The Efficiency Myth Killing Your Business

I’m worried that AI is removing our focus from what’s important. I promise I’m not anti-tech or some luddite wishing us back to the pencil and paper era. However, there’s a real issue here.

I keep hearing clients tell me that “using AI I can do [name your task] in 15 minutes when it used to take me 2 hours.” This sounds amazing, and in some instances, e.g. obtaining fast and accurate meeting notes, it is amazing.

However, there are loads of other jobs that we’d be better off eliminating rather than doing them faster, and this is my point. Are we all thinking hard enough about the difference between being efficient versus being effective?

On Friday, 14th August at 12:00 in my PFS Power webinar, The Efficiency Myth Killing Your Business, I’ll be looking at how you can avoid the potholes that the launch of new technology inevitably brings (super relevant in the AI era). You can register for it here.

Some research, which I came across in a Cal Newport blog, Why Hasn’t AI Made Work Easier?, looked at the digital activity of 164,000 workers at more than 1000 employers.

What did they discover?

“ActivTrak found AI intensified activity across nearly every category: The time [workers] spent on email, messaging and chat apps more than doubled, while their use of business-management tools, such as human-resources or accounting software, rose 94%.¹

What didn’t improve though, was what Cal refers to as deep work. What I’d describe as focused work on important problems that create value for clients and/or the business.

In the study, the amount of time spent on deep work actually fell by 9%.

This is a disaster for effectiveness. Simply working harder and faster is unlikely to make a material difference to your business and may actually decrease your quality of life. You just end up running faster on the treadmill wondering why things are not getting better.

I call this keeping yourself “fake busy.”

Do less, but better

If you want to succeed, and succeed faster, you need to work on the right projects (effectiveness), not simply do things faster (efficiency). In the words of Greg McKeown, author of Essentialism, “do less, but better.”

Let me illustrate with a financial planning example:

Firm A spends an intensive 3 month period on a project, streamlining their annual review process, because they realise that most people in the business spend most of their time doing things to retain and serve existing clients. It’s a worthy project.

However, by taking their time and thinking more deeply about the problem and not going after surface solutions, they realise that streamlining is not the real issue. The real issue is that the vast majority of clients don’t like receiving financial planning reports. It’s not an effective way to convey information.

So they build a process that uses a combination of video and email to deliver more accessible information in a format clients can consume and understand more easily.

This was a meaty project and they allocated significant chunks of time each week to meet and discuss their ideas and to move things along. This meant saying ‘no’ to other tasks that tried to make demands on their time.

The end result?

12 months later their referral rates have more than doubled and their time to produce information for clients has reduced by 50%.

External onlookers might mistake this for improved efficiency, but it wasn’t.

It was greater effectiveness, which they achieved by focusing on the real issue – how do we improve the client experience?

They ignored the industry noise which is currently all about how to write faster reports (efficiency).

Cal Newport has been studying and writing about digital tech and office work for a long time. Here’s the pattern he’s observed repeatedly:

• A new technology promises to speed up some annoying aspects of our jobs.
• Everyone gets excited about freeing up more time for deep work and leisure.
• We end up busier than before without producing more of the high-value output that actually moves the needle.²

He goes on to say, “The problem, I concluded, was that digital productivity tools sometimes speed up the wrong tasks, which might feel efficient in the moment, but lead us to accomplish less over time.” ³

So, what’s the solution?

In a follow up blog, Avoiding Digital Productivity Traps, Cal outlines three ideas, and I’m going to paraphrase them with some financial planning specific examples:

Idea #1: Use a Better Scoreboard

You’ve got to measure what matters. Which reminds me of the quote often attributed to Albert Einstein:

“Not everything that counts can be counted, and not everything that can be counted counts.”

When you set goals for the year or for the next quarter, make sure they are project type goals that are working on improving the inputs in your business. You don’t achieve your goals by focusing on the outputs, you do what’s necessary to change the inputs that will create the result you are chasing.

When you trial a new piece of software don’t get overly caught up in its impact on individual tasks (e.g. I can draft an email in 2 minutes instead of 15). Focus instead on your scoreboard. Are you making a change to the fundamentals of the business that will “make the boat go faster”?

Idea #2: Focus on the Right Bottlenecks

If you look at almost any process, you will realise that there is typically one bottleneck that determines the speed of throughput for the whole process.

For example, in many financial planning firms one bottleneck in onboarding a new client is the time it takes to prepare a financial planning report. There’s no point getting faster at any of the other steps in the process (e.g. attracting more on target leads). A backlog of reports will still be the determinant of your overall speed.

To be more productive, it’s the bottleneck in any process that you need to find a way to clear. So when evaluating new software you must always be asking, “What’s the problem we’re trying to solve?” and then seek out solutions that improve that specific bottleneck in your process, which may or may not involve new software or tech. Solve the “real issue.” (For example, in the report writing example, I’d prefer to eliminate them rather than write them faster)

Idea #3: Separate Deep from Shallow Work

The last idea is the simplest: proactively plan time in your daily and weekly calendar for deep work – work that is improving something in the way your business operates. These are typically projects that require time and deeper thinking over an extended period, but the pay back is massive.

By allocating time proactively, you are by default reducing the time you have available for shallow work tasks and so if some new software tool does end up increasing the volume of shallow work, you’ve limited the damage.

Conclusion

AI and technology are powerful tools, but only if we use them to work on the right things.

Efficiency is easy to chase; effectiveness is what actually moves the needle.

Let me know how you go.

On Friday, 14th August at 12:00 in my PFS Power webinar, The Efficiency Myth Killing Your Business, I’ll be looking at how you can avoid the potholes that the launch of new technology inevitably brings (super relevant in the AI era). You can register for it here.

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1,2,3 Why Hasn’t AI Made Work Easier?, by Cal Newport

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