I love Rube Goldberg Machines — those inefficient systems, full of convoluted twists and turns that use chain reactions to complete simple tasks.
In one of my favorite examples, a tipped milk bottle releases a sword, which cuts a rope that drops a guillotine, which releases a battering ram to swing a door that wields a grass sickle while disturbing a hawk, which drops a boot that stomps on the head of an octopus, whose tentacles squeeze an orange to produce a single glass of freshly squeezed orange juice. These cartoons can give us a good laugh, but to model a business in this gratuitously complicated way would be akin to planning to fail.
Efficient, uniform operations are table stakes in the modern business environment. We rely on carefully crafted systems, policies, and procedures to reduce the cost of doing business and ensure a consistent experience for customers.
Having perfectly designed and executed operations is an impossible goal, but it is one we must continue to strive for. The barbarians of entropy are ever at the gate.
So while no one would set out to emulate Rube Goldberg’s creations while designing business systems, as regulations and industry standards have changed, complicated twists and turns enter our operations anyway.
It’s hard enough to keep operations efficient inside a company, but new regulations can present special challenges. As new constraints are introduced, systems are adapted to allow the business to continue functioning. At some point, a firm needs to decide whether respond to new regulations piecemeal, without considering how each small change may impact the larger system over time, or whether it’s time to implement a systemic overhaul to maintain operational integrity. While such overhauls can be daunting, the proactive route can pay off.
The long-term benefits of investment in system overhaul may not seem obvious, especially with federal environmental legislation proving elusive in recent years. When you don’t know what the rules are going to be, doesn’t it make sense to hold off on pushing through any major changes? In fact, the reverse is true: With more laws being enacted at the state and local level, the greater the operational complexity they introduce when your approach is a reactive one. Even as federal efforts such as a national Cap and Trade program have stalled, for instance, states and cities are introducing new rules of their own: Four states are currently implementing organic waste diversion programs and Los Angeles has just implemented a plastic bag ban. Regional legislative differences like these can wreak havoc on a firm’s systems.
I see this firsthand in my work dealing with waste hauling and recycling programs in the retail grocery industry. When a state or municipality enacts legislation that requires the diversion of specific materials from the waste sent to landfills, it typically impacts a small portion of a firm’s locations. The leaders in charge of that region naturally look for the simplest operational exception that will satisfy the regulatory requirement, but may not consider the big-picture impacts of the changes. The solution might be idiosyncratic and inefficient, but it’s accepted as a cost of doing business.
Thus, the first twist is added to the machine.
Before long, a neighboring city gets wind of the program and enacts similar legislation. Different operating groups deploy a variety of exceptions as new regulations are deployed with differing requirements, and local service providers may be unable to provide preferred solutions, forcing additional exceptions into a firm’s systems. The answers are suboptimal, but viewed at the level of the problems they seem acceptable and inevitable.
Soon, more twists and turns are folded in to the company’s operations.
Depending on the size and scope of your business, you may face a continual stream of new regulations. After a few years, your operations may start to resemble OK Go’s music video for the song “This Too Shall Pass:”
By reacting to regulatory changes one by one, rather than holistically integrating sustainable business practices, organizations incur losses where opportunities for gains exist. Tackling these changes independently may make sense in a vacuum, but as they accumulate you’ll quickly reach a tipping point at which continuing to create additional exceptions is not a wise business decision. When you find yourself at this crossroads, a systems thinking approach can help reframe the exceptions and provide perspective from which a better path appears.
When regulations start piling up, take a look at the constraints collectively. Many of them will likely be similar, but there may be others that are more stringent. Once you understand the limitations, you can start brainstorming solutions that will satisfy requirements across the entire firm. Done properly, you might even give yourself a bit of headroom to obviate the need to respond to subsequent legislation. When you’re able to implement systems that are ahead of regulatory requirements, your team will be able to focus on operating the business.
Where I have seen the destructive effect of the reactionary approach, I have also quite clearly seen untapped opportunity. Implementing an integrated sustainability program often allows businesses to turn costs in to revenues, while reducing related risks. By staying ahead of the curve, you’ll track regulatory changes to ensure you’re already in compliance, rather than having to alter your business in response to each new piece of legislation, keeping operations streamlined and uniform.
If you stick with the reactive approach, however, you will eventually make a gauntlet out of processes that otherwise could be simple and straightforward.
A real Rube Goldberg Machine might only be run once before it’s dismantled, as it takes a great deal of effort to set it up and tune it for a successful run. That’s the magic of it: In building the machine, you are taking part in a flight of fancy. Businesses, however, cannot thrive on the basis of such whimsy.
Fortunately, leaders who opt for the proactive approach can stay ahead of the game.
Imagine that the next time a harried colleague asks you, “How are we going to deal with this new rule?” you can respond that you are aware of the upcoming changes, and that your operations already exceed the new requirements. Wouldn’t that be nice?
This post first appeared on the HBR blog on January 16, 2014.