I don’t know why I’m surprised, but I was—-actually shocked. Yesterday, I opened an email from a very reputable SaaS company. I was interested because the piece was focused on understanding the difference in productivity and efficiency. And virtually everything covered was wrong–dangerously wrong.
The same confusion, about these terms fills our social feeds. We don’t understand these terms, and how to leverage them appropriately, we will fail—possibly very efficiently.
So let’s start with some definitions:
Efficiency: Efficiency is strictly a measure of some sort of quantity accomplished in a period of time or for a certain “investment.” For example, if I normally send 100 emails in an hour, 100 mails/hour; then I find a tool that enables me to send 200 email/hour, I’ve doubled my efficiency. I’m accomplishing much more in the same period of time. Alternatively, let’s say I’m paid $100/hour. If I produce 200 emails/hour rather than 100, I’m twice as efficient. Each email in the former case costs half of what it costs in the latter case.
Efficiency has no relation to the quality of the result, it just measures the quantity of the result. An easy example is that if I’m going 100 mph, I can go twice as far as if I’m going 50 mph. But if I’m going the wrong direction, if my destination is to the West, and I’m driving very fast to the East, I’m being very efficient, but not producing the outcomes I expect.
Long term readers will recognize my saying, “We have created the ability to create crap at the speed of light!” This has to do with our obsession with efficiency, and not the correct outcomes.
Effectiveness: Effectiveness is an important concept, it’s the complement of efficiency. It focuses on the result or outcome. Effectiveness focuses only on our ability to produce the desired result. If we are doing something and it doesn’t produce the desired result, we are very ineffective. If it produces the outcome we wanted we are effective.
Using the previous example, if my goal was to go West, but instead I drove 100 mph East, I would be very ineffective.
Effectiveness has a focus on doing the right things to produce the desired result. If I do an email campaign, expecting 50% opens and 25% clickthroughs, but it produces 10% opens and 1% clickthroughs,, my email campaign is not very effective.
Stated differently, effectiveness is a measure of quality–which focuses on the compliance with the desired results.
Productivity: Productivity is the combination of Effectiveness and Efficiency. It focuses in getting the desired results in a period of time or for a certain investment.
Again, using the same example from before, if I drive West, achieving the outcome I want, at 100 mph rather than 50 mph, I’m twice as productive. I’m maximizing my effectiveness and efficiency.
To maximize our productivity, there is a sequence to how we do this. We have to focus first on effectiveness. That is are we doing the things that produce the desired outcomes. Once we can consistently produce those results, then we can focus on efficiency. Are we producing those results in the shortest time possible or for the least cost?
Going back to our email example, we want to focus on how we construct an email and the distribution list that enables us to get 50% opens and 25% clickthroughs. Once we have figured that out, we want to see how we can produce more of those in a period of time. For example, if I’m getting that result with 100 emails/hour, what do I have to do to create the same outcomes with 200 emails/hour.
Here, we start to see that efficiency may adversely impact our effectiveness. We might be able to produce more in a given time or cost, but the results are lower. It is often a dynamic process and we have to assess the balance or tradeoffs we have to make in balancing efficiency/effectiveness.
For example, if my current email program is producing 50% opens and 25% clickthroughs at 100 emails/hour (meaning I’m getting 12.5 clickthroughs per 100 emails) and my new program of sending 200 emails with 50% opens and only 15% clickthroughs (for 15 total), I may want to do the 200 emails/day.
This is an area where we sometimes run into problems with our Lean Efforts. The concept of continuous improvement is fundamental to Lean. In some sense, Lean forces us to “have our cake and eat it too….” Leveraging Lean principles, while we might adopt a strategy that enables us to do 200 emails/hour with 50% opens and 15% clickthroughs, we would immediately embark on a project to raise that to 25%.
Our responsibility as leaders and individual contributors is to maximize our productivity. That means we must constantly focus on both effectiveness and efficiency. We have to do both, in the right order, if we are going to maximize productivity.
And we have to recognize productivity is not static, that we have to continue to look at how we improve our productivity. How we produce more of the desired results in less time/cost.
Our misunderstanding of these principles and their interrelationship/precedence adversely impacts our performance. We seemed obsessed with efficiency, even though it is not creating the desired results. We seem committed to producing crap at the speed of light.