Harvard Business Review
Greg Satell provides a classic example of sub-optimisation in his post.
Managers strive for efficiency in every part of their businesses. Yet many of those businesses are bloated and ineffective. This is the efficiency paradox; it runs something like this…
The more efficient you make the parts of your organisation, the less efficient it becomes.
The way to avoid the paradox is to stop worrying about the parts and start worrying about the whole.
Greg Satell explains why.
McChrystal realized that although his squads of highly trained commandos and intelligence analysts were performing their individual tasks with world class alacrity, they were failing to, as he put it, “see the whole system“. For example, teams of commandos would go on a raid and capture valuable intelligence, but then bags of documents and hard drives would sit in a closet for weeks before anyone got a chance to look at it. Other times, an analyst would make an important breakthrough, but was unable to get that intelligence to the ground units that could make best use of it.
The examples of sub-optimisation aren’t limited to the military. Satell also demonstrates the phenomenon in the retail industry and engineering design.
If managers target, train and incentivise their staff to ensure their small part of the system is as efficient as possible, then “the shared mission is lost”. That isn’t the way to efficiency or profitability, only failure.
Click here to view the original web page at hbr.org
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