Effectiveness vs. Efficiency

Photo by sarniebill1


Take a deep breath. I am back, with a long one!

A post I wrote a few weeks ago (“The efficient, but less effective, way”), and a comment by one of the readers (thanks Jono), started me on a long path of thinking about the issues of Effectiveness vs. efficiency.

Now I know that this debate is not a new one. Every decision is some kind of tradeoff between the two and people are totally aware of that. And then again, are they?

Like many things in life, to a certain extent, we can’t do both. We can focus on one and do it very well and do a little of the second one. In I think in the last century and especially in the last couple of decades, our society has focused more on of efficiency than on effectiveness. And one of the reasons for that is that we don’t fully appreciate the philosophical differences between the two. Look at these definitions from dictionary.com:

ef·fi·cien·cy –noun,plural-cies.

1. the state or quality of being efficient; competency in performance.
2. accomplishment of or ability to accomplish a job with a minimum expenditure of time and effort: The assembly line increased industry’s efficiency.
3. the ratio of the work done or energy developed by a machine, engine, etc., to the energy supplied to it, usually expressed as a percentage.

ef·fec·tive –adjective

1. adequate to accomplish a purpose; producing the intended or expected result: effective teaching methods; effective steps toward peace.
2. actually in operation or in force; functioning: The law becomes effective at midnight.
3. producing a deep or vivid impression; striking: an effective photograph.

What the definitions don’t tell us is the focus. Efficiency is about marginal improvements. We take the current situation and try to make it better. To make the most of what we have. To do better with what we have. And that is a very useful skill. But it rarely leads to huge leaps. And it rarely breaks the boarders and provides levels of performance we haven’t thought possible. Effectiveness, on the other hand is about change. Is about finding a better fit to our goal. It is making something work better, not in the margins, but in the core of its being. It is about finding the right solutions to the right questions. If you make something more effective, you are changing the way it works, re-inventing it (maybe a bit more similar to term Efficacious). And you are focused on the long-term effects.

Efficiency is a closed-world concept. You work with what you know and have and “minimize damages”. And as a closed-world concept, it has its disadvantages.  Justin Fox pointed out one of them on HBR.org:

At one level this is much more efficient than the old system. The spreads are smaller, so investors are getting a better deal, right? Well, not if the system also becomes much more fragile, and susceptible to sudden collapses. Over the past three decades our financial system has become vastly more complex in terms of technology and diversity of available financial products. By some measures it has become more efficient — trading commissions have certainly come down. But it has also become more prone to crisis and (maybe) collapse. Efficiency (and this is an argument borrowed from Taleb) breeds fragility.

And Tony Schwartz makes a related point on the same blog:

But is it good news? Is more, bigger, faster for longer necessarily better?

Americans already put in more hours than workers in any country in the world – and that doesn’t include the uncounted shadow work that technology makes possible after the regular workday ends.

Here’s the bigger point. Just as you’ll eventually go broke if you make constant withdrawals from your bank account without offsetting deposits, you will also ultimately burn yourself out if you spend too much energy too continuously at work without sufficient renewal.

Michael Watkins and Umair Haque both make similar points on the HBR.org blog.

Big, simplified example? The focus of the last few years was on more money. A lot of efficient ways to make more money. Were they effective? We all know that answer to that question.

Now, I am not saying that efficiency is a bad thing. That couldn’t be more wrong. Every young MBA student struggling with the concepts of strategy will tell you that you have to keep cutting costs, systematically, never-endingly. You have to improve your business and do it in the best way you can. Otherwise the competition will. I am just saying the emphasis is wrong. Because if you can’t do both all the time at a high level, you must have priorities. And while focusing you priorities on efficiency leads to all the aforementioned problems, focusing on effectiveness, while it is harder, is the real promise of the future.

By now you must be wondering how all of this is related to the subject of this blog. I talk about management of people and how to foster relationships, reduce rules and create an environment of autonomy, mastery and purpose. There is no doubt that all of these practices are effective. You don’t have to trust me about it. There are years of research to prove these things. The problem with these things is that if you look at them from the efficiency point of you, they seem inefficient. “What, I have to sit with my employee for an hour and a half and talk to him? Who has the time???” These are complaints I hear from people when I discuss some of these issues with them. “In the fast paced reality, there in not enough time to practice all these ’soft skills’ best practices”, people tell me. And apparently, I am not the only contemplating about these issues. Look at what Bob Sutton writes in his blog:

…the difference between good and bad bosses, it made me realize that — although good bosses are concerned about using their time well, and especially, making sure not to waste their people’s time — that they tend to think and act as if it is more important to do things as well as possible than to do things as quickly as possible.  Indeed, some of the work bosses I can think of always seemed to be focused on finishing whatever they are doing at the moment so they can get on to the next thing.  The result, unfortunately, is that they spend their days rushing around, doing one thing after another badly.

And I saw similar things said in Susan Scott’s book, Fierce Leadership: A Bold Alternative to the Worst:

Physicians who don’t get sued take a little more time – three minutes more than physicians who do get sued. And it was the quality of the physician-patient conversation, how the doctor talked with their patients – notice with, not to their patients – that made the difference. Patients like doctors who really listen, draw their patients out (tell me more about that), and answer their questions fully. Those three extra minutes and how they were used were the differentiator. In the blink of three minutes the patient felt seen, heard, understood, valued, and respected. You don’t get that in every doctor’s office. Or in every executive’s office.

Yes. These doctors are not as efficient (they will see fewer patients per day) but they are much more effective. Sometimes we need to slow down to speed up.

What is your bias? When the priorities are on the table, which one do you consistently prefer – efficiency or effectiveness?



One Response to “Effectiveness vs. Efficiency”

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