This document discusses running an agile Fortune 500 company and presents a model for understanding employee output that is more accurate than simply measuring productivity, efficiency, and utilization. The model proposes that output is determined by the interaction of multiple factors: capability, innovation and learning, synergy between groups, efficiency, and utilization of time. It argues this model better captures how knowledge work outputs are determined compared to traditional managerial approaches that focus only on measuring tasks against planned hours.

1. “Running an Agile Fortune 500 Company”
Aditya Yadav, aditya.yadav@gmail.com
in.linkedin.com/in/adityayadav76
*

2. *
*A Typical Global Company
*Fortune 500/1000
*200 Divisions
*40 Countries
*25000 Employees

3. @ Acme Inc.
*

4. *
*Original Question “Our Managers Should Focus
On Productivity & Efficiency…”
*The Correct Question - “ *no comments* Allow
me to tell you a story.”

5. And The Philosophy Behind The Answer
*

6. *
* Managers are obviously obsessed with Cost Cutting
* But across every organization I can see they are Obsessed with Employee Productivity,
Efficiency etc.
* And nobody gives it a deeper thought than just using the terms Efficiency, Productivity,
Utilization, Cost interchangeably and in the same sentence to mean one and the same
thing.
* It seems All managers in the world agree that Work needs to be broken down into tasks
which need to be monitored and measured. So they assign „x‟ „planned‟ hours to a task
and measure the „actual‟ hours „y‟ taken to do it. Obviously Productivity = Efficiency =
Utilization = 1/Cost = ratio(x,y)
* And then Managers across the organization(s) spend a lot of time benchmarking,
comparing, blaming everyone else.
* This is so ingrained in the Managerial Psyche that we need atleast a better
understanding if not a complete demolition of these concepts as they exist today.
* For our purpose, lets us call the Aggregate Result of Employee Effort as Output
* Allow me to build a parameterized Model which is closer to Reality and Data
* Which will also show how Abstract and Poor this Managerial Obsession is and how far
from reality it is even within the Model.

7. *
* If Utilization = Usage / Capacity
* Then Efficiency = Output / Usage
* Allow me to exemplify
* If you could work 40 hours but rather work just 30 then your
Utilization is 30/40 = 0.75 (or 75%)
* Within 30 hours which you work if you do 50 hours worth of work
then your Efficiency is 50/30 = 1.67
* And the simplest answer for Output would be f(Utilization *
Efficiency) = f(1.25)
* We have not come very far but even this model is a lot better than
measuring ratio(x,y)
* This model would work if you were in Manufacturing or if you were
lifting stones from A to B, but atleast not in The Knowledge Work
Industry

8. *

9. *
*Ok! Now we have Efficiency and Utilization
sorted out in the Context of Knowledge Work
and other things other than Manual Labor
*Some people and teams simply do more, so we
have to multiple our formula in the model w/
Capability Value or Capability Index
*So we have
*Output = Capability * Efficiency * Utilization

10. *
* Things like Resources, Tools, Automation etc. impact the
output considerably so we need to accommodate for that
* Also we know from Empirical Data that the Best Employees
deliver 100x compared to Mediocre Employees
* And we have seen earlier that what separates Geniuses from
Regular People is Learning and Learning How To Learn
* We include all of the above into one factor called IAL
(Innovation & Learning) which empirically has even gone upto
100 in some cases.
* So we have
* Output = Capability * IAL * Efficiency * Utilization

11. *
*In a lot of models usually there is a parameter
which is more abstract than others
*In our case we call this Synergy, the factor that
explodes outputs in Groups & Teams under
some favorable conditions
*So we have
*Output = Capability * IAL * Synergy * Efficiency
* Utilization

12. *
*If you think I‟m out of Whack here…
*Then the Productivity = Efficiency = 1/Cost =
Utilization obsession doesn‟t make our Managers
very Sane Either
*At least this 5 parameter model is closer to reality
*Though it can be and I have applied it
scientifically…
*Even as a Mental Model it is a great model
compared to what Managers use…

13. *
Aditya!!!