Eliminating waste is the holy grail of management science—but overemphasizing it leads to a host of problems. Companies should pay just as much attention to resilience.
In his landmark 1776 work The Wealth of Nations, Adam Smith showed that a clever division of labor could make a commercial enterprise vastly more productive than if each worker took personal charge of constructing a finished product. Four decades later, in On the Principles of Political Economy and Taxation, David Ricardo took the argument further with his theory of comparative advantage, asserting that because it is more efficient for Portuguese workers to make wine and English workers to make cloth, each group would be better off focusing on its area of advantage and trading with the other.