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July 2006
August 2006

2006-07-13 »

Optimizing for Productivity

I was reading in the aforementioned Good to Great about different "great" companies and their way of reducing their vision to a single "hedgehog concept," which has various useful boring attributes that I won't go into right now, as well as one more that I will: an optimization goal, which they call the "key denominator." Basically, to be maximally financially successful, a company needs to optimize its operations for the best ratio of profit to something.

Some companies use things like "most profit per store" or "most profit per product line." They talked about a bank in the U.S., which optimized its operations for "most profit per employee" when banks became deregulated. The most obvious way to do this is to reduce the number of employees and/or otherwise chop your HR costs, but in a world where banks are suddenly not protected monopolies anymore, that might be the only thing you can do.

That particular optimization goal got me thinking. I don't really like big companies very much. Once they get too big, they get annoying because it's hard to keep track of everyone and there are always some stupid people. So optimizing a new company in terms of profit per employee - which isn't nearly so painful in a company with no initial employees as it is when you'd have to lay off a bunch of people - might be quite entertaining.

And then I thought, wait, that's not quite it. You can increase profit per employee by simply making your employees work longer hours and paying them less, which isn't really what I want. Okay, so I work really long hours, but that's just me, and it's still sort of cheating; it makes me look more productive but I'm only producing more, not producing more per hour. If I was really smart, I would be able to produce more per hour than the next guy. If I also work more hours, well, great, but that's just a bonus.

And so that's it. We want the smartest, most productive people around, and the people we get, we want to make even smarter and more productive. So why not maximize profit per man-hour? Why not do it all the way across the company, and why not help your customers do it too?

In other words, laziness, impatience, and hubris. It's not just for programmers anymore!

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