One word, big difference
While working on the title for my upcoming session at CompTIA ChannelCon 2015, I realized that just one word can make a huge difference. My session is entitled “Transform from the Inside Out: Building Internal Effectiveness while Growing Your Business.”
But why focus on effectiveness, when the buzz is usually all about efficiency? It is a slight but profound mindset shift. To me, efficiency is about maximizing existing resources through the reduction of mistakes, errors, and waste. But, effectiveness bears the hallmarks of expansion, success, creativity and innovation.
What does it all mean?
When a business wants to be more efficient, the aim is to do more with less. Reductions can be made to costs, workforce and technology. The challenge is to decrease costs without impacting the mission, functionality, everyday operations and existing workplace environment. Efficiency initiatives are rooted in the past, focused on cleaning up what already exists. Sometimes efficiency also does require investments to replace or modify existing resources, processes, technology systems and infrastructure as I noted in a previous write up titled “For the love of efficiency!”
However, when an organization expresses the desire to be more effective, they are thinking of the future. Being effective is not so much analytical as it is emotional. Effective businesses think about expansion, new ways to collaborate and communicate, enhancements to functionality, and understanding the psychology of human behavior to create new, positive workforce habits.
Uber comes to mind as a predominantly effective business. As a young company, their mindset isn’t to maximize efficiency. Uber’s priorities right now won’t reduce workforce or consolidate operations. Their mindset is to create; new jobs, new connections, enhanced client safety, alternative ways of using technology and much more. Uber’s goal is to impact the community with its new mode of service. But, as they age, they will need to incorporate efficiency initiatives into their strategic plan in order to maximize resources, while still growing and innovating.
Past and future
So let’s review – effectiveness is forward-thinking and impactful. Efficiency is more focused on maximizing resources made in past decisions.
When thinking about efficiency, think local, operational short-term wins through cost reduction or consolidation, whereas effectiveness focuses on a more macro level, considering the impact on not just the company but the market and society. Effectiveness keeps a longer term strategy in mind and is thus more adaptable to the changing environment.
Measuring progress – a fine line
There is a fine line when measuring the success of both efficiency and effectiveness initiatives, both of which are needed to achieve a sustainable market advantage. Both result in change, which is very difficult to measure. Efficiency is measured as the change in budget, schedule, and resources. To measure effectiveness is to track the delta in the way overall strategic initiatives are achieved; how does the future differ from the past? In the automobile manufacturing industry, you observe the pursuit of both efficiency and effectiveness. The production process must constantly be improved (efficiency) while creativity and innovation must be present to effectively devise appealing designs for future models, like new hybrids.
Find the balance – effective AND efficient
When helping executive clients create strategic roadmaps, I advocate that equal thought is given to both efficiency and effectiveness. By clearly delineating between efficiency and effectiveness, it is easier to create a strategic plan and then align resources and actions accordingly. For example, a team that is being reassigned in order to save costs could be utilized for an initiative meant to foster innovation.
Putting an effective, efficient plan together needs to account for the human element and the way humans use technology to make decisions. MIT Technology Review published a fascinating article entitled “Software that Augments Human Thinking” that explores human computer symbiosis and how it affects required resources.
In today’s frenetic, information-overloaded society, we often find ourselves sacrificing efficiency and effectiveness in order to get “results” in less time. Proper planning allows us to act proactively, rather than reactively. Through proper planning and ensuring that an initiative features goals that are both efficient AND effective, impact is increased and rework is avoided. For example, marketing budget determination does bring calculated efficiency to the table, but the messages themselves may not necessarily be effective. Both are important performance indicators for any organization.
Low cost is not the bottom line
When organizations are frenzied to efficiently reduce costs over time, too much emphasis is placed on the “now” that the impacts on tomorrow are overlooked. On the flip side, however, a company who is always thinking towards tomorrow and how to increase their effectiveness may find themselves in a jam. In your role as CIO or other key decision maker, you can help your organization find the balance of efficiency and effectiveness.