Blog: Simply Measuring

What could possibly be wrong with “efficiency”? Plenty.

14 July 2017

Modified version of blog posted 10 October 2014 and, 9 September 2015.

Efficiency is like motherhood. It gets us the greatest bang for the buck, to use an old military expression. Herbert Simon, winner of one of those non-Nobel prizes in economics, called efficiency a value-free, completely neutral concept. You decide what benefits you want; efficiency gets you them at the least possible cost. Who could possibly argue with that?

Me, for one.

I list below a couple of things that are efficient. Ask yourself what am I referring to—the first words that pop into your head.

A restaurant is efficient.

Did you think about speed of service? Most people do. Few think about the quality of the food. Is that the way you chose your restaurants?

Modified version of blog posted 10 October 2014 and, 9 September 2015.

Efficiency is like motherhood. It gets us the greatest bang for the buck, to use an old military expression. Herbert Simon, winner of one of those non-Nobel prizes in economics, called efficiency a value-free, completely neutral concept. You decide what benefits you want; efficiency gets you them at the least possible cost. Who could possibly argue with that?

Me, for one.

I list below a couple of things that are efficient. Ask yourself what am I referring to—the first words that pop into your head.

A restaurant is efficient.

Did you think about speed of service? Most people do. Few think about the quality of the food. Is that the way you chose your restaurants?

My house is efficient.

Energy consumption always comes out way ahead. Tell me: who ever bought a house for its energy consumption, compared with, say, its design, or its location?

What’s going on here? It’s quite obvious as soon as we realize it. When we hear the word efficiency we zero in―subconsciously―on the most measurable criteria, like speed of service or consumption of energy. Efficiency means measurable efficiency. That’s not neutral at all, since it favors what can best be measured. And herein lies the problem, in three respects:

1. Because costs are usually easier to measure than benefits, efficiency often reduces to economy: cutting measurable costs at the expense of less measurable benefits. Think of all those governments that have cut the costs of health care or education while the quality of those services have deteriorated. (I defy anyone to come up with an adequate measure of what a child really learns in a classroom.) How about those CEOs who cut budgets for research so that they can earn bigger bonuses right away, or the student who found all sorts of ways to make an orchestra more efficient.

2. Because economic costs are typically easier to measure than social costs, efficiency can actually result in an escalation of social costs. Making a factory or a school more efficient is easy, so long as you don’t care about the air polluted or the minds turned off learning. I’ll bet the factory that collapsed in Bangladesh was very efficient.

3. Because economic benefits are typically easier to measure than social benefits, efficiency drives us toward an economic mindset that can result in social degradation. In a nutshell, we are efficient when we eat fast food instead of good food.

So beware of efficiency, and of efficiency experts, as well as of efficient education, heath care, and music, even efficient factories. Be careful too of balanced scorecards, because, while inclusion of all kinds of factors may be well intentioned, the dice are loaded in favor of those that can most easily be measured.

By the way, twitter is efficient. Only 140 characters! This blog is less so.

References

Herbert A. Simon Administrative Behavior: Second Edition (Macmillan, 1957, page 14).

This TWOG derives from my article “A Note on the Dirty Word Efficiency”, Interfaces (October, 1982: 101-105)

© 2017s Henry Mintzberg

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Analyst: Analyze Thyself

24 August 2016

Photo credit: Ian ThompsonCC BY-SA 2.0

“It is a well-known axiom that what is not measured can’t be managed” (Kaplan and Porter in the opening of their 2011 Harvard Business Review article “How to solve the cost crisis in health care”). This is well-known all right, and false, not to mention downright silly.

Photo credit: Ian ThompsonCC BY-SA 2.0

“It is a well-known axiom that what is not measured can’t be managed” (Kaplan and Porter in the opening of their 2011 Harvard Business Review article “How to solve the cost crisis in health care”). This is well-known all right, and false, not to mention downright silly.

Who ever successfully measured culture, leadership, even the potential for a truly new product? Can none of these thus be managed? Did Kaplan and Porter measure the effectiveness of their own recommendations? Indeed, who has even tried to measure the performance of measurement itself, aside from assuming that it is marvelous? And how about measuring the performance of management? (Don’t tell me that increase in share price does this for the CEO. See “The tricky task of measuring managers.”) I guess, therefore, measurement and management can’t be managed.

Guess what? They can. We just have to understand that many of the things that matter most in organizations (and in life) cannot be measured, yet they have to be managed, whether personally or organizationally. Certainly we have to measure what we can; we just cannot allow ourselves to be mesmerized by measurement―which we so often are.

In this article, Kaplan and Porter (2011) provide a list of seven steps “to estimate the total costs of treating...patient populations”:

1.    Select the medical condition [specifying the possible “complications and comorbidities"]

2.    Define the care delivery value chain…which charts the principal activities

3.    Develop process maps for each activity

4.    Obtain time estimates for each process

5.    Estimate the cost of supplying patient care resources

6.    Estimate the capacity of each resource and calculate the capacity cost rate

7.    Calculate the total cost of patient care

Don’t look for:

8.    Include the costs of doing all this.

But you can get a sense of it by reading the authors’ example of a knee replacement, for which 77 activities are listed.1 Multiply this by elbows, hips, brains, hearts and minds, etc., factor in the frequency of improvements in these activities, which may come one at a time, and you have to wonder if analysts will soon outnumber clinicians in health care.

But the direct costs of their efforts are not the only costs. How about the costs of the distractions to the clinicians―for example, by having to record so much data―plus the costs of the political battles that ensue over who is measuring what, how, where, when, and for whom. Analysts see measurements as objective; contrast this with the political blood spilled over determining them.

Imagine if analysts put themselves through the same scrutiny as some do everyone else. In other words, imagine if they analyzed themselves. Maybe then, instead, we would get more of the following:

Years ago, the British retailer Marks and Spencer decided it was spending too much money controlling the movement of stock in its stores. So instead of a clerk filling out an order form to replenish a shelf, which was handed to another clerk behind a counter, who went to fetch the items, etc., the company got rid of the whole procedure and simply let the clerks go in the back and scoop up what they needed. The company was able to function with thousands fewer clerks and 26 million fewer cards and papers.

Now that’s truly efficient­­, and a vote of faith in the honesty of the clerks. Health care administrators take note: treated with respect, left to figure out many things for themselves, health care professionals can prove to be at least as trustworthy as store clerks.

© Henry Mintzberg 2016. Excerpted from my new book Managing the Myths of Health Care (forthcoming in 2017).

Follow this TWOG on Twitter @mintzberg141, or receive the blogs directly in your inbox by subscribing hereTo help disseminate these blogs, we now also have a Facebook page and a LinkedIn page.

 


1 Not to mention that “Outcomes for any medical condition or patient population should be measured along multiple dimensions, including survival, ability to function, duration of care, discomfort and complications, and the sustainability of recovery” (p. 5).

 

What could possibly be wrong with “efficiency”? Plenty.

9 September 2015

Last week I wrote that I will be writing TWOGs more bi-weekly, and revisiting some earlier ones in between. This is the first of those.

First posted October 10 2014

Efficiency is like motherhood. It gets us the greatest bang for the buck, to use an old military expression. Herbert Simon, winner of one of those non-Nobel prizes in economics, called efficiency a value-free, completely neutral concept. You decide what benefits you want; efficiency gets you them at the least possible cost. Who could possibly argue with that?

Me, for one.

I list below a couple of things that are efficient. Ask yourself what am I referring to—the first words that pop into your head.

A restaurant is efficient.

Did you think about speed of service? Most people do. Few think about the quality of the food. Is that the way you chose your restaurants?

Last week I wrote that I will be writing TWOGs more bi-weekly, and revisiting some earlier ones in between. This is the first of those.

First posted October 10 2014

Efficiency is like motherhood. It gets us the greatest bang for the buck, to use an old military expression. Herbert Simon, winner of one of those non-Nobel prizes in economics, called efficiency a value-free, completely neutral concept. You decide what benefits you want; efficiency gets you them at the least possible cost. Who could possibly argue with that?

Me, for one.

I list below a couple of things that are efficient. Ask yourself what am I referring to—the first words that pop into your head.

A restaurant is efficient.

Did you think about speed of service? Most people do. Few think about the quality of the food. Is that the way you chose your restaurants?

My house is efficient.

Energy consumption always comes out way ahead. Tell me: who ever bought a house for its energy consumption, compared with, say, its design, or its location?

What’s going on here? It’s quite obvious as soon as we realize it. When we hear the word efficiency we zero in―subconsciously―on the most measurable criteria, like speed of service or consumption of energy. Efficiency means measurable efficiency. That’s not neutral at all, since it favors what can best be measured. And herein lies the problem, in three respects:

  1. Because costs are usually easier to measure than benefits, efficiency often reduces to economy: cutting measurable costs at the expense of less measurable benefits. Think of all those governments that have cut the costs of health care or education while the quality of those services have deteriorated. (I defy anyone to come up with an adequate measure of what a child really learns in a classroom.) How about those CEOs who cut budgets for research so that they can earn bigger bonuses right away, or the student who found all sorts of ways to make an orchestra more efficient. This week, on the news in Canada, we are hearing about railroads that are determined to be more efficient, while overworked engineers are reporting that they have been falling asleep at the switch. Very efficient this.

  2. Because economic costs are typically easier to measure than social costs, efficiency can actually result in an escalation of social costs. Making a factory or a school more efficient is easy, so long as you don’t care about the air polluted or the minds turned off learning. I’ll bet the factory that collapsed in Bangladesh was very efficient.

  3. Because economic benefits are typically easier to measure than social benefits, efficiency drives us toward an economic mindset that can result in social degradation. In a nutshell, we are efficient when we eat fast food instead of good food.

So beware of efficiency, and of efficiency experts, as well as efficient education, heath care, and music, even efficient factories. Be careful too of balanced scorecards, because while including all kinds of criteria may be well intentioned, the dice are loaded in favor of those that can most easily be measured.

By the way, twitter is efficient. Only 140 characters!

References

Herbert A. Simon Administrative Behavior: Second Edition (Macmillan, 1957, page 14).

This TWOG derives from my article “A Note on the Dirty Word Efficiency”, Interfaces (October, 1982: 101-105)

© 2014 Henry Mintzberg