The effectiveness vs efficiency question is a common one, usually presented as a balance or tradeoff between the priorities of doing the right things versus doing things right.
Effectiveness is measured in terms of achieving desired results and it’s about maximizing the value produced (by achieving worthy goals) within given constraints (e.g. capacity, time).
On the other hand, efficiency is about accomplishing a goal (or a task) with minimum expenditure of resources (i.e. time/effort/cost), or in other words, maximizing the ratio of achieved value to expended resources.
Someone bought something they needed for more than what it was worth and was considered dumb. Someone else bought something they didn’t need for less than what it was worth, and was considered smart.
Are effectiveness and efficiency competing goals? We all try to find ways to be effective and efficient, but it is possible to be effective, but not efficient, or vice versa, or neither. The reality is that efficiency should only be observed and evaluated in the context of effectiveness. Efficiency is only a tool. That is, without having a goal, a purpose of achieving something worthwhile, something of value, then efficiency does not make much sense. Maximizing the ratio of value achieved over the effort expended is futile when the resulting value is questionable or zero.
On the other hand we can say that efficiency enables increased effectiveness. Implementing economical ways to achieve set goals with less effort and time, releases resources which can then be allocated to other goals. Such goals can be other primary goals, or secondary goals such as investments in learning or in developing competences related to increasing further our effectiveness or our efficiency.
“The most effective way to do it, is to just do it.” – Amelia Earhart
How much efficiency is enough? If efficiency was free, then the answer would obviously be that maximum efficiency is desireable. However, efficiency is not free – there is a cost that needs to be borne before we can achieve any returns. Efficiency is both an investment and a product of tradeoffs.
Effectiveness aims to optimize the value of selected goals, whereas efficiency optimizes return of investment.
Therefore, to the extend that efficiency can be increased by minimizing the denominator (input=expenditure) of the value/expenditure ratio without changing in any way the nominator (output=value), then efficiency is unquestionably desireable (assuming of course that the gains are higher than the cost of efficiency). However, in most cases things are not that straightforward, and efficiency gains come with increased complexity, increased levels of risk or/and compromises in the desired goals.
In other cases, efficiency is achieved at the expense of other systems, by producing externalities or negative spillovers. When this happens, we only manage to achieve “local efficiency” which is a pseudo-efficiency as it potentially reduces the effectiveness of other goals or our ability to achieve those goals efficiently.
So when talking about efficiency, we need to also define up front the broader system(s) within which we are operating (and care about), as we need to consider holistically the effect of our efforts towards increasing efficiency.
“The efficiency of our minds distorts the effectiveness of our thinking.” – Gerald Morris.
Effective Intelligence (FI) is related to our capability to maximize the number of (worthy) goals achieved (and consequently maximizing the value produced). Efficient Intelligence is related to our capability to minimize the time/effort/cost needed to achieve them. Or, in other words, our capability to maximize the value to effort ratio (the return of our efforts).
Therefore, Efficient Intelligence can be defined as our ability to focus our capabilities in devising and implementing efficient ways of action.
Keep in mind that we can be effective (or not) in achieving a goal, but the set goal itself should also be effective in achieving a desired outcome and benefit (directly or indirectly). Otherwise we cannot claim to be effective in achieving goals that do not contribute both effectively and efficiently to a desired positive outcome.
Effectiveness of a single goal or task does not necessarily include efficiency (we can be inefficient in achieving a goal, i.e. expend more resources than needed, but still complete a task and achieve our goal). And this is true, unless the goal includes (as it should) a time and effort/cost constraint, in which case, a certain level of efficiency is implied/expected and is part of the definition of the goal. This means that, in this context, effectiveness includes a productive level of efficiency.
The Effective Intelligence (FI) concept includes indirectly an adequate amount of Efficient Intelligence, as otherwise there is wasted capacity, which can reduce our ability to maximize the returns of our Effective Intelligence. Therefore, when setting a “portfolio” of many goals, which attempt to allocate our entire life’s capacity to achieving our life’s goals (i.e. our honestly defined space of success), then effectiveness includes efficiency, as the goal of effectiveness in setting and achieving many goals includes the concept of maximizing both the collective returned value of all goals, as well as the return of investment.
“Effectiveness does not lie in that narrow-minded concept called rationality. It lies in the blend of clear-headed logic and powerful intuition.” – Henry Mintzberg
Effective Efficiency as a concept would then describe a goal of optimal efficiency which maximizes our overall effectiveness. We can call this optimal level of efficiency “Productive Efficiency“. A productive level of efficiency may allow the defined process and goals to include some inefficiencies which, however, allow us to increase our agility and hence increasing our overall effectiveness .
“There is nothing so useless as doing efficiently that which should not be done at all.” – Peter F. Drucker