Tag Archives: when standardization is bad

Conventional Wisdom & Specialization

Conventional wisdom is an asset in so many situations that one can hardly do without it. After all, it “makes sense!” Or at least it seems to make sense… and it can speed-up consensus and increase our confidence in our decision making.

But in a dynamic world when the underlying assumptions shift, we conventional wisdom easily lead our organization to make some big
mistakes.

For example, conventional wisdom holds that specialization is good. A person can get very fast and reliable doing the same thing the same way again and again. The classic example is Henry Ford’s assembly line which broke the complex craft of auto assembly into a sequence of very specialized jobs that could be easily taught to the relatively unskilled labor on the assembly line. Assembly line efficiencies put automobile ownership in reach of a much larger portion of the country and made the benefits of specialization a part of our national business psyche.

Specialization is applied to many jobs today as well, such as dividing a call center into teams of specialists by type of call, or dividing incoming orders so that one person handles all of the especially complicated jobs, or conversely, the easiest tasks may be pruned off and assigned to a junior person to exclusively handle.

When the volume and nature of the work flow is predictable, specialization can increase both efficiency and quality. But when the quantity, timing, or nature of the demand for work is uncertain, specialization significantly reduces efficiency!

For example, when a service organization wanted to speed up throughput and reduce overtime costs for processing new account applications for clients in the Financial Services industry, they organized their processors into different groups to handle different clients. This enabled each processor to complete an account
set-up faster because they could easily memorize the steps and forms for their small group of clients.

Nonetheless, the efficiency of the operation as a whole declined substantially. Variation in the incoming volume resulted in one group being swamped one day and working overtime, while another group was very slow.

So the rule is: sequential specialization, like the assembly line, often speeds up the mastery and execution of the subset of work, but will also reduce the total throughput whenever there is variation in the amount of time that a step may take. Each hand-off is an opportunity for work to be waiting for a worker or for a worker to be waiting for
work. When variation is low, specialization can increase throughput, but if there is variation in incoming quality or in the amount of time needed to execute a step, specialization tends to reduce efficiencies of the operation as a whole.