The perils of being too good for your own good
A recent United Airlines “non-flight” left me stranded and scrambling at Chicago’s O’Hare airport. I had arrived with plenty of time to catch my final leg home to Sacramento. But in the time between deplaning and getting to the gate, United had cancelled the flight. Not for bad weather or for lack of planes, but because the flight crew was stranded in Kentucky from bad weather six hours earlier and in another part of the country. The only remaining direct flight home had more than 140 people waiting on standby. I rerouted and got the very last seat to Los Angeles, connecting to Sacramento, and was home by 1:30 a.m., only four hours late.
There is an illusory, often unnecessary, tension between the wild and crazy side of innovation and the button-downed nature of ongoing operations, which is distracting us from one of the real problems in managing innovation. My United story illustrates creativity is not the enemy of efficiency, efficiency is the enemy of efficiency.
By that, I mean the pursuit of efficiency. The relentless accumulation of little improvements in efficiency (each one a creative act on someone’s part) creates an organization that, while efficient, is no longer safe from even small disruptions in its operating environment (whether externally or internally generated). The pursuit of efficiency can move unnoticed right past effective and into something you might call hyperefficient — which sounds good but in medical parlance is a pathology.
United is not alone, although I would argue it is leading in this category. An article in the July 5 issue of the New York Times read:
“As anyone who has flown recently can probably tell you, delays are getting worse this year. The on-time performance of airlines has reached an all-time low, but even the official numbers do not begin to capture the severity of the problem.
“That is because these statistics track how late airplanes are, not how late passengers are. The longest delays — those resulting from missed connections and canceled flights — involve sitting around for hours or even days in airports and hotels and do not officially get counted.”
Efficiency leads, ultimately, to a system in which the output of every step is tightly coupled to the inputs of the next steps. There is no wasted time or material — no slack. Tightly coupled systems tend to fail catastrophically and there is a long list of good literature on this topic (see Herbert Simon’s Sciences of the Artificial or Charles Perrow’s Normal Accidents).
Henry Ford learned this first hand. He spent roughly seven years developing mass production and another 10 perfecting it. In the process, Ford built such a tightly-coupled factory that, when General Motors and others demonstrated the market for variability in car makes and models, Ford could not respond.
Changing the design of even a single bumper created ripples up and down the line. Five years later, to finally change, all Ford manufacturing operations were shut down for six months — laying off 75,000 workers — while Ford engineers worked on a new production line. Ford never regained its dominance in the market.
United, like so many other carriers, has built the aerial equivalent to Ford’s River Rouge plant — systems so tightly coupled that even the smallest flight delays in one corner of the country are felt by travellers everywhere else.
But sitting in O’Hare, I was also reminded of a manufacturing systems lecture that explains why I really hate United — it has, in the pursuit of efficiency, consciously and completely forsaken the customer.
The theory is known as Little’s law and states: Inventory equals throughput times flow time. The average throughput time in a production system is proportional to the average inventory (work-in-process) in the system. Little’s law is also one of the handful of relationship laws that every manager should know. It’s also very useful in understanding the pitfalls of hyperefficiency.
One of the key insights from Little’s law is for an organization to achieve maximum utilization of equipment, it must make sure there is never a shortage of work-in-process queued up and ready to go.
To put this in terms an airline passenger would care about, the more United tries to cut costs by increasing the utilization of its processing equipment (planes and flight crews), the more it allows work-in-process inventory (passengers waiting for planes) to approach infinite. As United maximizes the efficiency of its capital, it willingly sacrifices the passenger experience.
For United, like Ford and so many others, investments in increased efficiency become, in the end, more threatening to current efficiencies than any tolerance for creativity.
Andrew Hargadon is a professor at the University of California, Davis Graduate School of Management in Davis, Calif., and author of How Breakthroughs Happen: The Surprising Truth About How Companies Innovate. For more information, visit www.andrewhargadon.com.
There is an illusory, often unnecessary, tension between the wild and crazy side of innovation and the button-downed nature of ongoing operations, which is distracting us from one of the real problems in managing innovation. My United story illustrates creativity is not the enemy of efficiency, efficiency is the enemy of efficiency.
By that, I mean the pursuit of efficiency. The relentless accumulation of little improvements in efficiency (each one a creative act on someone’s part) creates an organization that, while efficient, is no longer safe from even small disruptions in its operating environment (whether externally or internally generated). The pursuit of efficiency can move unnoticed right past effective and into something you might call hyperefficient — which sounds good but in medical parlance is a pathology.
United is not alone, although I would argue it is leading in this category. An article in the July 5 issue of the New York Times read:
“As anyone who has flown recently can probably tell you, delays are getting worse this year. The on-time performance of airlines has reached an all-time low, but even the official numbers do not begin to capture the severity of the problem.
“That is because these statistics track how late airplanes are, not how late passengers are. The longest delays — those resulting from missed connections and canceled flights — involve sitting around for hours or even days in airports and hotels and do not officially get counted.”
Efficiency leads, ultimately, to a system in which the output of every step is tightly coupled to the inputs of the next steps. There is no wasted time or material — no slack. Tightly coupled systems tend to fail catastrophically and there is a long list of good literature on this topic (see Herbert Simon’s Sciences of the Artificial or Charles Perrow’s Normal Accidents).
Henry Ford learned this first hand. He spent roughly seven years developing mass production and another 10 perfecting it. In the process, Ford built such a tightly-coupled factory that, when General Motors and others demonstrated the market for variability in car makes and models, Ford could not respond.
Changing the design of even a single bumper created ripples up and down the line. Five years later, to finally change, all Ford manufacturing operations were shut down for six months — laying off 75,000 workers — while Ford engineers worked on a new production line. Ford never regained its dominance in the market.
United, like so many other carriers, has built the aerial equivalent to Ford’s River Rouge plant — systems so tightly coupled that even the smallest flight delays in one corner of the country are felt by travellers everywhere else.
But sitting in O’Hare, I was also reminded of a manufacturing systems lecture that explains why I really hate United — it has, in the pursuit of efficiency, consciously and completely forsaken the customer.
The theory is known as Little’s law and states: Inventory equals throughput times flow time. The average throughput time in a production system is proportional to the average inventory (work-in-process) in the system. Little’s law is also one of the handful of relationship laws that every manager should know. It’s also very useful in understanding the pitfalls of hyperefficiency.
One of the key insights from Little’s law is for an organization to achieve maximum utilization of equipment, it must make sure there is never a shortage of work-in-process queued up and ready to go.
To put this in terms an airline passenger would care about, the more United tries to cut costs by increasing the utilization of its processing equipment (planes and flight crews), the more it allows work-in-process inventory (passengers waiting for planes) to approach infinite. As United maximizes the efficiency of its capital, it willingly sacrifices the passenger experience.
For United, like Ford and so many others, investments in increased efficiency become, in the end, more threatening to current efficiencies than any tolerance for creativity.
Andrew Hargadon is a professor at the University of California, Davis Graduate School of Management in Davis, Calif., and author of How Breakthroughs Happen: The Surprising Truth About How Companies Innovate. For more information, visit www.andrewhargadon.com.
