Business owners are very busy people. There is always an endless list of tasks to be accomplished. Many times they have to choose between being efficient or effective.
According to the late and renowned management consultant Peter Drucker, efficiency is doing things right while effectiveness is doing the right thing. When growing a company, efficiency can support profit, but effectiveness may drive growth.
How does a business choose between the two?
Efficiency Over Effectiveness
Some people finish a task as soon as possible—maybe even before thinking of a solution. To them, the most important thing is to complete it in a short period of time regardless if it is the most effective way to do it. They may end up working harder and longer to make up for this method's lack of effectiveness.
I believe that sometimes it's better to dive in than to wait until discovering the perfect solution. For example, I answer all my emails right away with a word or a fragment of a sentence in order to move on. While I definitely find this efficient, sometimes it is not effective. The sender may have additional questions that my short reply didn't answer.
Another example is when a company has a very efficient process for posting social media content and replying to inquiries. That's all well and good, but if they are engaging with the wrong prospects—people who will never buy their product or service—then it may not be the most effective process.
Effectiveness Over Efficiency
People who choose effectiveness over efficiency tend to procrastinate. They typically wait until they have it all perfectly planned out and organized down to the most minute details before beginning anything. They most not get it done quickly, but they can accomplish the absolute task's goal as part of the bigger picture.
For example, a company's hiring process may ensure that the candidate comes back to interview three times to talk to 10 people in the company. Candidates may also be asked to take a personality test and submit to a background check. The team then convenes for hours to discuss if they should hire this person.
They might hire the best-fitting person. But it may not be very efficient since it takes up so many people's time and many days before an offer is made. The candidate may have offers from other companies they get sooner and could go work somewhere else before this company makes their offer.
A Case for Balancing the Two
It typically is not possible to be both effective and efficient simultaneously inside a business. There is a constant trade off where the organization focuses on one method and then shifts to focus on the other.
Take any action that has been successful before. Once completed, go back and make changes to make it more efficient. You can iterate on this over and over again by making a small decision. Then you can make changes by evaluating the results.
Once you do that, you can make another small decision and analyze the outcome again. This can help you find the most effective and efficient solution over a longer period of time.
Successful businesses are often built for the long term. Documenting and refining processes inside the company can help boost efficiency. Engage the team to put together what the best practices are for each department or process. Leaders can constantly plan for the future and change the way they do things on a regular basis.
While efficiency may get things done at a lower cost and higher profit today, companies are only sustainable if they can effectively solve their customers' problems. Don't choose. Alternate between doing both to help you get your company to where it needs to go.
Learn more ways to get business done.