Efficiency: Are We Optimising Ourselves Out of Advantage?

Efficiency. The golden ideal of modern business. From Henry Ford's assembly line to today's process automation, the pursuit of “doing more with less” has been the compass guiding companies for generations. But here’s the paradox: what happens when the relentless drive for efficiency becomes the very thing that undermines long-term success?

This isn’t a critique of efficiency itself—streamlining operations, reducing waste, and improving productivity are undeniably valuable. Rather, the question worth asking is: at what point does the pursuit of efficiency start to erode resilience, innovation, and, ultimately, competitive advantage?

Consider supply chains. Over the past few decades, businesses have embraced globalisation and just-in-time (JIT) manufacturing—a strategy designed to minimise inventory costs and maximise cash flow. On paper, it’s brilliant. Why hold warehouses full of parts when you can have them delivered exactly when you need them? Why not outsource production to regions with lower labour costs and fewer regulations?

The answer came crashing down in 2020. Global supply chains, optimised to the point of fragility, failed spectacularly under the pressure of a pandemic. Companies that had prioritised efficiency over redundancy found themselves paralysed, unable to meet demand. The very systems designed to save money ended up costing billions.

This isn’t the first time efficiency has backfired. In 2008, the financial crisis revealed how over-leveraged banks—operating lean, highly optimised balance sheets—were ill-equipped to absorb shocks. And before that, in the early 2000s, the collapse of dot-com companies highlighted the fragility of business models built on razor-thin margins and excessive reliance on external funding.

Efficiency, it seems, often comes at the cost of adaptability. By stripping away “waste,” businesses also strip away their buffers—their ability to weather the unexpected.

Redundancy is a dirty word in the efficiency-obsessed world of business. It implies waste, excess, and inefficiency. But redundancy, in the right context, is resilience. It’s having extra capacity when demand surges unexpectedly. It’s maintaining local production capabilities, even if they’re more expensive, to ensure continuity during a geopolitical crisis. It’s building systems that can fail gracefully rather than catastrophically.

Nature offers a compelling analogy. Human bodies carry around spare capacity in the form of extra organs, fat reserves, and even duplicate systems like kidneys. It’s inefficient in the strictest sense—most of the time, we don’t need two kidneys. But when one fails, the redundancy is life-saving.

Businesses, too, need this kind of redundancy. Amazon, for instance, famously maintains excess warehouse capacity during most of the year, knowing it will pay off during the holiday season. Tesla, despite its reputation for innovation, has invested heavily in vertical integration—producing its own batteries and chips to reduce reliance on external suppliers. These strategies aren’t efficient in the short term, but they create resilience in the long term.

There’s another tension at play here: the difference between efficiency and effectiveness. Efficiency is about doing things right—minimising inputs, maximising outputs. Effectiveness, on the other hand, is about doing the right things—achieving meaningful outcomes, even if the process is messy or costly.

Think of Apple’s product launches. The company could undoubtedly save millions by cutting back on the theatrics—the meticulously designed keynotes, the polished advertising campaigns, the obsessive attention to packaging. None of these things are “efficient.” But they are effective. They create anticipation, build brand loyalty, and drive sales. In Apple’s world, effectiveness trumps efficiency every time.

Or take Pixar. The animation studio is notorious for its iterative, time-consuming creative process. Films are rewritten, reanimated, and re-edited countless times before release. By efficiency standards, this is madness. By effectiveness standards, it’s genius. The result is a string of critically acclaimed, commercially successful films that have defined a generation.

This isn’t a call to abandon efficiency. Instead, it’s an invitation to rethink it. What if businesses could balance efficiency with resilience, redundancy, and effectiveness? What if the trade-off between short-term cost savings and long-term adaptability wasn’t a trade-off at all?

Some companies are already exploring this “third way.” Take Toyota, the pioneer of just-in-time manufacturing. After the 2011 Fukushima disaster disrupted its supply chain, Toyota re-evaluated its approach. It now maintains higher inventories of critical components and works closely with suppliers to ensure mutual resilience. The system is still efficient, but it’s no longer brittle.

Similarly, Unilever has adopted a “multi-local” manufacturing strategy, producing goods closer to the markets they serve. This reduces reliance on global supply chains, cuts emissions, and builds goodwill with local communities. It’s a model that prioritises effectiveness—meeting consumer needs sustainably—over pure efficiency.

The obsession with efficiency has brought us incredible progress. It’s given us affordable goods, faster services, and unprecedented convenience. But it’s also made us vulnerable—fragile in the face of uncertainty, unprepared for the unforeseen.

So, as we optimise our businesses, our systems, and even our lives, perhaps the question isn’t “How can we be more efficient?” but rather, “What are we optimising for?”

Are we building systems that thrive only under ideal conditions, or ones that can also adapt and endure? Are we chasing short-term gains at the expense of long-term sustainability?

Most importantly, are we willing to sacrifice a little efficiency today to create a world that’s more resilient, more effective, and more human tomorrow?

The answers lie not in the pursuit of perfection, but in the acceptance of paradox.

Efficiency and resilience.

Redundancy and adaptability.

The right things and the right way.

Can we find the balance—before the next shock forces us to?

Ready to embrace the paradoxes holding back your organisation? Let’s talk.