HBR On Strategy

Shifting Your Focus from Short-Term Efficiency to Long-Term Resilience

Feb 14, 2024

Efficiency is pursued by businesses, but it can have social and economic costs. Roger Martin explains the downsides of eliminating inefficiencies. He suggests shifting focus to long-term resilience and avoiding singular goals. Walmart and Southwest Airlines' lessons in pursuing variety and avoiding harm to customer relationships are discussed. Companies like Walmart, Target, and Costco implement the 'Good Job Strategy' for a more resilient workforce. Income inequality can be addressed through paying a living wage and diversifying purchases.

26:00

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Quick takeaways

Excessive focus on efficiency can lead to social and economic costs such as stagnant wages and increasing inequality.

Business leaders should prioritize long-term resilience over short-term efficiency by embracing a more holistic view of business systems and setting multiple goals.

Deep dives

The Negative Consequences of Obsessive Efficiency

In this podcast episode, strategy expert Roger Martin discusses the downsides of companies pursuing efficiency at all costs. He highlights how this pursuit has led to social and economic costs, such as stagnant wages and increasing inequality. Martin emphasizes that it's time to re-prioritize and shift thinking towards long-term resilience, especially in the aftermath of the COVID-19 pandemic. He provides real-world examples, like companies cutting staffing to the bone or loading up with debt, to illustrate how excessive efficiency can lead to negative outcomes.

Recommendations for Executives in Business and Management

03:54

Diversifying Purchases for a Resilient Economy

00:49

Pressure Leads to Pareto Distribution in Economic Systems

01:22

Introduction

3min

The Negative Consequences of an Obsession with Economic Efficiency

12min

Shifting Away from Singular Goals and Embracing Variety: Lessons from Walmart and Southwest Airlines

3min

Implementing the 'Good Job Strategy' and Examples of Resilient Companies

3min

Addressing Income Inequality and Promoting a More Balanced Economy

5min

Efficiency is usually something businesses strive for, but is it possible to be too efficient?

Roger Martin is professor emeritus at the Rotman School of Management at the University of Toronto. He warns that an obsession with eliminating inefficiencies in U.S. companies has come with social and economic costs. He sees those downsides in everything from staffing to wages and even corporate debt levels. But he argues that it’s not too late for businesses to change their priorities.

In this episode, Martin helps leaders understand how to shift their thinking to connect excess resources in the shorter term with a positive outcome: long-term resilience. Martin also explains why it’s important to avoid the strategy trap of setting and meeting singular goals.

Key episode topics include: strategy, business and society, operations and supply chain management, efficiency, corporate debt, wages, staffing, inequality, goals.

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.

· Listen to the full HBR IdeaCast episode: When Efficiency Goes Too Far (2020)

· Find more episodes of HBR IdeaCast

· Discover 100 years of Harvard Business Review articles, case studies, podcasts, and more at HBR.org

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HBR On Strategy

Shifting Your Focus from Short-Term Efficiency to Long-Term Resilience

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

The Negative Consequences of Obsessive Efficiency

Efficiency and Inequality: A Complex Relationship

Moving Towards Resilience and Balance

Recommendations for Executives in Business and Management

Diversifying Purchases for a Resilient Economy

Pressure Leads to Pareto Distribution in Economic Systems

Remember Everything You Learn from Podcasts