Published on 9 September 2010
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I don't miss frequent flying, mainly for one reason: there is no longer any slack in the system. Airlines have optimized to the point that almost all flights are nearly full and are often overbooked. Toss a storm or failure into this machine and it can take seemingly forever to get furious passengers on canceled flights home. I still have haunting memories of being stuck in Newark for 28 hours following a relatively small snow storm watching five overbooked flights to my destination leave before me (and I was holding a Class Y ticket, no less). In the midst of all of this overclocked chaos, I'm pleased when I can drive rather than fly.

Ignoring the Obvious

This is essentially the point Tom DeMarco makes in his book Slack: Getting Past Burnout, Busywork, and the Myth of Total Efficiency. From the very outset, he states it plainly: "the more efficient you get, the harder it is to change."  Trouble is, change happens. And when it does, the end results to an over-optimized company aren't pretty: angry customers, missed opportunity, diminishing revenues, and obsolescence.

DeMarco's book is a quick read, and many of his points are painfully obvious, yet painfully missed. For example, he describes:

  • How "ax-wielding crazies... trade away the future to make the present look a little more rosy"
  • The problems that come with treating employees as "fungible resources"
  • How the net result of the Hurry Up mantra is really Slowing Down
  • The value of human capital and the real costs of losing employees
  • The myth that information work can be rushed ("people under time pressure don't think faster")
  • Tell-tale signs of a poorly-run company: aggressive schedules, extended overtime, Culture of Fear, process obsession, and Management by Objectives
  • Why effectiveness is more important than efficiency
  • What true corporate vision and leadership looks like
  • How to encourage change and manage risk.

Dated, Yet Timely

While the book is nearly a decade old, DeMarco's advice is now even more needed, but less heeded. Our times place even more emphasis on cost-cutting in lieu of potential, short-term profits instead of investment, regulation in lieu of innovation, and so on. That explains the common large company strategy of "cut costs, stop innovating, and hope to make it up with acquisitions" (and why those acquisitions are ultimately so expensive). I would argue it's also a primary systemic cause of our current economic woes. It's essentially the thrift paradox: if everyone is cutting costs, no-one will grow.

Yet I think DeMarco would be pleased that, against prevailing government and business winds, today's most successful companies have done exactly what he prescribes. IBM's Think Fridays come to mind, but perhaps a better-known example is Google's 20% Time.

A typical corporate cost-cutter would not tolerate such a thing. After all, how much revenue does Google get directly from Gmail, Google Talk, Google News, Google Sky, and the other 20% projects?  Almost none, when compared to their massive advertising revenues. So an astute efficiency expert might find 20% "fat" that he could cut out of Google's expense equation.

But over half of Google's products originated in this 20% time, and these projects have dramatically improved the reach, goodwill, and public impression of Google. As eWeek puts it, they "gain more influence over the internet landscape."  It keeps them highly relevant, and helps prevent them from going the way of Alta Vista and Ask Jeeves (if those names aren't familiar, just google them or gmail me). And this week's unveiling of Instant search is yet another example of Google's proactive change; one that bean-counters might argue is an unnecessary and cannibalistic change.

Just Ask Yourself

While DeMarco writes in abstract terms, many of the mistakes he describes are quite familiar. I don't know how these problems look in a manufacturing company or utility, but I've seen them in technology and software companies. So I would propose the following litmus tests. If you answer "no" to one or more of these, you might be a breakneck.

  • Are my R&D and revenue pipelines diverse?  Instead of expecting one or two big new product investments to pull off a revenue miracle, am I spreading the risk across a portfolio of new product developments knowing that some will fail and some will succeed?
  • Do I routinely solicit new product ideas from my employees (who may see opportunities that I miss)?  And do I act on these?
  • Am I significantly investing in R&D, including "skunkworks" projects?
  • Am I giving my employees time to innovate?
  • Is my company giving back to the open source movement, or is it "all take and no give?"
  • Am I encouraging career development in my employees, instead of treating them as "fungible resources"?
  • Am I allowing time in schedules for unknowns and risks?

The solution to many of these problems is simple: do business the old fashioned way. Think long term. Invest broadly in the future. Hire good people and value them. Don't lay off or outsource just because you can. Look beyond just this quarter's financial results. In short, make room for change and cut the world some slack.