"Everyone talks about the need for innovation these days, but they especially talk about why businesses are so bad at it."  That's the opening line from my newest column "The Myth of Efficiency" at Forbes.com.  Today businesses seem to be struggling with innovation – preferring instead to cut costs and pursue efficiency.  But we now know that the foundation for cost cutting as a route to better returns is based on faulty – in fact mythical – claims by Frederick Taylor and his devotees of "scientific management."  Read this article if you ever wondered about the value of cost cutting compared to innovation – and learn why so many people "default" to actions that never make things better.

My column cites a great New Yorker article entitled "Not So Fast" on the faulty foundations upon which scientific management – and subsequently much of business education – is based.  For an even deeper read into the mythical bases of Taylor and his crew pick up a copy of The Management Myth:  Why the Experts Keep Getting it Wrong by Matthew Stewart (2009 W.W. Norton) available via the link at Amazon.com.

This is timely, because "Defining talent needs, managing costs central to workforce planning in 2010" is the headline from Mercer's own website about it's recent survey showing that the #1 factor in planning for human capital next year is managing cost!!  How are we to grow out of this recession when people are cost obsessed?  Especially now that we know cost cutting has no foundation as a basis for improving or sustaining returns?  Certainly we now have good reason to challenge conventional wisdom as espoused in books like Cut Costs + Grow Stronger recently published by HBS Press.  

If you are confronted with picking between cost cutting or innovating read this article, because your "gut" just might have been developed on faulty assumptions – leading you to make the wrong decision.