Microeconomic view of moving to the next level

When we consider an issue from a different perspective it can sometimes enable new insights.  This blog site is about uncovering opportunities to create a better outcome; to breakthrough to the next level.

Microeconomics is a strand of economics which examines the decision making of individuals and firms as small units and what determines their purchasing decisions and their willingness to supply goods and services.

Let’s focus on the willingness and ability of a firm to supply their goods or services.  They will organise resources of people, expertise, equipment and the like to produce a level of output.  Generally the more resources they devote to the task give a greater output.

Given X clinicians the medical unit is able to provide Y treatments. How common is it to hear the argument that more can be done if we are given more resources?  What is often ignored is the codicil; ‘provided the way we are organised stays the same’. 

But what if things challenge the way we are organised?  What can we do with the resources if we find new ways to organise them?  What if we were to ask “what more can we do”?

Perhaps we can organise ourselves in a different way which would enable us to deliver better levels of care and treatment using the same total amount of resources.  To which the response is often heard, ‘So you want us to do more?’  This is not about individuals working harder but the organisation changing current practices (changing the rules) and current mindsets in order to deliver more.  It is about an organisation being willing (motivated) and able (capacity) to deliver a greater levels of service.

It may not be an increase in productivity that you are seeking but whatever it may be the same principles apply.  Simply change the lower axis from output to whatever you want to achieve be it better customer experience, better reputation, greater customer wellbeing or greater workforce wellbeing for example. What are the things you need to challenge to shift to the next level?

Change the rules:

• More effective use of resources
• Different use of resources
• Use different resources
• Use technology
• Change working patterns
• Change processes
• Stop doing the unproductive stuff

Change Mindsets:

• Develop a growth / innovation mindset
• Consult your workforce
• Encourage personal responsibility
• Encourage personal accountability
• Measure effectiveness as a means of evaluating improvement
• Improve motivation
• Improve wellbeing
• Improve emotional engagement across the workforce
• Improve leadership

A shift to the next level could come from a change in delivery patterns. The shift might be from an inflexible unit towards a flexible unit.  Few organisations have a steady level of production throughout the year schools, hotels, mental health units, accident and emergency, undertakers, accountants, armed services are often inflexible units and could be more responsive to the demand for their services.

Our inflexible unit might produce only marginal improvements in delivery if we put more resources into it whereas our flexible unit is able to respond with greater than normal levels of delivery given the same level of resource change. In economics parlance this is known as elasticity.

It looks great that our flexible unit is able to give such large changes in output if we increase resources but, if resources are cut, there seems to be a corresponding decline in service provision.  Ideally we would want large improvements in output if we increase resources and small declines if the reverse happens.

Most organisations can change shift patterns in order to change their flexibility but ‘what more could there be?’  Are there other ways of organising production? Does this require a change in the rules or a change in the mindset? Or a change in both?