When it comes to efficiency there are 2 types according to the authors of this brilliant book?—?“This is Lean: Resolving the Efficiency Paradox”
Resource Efficiency which is the most common focuses on efficiently using resource that add value in an organization. If you have resource utilization metrics whether its related to people or equipment then you are measuring resource efficiency
Flow Efficiency on the other hand focuses on the amount of time it takes from identifying a customer need to satisfying that need.
“Many organizations are more focused on resource efficiency than on flow efficiency. High capacity utilization is not only seen as a good thing, it is often the main goal. On this basis, a very well-managed organization would have no available capacity. Although this may be beneficial from the organization’s point of view, it can represent a problem from a customer perspective”
“The flow-efficient organization is analogous to a relay race. In a good 4 x 100 meters relay team, the handovers are smooth and all four runners can see what is happening all the time. By the time the first runner has nearly completed the first hundred meters, the second runner has already started running in order to simplify the handover and speed up the race. When the baton is handed over, no time is lost as both runners are at top speed.”
“In a resource-efficient organization, however, the first “runner” is carrying many batons at once. In fact, the more batons the better. But after he has run the first hundred meters, there is no one to meet him. A phone call reveals that the second runner is in Thailand for a meeting. It takes several more calls to find someone who is free to run the second leg. By the time the batons are handed over, nine days later, two have been lost and one has been forgotten. This is not a gold medal-winning formula, but it is, unfortunately, how many organizations behave.”
This is why I guess most of the times we wait for a long time on the phone or call backs when we are talking to our mobile, broadband, utilities service provider when we are need their help in solving our problem
Over focus on resource efficiency guarantees that flow efficiency will suffer. If flow efficiency suffers, then several secondary needs will be generated.
“Activities to meet these secondary needs may seem like value-adding activities, but they would not be necessary if the primary need were already fulfilled. The paradox is that we believe we are utilizing our resources efficiently, but we are actually being inefficient, since much of that utilization comes from superfluous work and non-value-adding activities”
“At the core of resolving the paradox is a focus on flow efficiency. By focusing on flow efficiency, an organization can eliminate many of the secondary needs that arise as a consequence of low flow efficiency”
For a more detailed explanation of the paradox watch this video on The Efficiency Paradox | by Niklas Modig.