The focus on maximum efficiency ignores the fundamental differences between the complicated and the complex, writes Margaret Heffernan
We’ve all sat in planning meetings and shaved off costs here while tightening schedules there. We think we’re keeping everything efficient and under control.
Since the Industrial Revolution, the prevailing ethos of business has focused on efficiency. Just-in-time manufacturing now means that, while Apple’s iPhone is designed in California, making it depends on raw materials and suppliers from over 20 countries.
This complex, tightly managed supply chain is designed for maximum efficiency: reducing costs and taking advantage of labour specialisms, employment conditions, currency fluctuations and tax breaks. It is pretty miraculous and has led most organisations to optimise efficiency everywhere they can.
But that’s because we ignore the drawbacks. Such complexity also exposes manufacturers to unpredictable factors, including outbreaks of disease, labour disputes, economic volatility, social turmoil and more.
Complicated or complex? It’s important to know the difference
These systems are so dazzling that it’s easy to forget that they multiply contingencies and amplify risk. The belief that efficiency makes everything better ignores the fundamental differences between what’s complicated and what’s complex.
A useful analogy is air travel. Much in flying is merely complicated. You know passengers will check in, their bags will be loaded onto planes and they will want to eat and drink. Those aspects are managed with a beady eye on efficiency and they work well.
But once the plane takes off, you cannot guarantee exactly what will happen: whether geese will hit an engine or a part will fail. Too many factors are at work and beyond control. So, aircraft have been designed with more engines and technology than they need – just in case one fails. Robustness, not efficiency, is their protection against the unpredictable.
Confusing the complicated and the complex is dangerous. If you think everything is complex, projects become bloated and overly cautious. If you think everything is merely complicated, you eliminate all margins for the unexpected. The overuse of efficiency in the NHS, for example, left it unprepared for the coronavirus outbreak. Using 100 per cent of the capacity in intensive care or running down stockpiles looks efficient when in reality it’s dangerous.
Case study – the Dutch homecare system
Often, both the complicated and the complex exist within a single system. That was true of the Dutch homecare nursing system, which was designed to maximise efficiency. This made it a cumbersome bureaucracy where contracts specified precisely how nurses should spend their time with patients.
One nurse, Jos de Blok, saw there were two aspects to this system. One was just complicated –issuing the contract that assigned a nurse to a patient was predictable and repetitive, so technology could make it more efficient. But helping the patient recover was inherently complex, because no two patients are identical and the work cannot be predicted.
That part, de Blok thought, should be left to human judgement, because it needs to be more adaptive and responsive. So he proposed an experiment: automate the paperwork, but give nurses the freedom to use their judgement.
When EY audited de Blok’s experiment, it found that patients got better in half the time. And when the experiment was expanded, costs were shown to be 30 per cent lower. An estimated €2bn would be saved if the whole country adopted the system.
Don’t fall for the illusion of control
Efficiency is powerful with any work that can be standardised, measured and predicted. But not everything can be.
Trying to standardise and measure all work may instil the illusion of control, but it too often demotivates people whose skill sets can meet unpredictable demands. It also robs people of their capacity to adapt and respond with creativity and commitment.