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Efficient and Effective

© Bert Markgraf

In business and in management, operating in efficient and in effective ways is a key to good performance and to successfully reaching the goals set for the business. While efficiency and effectiveness are similarly desirable characteristics of business behaviour, either one is often seen as attainable only at the expense of the other. Looking at the interplay of the two characteristics can give a clear insight into the ideal behaviour for a manager when faced with tasks which must be completed quickly, but also completed in such a way that the key goals are attained.

"Efficient" is defined as working without waste or using a minimum of time, effort and expense. But, the definition is silent about the goals of the operation. A person can be very efficient at what they are doing but still not get to where they want to be because they aren't doing the right things. That's where "effective" comes in. "Effective" means "having the desired result". Once the desired overall result is defined, the tasks leading to the result can be isolated and these tasks can then be completed efficiently. While this seems obvious, actual execution of tasks in many companies doesn't follow this simple principle.

If a business wants to grow, one way is to attract more customers. To attract more customers, potential customers must be informed of the advantages of doing business with the company. This requires the step of identifying potential customers and identifying why they would want to become customers. Since the business already has customers, the easiest way to identify new potential customers is to identify people like the existing customers; the reasons these new customers would buy from the business are the same reasons the existing customers do. The steps which will be effective in attracting new customers are now clear:

1. Identify groups of existing customers and find out why they are customers;
2. Identify similar groups outside the existing customer base;
3. Contact these potential customers and let them know the advantages of becoming customers, giving them the reasons existing customers gave.

These steps will be effective and they can now be performed efficiently. On the other hand, sending out mass mailings to general mailing lists can also be performed very efficiently, but it won't be as effective and probably will not let the business reach its goals.

When I managed a large project with advanced technology some years ago, I assured the customer that we would complete the project on time and on budget (efficient). The customer looked thoughtful and said that those were not his priorities. Instead, he said, the system must work properly (effective). Once it works, he said, we'd like it on schedule and it would be nice if the costs were in line. Often, we do a lot of things very efficiently but lose sight of where we're going. Efficiency is the last thing we need; identifying the goals and the tasks which will be effective in getting us there comes first.

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