The efficiency trap

Rational economic theory is the holy grail of business. Everyone's obsessed with efficiency. Consultants swarm in with their fancy spreadsheets, promising to optimize everything. Who's gonna argue with that? Afterall, that's what they get paid to do. It sounds smart. Safe. Logical. You’re not going to get fired for being rational.

Sometimes, chasing efficiency actually costs you. You trim the fat, but whoops, you just cut out the heart. That "inefficient" process? It might be the secret sauce that keeps customers coming back. But you wouldn't know it from studying those spreadsheets.

Optimization is great until it isn’t. You MUST first understand the why behind a process before you focus on making it more efficient. Because humans aren’t rational. They’re complicated. They’re emotional.

For example, take restaurants. Fast food joints have efficiency down to a science. But imagine a cozy bistro deciding to “optimize”in order to increase revenue. Perhaps a consultant suggested they turn tables more frequently. So in come harder chairs, more tables, brighter lights, pushy waiters. Congratulations, you've killed the vibe. Now it's just another place to shovel food in your face. People don’t come back like they did and a downward spiral ensues.

The problem with all this rational thinking is that it misses the point. People don't make decisions based on spreadsheets. We're driven by emotions, quirks, and stuff we can't even explain. Your customers might not know why they loved your restaurant, but they sure as hell know when that magic is gone.

Want to build something meaningful? You need some chaos. Some personality. Something that doesn't make perfect sense on paper.

Rational behavior doesn’t create meaning or excitement.

Ever wonder why accountants are always maligned as ‘bean counters’ dry and humorless? Exactly.

Efficiency has its place. Know what that place is. It's a tool, not the end goal. Before you start "optimizing," make sure you understand what actually makes your business tick. Otherwise, you might just optimize yourself right out of business.

This week’s kickstart

Take a look at your business processes. What’s something that’s efficient that if you made it ‘inefficient’ you’d create more value for your customers? Where can you get 1+1= 3?

Conversely, what’s something that if you made it more efficient it would free you up to create the right kind of inefficiencies elsewhere?

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