Effectiveness vs Efficiency

 This episode of the Definitely, Maybe Agile podcast uncovers a surprisingly common problem plaguing today's agile environment: efficiency and effectiveness.

Join Peter and Dave on this week takeaway:
-You need both but focus on effectiveness because it has been neglected
-This focus is driven by the rapidly changing environment
-Solely efficient systems will be fragile, effectiveness builds necessary resilience 

 References in this episode: 

Scott E. Page – Understanding Complexity 

https://www.amazon.ca/Understanding-Complexity/dp/B07PXG1ZY1/ref=sr_1_1?dchild=1&keywords=scott+e+page&qid=1622836350&sr=8-1

We love to hear feedback! If you have questions, would like to propose a topic, or even join us for a conversation, contact us here: feedback@definitelymaybeagile.com 

Transcript

Peter 0:03

Welcome to Definitely Maybe Agile, the podcast where Peter Maddison and Dave Sharrock discuss the complexities of adopting new ways of working at scale. Hello and welcome to another exciting episode of Definitely Maybe Agile with your hosts Peter Madison and David Sherrock. So hello Dave, how are you today?

Dave 0:21

Excellent. You're in a great mood, Peter. So uh is that the topic or is something else happening in your life?

Peter 0:27

Uh the the topic being my great mood, yeah. I think that'd be a wonderful thing to talk about. We can talk about that for the next 20 minutes. Uh no, today I thought we would talk about effectiveness and efficiency. So would you like to kick us off on this topic?

Dave 0:41

I I think this is a fascinating topic because we come across this this sort of um conflict all the time. And I and in many cases I don't think it's been discussed enough, right? The the the growth of agile or the growth of a lot of the practices, let's say in the last decade or so, a lot of those practices are focused on being effective, on the importance of being effective. But what we've not done enough, I think, to address is the fact that for a number of decades before this shift towards being effective and agile practices and things like this, is organizations have been focused on being efficient. And I think that's still their DNA in many, many situations. This drive for efficiency. So there's a natural conflict. You can't be effective and efficient, like in the same breath, if that makes sense. There's something there that it's an either-or thing, and yet we're focusing on effective without saying, well, why would we not be efficient? Or what's the impact of efficiency on our ability to be effective?

Peter 1:55

Yeah, and it's interesting, isn't it? Because when we when we think about efficiency, it sounds like, well, this is something we really, really want, and and we do. It's not a it's not that we want to not have any efficiency in the way that we do delivery, but we need to be conscious of the fact that if we solely focus on efficiency, which has kind of been the message that's been driven in from a leadership perspective for a number of decades, as you said, is that what happens is we end up building these very fragile systems because we eliminate all waste from the system. That's the goal. We like we we create the most efficient system that's possible, which means there's only one way through it, and it now becomes uh if anything changes around that system or in the system or happens that the system isn't ready to respond to, it breaks. And we've seen that very much.

Dave 2:46

I I I love the way that you're saying that, is it if anything changes? Because if I look at the the quintessential uh example used for efficiency, if you think of Toyota and auto manufacturing in general, driven by the drive through lean and lean six sigma to eliminate variants and really optimize that flow from a manufacturing perspective of just in just in time delivery. Just in time delivery makes the assumption or is based on smooth, non-changing. You know, if I my trucks leave with just enough steering wheels for the cars that we're making in the factory today, there's an assumption or there's a demand, if you like, that no interruptions to that delivery supply chain happen. Otherwise, we're immediately stuck with a situation where we've got idle workers or idle machines because there's there's a break in that efficient supply chain. And I think, on the one hand, in terms of globalization, in terms of the the last sort of 20 or 30 years focus on leaning out our supply chains, which has been very effective, there was definitely a lot of waste in there, was also predicated on the fact that there was a lot of stability in the environment. So efficiency works really, really well, and we want to squeeze out any slack in that system. But as the last 12 months has shown, as soon as you disrupt that, it's fragile and it breaks. Hence, we saw this last year with the supermarket shelves being empty of certain products because of this disruption in the supply chain. So efficiency has benefit, and we should definitely be aware of it. But excessive efficiency, as you say, in a changing, a rapidly changing environment, we need something more.

Peter 4:41

I agree. And it's this one of the other benefits of ensuring that we're building effectiveness in the system is if we're effectively effectively building a slack into the system. And we need to have that slack in the system because it gives us the opportunity to think and to respond that we wouldn't have otherwise. So and it also allows the system to be able to flex more easily. So it can the system can respond better to change, it can absorb change better, it allows it to uh be able to still continue to operate even when other things outside of it start to change. And this uh one of the other major benefits there is that, of course, we we learn from when things go wrong, and we we we need to have the space to be able to do that. If you eliminate all waste out of the system, then you also eliminate all uh all opportunity for learning. This is one of the reasons in that in the Toyota system that uh they they the famous Andan chord and all those pieces, and where what that really represented was an opportunity to learn. So, what they would do is that uh they if what they saw happening was that the number of times it was pulled from like the 3500 a day dropped down to like 2500, they would tighten the tolerances so that it got pulled more often. It was generating more opportunities for learning, more opportunities to be able to say, okay, can I can I look at the system? Can I start to look at how we can do things and things like that?

Dave 6:10

What I like, I mean, what you're describing is that even in efficiency, we in an efficient system, we we can't hold it stable the whole time. There's always room to continually change. Um, I think uh I as you know, I read a lot around the the complexity space, and Scott E. Page has a great kind of one of these, uh I think it's a lecture series called Understanding Complexity. I've got it from Audible, fantastic kind of listen. And his description of this fast-paced, you know, complex world and how we address it, he he talks about efficiency and effectiveness in terms of um efficiency being exploiting, a strategy where we exploit what we know. And I used the word carefully on the exploit. I don't mean we exploit the people, I mean we exploit the opportunity, we know what's going on, and we make it as efficient as possible, very little waste, and we just go straight in to maximize the value that we can generate from a particular problem space or problem. But he balances that with explore. And the explore is that effectiveness piece. And his argument, and it is really interesting, is that as you go into complex spaces, as you go into environments which are rapidly changing, you need to have a lot more explore than exploit. So if we talk about effectiveness versus efficiency, it's this exact we've gone from a space where efficiency dominates. We need both. You just described, even with the world of efficiency, we're still exploring, we're still seeking effectiveness, but we're doing that with the and on chord in that efficient world. Well, now we're and we're entering a period of time in an environment where explore has to dominate in order for us to successfully navigate these rapidly changing environments. And I I feel that that lean of shift from a dominantly efficiency-driven business to a dominantly effectiveness-driven business is not fully recognized. I think people are making that shift without knowing why they have to and and why they're they're kind of being driven to it by the the market itself. I mean, anything that you see in your world that would match or conflict with that?

Peter 8:35

Uh well, I would say that uh uh because this is a question that actually came up from uh somebody I was working with uh over the last couple of days on some strategy work, that they were talking about well, well, how do I actually uh put that effectiveness into the system? What are the things that I can do to actually um create that space? Um, how do I uh generate opportunities for learning within the organization? How do I free that up? And so I was providing a number of examples of opportunities around communities of practice, but also things like dojos and hackathons within the software delivery space that we're talking here in Larry, and bringing that um but some of the other pieces are bringing that actually to make it a part of it, to don't do those things out of hours, like make them a part of this is what we do. So this is because it has to be done in hours, it has to be a part of this is a part of what we need as a culture to be looking at this, to be building that engineering culture, to be building effectiveness in, to make the to make learning how to do things better, uh, a uh a real part of how the organization operates, uh, to look at the whole learning organization and uh all those kind of wonderful things.

Dave 9:49

It's it's a a brilliant point there because um I and what is so Scotty Page also talks about Slack, and that's the Slack in the system. I can't I don't want people working 100% of the time. And this is efficient mindsets. We want utilization to be maximized, and we focus on utilizing our machines, utilizing our teams of people, utilizing cash, whatever it might be. But in an environment where things are changing a lot, we actually need savings from a cash perspective for a rainy day because rainy days happen more often. We need to recognize that we need a balance between work and life, or work and slack time to think about problems or seek solutions. We need to to you know get more balance in there, I think. And uh the the conversate, the the bit that Scotty Page adds on there, one is Slack. And like when we hear about Slack, first of all, we think it's negative. Like we look for slacking workers. A slacker is something that we think is a problem. So what we actually want to understand is we're building space for non-like demand-driven work, if that makes sense, exploratory work. It's maybe we think of it less of Slack and more about exploration. Uh I always coming from an academic background, this is what we used to talk about as being blue sky research. There's no real end goal, but the value is in the research itself, right? That's that slack. But the other aspect that comes in is diversity. And the diversity that is being talked about here is the diversity that we want to see, for example, on a cross-functional team. Rather than diversity has taken on an incredibly important meaning in other ways as well. But when Scottie Page is talking about it, he's talking about we want lots of different experiences, lots of different skills coming together so that you're you've got, you know, you're avoiding groupthink.

Peter 11:54

Yeah, I I call that uh diversity of thought. Like uh so that when you bring the the group together, you're you're not uh just getting one set of perspectives. We we very often forget well, and this is where those two walls of diversity kind of collide too. It's the because by bringing the different uh different cultures to the table, you'll very often come with different experiences and different ideas and different thought patterns and different ways of looking at problems, uh, just simply because of the backgrounds and experiences that uh those people have had. Um yeah, I think that's a very good point. Um what else would you want to explore in this space?

Dave 12:30

You mean in terms of effectiveness and efficiency?

Peter 12:33

Of course.

Dave 12:33

Good. Um, so uh the the thing that uh um I guess bothers me the most around this focus on effectiveness is I think we're we're not taking enough time to address the residual DNA. I think we need to recognize that for decades now, I always kind of count it from around the the 90s where this kind of shift really changed and globalization sort of took off. But wherever you start it from, it's got a long history. It's in the DNA of the organizations, so much so that it's it's almost not talked about because it's just it's everywhere. Uh and I think when we look at agile transformations, which is what brought us together and these conversations, what we often forget to recognize is that there's a whole bunch of habits and behaviors and expectations which are driven from an efficiency mindset. And they had to be because they've spent decades bringing efficiency into how business gets done. So the question becomes less about we need to be more effective, let's build some Slack and diversity into our systems and it will happen. I think as well as doing that, we also have to address this sort of in the bones focus on utilization, focus on, you know, how are we making use of our virtual teams? Why is a super expensive developer or architect on a team testing or reviewing one of the junior developers' work? Why is that useful? Is that the right way to do things? And that is just not discussed in many cases.

Peter 14:18

I agree. It's it's the I often run into that in the uh and we're seeing it talked about more than it was before, which is I think is a really good thing. Uh, but the evolution versus revolution, the like we we want to understand where we are today and we want to what is the next smallest step. So do a series of small changes, and there's becoming almost an allergic reaction to this uh term transformation, and uh in the sense which is that we don't want transformation gets associated with these with a very large concept. People think of reorganizing uh departments and aligning people in different ways and all of this, but those types of large-scale transformations are so disruptive uh and because of the habit systems, because of the intrinsic networks in the organization, because of the way that work actually occurs in the organization uh versus the way we often think of it. Or work occurs to an organization, not necessarily, uh, or in fact very rarely, in the way that the hierarchy is laid out. Uh, the way that all work actually flows through the organization uh can be mapped out in a in a very different manner using value stream mapping and other techniques to understand where are my value streams, and and that's becoming more of a conversation to be able to look at it uh in that perspective. I do wonder sometimes with that whether we we gotta also avoid even in that to fall into the trap of optimizing purely for efficiency. And so when we talk about flow, it's uh and we talk about value stream mapping, we we've got to make sure that we're we're not just optimizing for efficiency, we're optimizing for effectiveness as well.

Dave 15:57

Yeah, yeah. Um, and if I can just tweak this one a bit, because as you're talking about this, one of the things that pervades all of these conversations and transformations, but rarely gets airtime. And it's something that I was just talking today with um with a colleague about is how you manage the funding of exploring effective type of behaviors versus how you manage the funding of exploiting and using Scotty Page's term there, or efficiency type behaviors. And I think in many cases we've got used to the idea of you know four decimal places of accuracy in our financial plans because efficiency is tight and clean, and we know exactly what's there. And I think when you're in an exploring effective world, you have to look at the financing side of things and the governance of what successful looks like. Again, think universities and how research is funded is done in a different way with different expectations to, for example, a factory manufacturing wooden horses or whatever it might be. There's a there's a different need in terms of that financial perspective and governance and success measures, which I don't know that we've really addressed. Yeah, and in fact, let me qualify that. We've definitely not addressed it.

Peter 17:22

Certainly not broadly, and there's uh beyond budgeting, is uh like some of the work in that space is is very interesting and it uh but it's not widely not necessarily widely known or adopted into other practices, so but ensuring that we're looking at different ways of funding uh work within the organization, uh and certainly not in the way that you're describing it, I think, in terms of like exploit versus explore and understanding the differentiation of funding in that fashion. Um that is interesting. So we're we're almost at our 20 minutes. So it's probably at this point we normally uh wrap these things up. So uh would would you like to uh give us our three takeaways?

Dave 18:04

Okay. Well, let's I'll try, and it's been quite a broad-ranging conversation, but there's a couple of things. Number one is um we need both efficiency and effectiveness. And I think the reason we're passionately vying and advocating for effectiveness in how organizations look at the work they do is efficiency has dominated the conversation and the practices for decades. And there's a need to shift to a lot stronger focus on effectiveness or explore in in uh the Scottie Page's terminology. And that need to shift the balance, I think, is as we've said, is driven by the external environment. The way I always look at this one is it's not a fad, it's driven by external factors out of our control. So we either heed those factors or we will end up with fragility in our organizations and we'll lack the resilience needed to succeed in that new environment. So maybe those are two things that I pull up is that balance and shifting the balance away from efficiency to a lot stronger focus on effectiveness and the fact that the driver there is driven out of the environment. What would you add as a third?

Peter 19:24

I think as a third, I would add uh the, and I think you touched on it in there, the this idea that if we build purely efficient organizations that optimize everything for the efficiency, they become fragile in that uh any they're not going to be very good at reacting to change because everything is at the the minimum as it could possibly could be to deliver the value it's delivering. Uh whereas if we build effectiveness into the organization too, we get we start to build resilience into the organization. And that resilience is critical uh to respond to the the rapidly changing environment that we find ourselves in. Uh so so with that, I I think we can wrap it up for the day. And uh I'd like to thank you as always, Dave. And uh if anybody has any uh feedback they'd like to send us, they can reach us at uh feedback at definitely maybeagile.com. And uh so thank you.

Dave 20:16

And what I would say is we did mention a couple of references, we'll make sure they're in the notes so that if you can you can find those and follow up if you need. Again, always a pleasure, Peter. Till next time.

Peter 20:26

Always a pleasure. You've been listening to Definitely Maybe Agile, the podcast where your hosts Peter Maddison and Dave Sharrock focus on the art and science of digital, agile, and DevOps at scale.