#209 – Efficiency vs. Effectiveness

As the late Peter Drucker phrased it, ‘efficiency is doing things right, and effectiveness is doing the right things’. We see the act of increasing efficiency as focusing on reducing waste (e.g., the overhead, lead time or effort) as possible in delivering a desired outcome, whereas we see the act of increasing effectiveness as focusing on maximizing the value-add of the delivery and, thus, improving the outcome. Neither efficiency nor effectiveness should stand alone as the single parameter that we should invest all our energy in optimizing.

However, if you let Management decide on their own, they’ll most likely end up with efficiency being the measure that they want to improve (maybe, they’ll disguise it as ‘lead time’), because it sounds like saving money. In that case, have in mind that running faster is not necessarily something to aspire for, as complex problems require creative and innovative problem-solving which, often, requires some level of deep thinking. Instead, improve your Flow Efficiency by reducing your wait times in your delivery process—generally, focus on increasing your effectiveness, instead.