Toxic Efficiency: How to Kill Your Organization by Making Efficiency Your God

Back in the 90s, I read an interesting book about fighting power by a retired US Colonel (Trevor N, Dupuy) much of which I disagreed with, where he established that the German Wehrmacht had by April 1945, quadrupled the fighting power of their infantry battalions in comparison with their capability in June 1940, this in spite of virtually halving the manpower on an infantry battalion down from 800 to approximately 400 men. What the author didn’t discuss was the futility of such developments, since the war was already lost and this kind of fighting power was irrelevant.

But the futility of focusing on transactional efficiency is often hidden in organisational cultures which prefer to work on solving problems that they can solve, that reinforce the collaboration of existing power and resourcing structures, instead of focusing on the problem whose resolution will lead to systematic change that will demolish current accumulated reserves of Relational Capital, whose new shape is unpredictable.

A few years later, I found myself facilitating the leadership of an automotive assembly plant on their strategic rationale for achieving the appropriate level of lean-ness as being the means of ensuring that they would be a natural site for the assembly of future models from their Japanese partners. I realized that there was something wrong with this as a viable strategy, but couldn’t put it into words.

Subsequently, I led an exercise in reverse-assembly of a 4WD vehicle in order to discover how to simplify the current assembly process. This was useful in that it led to the simplification of the assembly process by focusing on pre-assembly of modular components (so we could appear to reduce the man-hours involved in assembly), a significant reduction in the variety of fixing devices, and the final realisation that the 4WD vehicle needed to be redesigned and light-weighted (since it was really based on a heavy truck sub-frame and suspension system). We constructed a new prototype vehicle with significant benefits and showed it to our Japanese partner. The outcome was unexpected. I was asked to formally apologize to our Japanese CEO. As he drily put it: we do the innovation, you just assemble the product. At that point, I realized the danger of focusing on efficiency: it can mean that you lose the ability to invent new products, yourself.

In 2000, I was headhunted from Cranfield University to become Pfizer’s Chief Learning Officer, setting up a corporate university, organising governance, metrics and a system of barefoot practitioners. I realised that if I wanted to be successful in my own terms I had to connect closely with the strategy (developing a system of Strategic Learning Plans that answered the question of what do you need to be good at to deliver the strategy?, and what do you need to learn to provide the capability required?). I worked on improving the learning process for drug project teams whose lifecycle can take 8-10 years and involve considerable member rotation meaning that teams can unlearn as fast as they learnt. This lead to the invention of the Baton Passing technique with some significant improvements in time and cost-saving and reduction in attrition or failure.

Then in 2003 I suddenly woke up. I noticed that acquisitions were not delivering and it wasn’t down to the costs of integration. I realised that there was no point in optimising a strategy that would never deliver the shareholder returns required in the long run, at a time when innovation productivity in the pharmaceutical industry had been flat-lining since 1981. We needed a new strategy. So I began leading skunkworks projects to harvest lost Intellectual Property in Pfizer and build awareness of the fractured nature of the current investment strategy and its limitations. But it was too late. Naturally, leadership (like all pharmaceutical businesses) told itself to cut costs and began the dreary ritual of down-sizing and attempting to learn how to operate efficiently, but like the Wehrmacht, they missed the strategic point of inflection, in other words, that all strategies have a lifecycle, but that when you focus primarily upon efficiency without a balanced, ambidextrous approach that includes effectiveness, you are doomed.

Key Learning Point for Leaders: try to balance transactional efficiency strategies with systemic effectiveness strategies!

Giving It Away To Win: From Power Push to Viral Pull

One of the core contradictions at the heart of change management is the idea that for a new idea to be successful, leaders must sign up to the proposed change. The problem is, how can you be committed to a form of change that you have never experienced and which will devalue your carefully-acquired Relationship Capital?

It’s important to recognise the viral element of successful change management. Sometimes, as with products, it’s a good idea to be a fast-follower who can exploit the pioneer’s market creation. One of the most dangerous things that can happen to an organisation is when a CEO takes a long flight and gets time to think without distractions, or is invited to speak at a conference and gets infected with a new idea for changing or improving a business’s performance. What happens next probably explains the 70% failure rate of first-wave systemic change methodologies, and is a further demonstration of what happens when a change-agent tries to pretend that they can be effective without building Relationship Capital:

• Someone has a “vision” for an improved business, and hires a change Practitioner “who’s done it before”. This Practitioner thinks they have a mandate for change, but it’s merely an understanding that will flex when circumstances change.
• The Practitioner builds a “Machine” to deliver the change, which turns into a new function (aping current organisational behaviour, in order to survive among the competing functions) and becomes an overhead. 
• The Machine starts constructing metrics to look good and attacks the Low-Hanging-Fruit (LHF) to justify the investment; the Machine’s purpose mutates into feeding itself, looking for good stories of its work among the functions (which alienates the functions by suggesting that it was all down to the Machine); it becomes disconnected from the business.
• The Business gets pestered by Machine consultants who keep arriving to do stuff and distracting its people. The Business functions begin to question having to pay for feeding a Machine that’s increasingly seen as disconnected from the Business, and leaders start blocking any moves away from LHF into systemic change. 
• The Machine creates its own efficiency numbers to demonstrate activity and apparent benefits. Business functions gang up on the Machine, or a crisis occurs and the Machine is closed down, or quietly dies a death. Things go very quiet.
• Then (after an interval of time, with luck) an Internal Business Visionary rooted in the real world of the Business functions starts it up again BUT at a lower level within their own function. This internal visionary has learnt from the failure of the Machine that fed itself to death, that change has to be business-focussed and initiated and should not try to ape the clothing and behaviour of the Business functions.
  

The change lessons could turn out to be:

1. Let someone else fail and then follow them, or work with someone who really wants to do it. It’s not about doing it TO the business, but for the Business to do it TO and FOR ITSELF.
2. If you build a change Machine to compete with the Business functions, they will have to destroy you at some point.
3. The Practitioner who succeeds in the long term will give away their practice and focus on maintaining a Centre of Excellence and the development of thought-leadership, learning to act as a guide, and not as a Machine builder or driver.