Small Business Blog from Atlantic Canada

Before we even go further let us have a look at the definitions of “effective” and “efficient”.

Efficient: being effective without wasting time or effort or expense; able to accomplish a purpose

Effective: producing or capable of producing an intended result or having a striking effect

See the difference? Simply put, effectiveness is doing the right things and efficiency is doing things right. I have always had to work with this distinction with small business leaders and entrepreneurs. Somehow doing the right things seems to elude most entrepreneurs. It is usually a challenge to guide entrepreneurs to prioritize to “do the right things” over “doing things right”. One can be efficient without being effective. Effectiveness is what will drive your business forward.

As a business owner (and manager), I think one of your objectives is to ensure your business excels in your domain. Towards this objective, your job is to formulate and execute strategy to realize your corporate goals. You also need to have strong people management skills, delegate, motivate, communicate and control. I have a question: “Do you want to be effective or efficient in performing your functions outlined above?” If you say “I am efficient in delegating tasks to my employees”, I am going to ask you, “But are you delegating the right tasks in the first place?”. You can’t be efficient in “controlling”; you have got to be effective. Effectiveness always takes precedence over efficiency.

Peter Drucker tells us to ask three questions:
1.What am I doing that does not need to be done at all? - Drop these tasks

2.What am I doing that can be done by someone else? - Delegate these tasks

3.What am I doing can only I can do? - Do these tasks

As a leader and manager, you will be the most effective doing point 3. Most small business owners that I have come across have difficulty in delegating. I must admit even I sometimes fall into that trap of not delegating. At such moments, I believe no one else can do a better job than me and hence I want to do it myself. Today, whenever I get such a feeling, I wait until the feeling passes. I have learnt to let go and trust people to do the job they are hired to do. I digress.

Being effective starts with the customer. They are the ones who decide what tasks are important. Additionally, as a small business leader you must also spend some time thinking about your organizational goals, think about innovative solutions – think effectiveness. If you concentrate on efficiency, your job and the employment you generate will be outsourced. There will always be someone who can do what you are doing more efficiently. Efficiency is the last thing you need; identifying goals and the activities needed to achieve those goals will be effective and that needs to come first.

Once your goal is defined, tasks leading to the goal can be isolated and completed efficiently. While this may seem obvious, execution of this process in some businesses do not follow this principle. I had one such experience yesterday - again. In fact it has been quite a while since I had a effective/efficient conversation with an entrepreneur. I was under the impression that the debate on effectiveness and efficiency was over, but I guess I was mistaken. If one small business CEO can make a rookie mistake, how many more are out there who do not understand this yet?

I would love to hear differing perspectives and experiences on this. What say you?