Efficiency as Strategy: Lessons from The Origins of Efficiency for Federal Government Contractors

Brian Potter’s The Origins of Efficiency is an inquiry into how modern societies achieved material abundance. Rather than treating progress as an abstract story of “innovation,” Potter anchors it in the concrete evolution of production processes—the step-by-step transformations that turn raw materials, information, and labor into useful outputs. His central claim is that the dramatic reductions in cost and increases in quality across many sectors can be traced to systematic improvements in how production is organized, scaled, and controlled.

The book begins with a detailed examination of seemingly mundane products, such as incandescent light bulbs, to show how early, craft-based processes were gradually replaced by highly specialized, high-throughput systems. In each case, Potter dissects the production chain into a sequence of operations, each with characteristic methods, rates, input requirements, and failure modes. Over time, these operations are re-engineered: steps are automated or eliminated, variability is reduced, throughputs rise, and fixed costs are spread over much larger volumes. The end result is a transformation not just in price, but in reliability, availability, and ultimately in how society uses the product.

From this history, Potter derives a general framework. Any production process can be improved by (1) changing the underlying method or technology; (2) increasing the production rate and scale; (3) lowering input costs through substitution or integration; (4) removing or consolidating steps; and (5) reducing variability so that failures, rework, and idle time decline. The ideal is a form of “continuous flow,” where work moves smoothly from one stage to the next, intermediates do not accumulate in buffers, and outputs are predictable. This logic is developed across industries—steel, chemicals, electronics, transportation—revealing common patterns behind otherwise diverse technologies.

A second major theme is asymmetry: some domains have experienced dramatic efficiency gains, while others have stagnated. Industries with standardized outputs, high volumes, and relatively permissive regulatory environments tend to accumulate efficiency improvements quickly. By contrast, sectors characterized by bespoke projects, fragmented demand, complex regulation, or strong local constraints—construction and certain professional services, for example—have seen much slower productivity growth. Potter’s contribution is not merely to describe this divergence, but to give readers a vocabulary for analyzing why specific sectors behave as they do.

For federal government contractors, this framework is highly relevant, even when the “product” is an engineering service, IT support contract, facilities management program, or logistics solution. Viewed through Potter’s lens, a contractor’s activity consists of networks of production processes: capture and proposal development workflows, staffing and onboarding pipelines, recurring performance tasks under a performance work statement, inspection and reporting routines, and compliance mechanisms that ensure adherence to FAR, DFARS, and agency supplements. Each can be analyzed in terms of method, rate, inputs, intermediate queues, and variability.

This perspective has several implications. First, in competitive, fixed-price or performance-based environments, sustainable margins depend less on one-off “heroics” and more on systematic reductions in the cost per unit of output—whether that unit is a help-desk ticket resolved, a facility inspected, or an asset maintained. Potter’s levers offer a structured way to think about where those savings come from: redesigning workflows, investing in supportive technology, reducing rework that later manifests as corrective actions or adverse past performance, and right-sizing buffers such as excess inventory or idle labor.

Second, his emphasis on continuous flow resonates with government priorities related to schedule, risk, and mission assurance. Contracting agencies care about more than price; they care about reliability, surge capacity, and the absence of disruptive bottlenecks. Processes with fewer hand-offs, less variability, and clearer control points are less likely to generate performance failures, claims, or disputes. Designing contracts and internal delivery models with these principles in mind can strengthen both proposal narratives and actual performance.

Finally, Potter’s discussion of sectors that resist efficiency gains offers a cautionary note. Many constraints in federal contracting—statutes, cost-allowability rules, labor standards, security requirements, and legacy IT environments—are structural rather than managerial. For contractors, the challenge is to identify the subset of efficiency levers that can be exercised within these constraints, and then to negotiate contract structures (e.g., incentives, options, and change mechanisms) that allow both parties to benefit from realized improvements.

Disclaimer: This blog post is for general informational and educational purposes only and is based on publicly available sources as of the date of writing. It does not constitute legal, financial, or other professional advice. Readers should consult qualified advisors before making decisions related to federal government contracting.