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[Management Behavior] Chapter 9: Standards for efficiency. Values ​​that exist other than money and time. It is not a management system that follows the previous year.


Roughly speaking

  1. Chapter 9 of Management Action. A story about efficiency that aims to achieve the value of an organization. The difficulty of thinking about things other than money and time.
  2. The difference in efficiency between for-profit organizations and non-profit organizations and public organizations. What are passive and positive values?
  3. Introducing four stages of element conversion in business analysis and examples of poor budget proposals.


Chapter 9: A story about efficiency.


This time, chapter 8. Communication and training. Click here for the table of contents for all articles.


This time, we'll be talking about efficiency. This is often said as a personal work technique, but I will write about the situation where the organization as a whole is pursuing efficiency. To think about efficiency, for-profit organizations, it is simple because they only need to measure money and time and consider the absolute best in implementing and maintaining output, but humans are not that simple. It's a feeling of mood, contribution to the organization, and more. Furthermore, things become more complicated with nonprofit organizations. This is because the organization cannot be maintained without money, but it is not conscious of money. Rather, it is important to know whether the organization's purpose is achieved in its original sense. Organizations seeking to decarbonize should measure their carbon emissions.



What are the definitions of efficiency differently between commercial organizations, non-profit organizations and public organizations?


According to Simon, efficiency changes depending on the organization. For commercial organizations, the following is the case:

In the case of commercial organizations, efficiency is measured by the passive value of time and money. When making decisions, you just need to choose the one with the best output/input ratio of options.

On the other hand, public and non-profit organizations are as follows:

In the case of non-profit or public organizations, it is more important to know whether the organization's own objectives are achieved rather than money or time. This is called positive value. Is it fair, especially when public organizations have a structure-neutral management or distribute ownership? Such problems arise.

So, if it's a commercial organization, should we just pursue money and time? That's not the case. The production/input ratio as a human is also determined by the satisfaction and benefits. It's good to calculate your final results in time and money, but looking at money alone could lead to miss out on potential future profits. Even for commercial organizations, it is important to set appropriate organizational objectives.


There are some things to be careful about when judging options while being considerate of efficiency. I previously wrote that the options are determined by the production/input ratio, but unfortunately, this is not a natural science, so the correlation between production and input is not constant. In natural science, based on the absolute law of energy conservation, it is possible to calculate how much input is necessary to produce. On the other hand, even if you can approximate your options, it is not possible to accurately measure them. Please note that this is only a relative evaluation with other options.



Four stages of element conversion in business analysis and examples of poor budget proposals


How should management decisions and results be converted into factors to actually measure efficiency? Simon carefully organizes the four elements of the management organization: element conversion.



To measure the achievement of organizational objectives in management, the following factors need to be checked: It involves establishing advertising effects and system construction that support the achievement of the objectives, checking the performance of research and sales, checking the amount of effort being put into place, and even checking the amount of passive value costs of money and time. The most difficult of these is to confirm the various factors in management execution. There is a need to multivariate analysis of key elements to achieve organizational objectives. It is a product of what is often called KPI management.


During the strategy to distribute Yahoo! BB modems for free, SoftBank's Masayoshi Son optimized the results by conducting multivariate analysis of where, how much, and who would distribute them. He even told me to leave those who are close aides that cannot be multivariately analyzed. The ability to set KPIs is important, but it is also necessary to measure the contribution level. Therefore, multivariate analysis should be performed in Excel. For more information, please read the book "Amazing "digitalization" work techniques that were sought by President Son" below, as I'm familiar with it. Multivariate analysis can be done in Excel.




What is the bad budget proposal pattern?

A bad budget proposal is a situation where the organizational purpose settings are reversed. The basic principle is to set the organization's purpose and break down what is needed to do so, but it is likely that bad practices such as following the previous year are infested with large companies and public organizations. Simon points out the following four patterns of budget proposals:


  1. Reverse from your salary and duties.
  2. Justify the previous year's budget.
  3. Restrictions are made by externalities such as elections and factional struggles.
  4. Personal selfishness enters.

It is also important to note that there are things that are likely to be justified when preparing a budget. White-collar staff reductions are a great example. They are the key to business planning, so people with important abilities need to be left in the organization, but it is often a capable person to quit early and incompetent people tend to remain. As an organization as a whole, we should not choose to casually cut white colours as it will have a significant negative impact on long-term production.


However, in reality, white-collar staff reductions are progressing in Japan, which could lead to social unrest in the era of major unemployment. Another article was written in connection with Stalin and Hitler during his great unemployment period., so if you're interested, please read this.



Aside (Gonjicchi memo)


I write notes for each chapter using iPad Pro and Apple Pencil. This time it's not an e-book, but it has around 550 pages, making it inconvenient to carry around. If you make a note of it on your tablet, you can do it on your smartphone when you review it later.