Effectiveness or Efficiency. Where is your focus?

Imagine a day full of meetings. "I have to be more effective today. Which meetings can I skip to get some stuff done?" you might ask yourself. The next day, two people work on the same thing. You might ask: "How about we split up the tasks to be more efficient?" These or similar terms are phrases we use in our daily work lives. It's all about being effective and efficient.

Looking across subject areas, I noticed that various concepts include these terms through their subject-matter lens. All these eventually boil down to one thing: It is really important which side (effectiveness or efficiency) you focus on.

This post discusses the concepts and why this focus is important. But let's start with the basics. What do I mean by my baseline of efficiency and effectiveness?

Starting with efficiency (because most people are familiar with this one):

Efficiency means accomplishing a task with minimal waste, effort, or cost. It focuses on optimising the use of resources to achieve the desired outcomes, ensuring that the inputs are utilised in the most productive manner possible.

Next up effectiveness:

Effectiveness refers to the degree to which objectives are achieved and the extent to which goals are accomplished. It measures whether the desired outcomes are attained, regardless of the resources utilised.

In essence, with effectiveness, you focus on achieving your outcome. While with efficiency, you reduce waste.

Same principle, different wording #

In engineering, people often use the terms efficiency and effectiveness. That may be the reason that I take them as a baseline. They are most familiar to my work context. As I explored various subject areas, I noticed they all have a similar foundation.

Looking at product management, I've seen the phrase: "When you build the right thing right, you'll be successful."^[1]. I noticed this odd constellation of "the right thing right" and started taking it apart. The "right thing" is about finding something worth building. It refers to effectiveness. The "thing right" is about efficiency. Reduce waste by building it in the best way possible. As we can see, it's a different wording but a similar principle.

Digging deeper, I found out that product development is about discovery and delivery. Product discovery exists to find out what will be of value. Product delivery is about finding ways to generate value.
From a high-level perspective: During the discovery phase, I focus on achieving an outcome. Delivery helps me to build for this outcome.
This shows that it includes the baseline principle as well.

Business administration uses financial statements as a communication tool. The income statement starts with the revenues, followed by the direct operating costs. The classic business question: Should I focus on gaining more revenue or cutting costs for a better bottom line? Focusing on more revenue could mean extending current offers. It's about creating more value for customers to gain better outcomes. Or you can control costs by looking at operating efficiency. Reduce costs by eliminating waste in the process.^[2] Do you see how it includes the baseline once again?

Ok, great, but why do I care?

Find the right thing before you build it right. #

As Simon Wardley would say: "Focus on the wrong thing, and you'll lose." So, ensure you find the right thing before building it right. In other words from Peter Drucker:

There is nothing quite so useless as doing with great efficiency something that should not be done at all.
– Peter Drucker

Exploring a real-world example: A media company invests an 8-figure amount into building a music app. They decided to

lease the library from a provider,
focus on a big music collection,
provide baseline audio playback,
ship it in their own branded app.

The organisation invests a lot of resources and goes to work. It builds and delivers the app in a couple of years. Engineers create and optimise the app for better efficiency (easier operation). They built a big app to discover that users listen to music differently. Discoverability of music and a great listening experience via smart speakers are actually the central features users are looking for. Congratulations. They efficiently wasted money and time. Hopefully, they had at least a good time doing it.

The efficiency trap #

In day-to-day operations, I hear "We must be efficient" way more often than "Let's get more effective". From a high-level perspective, I find that hard to accomplish. We're already very efficient. Especially in IT, we automate as much as possible. On the other hand, I saw more solutions that aren't used or don't bring in the expected returns. It feels like the "nine out of ten startups fail" rule applies to everything created from scratch.

Uwe Friedrichsen outlines in his post "Forget efficiency" that most businesses, past and present, have been driven by efficiency. But in the post-industrial market with more supply than demand, we clearly need to focus on effectiveness. This means a product only succeeds when it solves the customer's needs better than the competition. I certainly agree with his outlines and statements. It's worth reading.

Gregor Hohpe has another interesting take on efficiency in the book "The Software Architect Elevator":

Changing from efficiency-based thinking to speed-based thinking can be difficult for organisations: after all, it’s less efficient! In most people’s minds being less efficient translates into wasting money. On top of that, people being idle is more visible than the damage done by missed market opportunities.

Not being efficient doesn’t mean wasting money! I would even say you can focus on customer needs in the market without being inefficient.

Improve time to insight instead of efficient solutions #

Many companies can gain more by improving their time to insight. It's a focus on the customer perspective.

Time to insight measurement
The time it takes from an idea until we've validated the key assumptions for deciding whether to pursue an investment.

Breaking it down for non-product-people: You only know if your idea works when you get real-world customer feedback, such as customers buying the product. So try to improve your workflow of discovering if an idea is worth it (be more effective). You could try prototyping offerings without having a product to sell. If you see preorders getting in (or not), you have better data to decide if or how it makes sense to proceed.

To sum up, first, identify the feature that provides value for customers (is effective). Then (and only then) pursue delivery operations. It provides a higher probability of a positive upside.

The path forward #

Turning the conversation more broadly: I learned it is essential in every step I take to understand where my efforts have an impact. Will I increase effectiveness, or will I be more efficient? Before I try, I ask myself: Where should my focus be? Which "side" will make my life better? Remember, it's not always being more efficient. Quite the opposite, as I argued above. In our current state of the world, we're already very efficient.

By the way, sticking in automation with something mostly improves efficiency. It's the thing that you just automated that holds the effectiveness. This brings me back to the difference between features and benefits. Do we build features, or do we focus on achieving benefits for others?

Conclusion #

Efficiency accomplishes tasks with minimal waste.
Effectiveness verifies that actions accomplish the desired outcomes.

You find this concept and related terms in various subject matter-related topics. They all go down a similar road, asking you to follow one side or the other. So, it helps to ask which side to focus on. Take that into consideration.

There's a great book about this concept called "The Right It". I highly recommend you give it a try. It's very entertaining and insightful. ↩︎
Companies have been cutting costs to improve efficiency and bottom line. However, in our current VUCA world, resilience is very important. For example, diversify your suppliers to stay effective in the long run. Since this thinking does not directly affect the equation, many companies find executing challenging. ↩︎