The current COVID-19 driven global healthcare crisis, the eventual impact of which is not yet within sight, calls for collective sense making. Beyond the immediate solutions for now, we also have to assess what the aftermath of this crisis might look like. This means rethinking our perception of “redundancy”.
An article co-authored by Profs. Tanusree Jain, Trinity Business School, Concepción Galdón, IE Business School, Mario Aquino Alves, FGV-EAESP, Adrian Zicari, ESSEC Business School. See links to the French and Spanish versions of this article below.
Time to think and re-think
Rethinking “redundancy”. As a modern society, the destination that we have hoped to reach for decades now is one where business develops in a sustainable manner while also contributing to creating a world that is socially, economically and environmentally just and balanced.
And yet, we now find ourselves at a destination that none of us chose––a global pandemic with over 275,000 deaths worldwide, more than a quarter of a billion people on the brink of starvation, a handful of corporations owning much of our data and therefore our world, a human-induced climate threat largely attributed to corporate activity, and a sharp and unprecedented decrease in global economic activity with incalculable impact on companies and households. Rethinking “redundancy”
In a way, the COVID-19 pandemic has unravelled the dangerous impact of our cumulative decisions in conducting business as usual. Amidst this, the question that reverberates is “how did we get here”? And, more importantly, “how do we get back on track?”
Efficiency with Efficacy
As professors in management, we believe that the concepts of efficiency and efficacy provide one such lens to reflect upon the state of our world.
‘Efficiency’ can be described as doing more with less, or put another way, achieving more outputs with the same (or fewer!) inputs. Efficacy, on the other hand, is more strategic as it relates to achieving specific objectives. In other words, efficacy can be understood as arriving at one’s destination––let’s say the state of sustainable development––and efficiency is about reaching that state earlier or at a lower cost.
During the last few decades, we have directed our collective efforts towards achieving rising GDP at national level with consistent emphasis on increasing revenues and profitability at firm level, while creating global and national institutions that work to make this possible.
As a society, we assumed that a relentless focus on growth would increase per capita disposable incomes and solve all of our societal problems. All we needed to do was get there as efficiently as possible – meaning a concerted effort to reduce slack, create leaner structures, outsource and expand our global supply chains, standardize, automatize, and replicate.
Exploring Alternative Scenarios
Embedded within this approach of efficiency, there has been an overoptimistic lack of consideration for alternative scenarios. We took for granted that, notwithstanding financial crises and epidemics, the scenario of a general growth pattern worldwide was the holy grail.
As such, there was no point in thinking about other possibilities, and worse, to invest resources in preparedness. Indeed, the popularity of total quality management systems was based on the idea of streamlining. Accordingly, simply keeping assets aside for an unlikely eventuality would be against the very idea of efficiency. As such, it may be to to rethink redundancy.
We argue that glorifying efficiency has greatly contributed to the health crisis we are facing today. Rethinking “redundancy”
Some of the most advanced countries in the world are struggling to produce low-technology products such as masks because it was cheaper to have them imported. In struggling to be efficient, nations disregarded the immense expected value of having essential capacities available when needed or, conversely, the terrible cost of their absence.
Countries with the best medical schools did not prepare enough doctors and even fewer trained in public health and health policies, sometimes with the rationale that limiting the number of physicians would reduce healthcare costs.
And when the surge of outpatient care left available capacity in hospitals, this capacity has rarely been kept in reserve. In a much understandable effort to contain increasing healthcare costs, most countries chose not to have slack resources. Rethinking “redundancy”
As such, we increased efficiency by making redundancies redundant, and we forgot efficacy in the meantime. Now we realise that we arrived faster and cheaper at a wrong destination.
The Importance of Redundancy
With hindsight, we propose that business systems could be made more resilient to external shocks with proper ‘redundancy’ planning. Interestingly, the original sense of the word “redundancy” was understood as “the quality of containing additional parts that will make a system work if other parts fail”. Rethinking “redundancy”
In a curious linguistic twist, we now think of “redundancy” as an unwelcome excess, an excrescence to get rid of, as in a “redundancy plan”. As we have witnessed, that lack of redundancy has exposed several firms to disrupted production lines due to shortages in essential raw materials. The result – an extremely precarious healthcare crisis with hospitals lacking basic life-saving resources both human and physical.
We are not suggesting we forget efficiency altogether. We maintain that efficiency remains important and there is indeed a moral case for using resources as efficiently as possible. We all want trains to arrive on time, the cash collection cycle to shorten, and performance parameters to improve.
But, we suggest that the path to our fabled destination of sustainable development is not linear and hence cannot be attained without maintaining some redundancy.
- Read this article in its French and Spanish versions.
- Link up with Professors Tanusree Jain, Concepción Galdón, Mario Aquino Alves and Adrian Zicari via LinkedIn
- Discover and study at the CoBS alliance schools Trinity Business School (Ireland), IE Business School (Spain), FGV-EAESP (Brazil), ESSEC Business School (France, Singapore, Morocco).
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