesizing workflows, and managing resources and employee output have all been held to the same standard of maximizing labor efficiency and minimizing slack.
The End of Efficiency

Ever since Max Weber and Frederick Taylor, efficiency has been the ultimate business goal. Production, distribution, synthesizing workflows, and managing resources and employee output have all been held to the same standard of maximizing labor efficiency and minimizing slack.

We find modern examples of that all around us:

  • Open-office plans
  • Restaurants optimizing for "table turnaround"
  • Retirement homes feel like industrialized care for the elderly
  • Airlines offering the growing a-la-carte menu of auxiliary services, like checked bags, legroom, meals, and pillows.

But marketer and sociologist Ana Andjelic suggests that "the business model of restaurants, together with retail, fitness, travel, hospitality, beauty salons, and physical products etc. is going through the Great Inefficiency reckoning", because if you are currently operating at only 50% capacity in a efficiency-driven business you are in real trouble.

So she suggests there are five de-efficiency shifts that are happening in the world right now: De-Massification, De-Specialization, Decentralization, Improvisation and Community-fication.

Following, I summarize the different shifts Ana describes in her long-form op-ed:

De-Massification

For the past century mass production and consumer society were king. Car manufacturing, consumer electronics, and IKEA furniture present approachable aesthetic of mass production. However the revival of handmade and locally produced products is well on its way and has been growing at an every increasing rate over the past years. Consumers are starting to realize that less, but higher quality products that last longer have their appeal. On top of that, more and more people waking up to the fact that the logistics networks necessary to uphold the current economy are taking a heavy toll on the environment.

De-Specialization

When we mass-produce things, functional specialisation and division of tasks make perfect sense. But as the world becomes more complex and technological advances disrupt industries at an ever increasing rate, specialisation is ill-equipped to solve fuzzy and multi-disciplinary problems. Answering how to use physical stores to drive revenue across channels or how to change cost models to support the new role of stores require a holistic perspective and a versatile skillset. As a knowledge worker today you are the most valuable not as a specialist, but someone who has a versatile skillset to grow the business, move the wider culture, and help others do their job better.

Decentralization

The Financial Times did a piece on the end of the office and note that “the notion of putting 7,000 people in a building may be a thing of the past”. Ana notes that in her conversations with founders and corporate workers she found that "the current way of working - in a more decentralized manner - made teams be more aligned and collaborative, and made their decisions faster, in a lateral, grassroots manner". Similar in retail she reports that "smaller, more decentralized stores are more viable than the massive ones. They can more easily stock and sell merchandise based on the local demand, offer personalized service, and more focused assortments".

Improvisation

The world moves so fast and trends and tastes change so quickly that adaptability and improvisation skills become more important with every year. Organizations who do not run a lean and agile ship, have a very hard time today to stay current with their products, services, communication and shifts in technology and consumer tastes. The ones who have the data to see and interpret the trends before they happen have a distinct advantage.

Community-fication

I talk about the increasing importance of communities online and offline in every other newsletter. And with good reason. In this case, in mass production, efficiency requires short-term, impersonal interactions. But in craft production, the act of making involves an entire community of tradesmen, artisans, farmers, workers. Ana points out: "A handcrafted object is usually the beginning of a long-term connection between people who source materials, work on objects, and sell them. Consumers are also more willing to spend a premium on handcrafted items. This is due both to the items’ quality and to items being enriched by everyone who touched them: the community that surrounds each handcrafted item."

One important caveat for all of these trends:

The success of companies embracing Ana's Idea of "The Great Inefficiency" in their behaviors (and P&Ls) ultimately depends on the consumer, and how they find desirable to work, live, and entertain themselves.

All of the above shifts feel "more human" and while the focus on efficiency and productivity has certainly earned its place as the main driver of our economy and the quality-of-life improvements we made as a society over the past couple of years, they have certainly also led to a lot of destruction and detachment towards our fellow humans.

I'd love to see us all embrace some of those trends and bring our world back into balance.