Effectiveness vs Efficiency: Why Effectiveness Matters More in Business

By: Gracielo, September 2, 2021 In:

 What is the difference between effectiveness and effectivity? These two words have been used interchangeably in the business world but often misunderstood or misused. For better understanding, efficiency is to perform certain task in the best possible manner with the least waste of time and effort while effectivity is being adequate to accomplish a purpose; producing the intended or expected result. Efficiency in business relates to how much of a product or service is produced in a given timeframe while effectiveness is a measurement of quality.

            Something is effective if it produces the intended result, whereas it is efficient if it functions with the least use of resources. It is possible to be effective without being efficient and vice versa.

            When reading the above mentioned description it is understandable for companies to pick efficiency over effectivity in their business operations. When dealing with resources or manpower that are limited we often tend to maximize each of this aspects, however companies fail to see that efficiency is more of a short term approach as opposed to effectiveness which is beneficial in the long term and in the bigger picture perspective. After all effectiveness is about doing or using the right things — things that yield positive results while efficiency is simply about doing things right — i.e., completing a task cheaper or faster.

            Efficiency is more of a quantitative route as opposed to the qualitative approach of effectiveness. At hindsight, efficiency seems to be the better approach as it requires the least amount of input with a considerable amount of output. Efficiency is more of a quick and easy win, considering the ratio of what you input and the output you gained, cutting budget to have considerable outcome. However this approach will live you doomed in the long run, later on you will realize you have less growth and less revenue.

            Your business is your investment what little you input in your business only determines what you will gain. Cutting costs and giving only the bare minimum will leave your business weak and with far less reach than you intend it to be, making your brand weaker ultimately making you spend more in the process of taking back what you should’ve done from the start to begin with. Not investing on your business appropriately for long term goals weakens your brand.

            To give an example, to cut costs you picked a cheaper website for your ad as it will generate a modest amount of revenue as opposed to a well-known option. Yes, you are gaining revenue and saved budget in the process but you missed the opportunity to reach a wider audience and to build a strong following for your product. Since there is less site traffic only a few target demographic are reached. It is efficient since the goal to gain revenue is met with least amount of resources (budget in this case) exhausted but it is not as effective as it should’ve been because the better option is not chosen. The people that could’ve been reached could be a loyal customer, spending a bit more to assure quality will benefit you in the long run.

            Effectiveness is the level of quality with which a task or process is carried out that ultimately leads to higher overall business performance. Saving resources should not be the only goal but to make sure that the company is moving towards doing the right things that will benefit the company in the long run. Producing outputs of quality is crucial in creating and maintaining customer loyalty which are key requirements for modern business. Product quality and brand experience are crucial in building and maintaining customer loyalty. The goal shouldn’t always be to produce a huge quantity of products but to produce product of quality that will keep the customers coming back. The goal shouldn’t only be that a customer avails your product but that he would want to make a second purchase.

            Effectiveness, it has an extroverted approach, that highlights the relationship of the business organization with the rest of the world to attain a competitive position in the market, i.e. it helps the organization to judge the potency of the whole organization by making strategies and choosing the best means for the attainment result

            Effectiveness is finding a way to improve outcomes, perhaps by doing something very differently. You might change your whole approach to your business. Let’s say you noticed your business wasn’t acquiring as many new customers as you expected, and you want that to change. You need to reevaluate the quality of your product you might be focused in producing with the least amount of resources but sacrificing the quality. Customers might be attracted to buy once but that’s not the goal, believe it or not, one of the most sustainable ways to improve your business is through customer retention. The reality is that the customers you already have are the most profitable, and it’s worth your time and effort to keep them around. Quality products keep customers coming back and effectiveness keeps it in check that the products you produce are of quality.

            Generally speaking, people focus on efficiency. It’s easier to think about small improvements than to ask “why” and identify different approaches. However, focusing on effectiveness can dramatically improve outcomes. Effectiveness should be the first priority of any business, followed by developing efficient practices. For example when it’s your first time preparing a dish your goal is to cook something delicious right not to cook it in record time or with fewer ingredients, the goal is to serve something of quality.

            In the same way, businesses should strive only to perform tasks that effectively promote profits and growth. It doesn’t matter if a company can develop a project with few resources in a short space of time if that project doesn’t align with corporate goals.

            The first step in making a productive company is focusing on effectiveness, even at the cost of efficiency. Once a business puts effective practices in place, the company can begin making those practices more efficient.