Lexington, KY - Most organizations are obsessed with efficiency and productivity. These issues are at the very essence of competitive advantage in most mature industries. We will talk about young industries later, but let's first consider the efficiency of an organization that is mature.
Clearly, we all know (yes, we do) that efficiency is simply output divided by input. For example, in a mature cow, the amount of manure produced per unit of input is its efficiency. So now let's get serious and start with an axiom: You have to feed a cow, or else there will be no manure.
So, for the first law: Feed a cow if you want manure. (Even before the first law, of course, you need to get a cow.)
The more you feed a cow, the more it should produce. Of course, if you overfeed it, the cow may develop complications, and that's not good.
So, for the second law: Do not keep feeding a cow.
Now, do you know what to do with the manure? If you do, that's good. Do you know what to do with all of it? What if you could get some more; do you know what to do with that? And how about even more than that? You get the drift.
So, for the third law: Do not try to get more manure than you know what to do with.
A corollary of the third law is this: Feed the cow how much it takes to get you the manure that you can handle - no more, and no less.
Assuming we have enough manure, it is time to look over the fence. What do we see? Lots more heaps. The neighbor's cow is more productive. So should you feed your cow more?
The third law comes to the rescue in answering this question. Do not envy your neighbor's manure until you know what to do with it.
The neighbor uses less feed than you do. So, what's up? Well actually, it is his cow that uses less feed. Now you have to really worry, as the immutable and unnamed natural law kicks in: He who is more efficient gets more orders, and he who isn't, gets more disorder. (Incidentally, this follows from the second law of thermodynamics that entropy, or disorder, will always increase. But that is getting too technical for this conversation, so let's get back to cows and manure.)
What's wrong with your cow? Let's explore some possibilities. Is your neighbor adding something to the hay that you are not?
Fourth law: Hidden inputs can mask efficiencies. It is the technology, stupid!
Or, do you have a different breed?
Fifth law: A Longhorn does what a Longhorn does, but a Jersey does not.
And so now you hear another call: "Honey, does the cow have milk today?" Oops, you forgot. What you really wanted was milk, and you were competing all this time on manure.
That leads us to the sixth law, a very old one: You get what you measure. In this case, it happened to be manure.
So what did we learn? Make sure you have the right objective, the right cow for comparison and the right feed (or input), and make sure you are feeding the right cow the right way for the right reasons. And, of course, always listen to your honey caller.
We should not have more laws than commandments, so let's stop here for now, ending with the seventh law as some final food for thought.
All that smells is not manure. That odor you are picking up might be your assumptions. And last, but not least: If you want to win a race, make sure you've got a Thoroughbred.
D. Sudharshan is the dean of the Gatton College of Business and Economics at the University of Kentucky.