​When Efficiency Derails Discovery: What Leaders Can Learn from the Past 

Google leadership recently announced they have eliminated 35% of their managers who oversaw small teams. Brian Welle, VP of people analytics and performance, said this was part of their organizational focus on efficiency to “have managers, directors and VP’s  be a smaller percentage of our overall workforce over time.”¹   

At a town hall meeting, CEO Sundar Pichai explained. “We have to be more efficient as we scale up, so we don’t solve everything with headcount.”  

Google is not the only technology company focused on flattening its hierarchy to gain efficiency². Earlier this year, Amazon announced it has increased its employee to manager ratio by 15%. Microsoft, Intel and Meta have also cut management levels.  

The trend of delayering and reducing headcount is quickly spreading beyond technology companies. The Wall Street Journal recently reported that, “Employing fewer people – especially   managers – is viewed among boards of directors and investors as a sign of a company’s strength³.”  According to Johnny Taylor, CEO of the Society for Human Resource Management (SHRM)⁴, layoffs are up 80% from a year ago. 

In reading the various accounts of company efforts to delayer management and cut other positions, one theme stands out.  

Leadership’s overemphasis on efficiency sidelines attention to people development and organizational creativity.  

This sidelining calls for further reflection.  

People Development  

Layoffs are among the most difficult structural changes to implement well. They carry unintended consequences that reverberate long after the event. Research by Michael Blank and Omeed Maghzian shows that the spillover effects of “pile-on” layoffs – when many companies cut jobs at once –  have “an outsized [negative] economic impact on workers and local labor markets.”⁵  

Will surviving managers be able to deal effectively with larger teams? How will employees get reskilling opportunities so critical with the rise of AI? How will values be integrated into the new workplace? Will trust survive?  

Surveys also point to crucial challenges in developing people ahead. For example, a recent Gallup survey on engagement found that fewer than 50% of employees know what is expected from them at work. That number is down from 56% during Covid. Moreover, in 2024 global engagement of the workforce declined to 21% – only the second decline in the prior twelve years. Notably, managers experienced the largest drop.  

Organizational  Discovery 

Leadership’s over-emphasis on efficiency is also reminiscent of another change undertaken in American business during the 1990’s and 2000’s. That’s when large companies implemented the Six Sigma program, a project-driven management approach aimed at improving quality by ending errors. Developed by Motorola, Six Sigma used a structured method focused on analyzing performance metrics and increasing predictability. 

In 1995 Jack Welch, then CEO of General Electric, publicly committed to Six Sigma. In 2001,  3M and Home Depot launched Six Sigma, upon the arrival of new, advocate CEOs who had been part of Welch’s team. Eventually 58 of the top Fortune 200 corporations adopted it. These companies did close their quality gaps. Early performance results showed sharp increases in profits for these companies. The horizon looked very promising. But the reality turned out quite differently.  

In the early 2000’s, the experiment started to show disturbing signs when the impact of the change started to take hold.  

At Home Depot, employees complained that constant data tracking and paperwork consumed time they once spent with customers. Morale plummeted. In 2005, Home Depot dropped from first to worst among major retailers on the American Customer Satisfaction Index.⁶ 

A Fortune article in 2006 reported that 91% of large companies adopting Six Sigma had failed to keep pace with the S&P 500.  

The next year, a Business Week article chronicled the “struggle between efficiency and creativity” associated with Six Sigma. The inventor of post-it notes at 3M said his idea wouldn’t have surfaced if Six Sigma had been in place.  

Although adopter companies like 3M and Home Depot increased efficiency and profitability, they sacrificed creativity. Both 3M and Home Depot ultimately abandoned Six Sigma, and the CEOs who had championed it departed. 

In letting efficiency and metrics in Six Sigma take priority, leaders derailed the discovery of valuable insights from employees and especially from quality employee contact with customers.  

Learning from the Past  

Certainly, leaders need to run their companies efficiently. But when efficiency and metrics of success, e.g., X% managers, drive change at the expense of people development and organizational discovery, it is time for critical reflection. 

As George Santayana observed: Those who cannot remember the past are condemned to repeat it.⁷  

Organizations have been here before – but without much success.  

But now, leaders have the opportunity to learn from history. Draw on past lessons as they work with employees and other stakeholders to create change that reimagines the future. No longer do they blindly navigate change in these unsettled times.  

When partnered together, efficiency and discovery provide the foundation for navigating uncertainty in change that generates both practical and innovative solutions.