Chasing Bogus Productivity: Hurry Up and Wait...

Today’s post continues the Mistakes of Mainstream Management (MMM) series and explores how Silicon Valley executives and managers continue to fall for bogus productivity improvement programs by chasing local efficiencies that don’t help or even hurts the global effectiveness.

Here’s a typical example from a typical Silicon Valley corporation:

The “developer productivity” organization will hand out a promotions and bonuses for its executives and managers while the “information security”, “compliance”, “privacy”, “legal” & other “stakeholder” organizations celebrate the expanded coverage of their manual review of every project.

The end-to-end process from ideation to launch of a new product or feature would have slowed down significantly year-over-year, but hey, the builds are 5 seconds faster.

Same story with AI “adoption”. There are several Silicon Valley firms where AI is generating & testing a lot of code super fast, and yet developers continue to suffer through “death by a thousand cuts” processes with stakeholder “reviews” & “approvals” to take it to production, so that a customer can then derive some value from it.

Their AI adoption strategy in four words: “Hurry Up and Wait”.

One way to snap them out of their “local optimization” hang-over is to tell stories (Pro-tip": Incentive caused bias can cause executives to be blind to the pain they are inflicting on the company with their good intentions). This is where Eliyahu Goldratt comes into the picture.

Goldratt is the originator of the Theory of Constraints and the author of several best selling books including The Goal, which is one of three books that Jeff Bezos made his top execs read. While it would be misleading to apply the insights from the book to a complex socio-technical system like a software development organization that’s filled with purposeful human actors, I applaud him for his approach.

The Goal is actually a novel. Goldratt knew his customer base well - many managers/leaders don't read books! Even if they did, it is only novels. That's why he wrote business books as novels!

The story is about Alex Rogo, a manufacturing plant manager, who is given the tough job of turning around a failing plant in three months. Things were going downhill at the plant - shipments were late, inventories kept on piling up and the production backlog was also growing. Alex luckily stumbles upon his old Physics professor, Jonah, who challenges him by asking some thought provoking questions.

Jonah was an educator, not a consultant.  Using his clues, Alex eventually turns around the company and along the way learns a few important management lessons. Alex realizes how the robots that were introduced in the plant negatively impacted the overall productivity of the plant, and stops chasing efficiencies. After all, "a plant in which everyone is working all the time is very inefficient."

In today's post, I make the case that most claims of developer productivity gains & performance improvement programs in Silicon Valley Tech. firms are bogus. Productivity improvements have to be in service of something else - value creation or some innovative product/service for the customer.

Innovation doesn't happen by copying your competitors. So, if many of your development teams are simply copying your competitors instead of leading them, one has to wonder if that is the right kind of productivity we need to pursue in the first place. Leaving aside this perspective, I'd like to question if productivity improvements that are driven at many companies (just for productivity's sake) are worth it in the first place.

Most modern corporations are divided into departments like marketing, finance, product, engineering, security, legal, etc. and those departments in turn have various sub-groups and sub-teams under them, with each of their leaders driving their own Goals, KPIs and OKRs - mostly local efficiencies without a clear understanding of its short-term and long-term implications to the global effectiveness.

As the Systems Thinker, Russel Ackoff elegantly put it,

Take the example of Costco, which hasn't increased the price of its rotisserie chicken from $4.99 since the deal was introduced in the early 1980s. The same goes for its $1.5 hot dog combo! Why is rotisserie chicken so cheap at Costco?

Costco could make a giant profit on chickens just by raising the price by only $1. Instead, the store keeps the prices low on its famous rotisserie chickens and other staples as an incentive to get shoppers in the door. This is known as a "loss leader" in the retail world.

Corporations are complex socio-technical systems with a ton of interactions and inter-dependencies between its departments and their sub-groups. With a linear reductionist approach we'll not be able to figure out which parts of the system must be kept inefficient (less productive or not fully utilized) to improve the performance of the whole corporation. A leader that simply asks for 5% or 10% efficiency gain across all sub-organizations doesn’t have any clue about how organizations actually work.

In manufacturing, Work-in-Progress (WIP) inventory is visible (though not so much in software). You can see where the queues are piling up on the assembly line.

Some processes or steps in the assembly might be a constraint - e.g., a furnace used to heat-treat components before they can be assembled. However, the heat treatment duration is typically a set time (say 3 hours, depending on the components). There is no way to speed that up. The capacity of the furnace is also fixed once the plant is constructed.

So, there are multiple design considerations that go into the design and capacity of that furnace. It might be built for peak production capacity (think holiday shopping season) and kept under-utilized (inefficient) most days - the plant manager and the corporation are usually fine with it.

Even though the furnace run time is fixed, there are always some local performance improvements that can be made. For example: If the plant workers find many poor-quality components only during assembly (after the heat treatment), it will result in them not shipping the orders that are due at the end of the day. There might not be enough time for another 3-hour run of the furnace.

Instead, a simple process improvement can be made by doing the component inspection before loading them into the furnace and/or adding a few additional units as a buffer. The key point here is not to waste the precious time of the constraint (the furnace).

While the above is definitely a local efficiency, plant managers can't stop there - they have to expand their "system" boundary to the entire plant and beyond (including, say, suppliers) if they are to truly improve overall effectiveness.