Insanely hot

Some years ago, a senior person at a university where I then worked told me how he had met the then boss of Tesco, a supermarket chain that was at the time the doyen of British business. Breathlessly, he enthused about how each year they made 3% efficiency gains. That’s what we should be doing in universities, he declared. Do more with less!

I was reminded of this conversation because l came across a quote where, faced with declining performance, a subsequent Chief Executive of Tesco acknowledged that it had been “running too hot for two long”. What this means in ordinary language is that they did not have enough people to staff the tills and stack the shelves and, as a result, they are now taking on 8000 new staff. To put it another way – those efficiency savings turned out to be anything but efficient, and the business is now paying the price.

It is a pattern which can be seen repeatedly across both private and public sector organizations, reflecting the contested nature of what efficiency means, which is a major theme of my book (e.g. pp. 130-132). In the public sector, what often happens is that ‘efficiency’ means reducing costs in one budget only to find that they re-appear in another. To take just one of literally countless examples:

“A government deal with Applied Language Solutions (ALS) was supposed to cut £18m off the Ministry of Justice's (MoJ) bill for court translation services in England and Wales- around 23 per cent of the budget. But what was intended as a cost-cutting measure will cost the government thousands of pounds every day in delays and adjournments” (Channel 4 News, 2012).

It seems such an obvious point, evidenced by so many cases that one might have thought that the lesson would have been learned. But whilst on holiday last week I caught a TV show (I don’t recall the details, so can’t link to it) in which a panel of business leaders discussed the challenges facing the global economy. And what did they have to say? Well, it won’t be a surprise. That businesses in a globally competitive world had to become leaner, fitter and ever more efficient. In short, that they had to ‘run hotter’.

There is a quote usually, although possibly wrongly, attributed to Albert Einstein to the effect that the definition of insanity is doing the same thing over and over again and expecting a different result. It is a lesson our business leaders have yet to learn.