Effective vs Efficient

In back of my mind, the question pops up around the difference between Effective and Efficient. Couple of management books and few blogs, enlighten me to share this knowledge over Pongal holidays.

Definition

With fundamentals of computing, three states are vital in any system. They are

1. Input
2. Process
3. Output

With this context, Efficiency is focused on lower input and higher output with core processing of 'quantity'. As an example, the business is efficient if they deliver the high quantity take away with lower resources. Let us assume, a building is constructed in 6 months with 100 construction professionals during normal term. To make it efficient, the business is expected to complete the same task with less time frame (say 3 months) and less people (50). Now, it is claimed that the project is efficiently completed by 50%

On coming to Effective factor, there is a co-relation between input and output parameters. It is related to the fine tuned processing of doing right things. In turn, Effectiveness has the 'quality' focus; rather than 'quantity'.

Expert Opinion

In the essence, management Guru Peter Drucker describes "Efficiency means doing thing right; where as Effective doing right thing", as defined below:

Mathematical Mode

With mathematical derivation, matrix is represented on 2 x 2 mode as below:

As self explanatory, most effective succeeds at a high cost; but most efficient leads to fail due to cost control. Below mathematical curve proves the optimum solution to have the balance between effective and efficient.

Management Mode

Let us log into the business management mode. Objective is the key goals in the business context. Return on Investment (RoI) and Cost are vital parameters to drive Effective and Efficient model in the business management.

On doing high effective & low efficient mode, goal got pursued in high cost. So, it aims towards high RoI & Cost. High efficient & low effective directs lower production with low cost model and so aims lower RoI & Cost.

Ideally, the business management targets High RoI & Low Cost using high effective & efficient model. Strive to Thrive is success mantra !!

Conclusion

As industry leader persona, Top-5 summary points are:

1. Effective & Efficient are useful tools to leverage concurrently/interrelately
2. Both are performance scorecard/indicator, to get things done with on time mode
3. Motivates to share transparent customer feedback with your team
4. Engages team to make them feel of belonging sense
5. In turn, foster the positive work environment for better business results

As Ron Kaufman said "First be effective and then be efficient"