DeMarco told the Software Development 2004 conference in Sydney that constant pushing of information technology -- together with other operations -- to undertake tasks more quickly, better and with fewer resources is not necessarily good management.
"We live in an age where only the fastest survive [and] this busy-ness is part of the problem," said DeMarco.
"The busier you are the less able the company will reach their long term goals. When you take the 'slack' out of your organisation you don't have time to change," DeMarco added.
While admitting that his answer to this problem was simplistic, DeMarco highlighted Japan's efficiency-obsessed economy in the 1980s as an example of his theory.
"We saw what Japan was doing in the economy in the '80s and we flinched. They worked harder, longer and were better educated...as we found out this didn't work out so well for Japan. Since 1990, Japan hasn't been so great," DeMarco said.
He explained that while Japan still had the high work ethic of the '80s, and were still "brilliant and very bright", their over-efficient processes had been at the core of one of the longest recessions in history.
A delegate who wished to remain anonymous told ZDNet Australia that he totally agreed with with this analysis.
"The public service has gone from what the public service is known for to be to being obsessed by being efficient," the source said.
"We don't have time to work on innovative projects and it could cost us," he added
DeMarco went on to warn that being over-efficient would have consequences for employers if the job market (which he believes will grow significantly in the next couple of years) picks up.
"We need to learn how to invest in human capital. Stopping personal growth is like not paying somebody a salary," he said.
"If [companies] don't invest in people now they will not be there in a couple of years when the economy picks up when you need them. It will be a tough market for employers," he predicted.