Monday, June 11, 2007

Efficiency vs. Creativity – Part II

In my earlier post, I asked whether efficiency and creativity can co-exist. Now, I would like to give my opinions. I am no guru, though. I may be wrong.

While process excellence demands precision, consistency, and repetition, innovation calls for variation, failure, and serendipity.

In production line, precision, consistency and repetition of performance are all important. But variation and serendipity are essential in idea generation, and failure is unavoidable in R&D and new product marketing.

Customers demand that the products they purchase and the services they pay for to be reliable and consistent. Variation, however, may be acceptable to processes internal to a firm.

In Management Lite & Ezy 34, I mentioned that a company my adopt one of three strategies: low-cost, responsive or differentiation. I expect companies which compete on differentiation to stress creativity and innovation. On the other hand, efficiency may be the key to success for companies which compete on low cost or responsiveness.

Dell is an efficient company. It sold PC directly to customers via the telephone and later the Internet instead of going through retail stores or resellers. In its factory in Austin, Texas, a PC can be built, software installed, tested and packed in 8 hours! Its direct selling model and efficient assembly line allows Dell to mass-customize its products as well as cut cost in distribution.

Dell had been the number 1 PC maker for many years, but recently lost the top spot to HP. Some analysts attribute loss of Dell to changing market. According to NPD Group Inc., for example, the percentage of PC sales done via the phone and Internet fell and the shares of sales through retail stores rose, as people flocked to shops to fiddle with new gears such as digital music players, digital cameras, and slick laptops.

Dell may be efficient, but it lacks the innovativeness to adapt well to changing environment. In 2006, it spent less on R&D than Apple, despite being four times Apple’s size.

On the other hand, an innovative company needs efficiency to turn ideas into reality. Brown and Duguid, for example, noted that "great new ideas help only those organizations with the discipline and infrastructure needed to implement them."

Conclusion: I do believe that efficiency and creativity can co-exist. It fact, it takes creativity to devise an efficient business model, and it takes efficiency to implement great ideas. Getting the right mix of them, nonetheless, can be tricky.


Jay Heizer & Barry Render, “Operations Management”, 8th edition

John Seely Brown & Paul Duguid, "Creativity Versus Structure: A Useful Tension", MIT Sloan Management Review; Summer 2001

Louise Lee, “It’s Dell vs. The Dell Way”, BusinessWeek Online


  1. You are correct to say that efficiency and creativity is a constant balancing act. However, some of the sweeping statements and generalizations deserve a little more drilling down.

    I think as you watch this company transform over the next little while you may want to revisit creativity issues.

    For now, take a look at the XPS H2C or the XPS 2010, both category breakers, innovative and no one has anything like them.

    Its one thing to invest in industry standards and deliver innovative tech for customers so that we can work and communicate together.

    Its another thing to spend lots of "research" dollars to "innovate" to trap your customers and keep people tethered to a closed software and operating system.

    Just to say this is a complicated debate and one that I would not rely on erroneous reporting from Business Week for facts.

  2. Richard,
    Thanks for giving your comments. I do know Dell is adapting.

    I don't rely solely on the Business Week article. Neither do I rely solely on what you say. But now I have both sides of the story. I will take time to digest.

  3. appreciated and I understand...its just that business week story you cited is very flawed ;-) Happy to provide additional information, if needed