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The Efficiency Trap: Why Efficiency Can Lead Companies Astray
Be efficient, move faster, cut costs. In today’s uncertain times, that sounds like the default mode of operation. But what if this very focus blinds us to what truly matters in the long run?
At SCHOTT’s Inspiration Days 2025, under the motto “Doing the right things. Doing things right,” our founder Nico opened the space for a different perspective.
What if efficiency, when misapplied, doesn’t solve problems but systematically blocks innovation? And how might we rethink efficiency as a lever that creates real value instead of merely speeding up processes?
Why efficiency can prevent innovation
For decades, efficiency has been seen as a recipe for success. It supposedly stands for growth, scalability, and competitive advantage.
But what if, today, efficiency does something else entirely, cementing the status quo and blinding us to what really matters?
A fitting example: the most efficient carriage company in the world still didn’t invent the automobile.
And that’s not just a saying. History has shown the same pattern with companies like Kodak, Nokia, and Yahoo.
To get to the heart of the problem, it’s worth clearly defining three key terms.
Efficiency = Doing things right
Productivity = Achieving more with less effort
Innovation = Doing the right things (differently)
The misunderstanding begins where efficiency is mistaken for progress. Those who only improve what already exists are polishing the past instead of actively shaping the future. Data highlights this dilemma:
80% of automation budgets merely improve execution speed, while only 20% impact innovation (McKinsey).
Companies that focus solely on cost efficiency grow 30% slower over the long term (BCG).
The efficiency trap starts in the mind
The efficiency trap begins quite simply in our minds.
Our brain consists of two hemispheres and operates in two main modes:
Control Network (efficiency mode): focused, rule-based, controlled
Default Mode Network (creative mode): associative, playful, connected
When we feel pressure to be more efficient, faster, or more productive, our brain activates the so-called Control Network mode. We work with focus, follow rules, and minimize risks. That is useful, but it comes at a price. In return, the Default Mode Network, the creative state in which we generate new ideas, see connections, and shape the future, is dialed down.
The problem is that both modes cannot be fully active at the same time. When we feel pressured to increase efficiency, we switch into control mode and block creativity. Especially in uncertain times, we fall back on what we know. This pattern is described by Terror Management Theory: in fear, we seek safety in the familiar.
Looking at organizational structures makes this clear. We operate in systems with no room for ambiguity. Many companies have built structures optimized for predictability: OKRs, KPIs, forecasts. Yet creativity depends on ambiguity. The more we try to control the future, the less we invent it.
The efficiency trap therefore means that we believe greater efficiency makes us better prepared. In reality, it closes the door to innovation and blinds us to what could truly be possible.
Europe in the Productivity Dilemma
Europe is not suffering from an efficiency problem but from a productivity problem.
Despite high spending and ongoing optimization efforts, growth continues to lag behind. According to BCG, 72% of the growth gap between the EU and the US in 2023 stems from differences in productivity. While the US is betting on new technologies and growth markets such as AI, Europe has continued to optimize its mature industries and, in doing so, lost momentum.
A new way of thinking: Innovation, productivity, efficiency – in that order
The key question is not “How can we make it cheaper?” but rather “What is worth doing in the first place?”
A robust framework:
Innovation decides what is worth doing.
Productivity scales it.
Efficiency makes it sustainable.
A future-oriented company operates in exactly these three modes of work and knows when it makes sense to shift between them.
Case Study: Telekom – Innovation, then Scaling, then Efficiency
Like many large service organizations, Telekom faces a double challenge: customers expect faster and more seamless service, while costs and complexity in existing support structures continue to rise.
A key insight triggered a strategic shift: 40% of EU customers prefer self-service over interaction with human support staff.
Together with Telekom, we didn’t just derive an automation strategy but developed a well-considered concept that connects all three modes of work.
The Productivity Paradox and GenAI
A final concept in this context concerns the role of new technologies and tools. It is known as the productivity paradox.
New technologies do not automatically increase productivity.
Why? Because tools only have an impact when the way of working evolves with them. Many tools simply make work easier to track but do not make the work itself more valuable.
GenAI marks the next major technological leap.
But its potential unfolds only if we use it wisely. The first step is to bring teams on board without creating fear. Instead of writing requirement documents, it helps to ask simple questions:
What frustrates you about your work?
Which recurring tasks would you gladly hand over to a machine?
This creates spaces for experimentation where potential can be explored without bias. The key is to start with use cases that do not rely on complex or proprietary data, avoiding unnecessary barriers at the beginning.
And most importantly, build the foundation now. Many companies do not fail because of technology but because their data is unstructured and trapped in silos. AI will not fix chaos in the system. But with the right mindset and a solid data foundation, it can significantly boost productivity if we allow it to.
Beyond Efficiency: Three Modes for Sustainable Growth
How companies can intentionally combine and apply innovation, productivity, and efficiency. The white paper for practical implementation.
Thanks to David and the SCHOTT team for the inspiring dialogue and the shared stage at Inspiration Day.
