efficiency – understand-culture

Pareto

The Pareto principle: Also known as the 80-20 rule, stating that in many situations approximately 80% of the effects come from 20% of the causes.

Vilfredo Pareto, an Italian economist, documented in the early 1900s that 80% of the land in Italy was owned by 20% of the population. Pareto went on to observe that 20% of the pea pods in his garden contained 80% of the peas. It has become a common rule of thumb in business that 80% of sales come from 20% of clients.

The 80-20 rule could be a metaphor about the American approach to many things, or at least about an element or aspect of the Americans approach. Americans tend not to be perfectionists. Not because they do not recognize and honor striving for the best. But because in many cases attaining, reaching, accomplishing that extra 5% is in many cases “simply not worth it”.

Worth. Value. Does the customer want that extra degree of engineering excellence? Is it necessary to calculate that many digits behind the decimal point? Is that depth of analysis necessary in order to make a decision?

80% is often enough. For Americans, depending on the situation, 60% is enough. Depending on the risk-benefit relationship, even less is enough.

Food and obesity

Despite the fact that over 30% of Americans are considered obese, they continue to expect and consume very large portions of food. This is part of a culture that glorifies and celebrates things that are large. Large homes, large cars, and large food portions are made possible by America’s abundant wealth and natural resources and celebrated as a key aspect of American culture. Bigger is better.

McDonald’s revolutionized the restaurant sector by applying an assembly line model to their hamburger restaurant. This process produces food of predictable quality in an efficient manner. In order to be profitable, non-fast food chains like the Cheesecake Factory must quickly produce food products of predictable quality without wasting ingredients or resources such as water and electricity. These restaurants have set up processes that rely upon training low-skilled workers how to create high-quality products by following strict processes.

„Bigger is better“: Many travelers have noted that American food portion sizes are much larger than portions in other countries in Europe and Asia. A medium sized drink or meal in America is the equivalent of a large in many Asian or European countries. Mainstream America tends to value size and price over the quality of a food product. Most fast food chains give customers the option of super-sizing a meal for a small fee ($0.50 – $1.00). Super-sizing increases the apparent value of the meal because it increases the size (and calorie count) for a small sum of money.

Some corners of American society have begun to strive for healthier, more sustainable portion sizes. One notable example is the controversial decision by New York City Mayor Michael Bloomberg to limit soft drink sizes. The law bans the sale of sugary drinks larger than 16 ounces and is aimed at curbing obesity and unhealthy habits that ultimately increase medical costs and decrease worker productivity.

Another initiative aimed at encouraging Americans to make better eating choices is the federal law that forces food chains with more than a certain number of store locations to post calorie information on the menu. This law was part of the Affordable Care Act, also known as „Obamacare.“

Houses people love to hate

According to the U.S. Census Bureau „The average new American home last year was 2,480 square feet, an increase of 88 square feet from 2010.“ These excessively large single-family homes are often referred to as „McMansions“ due to their relatively low cost and massive size.

By comparison, this is more than double the average home size in France and Denmark. The average size of a house in the United Kingdom was 818 square feet in 2009. Large homes consume large amounts of electricity, water, and other resources.

Americans tend to fill these large homes with numerous large things such as high capacity washing machines, clothes dryers, and kitchen appliances. Americans tend to keep the temperature of their home around 70 degrees Fahrenheit regardless of the temperature outside or amount of energy required to do so. Although some utility companies are encouraging Americans to use more efficient lighting, inefficient lighting and appliances remain the norm in most of the country.

American homes tend to be found on large plots of land, especially in affluent suburban areas. These lots are usually landscaped and planted with decorative plants and grasses that must be mowed, watered, and maintained. Mowing large lawns requires large tractors that, in turn, consume large amounts of gasoline. Watering lawns is a very inefficient process during hot summer months when much of the water evaporates before it has a chance to absorb into the soil.

Increasing home efficiency: In November 2010 the Obama Administration announced a program that provides funds to help Americans make their homes more energy efficient. The funds are used, for example, to insulate attics or put double panes on windows to trap heat in the winter and cold air in the summer months.”

Many local utility companies now send “efficiency packs” to new customers that include water-saving nozzles for faucets, energy efficient light bulbs, and suggestions on how to save energy during the warmest and coolest months.

The U.S. government also provides rebates for new commercial and residential wind and solar power projects. These initiatives have a dual function. They are aimed at bolstering the U.S. economy by creating jobs in the renewable energy sector. And they are also aimed at reducing greenhouse gas emissions by increasing energy efficiency. America is striving to be more “green.”

Air conditioning

Air conditioning in the U.S. is present in almost every home and building. It is often run 24 hours a day in commercial buildings. Large airports are air-conditioned 24 hours a day throughout the entire year. Americans often use substantial amounts of money during hot summer months and cold winter months to keep the temperature in their home around 70 degrees Farenheit. These practices represent a focus on the output – comfort – over other considerations such as environmental toll, cost, etc.

The U.S. Department of Energy recently passed increased standards for heating, ventilation, and air-conditioning (HVAC) equipment used in homes. These new standards will gradually take effect over the next several years and will require newly installed heating and cooling equipment to be higher efficiency equipment. Although this act shows that the government is serious about curbing energy use in American homes, enforcement will be difficult.

Some companies have realized that they spend large amounts of money heating, cooling, and lighting empty offices during nights and weekends. Many have adopted technologies that program equipment to automatically switch off at certain times of the day.

Mobility

Automobiles: The Hummer H2 is perhaps the best example of unapologetic disregard for efficiency. This vehicle weighs around 6,400 pounds and travels about 10 miles on one gallon of gas. They sell for $40-$50,000, although sales have declined sharply since 2005.

Americans tend to value large, powerful cars despite their inefficient use of gasoline. For example, the Ford Mustang was first sold in 1964 and is currently in its fifth generation. The newest Mustang’s 5.0 liter V8 gets a boost of eight horsepower from 412 hp (307 kW; 418 PS) to 420 hp (313 kW; 426 PS), and the V6 remains rated at 305 hp (227 kW; 309 PS) and 280 lb·ft (380 N·m). Although fuel efficiency was formerly ignored in favor of power, the Mustang was redesigned to be more efficient and now gets around 30 miles per gallon.

Energy use: According to World Bank statistics Americans use an average of 7,069 kg of oil per capita in 2011. This is more than double of most European nations and about four times China’s per capita oil use.

Car size: Although Western Europeans actually own more cars per capita than Americans, American cars tend to be much larger. Americans also tend to live in suburban areas that are quite a distance away from their workplace, so they spend an average of an hour or more commuting to and from work every day.

The average width of American roads allows for much larger trucks and passenger cars. Taxi cabs also tend to be far larger in the United States than in Europe or Asia, even though they carry the same number of passengers (1-3) at a time.

Increased fuel economy standards: In response to growing concerns about pollution and global warming, President Obama in April 2012 finalized standards which mandate an average fuel economy of 54.5 miles per gallon for the 2025 model year. These tough standards aim to force car manufacturers to create more efficient gasoline-based vehicles as well as electric and hybrid cars. Fuel efficient vehicles such as the Toyota Prius are gaining in popularity as highly inefficient vehicles. Sales increased sharply in 2004 and Toyota has sold more than 120,000 Prius vehicles each year since 2007.

Car pooling: Another growing trend in many cities which aims to decrease pollution and fossil fuel use is car pooling: people riding together to and from work in order to save money and decrease the number of cars on the road. Most Americans still travel a fairly long distance to work each day, usually alone in their car. Local governments have sought to encourage people to share cars by introducing „High Occupancy Vehicle (HOV)“ lanes that are only open to vehicles with more than three passengers.

Citizens have created solutions such as „slugging,“ a common practice in Washington, D.C. where drivers pick up impromptu riders to meet the HOV requirements of high-volume interstates. Some commuters also form car pooling groups that rent vans and leave from specified locations at the same time every morning. The riders split the cost of the van and driver.

Biking: In some cities in America bike trails have been constructed from popular suburbs into downtown office locations. These trails encourage commuters to ride bikes to and from work and often involve bridges or tunnels that allow for an easy commute. This practice is still fairly uncommon among American workers, but as traffic continues to get worse and gas prices rise, more commuters may consider this option.

Business travel

Business travel via airplane or automobile remains extremely common in America despite rising airline ticket and gasoline prices. Businesses remain committed to approving business travel, appreciating the importance of face-to-face contact.

Although companies often work to cut costs, they are increasingly thinking about travel in terms of its carbon footprint. These companies are responding to customers’ increasing demands for sustainable business practices. Some companies are scheduling longer, less frequent business trips to cut down on air travel or using communications technology to decrease the need for frequent air travel.

Wirkung

Effizient. Latin efficiens, efficient; a large effect based on little effort; to achieve much with less; economic, economical.

Wirkung. Effect, output, results; a change realized by energy, effort, input; infuence; a sustained, positive effect.

Wirtschaftlich. Economical; concerning the economy; monetary, financial; to work intelligently; to be frugal, to save money; to achieve the maximum based on available resources.

Weniger ist mehr. Less is more. To focus on the essence, on the core. Functionality trumps design, thus saving time, resources, money. Often heard in the fields of design and architecture.

Effizient, nicht effektiv arbeiten. Work efficiently, not just effectively. A figure of speech often heard in the German workplace, meaning to do more than reach your goals by doing it efficiently.

Kleine Ursache, große Wirkung. Literally small cause, large effect. A figure of speech pointing out how small things – good and bad – can lead to very significant outcomes. In the German context it is a warning to pay close attention to the details of one‘s work.

Was nicht in die Masse dringt, ist unwirksam. What doesn‘t reach the masses, is ineffective. A quote attributed to Karl Jaspers, one of Germany‘s most influential philosophers of the post-War era. It is often used in discussions about the effectiveness of advertisement.

Efficient and inefficient

Many of the most popular brands of children’s toys in the U.S. are wooden toys manufactured by fairly small companies. Compared to mass-produced plastic toys from China, they are inefficient to produce and more expensive to ship. Quality and design is the focus, not speed or quantity.

American-made tools: The websites of popular American toolmakers such as Snap On and Craftsman include many statements about non-negotiable product quality and safety but make no mention of efficiency. Production of American products often maximizes quality and safety while giving much less attention to efficiency of production.

U.S. health care: The delivery of health care in the United States is perhaps the best example of disregard for efficiency in exchange for safe, high-quality output. According to a report from the Institute of Medicine, „about 30 percent of health spending in 2009 – roughly $750 billion – was wasted on unnecessary services, excessive administrative costs, fraud, and other problems.“

The reasons for this waste are complex, but the underlying logic is that in the health care sector (and in most other industries), Americans view a safe, comfortable, and positive output as the primary goal of their activities; therefore, efficiency is often ignored.

U.S. military: The U.S. military spends vast sums of money to achieve the strategic goals of the nation. For example, it costs the U.S. an estimated $1 million dollars to outfit a single soldier in Afghanistan for a year. The U.S. has spent more than $1 trillion dollars fighting wars in Iraq and Afghanistan since 2001. The key focus of military operation is achieving the strategic objective (or output); efficiency and costs are rarely discussed. If they are discussed, they are always secondary to achieving the mission.

Federal hiring process: President Obama signed a memorandum in February 2010 ordering the Office of Personnel Management to streamline the federal hiring process. Although implementing this order will vary across different agencies, the act symbolizes a concerted effort to add efficiency to what was previously an incredibly slow and ineffective process.

Hotel chains: Many companies cannot focus exclusively on output while neglecting efficiency. Hotel chains have started to encourage customers to conserve water (thereby increasing efficiency) by re-using towels and not changing linens every day. These campaigns are often marketed as „eco-friendly.“ They are aimed at lowering costs and increasing the company’s efficiency. The output must be of good and uniform quality, but if the company does not operate efficiently, then it will not be profitable.

Assembly line: With the assembly line Henry Ford revolutioned the automotive industry and the way products are produced in almost every industry. This new manufacturing process made building cars more efficient. Because of the increase in efficiency, the cost to produce a car went down and when production costs were lowered, so was the retail price of the cars. Today, almost all products – from faucets to airplanes – are produced in some form of assembly line.

Efficient products

Automobiles: Germans like to drive powerful, fast cars and are proud of their Autobahn with its lack of speed limits. At the same time they like to save money. This is reflected in their cars. Over the last twenty years the fuel efficiency of German cars has increased by 20%, while doubling their horsepower.

The VW Lupo 3L TDI is a case in point. It is the first mass produced car which can go 100 kilometers on 3 liters or less fuel, while maintaining the power of others compact cars.

The entire German car industry is constantly increasing the efficiency of its production methods. Most produce only 30-40% of the final product. The rest is developed and manufactured by a complex, sophisticated network of specialized suppliers, many of whom are located right next to their German customers.

Residential homes: Germans focus on building homes which maximize space. German houses tend to be small, certainly in comparison to homes in the U.S., which are twice the size.

German homes are built, and renovated, with an eye on energy conservation. Insulation and electricity efficiency are two of the key goals. And the German government supports these with generous subsidies via the KfW, Kreditanstalt für Wiederaufbau, the Bank for Reconstruction, founded in 1948.

This is especially the case with new construction and renovations, with the KfW offering ten different types of financial support linked to new efficiency technologies. All loans have borrowing rates guaranteed to be lower than the rate of inflation. In some situations, families receive cash payouts as subsidies.

Particularly popular, and subsidized by the government, are solar panels, which save electricity and reduce Germany‘s dependence on electricity produced by fossil fuels.

Water consumption: Since the 1980s ecological groups have been campaigning for less water use, in order to protect the environment and save money. Since then water conservation has become common in Germany. The manufacturers of showers, faucets, toilets, washers, dishwashers and other household appliances have developed and brought to market highly efficient products.

German households save so much water that waste water systems have difficulty keeping themselves clean due to too little waste water moving through the system. Local water works often need to flush through extra amounts of water in order to keep the system clean.

Ökostrom

Electricity: Germany is not rich in resources. Coal is no longer in abundance. There is no oil to be drilled out of the ground. There are too few mountain ranges offering hydropower. And the German population has rejected nuclear power as a long-term solution to its energy needs. In order to protect itself from the ups and downs of the international energy markets, Germany has long since focused on developing renewable energy sources.

Several laws since 1999 support the development of so-called Ökostrom or bio-energy, guaranteeing minimum prices for those utilities who produce it. Its planned outcomes – reduced dependence on fossil fuels, development of renewable resources, ensuring long-term energy supply – have begun to occur. The share of total electricity production attributed to renewables has been increased from 5.4% to 20.3% in the timeframe 1999-2011.

Gasoline: The Ökosteuer or ecology tax is also applied to gasoline and diesel fuel, making up roughly 10% of the price at the pump. The purpose of the tax is twofold: reduce consumption of what is a limited resource, and increase the efficiency of automobiles. Leading German economic institutes have documented the positive effect thusfar: less driving and the development of more fuel-efficient cars.

The laws passed were controversial. Many were skeptical that they would have the predicted effect. But since then large segments of the population are convinced that Germany is on the right path. Two changes of government have not challenged their effectiveness. Germans are proud of the fact that their electricity grids never fail, that they are shutting down all of their nuclear energy plants, and that their companies are producing cutting-edge renewable energy technologies.