Case in point for the last post:
A large Swiss bank, lately in the news because of 2 billion bonuses for the management while needing state help to the tune of 20 billion, actually had a good example of how stupidity scales: There was an improvement drive to "abbreviate more and only write department names in the short form, thus about 10 bytes per email and 100 bytes per memo. At (I do not really know how many people work there) lets say 20.000 employees and a lots of memos and mails per day, this saves Gigabytes of NAS and SAN storage and frees up at least one FTE in the IT department".
Yay. Can you spot the mistake?
Dienstag, 3. Februar 2009
The chinese worker problem, a process view
We all had these math quizzes when we went to elementary school - if 2 workers take one year to build a house, how long does it take 1000 workers to build a house?
And the answer of course is: forever, because they form a union and start fighting among each other.
But I digress.
We see much the same problem when modern consulting companies want to push something through management. Implementing workflow solution A will save everybody 10 minutes per day! At an estimated 220 working days/year, that is a whopping 4.5 working days per year!
Wheee... this means for every 220 / 4.5 = 49 staff you have, you can fire one -
if you have your average medium size mobile operator, you can now lay off 100 people and save millions. Bonuses go up everywhere, hearty handshakes for the consultants. Since the savings scale the bigger the company is, at Siemens or General Electric you could fire thousands and save billions.
Where it all falls down of course is that the numbers are bullshit. For one thing, they are impossible to measure. I can claim any number of minutes I could save...
And the answer of course is: forever, because they form a union and start fighting among each other.
But I digress.
We see much the same problem when modern consulting companies want to push something through management. Implementing workflow solution A will save everybody 10 minutes per day! At an estimated 220 working days/year, that is a whopping 4.5 working days per year!
Wheee... this means for every 220 / 4.5 = 49 staff you have, you can fire one -
if you have your average medium size mobile operator, you can now lay off 100 people and save millions. Bonuses go up everywhere, hearty handshakes for the consultants. Since the savings scale the bigger the company is, at Siemens or General Electric you could fire thousands and save billions.
Where it all falls down of course is that the numbers are bullshit. For one thing, they are impossible to measure. I can claim any number of minutes I could save...
- hey, if I have my own coffee machine on my desk I need not go to the kitchen any more, this saves at least 10 minutes per day
- we could increase reading speed for internal memos if we left out peoples first names. We could also use a lot of abbreviations.
- we can save about 10 seconds per person and meeting if we just say "hey, you" instead of peoples names. With an average meeting size of 10 people and 2 meetings per day, we can save even more than with a workflow program! and up with meetings of just 9 people!
You can see where this is going.
Economy of scale did not work as a business model in the Internet hype in 2000. It does not work in all processes, either - consultants beware, you need to look closer.
Furthermore, you need to be able to aggregate the time saved between people of similar skillsets, if you want to really cut down staff. Saving 10 minutes per day for widely divergent people and then randomly firing one is hurtful to the company.
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