In Peter Senge’s book, The Fifth Discipline, it was shared that “Dividing an elephant in half does not produce two small elephants”. In fact the point is that if you divide the elephant in half, you are really left with no elephant.
This HBR article is certainly the supporting evidence that brings home the message clearly.
Unfortunately, most organizations today fall into the same trap: they look at isolated metrics, but fail to see the whole system. They optimize each part of the business separately, and fail to consider how they interact. When we see an operation as a set of isolated metrics to optimize, we can lose our sense of context and decrease overall performance — an efficiency paradox.
In The Good Jobs Strategy, MIT professor Zeynep Ton makes exactly this point through her study of retailers. The conventional wisdom says to maximize profits through low wages, optimized scheduling, and extensive inventory management systems. Yet her research finds that these practices often serve to reduce overall efficiency and profitability.
In his book Team of Teams, General Stanley McChrystal describes another aspect of the over-optimization problem. Although his soldiers were winning every battle, somehow they were losing the war. What’s more, every time they began to gain the upper hand by shifting tactics, the enemy would adapt. It was beginning to seem like they were engaged in a never-ending game of whack-a-mole.
The problem is that the world is far too complex to be reduced to excel sheets, organization charts, and diagrams. In the final analysis, nobody cares what your internal metrics are. What’s really important is not the nodes, but the network. That’s what McChrystal means when he speaks of “seeing the system.”
If everyone is trained — and compensated — to focus on only their part of the task, the shared mission is lost. That’s not a path to greater efficiency or to profitability, but to oblivion.
Read the full article here