On Effectiveness and Efficiency

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I want to share with you an insight about two management concepts: effectiveness and efficiency. People interpret these concepts differently. Some languages do not even have a clear distinction between these words. In Hebrew, for instance, there is no literal translation for the word “effectiveness,” and in the Russian language, effectiveness is called “efficiency”—as if to say, “If you are efficient, then, you are effective.” (This illustrates to me the lack of marketing orientation in their economic sphere as well as in their political orientation.)

To explain the difference, I will start with a true story. 

I was told to go to the hospital to get a certain type of injection and to be there at eight in the morning. I got to the hospital on time. The nurse told me to sit and wait. The injection would be at nine. 

 “Why was I told to come at eight?” I asked.

“For efficiency, the pharmacy delivers medication on the hour, every hour. The scheduler assumed the pharmacy would deliver it first thing in the morning, at eight, and wanted to be sure that you would be here.”  

The medicine was not delivered at eight, they had too many deliveries that morning. It was delivered promptly at 9. 

At 9:15 a.m., I got the injection. I left a few minutes later and was home around ten. 

Now, let's analyze the concepts of effectiveness and efficiency in this story. 

If you asked the hospital, “Were you effective?” they would say: “Sure. We delivered the injection. The patient got it. We got the task done.” 

And if you asked, “Were you efficient?” they would reply: “Absolutely. Neither the nurse nor the pharmacy wasted time. The hospital was very efficient.” 

But what about me, the customer? Was the experience efficient for me? It took three hours to do something that should have taken much less time. 

Was the experience effective for me? Good question. I got the injection. I got the medication. 

But effectiveness is not just in whether I received the product. From a production standpoint, effectiveness is measured by whether or not the product was produced and delivered. From a marketing perspective, however, effectiveness is measured by client satisfaction. And I surely was not satisfied.

When we talk about effectiveness and efficiency, we must not ask ourselves if the product was delivered or how it was delivered, but rather, was the customer satisfied with the product and how much energy or resources were required for the client to be satisfied. 

Effectiveness and efficiency should be analyzed, therefore, from point of view of the customer and not from the one of production. 

Written by
Dr. Ichak Adizes
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