The “two pizza” rule
As the founder and CEO of Amazon.com, Jeff Bezos knows a thing or two about managing a large company. His “two pizza meeting rule” has become the stuff of legends. Bezos believes that the more people attend a meeting, the less productive that meeting will be. His solution is to ensure that no meeting at Amazon.com is ever so large that two pizzas cannot not feed the entire group. The theory behind this rule is that large groups of people are inherently inefficient. In advising some of the largest utilities and energy companies in the world, we have often found this to be true.
You are at least 10% inefficient
Based on our experience, we believe there is at least 10% inefficiency within any organization. The degree of inefficiency almost always grows in lockstep with the size of the organization. Some inefficiencies are not obvious, while others stand out. Many inefficient practices are rooted in a lack of focus on the entity’s core mission. After interviewing thousands of executives and employees at large companies, we have found that there is a story behind nearly every inefficiency.
It made sense at the time…
“We have always done it that way” is what we often hear at the start of stories explaining inefficient practices. Upon digging deeper, we usually learn that the change to a less efficient practice was a compromise made to deal with an emergent issue such as the loss of a key employee or a change in software. For example, at a generation facility, we encountered a practice of customizing maintenance work packages for individual craft technicians. This approach was very time consuming, and an inefficient use of planners’ time. When challenged, the process was changed to apply a standardized approach to work packages, freeing up planner’s to get more work done without hiring additional staff. While the planners were excited about a standardized approach, some craft supervisors were concerned about the transition.
A “dirt lawn full of washing machines and furniture”
It is human nature to maintain the status quo and resist change. But the longer you let an inefficient practice remain intact, the more difficult it becomes to correct that practice. As the comedian Adam Carolla once said: “There is a window for fixing windows and everything else in your life. If you don’t take care of it right away, it becomes part of the scenery. Next thing you know, you’ve got a dirt lawn full of washing machines and furniture.” This metaphorical “dirt lawn” can manifest itself in many different (and costly) ways. Inefficiencies become costly because their symptoms often consist of things like improper staffing levels, poor performance, cost overruns, and unsatisfied stakeholders.
How to clean up your lawn
Thwarting inefficiencies starts with a desire to improve, coupled with a questioning attitude. Hearing that “it has always been done that way” should raise an immediate red flag-especially when that statement comes from a part of the organization with budgetary or performance challenges. Managers should keep a close watch on their key performance indicators. However, it is important not to rely solely on data, as data only tells part of the story. In the style of Jack Welch, managers should also spend time “walking around,” regularly interacting with employees throughout their organization. Doing this will offer insights that data cannot provide. Engaging the support of a knowledgeable adviser like Goodnight Consulting to look to the outside for relevant data and best practices can also be very helpful.
Goodnight Consulting Can Help
We have spent decades helping our clients combat inefficiencies. We find that assessing staffing is often a good starting point, since staffing levels and organizational structures are a symptom of decisions made by management. Assessing the functional staffing of an organization and comparing it to benchmarks paints a vivid, holistic picture of your condition. Coupling this staffing data with contextual information gathered via interviews with managers and employees helps explain how you arrived at your current condition, the challenges and opportunities you face, and how to improve. Many clients also ask us to help them improve via process improvement workshops, cultural assessments, and by supporting implementation of key initiatives. Our team members have decades of relevant experience. Contact us for more information about how we can help you power improvement.