The Innovation Equation: Balancing Creativity and Productivity

Make Some Noise
The innovation equation: Balancing creativity and productivity
Make Some Noise

Imagine if we had a way to measure the fuel efficiency of our innovation engine, ensuring that every drop of effort pushes our customers’ product innovations forward just a little bit further.  

In our journey, we’ve had the good fortune of working with Greg Crabtree, author of “Simple Numbers,” who first introduced us to the power of efficiency metrics. 

Building upon the concepts championed by Verne Harnish in “Scaling Up,” which underscore the importance of meticulous precision in scaling businesses, Greg helped us adopt the practice of using Labor Efficiency Ratios (LER) as our compass for gauging progress. 

DLER (Direct Labor Efficiency Ratio)

Think of DLER like a fuel gauge in a car, but instead of measuring gas, it measures the effectiveness of our team’s work. Just as you want your car’s fuel use to translate into kilometers driven, we want our team’s hours to translate into real, tangible progress and, ultimately, innovations in our customer’s products.

While reaching a DLER of “1” indicates that our team’s work is efficient enough to generate profit, aiming for a higher DLER is our true north. This higher ratio underscores that we’re achieving more with every hour worked, paralleling a car that not only reaches its destination without wasted trips but does so with superior fuel efficiency.

It means our design and manufacturing efforts are not just meeting the mark; they are excelling, creating products that resonate deeply with our customers’ needs and aspirations, pushing the boundaries of innovation and design.

MLER (Management Labor Efficiency Ratio)

Consider MLER as a vital measure of our operational backbone. It’s a ratio that evaluates the efficiency of our support structure, including management and administrative functions, in bolstering the business. 

This metric does not directly reflect the steering of project managers or team leads in the development process but rather gauges how effectively our general, administrative, and operational support (SG&A) facilitates our overall operational efficiency.

A higher MLER score signifies that our management and administrative efforts are not merely keeping us on track but are enhancing our capacity to navigate toward product launch with optimal resource allocation and strategic foresight.

Combining Both Ratios Together

They’re our dynamic duo, ensuring that every creative cycle, from brainstorming to beta testing, isn’t just busy work—it’s smart work. They help us avoid the pitfalls of overengineering and underplanning, keeping our eyes firmly on the balance between cost and innovation. 

In the world of product development, we don’t just build—we sculpt, we refine, and we iterate. LER isn’t just about counting the hours; it’s about making the hours count, ensuring that with every product iteration, we’re not just spinning our wheels but driving toward market leadership. 

So, when you’re knee-deep in the creative process, remember that LER isn’t just a spreadsheet tyrant.  

Great products are born from more than just industrial design and engineering prowess; they appear from the collaborative rhythm of a team adept at choreographing complex technical services—a theme we explore in depth in our piece on the Choreography Mindset of Project Management. 

The focus can’t solely rest on design and innovation—it’s also about the systematic approach to productivity and profitability that your teams bring to the table. 

Labor Efficiency Ratios (LER) go beyond mere metrics; they are powerful beacons of your team’s operational harmony, guiding the ebb and flow of a productive, profitable, and creative workflow. 

Let’s build not just more but better—with precision, purpose, and the power of data-driven crafting.

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