Efficiency Versus Effectiveness

When I consult with executives on the health of their company’s revenue stream, I’ll frequently ask them about what they measure. The answers range from little beyond the current quarter revenue forecast, to lengthy lists of sales team productivity metrics including the number of calls, the number of RFPs, number of contracts signed, and so forth.

What’s frequently missing is the more qualitative or impact-focused measures of success. Frankly, 50 customer calls means nothing if those calls don’t advance opportunities in the pipeline from one stage to the next. Lots of activity doesn’t really mean much if there aren’t meaningful metrics about the results of those activities. It’s far more useful in understanding performance to measure the progress or the output instead of the input.

I consistently see this tug of war between measuring efficiency and effectiveness for nearly every business area, from sales to operations to customer service. Regardless of the functional area being evaluated, most metrics are focused on the efficiency side of the coin – how much or how many – and neglect the equally valuable measures of effectiveness – how well or how successful. That’s not to say that efficiency isn’t important. In fact, efficiency and effectiveness are inextricably linked. But measuring effectiveness can highlight areas that help drive strategic focus. 

We tend to measure everything in business, but metrics have a way of diluting our judgement. An over-reliance on efficiency measures leaves you missing out on strategic insights gained from qualitative measures. Every metric or KPI on a dashboard reflects what leaders have deemed important enough to measure. So, they are inevitably judgments as much as they are metrics. Are you evaluating your business on both efficiency and effectiveness?

Put Pen To Paper

In my opinion there are no greater tools for thinking than a blank sheet of paper and pen. You can substitute a blank screen and keyboard, which I do plenty of as well. But there is something very powerful about the physical act of writing and seeing your thoughts on paper. It allows you to see where your thoughts or ideas are in conflict. Where you don’t make sense. Where you are unclear or equivocal. And once you can literally see the thoughts in imperfect and incomplete form, you can work on fixing those problems.

Need to build or refine a strategy? Write.

Need to think through a problem? Write.

Need to clarify your thinking? Write.

Need to process some negative thoughts or feelings? Write.

Need to more powerfully communicate a message? Write

I could go on. The key to making it work for you is to make sure that you know that nobody else is going to see what you write. The writing is for you. This can help you avoid the major issue preventing writing to occur – self-editing. Just know that you can throw it away or shred it when you are done. It’s never wasted time.

Current Read:

Feedback is a critical part of any work environment, but as I’ve written about before, it can be tough to deliver effective feedback while balancing your desire to be liked by your employees. I appreciated this perspective about one leader who made the leap to giving direct, honest feedback, and how it helped his business, its employees and its clients:

This CEO Changed His Feedback Style--and His Company's Revenue Grew Almost 1,500 Percent | Inc.com

Quotable:

Next Steps:

I was excited about this one and got ahead of myself on the date. Please join me on Tuesday, April 13^th at 10 am Eastern for another LinkedIn Live. I will be discussing my recent HBR article, what an effective client-referral strategy looks like. If you missed the article, you can see it here.