Efficiency is not merely a desirable trait—it is the existential foundation of any operation. In orgtology, where systems are governed by the interplay between purpose and process, efficiency becomes the benchmark for survival. In nature, it defines the cycle of life: resources are finite, so the imperative is clear—minimize energy while maximizing outcome. Consider the formidable strength of an ant or the coordinated precision of honeybees; their biological choreography illustrates nature’s mastery of efficiency. Organizations, or "Org" in orgtological terms, are no different. To be structurally viable, Org must root itself in purpose. Purpose gives rise to process, which in turn manifests as construct - an algorithmic blueprint that governs the creation and calibration of structure. No structure exists without construct, and no construct materializes without process. Thus, structure is the echo of purpose transcribed through procedural flow. Purpose defines what must be delivered and produced. Processes then generate activities that deploy resources to create outputs. When these processes begin to cycle, they generate feedback—this feedback forms the basis of organizational intelligence. Such intelligence does not arise spontaneously; it evolves incrementally. Evolution in this context means optimizing the resource/output equilibrium - consistently reducing inputs while elevating returns. It is here that efficiency finds its expression. Through marginal adjustments to activity dependencies and refinements in process flow, Org identifies its operational “sweet spot.” Efficiency, then, is not static - it is the living intelligence of process, evolving through structured feedback and systemic recalibration. Basic assumption on operational efficiency If an efficiency measure relates outputs to inputs, we must first explore the relationship between operational predictions and the actual process flow—only then can we properly analyse efficiency. The traditional Input-Process-Output model assumes a linear production line with a clear start and end. Modern organizations, however, operate in dynamic systems: resource consumption and value creation occur across every activity node rather than at discrete endpoints. Outputs are the quantifiable results generated through repeated cycles within a process construct. Any measurable deliverable—whether a completed report, a treated patient, or a manufactured component—qualifies as an output. Inputs represent the energy required for cycling: human effort, financial capital, and assets (raw materials, technology, facilities). In orgtology, optimizing efficiency means balancing these resources against outputs at each stage of the process. The Structure of Org Efficiency To conceptualize efficiency in practical terms, I often reference a hospital—an environment familiar to most. Its purpose is clear: to return individuals in better physical condition than when they arrived. Achieving this requires precise orchestration of activities and resources. First, a hospital must exist as a physical structure, given its mandate to work with human bodies. Access necessitates entry controls, parking logistics, and health screening protocols—for conditions like COVID-19 or TB—to protect existing patients. Admission leads to ward assignment, vital monitoring, and potentially surgical intervention. Recovery and discharge then complete the patient's journey. Each step contributes to a lateral process flow—sequenced by purpose, not by department. Controlling this flow requires strategic instruments. Targets forecast anticipated results; performance is measured against these projections. Rules ensure standardization—such as requiring sterile conditions in surgical teams—which evolve into policies. Procedures translate policies into executable steps. Thus, purpose, process, policy, procedure, rule, and target form an integrated system of efficiency. Where this system falters, strategy becomes the corrective mechanism. Yet, in practice, few executive teams can express their organizational purpose through a single coherent process. Many are constrained by organograms—seeing structure as the organization itself. Efficiency challenges often arise from the way we organize and resource activities. Notably, the hospital example omits mention of roles, departments, or vertical divisions; instead, it emphasizes lateral flow, where sequence and logic follow the patient's journey—not the organizational chart. To resolve this fragmentation, orgtology introduces the Level Zero Model—outlined in prior essays. Here, we apply the model to create performance targets, assess risks and costs, and develop indicators. In doing so, we move toward a system where operational efficiency is not guessed at—it is engineered. The role of Efficiency in Strategy Before devising strategy, an organization must define its desired efficiency and test whether its processes can achieve it organically. The first step is to analyse current process flow; the second is to set operational targets over a strategic horizon. If those targets cannot be met through routine process adjustments, then strategy becomes necessary. Routine tweaks and marginal improvements are evolutionary in nature—they optimise existing systems without changing the destination. In contrast, strategy is revolutionary: it redefines the future state. For example, repairing a dam’s inlet is an operational, evolutionary action. Replacing the entire water‐management system with an AI‐driven network is a strategic, revolutionary shift. Many organizations conflate running the business with transforming it. Operations are mathematical, repetitive, and responsive—target setting belongs here, forecasting how processes will perform. Strategy, however, is abstract, non-repetitive, and projective: it designs interventions that processes won’t achieve on their own. In orgtology, we break strategy development into three progressive parts: Organisational Identity Define who we are: purpose, values, intent, and business model. Operational Efficiency Project how core processes will perform. Use process constructs to set precise operational targets—ideally annual targets over a three-year window. Identify the top ten operational risks before target setting to avoid hidden pitfalls. Strategic Effectiveness Determine what must change to remain relevant. Define strategic objectives along with the programs and projects that will deliver them. Conduct a top ten strategic risk analysis to inform execution. Together, organisational identity, operational efficiency, and strategic effectiveness describe how an Org will operate and evolve over a given period. At the heart of this framework lies efficiency: it signals when routine change suffices—and when bold, strategic action is required. Measuring Operational Efficiency Operational efficiency is gauged by comparing actual performance against predefined operational targets. When processes cycle, they establish a baseline—enabling us to benchmark improvements over time. By contrast, strategic goals address changes we will not repeat, so we frame them as goals rather than targets. Defining Targets Output Targets forecast measurable deliverables (e.g., units produced, patient discharges). Input Targets predict resource consumption (e.g., labour hours, materials costs, asset utilization). Deviation = Actual Result – Target Tracking Inputs and Outputs Inputs comprise labour, machine time, raw materials, assets, investments, and direct payments—the “energy” that powers each cycle. We measure inputs by cost and duration.Outputs are measured against goals, mandates, initial requirements, or target dates. Introducing Level Zero TargetsLevel Zero targets act like vital signs: they predict what should occur if operations run at optimal efficiency and strategy remains effective. Deviations from these metrics trigger strategic intervention, not mere operational tweaking. Typically, we assign one Level Zero target per area, but the model allows multiple. We start with a baseline, then project a value for each year of the strategic period. This table provides a clear, quantifiable roadmap. By monitoring these Level Zero targets, we can spot deviations early and decide whether to adjust operations or launch a new strategic initiative. Time as a Target A common question in operational discourse is whether time constitutes an input or an output. In orgtology, the answer is neither—time is a situation, not a resource. It is not something one controls or consumes. All systems and individuals operate within the fixed reality of 24 hours per day; this boundary is immutable. However, when used as a metric, time becomes an instrumental tool for extracting efficiency insights. For example: Comparing planned labour hours against actual hours worked allows us to establish an input target, assessing how efficiently human energy is deployed. Comparing a projected completion date against the actual date of delivery creates an output target, evaluating whether expected outcomes align with process performance. The distinction lies in causality: Labour hours reflect a person's direct energy expenditure—efficiency here can be explicitly measured. Completion dates, however, can be missed due to a multitude of factors—external dependencies, systemic delays, unforeseen risks. Hence, while finishing on time is an output value, it is one influenced by complex conditions. In orgtology, efficiency is not about controlling time—it’s about navigating within its fixed constraints. Time reveals efficiency rather than defines it. Optimising the operational construct A process construct is the operational blueprint that links every activity and resource into a cohesive, intelligent flow. Unlike an organogram—which merely shows reporting lines—the process construct reveals how work moves across and beyond payroll boundaries. To engineer this construct, follow three steps: Map High-Level ActivityCapture the organisation’s end-to-end workflows at a summary level. Cluster Under the Level Zero ModelOrganise those activities into five core systems (each a set of related processes):ResourcesCore BusinessRelationshipsTransformation Risk Define Process Families and Sub-systemsGroup clustered activities into process families, then decompose into sub-systems. The outcome is a multi-layered network diagram that visualises how each level of activity sustains your purpose. With this operational construct in place, you gain: Accurate cost projections. A basis for setting realistic targets. Early-warning risk indicators. Performance metrics aligned to flow logic. The strategic insight needed to design lasting change. No strategy consultant should propose interventions without first understanding the Org’s process construct. It is the foundation for every subsequent decision on efficiency, risk, and growth. Core process construct of the International Orgtology Institute with its basic systems: the resource system, the orgtelligence system, and the relationship sytem. Making Cost and Revenue Projections Accurate cost and revenue projections are vital in both private and public sectors. In the private sector, cost tracking underpins profit calculation. In the public sector, it demonstrates accountability to stakeholders and communities. In either context, well-defined cost targets reveal performance trends and support sound decision-making. The Challenge of Organogram-Based Cost Centres Traditional costing models assign budgets to departments, divisions, or units—mirroring the organogram. But organisational activities rarely respect those vertical boundaries. Just as the body cannot digest solids and liquids in separate systems, an HR cost centre cannot capture the shared resource flows of recruitment, procurement, and budgeting. Clustering by purpose—rather than by reporting line—yields a more accurate financial picture. Shifting to Process and Project Cost Centres To align costing with real workflows, follow these steps: Map Processes to Level Zero Systems Use the Level Zero Model’s five core systems (Resources, Core Business, Relationships, Transformation, Risk) to group related processes into cost-centre clusters. 2. Define Process Cost Centres Assign repeating operational processes (e.g., order fulfilment, patient care) as cost centres. Their cyclical nature makes them ideal for budgeting and efficiency analysis. 3. Define Project Cost Centres Identify change initiatives—projects that start, deliver, and close—and treat them as strategic cost centres when they impact Level Zero systems directly. Projects embedded in recurring processes remain operational cost centres. 4. Gather and Allocate Data Collect historical cost and revenue data for each process or project cost centre. Allocate shared expenses (overheads, assets) according to resource consumption or time spent. 5. Project Future Costs and Revenues Build three-year forecasts for each cost centre, adjusting for expected volume changes, inflation, and strategic initiatives. Benefits of the Level Zero-Based Approach More accurate costing reflects actual workflows rather than organigram boundaries. Clearer distinction between operational expenses (running the Org) and strategic investments (changing the Org). Enhanced decision support: managers can see which processes drive costs and which projects deliver strategic value. Improved accountability: each cost centre is tied to measurable outcomes within a core system. By treating processes and projects as the primary cost centres, organisations gain transparent financial control. This clarity enables smarter target setting, risk management, and strategic planning—all grounded in the true operational construct of Org. Measuring Operational vs. Strategic Performance Operational performance measures repeatable, here-and-now activities powered by implied intelligence. Strategy, by contrast, designs unique interventions for future change. Because operations cycle predictably, we can forecast—and then measure—their performance. Process-Linked Metrics Define input targets (e.g., labour hours, material costs). Define output targets (e.g., units produced, delivery dates). Calculate efficiency as Outputs ÷ Inputs; hitting targets confirms process health. Anchor every target to a Level Zero-based process construct, not a department or individual role. Complementary Controls: Rules, Policy, Procedures Rules guard against deviation (e.g., “surgeon must be sterile”). Policy formalizes rules (“sterilization policy” for all operating rooms). Procedures prescribe steps (“Step 1: Wash hands; Step 2: Don gown”). Together, targets track performance deviations, while rules → policy → procedures ensure consistency and quality across the process construct. Minimising Operational versus Strategic Threats Strategic vs. Operational Risks Strategic risks arise when there are risks that threaten the relevance of the organisation. These typically engage the executive committee and board. Operational risks occur when performance of the Level Zero construct is threatened. Locating Operational Risks in the Level Zero Construct Resource-based risksDepreciation, non-performance, budget overruns Stem from people, capital, assets Level Zero-design risksProcess flow bottlenecks, handoff failures, misaligned dependencies. Emerge only when a process is structured or sequenced poorly. Organizational charts distort risk mapping because activities cut across functional silos. Instead, identify risks by tracing CSFs for each process—each unmet CSF signals a risk. Quantifying and Ranking Risks Avoid 3-colour systems (red/orange/green) that cluster disparate risks together. Assign each risk a Risk Value (%) based on likelihood and impact. Assign a Control Effectiveness (%) reflecting existing mitigations. Calculate Risk Exposure = Risk Value − Control Effectiveness. Rank risks by exposure to prioritise threat reduction efforts. From Exposure to Mitigation Focus first on high‐exposure risks (positive values). Review CSF’s and redesign process steps to eliminate root causes. Enhance controls (technology, training, policy) to shift exposure into the negative (over-controlled) zone. By separating strategic from operational threats and applying percentage-based risk exposure, organisations gain clarity on which risks truly endanger daily operations—and which require board-level strategic action. Conclusion: Integrating Attention & Intention within the Level Zero Model Throughout this essay, we’ve traced efficiency from purpose into the Level Zero Model’s five core systems construct (Resources, Core Business, Relationships, Transformation, Risk). We framed how operational targets—and the strategy that follows when those targets can’t be met—create a living feedback loop for continuous improvement. To unify running and transforming an Org, we label the operational lens attention and the strategic lens intention. Below, each Level Zero system shows how daily operational vigilance (attention) pairs with future-state strategic focus (intention): Level Zero, intention, and attention from an orgtology perspective by Derek Hendrikz By applying attention and intention across each system, Org ensures: Daily attention keeps processes aligned to targets, confirming operational efficiency. Periodic intention drives projects and strategic shifts when evolutionary tweaks fall short. A continuous feedback loop: attention identifies deviations; intention designs the fixes. When efficiency (attention) and effectiveness (intention) co-exist within the Level Zero Model, an organization both runs smoothly today and adapts purposefully for tomorrow. This essay is an updated version of the essay below: Hendrikz, D (2021). ‘Optimizing Operational Efficiency', * The International orgtology Institute, * 22 August. Available at:https://orgtology.org/.../171-optimizing-operational...
