Efficiency and Effectiveness

“Efficiency is doing the things Right; Effectiveness is doing the Right thing”…Peter F Drucker

Efficiency and Effectiveness are often mixed up on what they stand for. The above quote from Drucker while is insightful, like often with other management connotations, it is a bit confusing…So let us look at them…

Efficiency:

Efficiency is all about how well we are using the Inputs to convert into an Output. Efficiency is usually measurable. Some of the measures of the efficiency are the Time taken or the Money saved. One of the finest examples of the Efficiency is the Pit stop in a Formula1 Race. The typical activity in the Pit stop are like 7-8 crew members involved in changing the tyres (1 or more) and to fuel the tank all in a matter of 8-13 seconds ! Efficiency is all about doing the set of standard activities in the right manner

Effectiveness:




  In the above example of Pit stop, while it is the incredible efficiency of the crew alone cannot make the race for the driver.You may wonder why…that is due to the Effectiveness .Okay…Okay…I will come to the point here….Say if we were to rely on the efficiency alone, and there were standard instructions for the crew to change all the 4 tires & fill the fuel to the full tank, the Output of this pit stop process can still be good but the Outcome of the race for the driver may still be bad. This is where the role of effectiveness comes in…

• How many laps are still left?

• How much fuel would be enough?

• Can I just replace 2 out of the 4 tyres and finish the race?

Answering all the above questions can shave off at least 3 or 4 seconds in the pit stop which can alter the Outcome of the race for the better.

So,Effectiveness is the process of determining what are the right things to do. Effectiveness is more of a common sense or what we commonly call as experience

So, you may ask “ Which is more important…Efficiency or Effectiveness? “…..Without doubt the answer is Effectiveness. This is because, Effectiveness is about taking the right direction ,without which Efficiency will lead us to the wrong destination faster !

I am not discounting the role of efficiency in any way…It is definitely necessary…World class companies such as Toyota ruminate a lot of time in determining the effective process. Once they zeroed in on the right process, they operate with ruthless efficiency.