Moving from efficiency to effectiveness using adaptive systems thinking

by Matthew Moore on 22nd June 2009

Doing things efficiently is pointless if they are the wrong things. Here, we interview Keivan Zokaei of the Lean Enterprise Research Centre about how the best organisations, such as Toyota and Tesco, are adaptive to the market's needs whilst maintaining both quality and efficiency within their business processes.

After completing a degree in polymer engineering, Keivan Zokaei began to take an interest in management issues, which saw him take a post-graduate business degree. Discovering Lean and sustainability whilst researching his dissertation, Keivan subsequently began working at the Lean Enterprise Research Centre (LERC) with Professor Daniel T. Jones.

During his five years at LERC he has had the opportunity of working with many of today’s foremost business thought leaders such as Dan Jones, John Bricheno, Peter Hines, John Seddon and many others, and has completed a PhD.

Keivan’s role now is to direct an MSc in Lean Operations Management for service industry. His main area of interest is applications in the service industry and also Supply Chain Management. As part of his role he has worked with companies such as Unilever and some large automotive companies by training executives and continuous improvement managers.

During your time at LERC, how would you say management thinking has evolved?

Thinking has changed from efficiency-focused paradigms to being effectiveness-focused. Efficiency is doing things right and effectiveness is doing the right thing. There are many companies that are “doing the wrong thing righter”. I don't think we have to move on from Lean, on the contrary I think lean thinking and the lean community are fundamental to this paradigm shift.

We recently completed research in the area of effective vs. efficient management. For example, in the Fast Moving Consumer Group industry and retail we learnt that there are a lot of fairly efficient supply chains. We mapped 33 different supply chains, end to end and in detail; I took a sample of 23 of these chains and found out that 19 of them, although being very efficient, are completely ineffective. Some of these chains are doing things along the chain (at several points) that are meeting targets in terms of efficiency, but which are completely disconnected from what the customers want. As such it's easy to make silly mistakes because there are targets which completely disregard the customer.

We have to advance our lean management very quickly and continuously adapt, which is what Toyota and other very good companies do. Toyota do standardise their processes, but they are also looking to make everything adaptive and agile if you like. So on the one hand this sounds contradictory but in fact it's not: standarisation is there to make sure they deliver improvement very flexibly. That's the nature of good continuous improvement and that is why we have to move away from the rigid / tools focused paradigms of the past.

You have to be able to adapt and react quickly, ahead of the competition.

And that's where innovation comes in?

Absolutely, its all about innovation. At the same time you need to be like Toyota. Steven Spear recently published a new book called "Chasing the Rabbit" where he talks about his experiences with Toyota and other companies and he talks about why they are ahead of the game. It is the nature of their adaptive continuous improvement. This is a very good book that I recommend.

They standardise everything because unless you standardise it, you cannot be sure that the best improvement will stick. That ensures that they don't get into the trap of 'thinking tools'; they think systems and that's the difference.

They are moving into systems thinking?

Yes. I think systems thinking is where effectiveness and efficiency converge together.

How do you define the system? Where does it begin and where does it end?

Interviewee Name: Keivan Zokaei

Interviewee Company: Lean Enterprise Research Centre

Interviewer Name: Matt Moore