Efficiency and Resilience

March 1, 2020 / Finance, Technology, The Context

These two parameters are in a dynamic relationship, often requiring a tradeoff: maximizing the efficiency results in a brittle system, the redundancy of a more resilient system makes it less efficient.

In a relatively stable scenario the first is acceptable, while preparing for times of crises requires investing in redundancy.

Technological innovation very often allows the design of new production processes, or organizational methods, which in turn lead to a radically increase in efficiency. We can use this to increase the output of the system, or, based on what is best, buy ourselves an improvement in resilience.

The supply chains whose purpose is to maximize profit, and that traverse the planet of a globalized production process are very efficient. We must evaluate how to also make them robust and resilient. An improved production can, for example, lead to the establishment of multiple production centers, one per continent, allowing the price of the product to even decrease while greatly increasing its resilience. This is what Tesla is doing with Gigafactories.

The democratic political process whose purpose is to create consensus is very robust, even if apparently chaotic and improductive, and we must find a way to improve its ability to efficiently produce desired legislation and regulation. New ways to manage the debates in parliaments, of electronically tracking the changes as laws are amended, can make the work of elected bodies more transparent, and accountable. Do you have good examples of this in some countries?

As we evolve our complex systems, lets make sure that we are aware of the dynamic balance between these two components, and that we are setting them to the right levels at each time.