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Efficiency & Effectiveness

“Efficiency is doing better what is already being done.

Effectiveness is deciding what to do better.”

Source: Peter F Drucker

I used this subject at a presentation to the 7.45 Breakfast Club this week.  Given that the club has members from a very broad spectrum of businesses, including sole traders, I wanted a subject that would be equally relevant no matter how big your business.

I use the Efficiency and Effectiveness matrix as a discussion tool to help businesses identify where they may need to focus their efforts.  It is a good way of prioritising ideas for change and focusing on the areas that will achieve the maximum benefit. 

To explain the model I typically use the following examples:

Effective & Efficient = ‘Thrive’

Organisations that implement the right strategy, efficiently tend to thrive. Sometimes they are so effective and efficient that they rapidly outgrow strategies, by meeting  their targets earlier than planned. The best will then go on to define and achieve more challenging strategic targets, thus increasing their ability to thrive.

Effective & Inefficient = ‘Survive’

A lot of organisations get by, ‘surviving’, forever showing potential, but never meeting their growth targets. Such organisations include public sector services, operating to a clear brief, that never quite achieve the levels of service to match the investment that is made in them. Private sector organisations with poor management or inefficient practices also fall into this category.

Ineffective & Inefficient = ‘Die Slowly’

These organisations do not have the right strategy to achieve what they are aiming for.  They also suffer from poor management and / or badly managed process discipline.  Many small family run businesses fall into this category and exist in an almost permanent state of decline.

Ineffective & Efficient = ‘Die Quickly’

Organisations that are highly efficient at doing the wrong things fail heroically; unless emergency action is taken to redefine their strategy.  Although they may have invested heavily in modern and efficient processes and systems, they share a lack of management awareness that they are headed for danger. Basically the vision driving their strategy, does not match the realities of the marketplace.

So where do you services fit within the matrix?

Are you as efficient and effective in all the product or service areas you provide?

If not what are you going to do about it?

If you are still not sure, drop me a line and we can discuss further.

4 responses

  1. Hi Paul. Thank you for the simple but effective diagram to explain effectiveness and efficiency. I will sure to reference your website when using the diagram in my presentation. Best regards.

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