Ep. 17: Effectiveness vs Efficiency

[00:00:00] Peter Madisson: Welcome to definitely maybe agile podcast where Peter Madison and David Sharrock discuss the complexities of adopting new ways of working at scale.

[00:00:12] Hello, and welcome to another exciting episode of definitely maybe agile with your hosts, Peter Madison and David Sharrock. Hello, Dave, how are you?

[00:00:20] Dave Sharrock: Hey, excellent. You're in a great mood, Peter. Is that the topic or something else happening in your life?

[00:00:26] Peter Madisson: 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. No, today I thought we would talk about effectiveness and efficiency. Would you like to kick us off on this topic?

[00:00:38] Dave Sharrock: I think this is a fascinating topic because we come across this conflict all the time. And in many cases, I don't think it's been dis-cussed enough, right? The growth of agile, or the growth of a lot of the practices, let's say in the last decade or so, are focused on being effective. What we've not done enough to address, is the fact that for a number of decades be-fore this shift towards being effective in agile practices, 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 in the same breath. 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?".

[00:01:39] Peter Madisson: Yeah. It's interesting, isn't it? Because when we think about efficiency, it sounds like this is something we really, really want. And we do. It's not that we want to not have any efficiency in 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. What happens is we end up building these very fragile systems because we eliminate all waste from the system. That's the goal. We create the most efficient system that's possible, which means there's only one way through it. And 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.

[00:02:23] Dave Sharrock: I love the way that you're saying that "if anything changes", because if I look at the quintessential example used for efficiency, if you think of Toyota and auto manufacturing in general. Driven by lean and Lean Six Sigma, to eliminate variance and really optimize that flow from a manufacturing perspective of Just-in-Time delivery. Just-in-Time delivery makes the assumption, or is based on, smooth non-changing.

[00:02:53] If 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, that no interruptions to that delivery supply chain happen. Otherwise, were immediately stuck with a situation where we've got idle workers or idle ma-chines, because there's a break in that efficient supply chain. I think on the one hand, in terms of globalization, in terms of the last 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, but 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. We saw this last year with the supermarket shelves being empty of certain products because of this disruption in the supply chain.

[00:03:56] Efficiency has benefit, and we should definitely be aware of it, but excessive efficiency, in a rapidly changing environment, we need something more.

[00:04:06] Peter Madisson: I agree. One of the other benefits of ensuring that we're building effectiveness in system is building slack into the system. 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. It also allows the system to be able to flex more easily. The system can respond better to change. It can absorb change better. It allows it to be able to still continue to operate, even when other things outside of it start to change. One of the other major benefits is that, of course, we learn from when things go wrong and 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 opportunity for learning.

[00:04:48] Dave Sharrock: What you're describing is that even in an efficient system, we can't hold it stable the whole time. There's always room to continually change. As you know, I read a lot around the complexity space, and Scott E. Page has a lecture series called Understanding Complexity. And his description of this fast paced, complex world and how we address it, talks about efficiency and effectiveness in terms of 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. Go straight in to maximize the value that we can generate from a particular problem space. But he balances that with explore. And the explore is that effectiveness piece. His argument, is that as you go into complex spaces, you need to have a lot more explore than exploit. So, if we talk about effectiveness versus efficiency, 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. Well now 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 feel that 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 why they're being driven to it by the market itself. Anything that you see in your world that would match or conflict with that?

[00:06:43] Peter Madisson: I would say that, because this is a question that actually came up from somebody I was working with over the last couple of days on some strategy work. They were talking about, " How do I actually put that effectiveness into the system? What are the things that I can do to actually create that space? How do I generate opportunities for learning within the organization? How do I free that up?". 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. Don't do those things out of house. Make them a part of, this is what we do. It has to be 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 learning how to do things better a real part of how the organization operates.

[00:07:32] Dave Sharrock: It's a brilliant point there. Scott E. Page also talks about slack. And that's the slack in the system. I don't want people working a hundred percent 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. 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 get more balance in there, I think. When we hear about slack, first of all, we think it's negative. We look for slacking workers. A slacker is something that we think is a problem. What we actually want to understand is we're building space for non demand driven work. Exploratory work. Maybe we think of it less of slack, and more about exploration. 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. But the other aspect that comes in is diversity. The diversity that is being talked about here is the diversity that we want to see on a cross-functional team. We want lots of different experiences, lots of different skills coming together, so that you're avoiding group think.

[00:09:03] Peter Madisson: Yeah. Call that diversity of thought. When you bring the group together, you're not just getting one set of perspectives. We very often forget by bringing different cultures to the table, you'll very often come with different experiences, different ideas, different thought patterns, different ways of looking at problems, just simply cause of the backgrounds and experiences that those people have had. I think that's a very good point. What else would you want to explore in this space?

[00:09:29] Dave Sharrock: You mean in terms of effectiveness and efficiency?

[00:09:32] Peter Madisson: Of course.

[00:09:32] Dave Sharrock: Good. The thing that I guess bothers me the most around this focus on effectiveness is I think we are 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 nineties where, this shift really changed and globalization 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 almost not talked about because it's everywhere. And 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, behaviors and expectations, which are driven from in 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. As well as doing that, we also have to address this " in the bones" focus on utilization. Focus on 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.

[00:11:08] Peter Madisson: I agree. We're seeing it talked about more than it was before, which I think is a really good thing. Evolution versus revolution. We want to understand where we are today, and what is the next smallest step? Do a series of small changes and there's coming almost an allergic reaction to this term "transformation". People think of reorganizing departments and aligning people in different ways and all this. Those types of large scale trans-formations are so disruptive because of the habit systems. Because of the intrinsic networks in the organization. Because of the way that work actually occurs in the organization. The way that all work actually flows through the organization, can be mapped out in a very different manner using value stream mapping and other techniques to understand where are like value streams. That's becoming more of a conversation to be able to look at it in that perspective. We have to also avoid to fall into the trap of optimizing purely for efficiency. So when we talk about flow, and we talk about value stream mapping, we've gotta make sure that we are not just optimizing for efficiency, we're optimizing for effectiveness as well.

[00:12:11] Dave Sharrock: Yeah. And if I can just tweak this one a bit, be-cause as you are talking about this, one of the things that pervades all of these conversations, but rarely gets airtime: how you manage the funding of exploring effective type of behaviors, versus how you manage the funding of efficiency type behaviors. In many cases, we've got the use to the idea 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 re-search is funded is done in a different way with different expectations to a factory manufacturing. There's a different need in terms of financial perspective and governance and success measures, which I don't know that we've really ad-dressed.

[00:13:14] Peter Madisson: Yeah.

[00:13:15] Dave Sharrock: Let me qualify that. We've definitely not ad-dressed.

[00:13:18] Peter Madisson: Yeah. Beyond budgeting- some of the work in that space is very interesting. But it's not widely known or adopted into other practices. Ensuring that we are looking at different ways of funding work with-in the organization. And certainly not in the way that you are describing it, I think in terms of like exploit versus explore. And understanding the differentiation of funding in that fashion.

[00:13:42] So we're almost at our 20 minutes, so it's probably at this point we normally when we wrap these things up. Would you like to give us our three takeaways?

[00:13:49] Dave Sharrock: Okay. It's been quite a broad ranging conversation, but there's a couple of things. Number one is: 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 Scott E. Page's terminology. And that need to shift the balance, as we've said, is driven by the external environment. The way I always look at this: is it's not a fad. It's driven by external factors out of our control. So we either heed those factors, or we end up with fragility in our organizations and will lack the resilience needed to succeed in that new environment.

[00:14:49] 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 effective-ness. And the fact that the driver there is driven out of the environment. What would you add as a third?

[00:15:05] Peter Madisson: I think as a third, I would add, and I think you touched on it in there. This idea that if we build purely efficient organizations that optimize everything for the efficiency, they become fragile. They're not gonna be very good at reacting to change because everything is at the minimum as it possibly could be to deliver the value it's delivering. Whereas if we build effectiveness into the organization too, we start to build resilience into the organization. That resilience is critical to respond to the rapidly changing environment that we find ourselves in.

[00:15:36] So with that, I think we can wrap it up for the day. I'd like to thank you as always Dave, and anybody has any feedback they'd like to send us, they can reach us at feedback@definitelymaybeagile.com.

[00:15:48] Dave Sharrock: Yeah. 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 find those and follow up if you need. Again, always a pleasure. Until next time.

[00:15:58] Peter Madisson: Always a pleasure. You've been listening to definitely maybe agile, the podcast where your hosts, Peter Madison and David Sharrock focus on the art and science of digital, agile, and DevOps at scale.