Paradoxically, these are the times we as leaders should lead and teach our teams that slack is not only appropriate, it’s likely the only way to get out of the mess we’re in.
--Jason Montague, software engineer
My last treatise on “Efficiency and Fragility” was not well received. It seems there were two reasons; one was a lack of clarity on my part; and secondly most people reading have elevated efficiency to the goal of business. The notion that being overly efficient can be bad flies in the face of 20th Century management theory. I will make another run at the topic because I believe it is one of the most important topics facing 21st Century businesses.
I would like to distinguish between two types of inefficiency. One is deliberate and the other is mindless. If we do not distinguish between the two, we get hopelessly lost. I am 100% against mindless inefficiencies which we must hunt down and eliminate. But deliberate inefficiencies are different. Our jobs as leaders must be to put “purposeful slack” into our systems.
And what is purposeful slack?
Slack is anything that eases strain on a system. Elastic in your briefs is an example of purposeful slack. Slack allows for a certain type of “give” or resilience. Our overly optimized, efficient exchanges have less and less slack built into them. When humans executed trades instead of computer algorithms doing the trading, there was more slack in the system. Now certain trading behaviors routinely stop trading completely in a stock. Enter fragility.
If you run a customer service department with dozens or hundreds of reps manning the phones, then what percentage of their time should be maxed out? Overly optimized schedules demand a higher and higher percentage of folks being busy. When an influx of calls comes into an overly optimized system, you end up with a customer service nightmare. Without slack, the system breaks.
In direct marketing, there is a term of customer acquisition called the “allowable”. It is the amount of money you are “allowed” to spend to secure a customer. Setting the allowable to the absolute amount you can afford will almost certainly lead to exceeding that amount due to unpredictable performance. Savvy marketers familiar with “purposeful slack” build some give in the allowable as to not lose money.
By the way, it is not surprising that many new companies marketing online have elevated algorithmic efficiency to such an exalted place that they frequently take all the slack out by design and set their allowable to the absolute figure they can afford. They falsely believe in exactitude. The result is that most lose money.
If you are headed somewhere and cannot afford to be late, it is best to introduce some slack and leave a bit early. This helps when unforeseen circumstances (Black Swans?) enter the scene. Slack introduces flexibility. Flexibility adds resilience to a system. Flexibility and resilience help weather storms.
Engineering slack may be a better way of articulating what I mean than glorifying inefficiency. But what I am trying to say and execute with our own business is lessening the fragility of our system. Our daily deal division where we send out a product offering every day no longer buys 100% of our products from China. We will pay a little more for products made in Brazil, USA, Vietnam and India. We are purposely introducing inefficiency (i.e. paying higher prices) so that a black swan event like war with China does not devastate our growing business.
[Parenthetically, Leon Panetta revealed over the weekend that the bulk of the US fleet was being redeployed to the Asia-Pacific region ostensibly to counter China’s influence. Our muscular foreign policy based upon interventionism makes an eventual war with China a distinct possibility. Seems our willingness to pay extra and diversify was a good idea.]
If you are leading your organization, division or even assembly line, if you are not coupling your hunt to eliminate mindless inefficiencies with a hunt for where to put slack into your system, you are not doing your job.
Jaffer Ali is the CEO of PulseTV and Vidsense. He can be reached at 708-478-4500 ext. 105