Effective vs. Efficient: A Tale of Two Cities

Some organizations are effective. Some are efficient. From the customer’s perspective the two may look very much the same, but the difference to your bottom line can be substantial.

A few years ago my wife and I toured Vienna, and then hopped a train over the Dolomite mountains to Venice. Both cities were wonderful. For two places that are not much farther apart than San Antonio and Dallas, however, the cultural differences were extreme.

Upon landing in Austria, I set my watch by one of the many large clocks hanging in the Vienna airport. For the next five days, my watch agreed exactly with every clock we saw. The alarm clock on the bed stand, the clocks in the subway and the big clock on the city hall all showed the same time to the minute. In Austria, when it is 8:00 o’clock, it is 8:00 o’clock everywhere.

venice bell towersThen there was Venice. That city has 115 Catholic churches, not counting those on the lagoon islands. It seems that about half of those have carillons (bell towers) that chime the hour. You can hear them start at about ten minutes before the hour, and the last ones finish about ten after. According to the Venetian churches, when it is 8:00 o’clock it is somewhere between 7:50 (or so) and 8:10 (or thereabouts.)

Vienna is efficient. Venice is effective. In Vienna, the time is a precise measurement. You can set your watch by any clock in town. In Venice, the churches are certainly effective in letting you know the hour is arriving (or has recently arrived.) They just aren’t so good at pinning it down exactly.

We could attribute this to the differences between Germanic and Latin cultures and leave it at that, but I think it is also a metaphor for company cultures.

Some companies are effective. They get the job done. They revel in their ability to accomplish the mission despite hiccups and near-misses. They have mottos like “Whatever it takes,” or “Git ‘er done.” They talk about how their terrific employees regularly go above and beyond the call of duty to meet a deadline or make a delivery.

Other companies are efficient. They don’t talk much about employees going the extra mile, because they rarely have to. They know when an order comes in or a customer arrives it will be handled the right way, and the same way every time.

Efficient companies depend on their people to execute proven and tested systems. Effective companies depend on their people to figure it out as they go. Efficient companies prize teamwork and process. Effective companies value individual heroics.

Is your organization efficient or effective? Building an efficient organization takes more work up front, but pays off bigger in the long run. Running an effective organization also gets the job done, but being efficient delivers predictable results and consistent profits. Merely being effective means that you have to regularly “go the extra mile;” and extra miles cost money.

Categories: Business Perspectives, Entrepreneurship, Strategy and Planning... Bookmark this post.

4 Responses to Effective vs. Efficient: A Tale of Two Cities

  1. David Cunningham says:

    This essay is a nice illustration of a key business dynamic. (Perhaps I can write off my next vacation by studying the Effective/Efficient syndrome from Paris, Athens, and Reykjavik, to Singapore.) It is important to be able to recognize this characteristic when advising companies. Owners of either type are likely to be proud of their organization and its culture. This essay may be a gentle way of introducing the issue. But anytime you focus on a problem you have to be prepared with a solution. In this case it may be the introduction of business intelligence in the form of work flow analysis and dashboard performance illustration. Thanks John.

  2. David Basri says:

    I do not think that “effective” and “efficient” are mutually exclusive. Being efficient is largely a product of good processes, procedures and training. It is possible to develop those kind of procedures that also have a healthy dose of effective individuality baked in. Efficient processes should take care of most day-to-day requirements. When customer or company circumstances are outside the procedural box, employees can and should be encouraged to take initiative to be creative and effective.

    For example, PEI is a software development company. Employees (including myself) are first expected to be creative. However, strict naming conventions, coding standards, long term maintainability and testing are enforced. While we are more on the “effective” side of the gradient with a healthy dose of “efficient”, there just needs to be some kind of balance.

  3. John Hyman says:

    Great perspective and a lot to think about. Having spent a lot of time in Europe, I cannot get off the story. I wonder if the tale of two cities might involve a technology gap? Keeping centuries old clock towers and those mechanical time keeping movements in sync seems daunting at best. Transforming from effectiveness to efficiency seems more attainable…

  4. Frank Arnold says:

    David’s comment on not mutually exclusive is reality. An organization with a solid base of efficiency certainly relies less on effective individuality, but I believe both are essential.
    But this thought provoking discussion also leads me to want to get on a plane and head for Europe to continue my education. Thanks.

Leave a Reply

Your email address will not be published. Required fields are marked *