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Efficiency or Effectiveness - which is it?

8 Aug

Efficiency or Effectiveness - which is it?
By: Lisa Letke ( Lisa Letke's Blog )
Tags: proposal management, project management, operations, efficient, effective

A while back I posted a poll to the Operations community on with the following question:

What would you rather be – efficient or effective?

I did not post definitions in the poll, but two generally accepted definitions are listed below:

Efficient: Productive of desired effects - in other words - getting the maximum output with minimum resources. Being efficient focuses on end results.

Effective: Producing a result that is wanted – in other words – continually measuring whether the actual output meets the desired output. Being effective focuses on process and quality.

Clearly my audience was focused on getting results and being effective, as 75% of responders selected effective. However, there is a strong case for efficiency over effectiveness in select instances. More specifically, in instances that arise on a day-to-day basis when handling the operations of an organization.

In order to be successful, an organization, and the individuals who comprise it, must be both efficient and effective. I’ve provided two examples below to illustrate when efficiency trumps effectiveness and vice versa.

#1 Project Management – Project Manager, Mr. X, is assigned a project with an important client who recently had a bad experience with Mr. X's firm because of cost overruns. If this project goes over budget, Mr. X’s firm may lose the client. He has a choice – he can purchase an expensive, data entry-heavy budget software program would be highly effective – regularly providing the client with detailed, real-time actuals, compared with budgeted costs. However, the cost of the budget software would eat nearly 98% of the project management budget, thus practically ensuring cost overruns once he included his time and the time of his staff. In this case, Mr. X needs efficiency. A less expensive budgeting software (read: fewer resources!) will still track project expenses, though with fewer bells and whistles, and be key to assisting Mr. X in delivering the desired end result – an on-time and on-budget project.

# 2 Proposal Management – More than likely if you are working in operations, you have spent time writing, reviewing or editing a proposal. You may have also been, ahem, victim to stringent proposal processes set up by your organization. If your experience is like mine, there may often be a disconnect between those individuals who set the rules and those who follow them. Quite often the following proposal management scenario ensues: the request for proposals is released; the proposal management team determines the calendar and announces that in order to follow the established procedures and meet the deadlines, the proposal will be written on Friday, reviewed on Saturday, completely revised on Sunday and submitted to the client by 12 noon on Monday – a full 24 hours before the due date. The result = a very efficient, but highly ineffective process. The proposal will be submitted on time, but the quality will suffer. A more effective process will respond to the needs of all stakeholders (the entire proposal team) and have a better chance of producing a winning proposal.

In each example above, it’s clear that efficiency and effectiveness are not the same thing (as is often thought). In fact, they are often directly in opposition to one another. Efficiency is often sacrificed for effectiveness and vice versa. A good operations manager can assess the need for each and respond accordingly.

It’s also a lesson learned for me and my poll. My poll was very efficient, with 2 choices – efficient or effective – which is it? In retrospect, it would have been more effective if I had added a third choice – Both.

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