Austerity versus efficiency

Pioneer UAV USMC
Pioneer UAV USMC. Image via Wikipedia

Nowadays the competitive key factor seems to be austerity. I have been always a strong defender of austerity, because austerity forges character. But can be austerity a driver of economy? Obviously, this assertion should be analyzed in deep.

I prefer to consider austerity as a strategic decision of the company that can be added to its values. It will depend on the vision of the company and the environment if the directorate must incorporate it.

Aristotle thought that the shepherd peoples were good for war, because they were accustomed to cross valleys and mountains and to support cold weather and starvation. Austerity is a way that an enterprise can use to focus a strongly competitive market situation because it makes a stronger company, but there can be other ones. Today we know that spending money in manufacturing drones can be more effective (and even more efficient) than a group of soldiers accustomed to endure hardships.

In traditional competitive strategy, austerity is related to establish a cost strategy, although we know that management can select other strategies to compete in the market. We select a strategy in function of many variables, and one of them is the available resources. If our resources are very limited other options can have been discarded. This strategy can be to change a technology for a less expensive one, or to substitute entropic tasks with personnel for modern technology.

In terms of complexity, austerity is given us a more resilient company, that can be as easily adaptable to unknown and difficult competitive situations as Aristotle’s shepherd peoples to war situations.

On the other hand, efficiency is not related to a strategic decision. Efficiency is a variable to measure the performance of a process. Although we do not follow a cost strategy, to optimize the cost of a process must be a driver of the managing work.

If terms of complexity efficiency is reducing entropy and then, it is providing a more resilient company too.

Austerity is a strategic term, and efficiency is an operative term. To implant austerity depends on the policy of the directorate, but the search for efficiency does not depend on it. When we are talking about reduce complexity, sometimes we can think in be more austere, but we always think in be more efficient.

I have used the term policy in its strategic sense. Of course, political parties have its own concept of the best policies to govern a society, but in a strategic sense policies are selected depending on the competitive forces of the environment, and they must not be selected depending on the beliefs of a group of people that feel themselves in possession of an absolute truth.

For instance, if a company has a more restricted credit, it will need to think seriously about austerity policies. It is important to notice that austerity does not imply to reduce the expenses in innovation, it implies to select new projects where we must apply innovation investments, we will need to focus innovation on developing a reduction cost strategy.


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