Planning On Inefficiency

I recently – accidentally – launched a new web site. I didn’t mean to, really. It just happened because what I’d planned to do next year was just less costly to do now. So now I have an imperfect web site (because it went up without much/any planning) and customers are actually using it. And in this happy accident something I’ve suspected for a while about the value of planning became crystal clear to me. Despite what all the business literature tells us, sometimes plans can be the recipe for inefficiency, and this isn’t all bad – especially when you’re out to change the world.

Efficiency is Great

This fall I’m teaching change management and teambuilding to a Lean Six Sigma class at GWU’s Center for Excellence in Public Leadership, and the more I learn about Lean Six Sigma the more I realize it’s a good thing. Lean 6 is all about squeezing the .04% inefficiency out of a process that can return millions in savings and productivity. And in large scale predictable processes, the returns for such increased efficiency can be huge. All necessary. All good.

When I stop to think about it with my strategic planner hat on, it seems obvious that the entire art of business planning is an intentionally small investment in inefficiency (i.e., an overhead activity) built into the front end process designed to reduce or eliminate efficiency on the back end. “A tea cup of planning and an ocean of execution,” Ross Perot used to say.

This strategy makes sense if the back end includes the deployment of humongous resources, such as those it takes to fight a large scale war, build an airplane or issue social security checks.

But what if that’s not your game? What if you’re trying to hold a formerly-terrorist-held neighborhood? Creating/responding to an emergent market/need? Struggling to launch an important nonprofit program on behalf of people who can’t speak for themselves? Or playing basketball against an aggressive and resourceful team? What if you’re trying to lead change and transformation in places typical managers and leaders don’t venture into?

Inefficiency is Inescapable

In all scenarios, but especially in the fast moving potentially world changing ones where uncertainty and risk are highest, you simply can’t plan enough. No matter what you strategize in the locker room, things just happen in new and unpredictable ways out in the real world. You have to learn by doing. And learning is inherently inefficient. This is what I discovered when I decided to go ahead and launch the new site. Yes, it will be more costly to convert and upgrade it later, but then I’ll have more customers and I’ll know what the upside is to know exactly when and how much to invest in the upgrade effort.

Eric Ries in his new book The Lean Startup advocates spreading the cost of learning inefficiencies across the entire product development, testing, tweaking and operating cycles. He holds that the downside of pissing off early customers is lower than the upside of getting it right faster so they love you in the end. While this approach might not work for building an airplane, it has a lot of merit for many other aspects of business.

Part of me – the strategic planning part – struggles to understand why this idea of planning on inefficiency might be valuable. After all, my “big brand business school” mind cowers at the potential for customer satisfaction debacles, brandshine erosion and sales channel confusion. But then my own website accident occurred and I suddenly got it. When you’re in the locker room planning what “might” happen when quarter starts, you’re motivated to win and you can eliminate a major amount of inefficiency by planning the most likely scenarios.

But when you’re on the court and in the game – knowing you could not possibly have planned for every eventuality, knowing you’re learning on the job, knowing you are vulnerable to uncertainty no matter what you plan – you instinctively shave off the seconds needed for faster response time, you go for the 20% that produces the 80% without energy-wasting debate and you learn what the market really demands. Assuming you planned your resources well enough, even when you lose, you live to play another game.

In other words, inefficiency happens, so you might as well plan on it and plan for it to happen in an environment where everyone’s tolerance for it is minimized because the risk is high and they’ve got their eye on the prize.

Inefficiency As Fuel for Innovation

We talk a lot about innovation in business literature and it strikes me that there is an important link here. Innovation often looks highly inefficient – until you can apply hindsight and see the benefits it did or didn’t produce. Only then can you do a cost/benefit analysis to see if there really was a more efficient way of producing… whatever.

Yet if we look at innovation through the on-the-court/minimized-tolerance-for-inefficiency thinking above, we can see that if we throw ourselves into the game, where the risk is high, we not only create the conditions to minimize inefficiency, but we also increase the potential for innovation. Innovation isn’t just a product of the (ever shrinking) R&D department who has time, money and resources to dream, it’s also quite often produced by necessity, no or low resources and a distinct lack of time.

So what if we just accept that inefficiency happens and plan to build it in where it’s most likely and most naturally going to be minimized? I’m trying this experiment real time at the moment, so I’ll let you know how this approach plays out!

What’s your response when inefficiency happens? Do you welcome it or allow it to frustrate you? What’s your best story of inefficiency-gone-bad? Gone-good? How have you experienced inefficiency and innovation working together? Do you plan on inefficiency? How does that work out for you?

NOTE: My new web site is www.InPowerCoaching.com and it’s an experiment in self-serve executive coaching, launching with the Speak Truth to Power eCourse to help executives and exec-wannabe’s tap into their own personal power to vault them to leadership success. I’ll probably formally “announce it” around the first of the year but feel free to have a peek, take a taste and become part of my real time experiment!

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