Flow Awareness = Flow Efficiency 🌀

Resource Efficiency and Flow Efficiency are two different operations strategies. 👇🏽

▶️ One focuses on maximising the utilisation of individual resources, and the other focuses on maximising the value delivered to customers.

▶️ One aims at reducing resources' idle time, keeping them 100% busy. The other ensures that flow units are constantly moving, minimising the waiting time for customers.

▶️ One focuses on assigning work to people to keep them busy. The other focuses on attaching people to work so that each flow unit receives continuous attention.

▶️ One often results in large work-in-progress inventories. The other strives to control WIP to ensure smooth flow.

▶️ One measures success by the percentage of resource utilisation and volume of outputs. The other measures success by the speed and quality of outcomes.

❗Neither is right or wrong. The optimal strategy is contextual and depends on the cost of delay in satisfying customers' needs.

✈️ Ryanair, for instance, embodies the resource efficiency paradigm: They use their aeroplanes to a greater extent than other airlines by "keeping them in the air". However, this comes at the cost of longer waiting times for customers. Customers take off and land at airports in remote locations and are forced to spend a lot of time waiting. Ryanair clearly focuses on the operational objective of ensuring resource efficiency, and it has been very successful in this.

In contrast, fire departments are a clear (and extreme) example of the flow efficiency paradigm: They always have available capacity and keep expensive resources on standby, ready to move at a moment's notice. No cost is spared to minimise response time. Why? Their cost of delay is measured in properties destroyed or even human lives lost 💔.

This highlights the importance of choosing the proper efficiency strategy based on the specific context and consequences of delays.

In Digital, it usually makes more sense to favour the efficiency in which flow units move from a 'need identified' to a 'need satisfied'.

That is a strategic decision that executive leadership teams should be discussing, intentionally and proactively. By being oblivious to it, they are doing a disservice to the organisation and failing to prepare it for the brutal disruptions of the decade ahead.

I wish there were a stronger sense of urgency on the topic among leadership teams across the board.

💬 Is that discussion happening at your workplace? If not, should it be? 🤔