Productivity, Efficiency & Effectiveness: The difference and why you care

Global productivity and sales conceptYears ago, back when I *thought* I knew what I was doing, I briefly called myself “The Effective Entrepreneur” and talked about increasing effectiveness through efficiency.
Bought the domain, built a website, had biz cards printed, the whole nine yards.
Then I realized a few things:

  • my clients were more interested in making an impact and funding their desired lifestyle than being efficient
  • many people can’t spell either “effective”, “entrepreneur” or “efficient” and
  • people thought I was all about technical systems

It didn’t take long for me to quickly bury that brand and it made me think a bit about the difference between:  productivity, efficiency and effectiveness.
Rather than give you dictionary definitions, here’s what stands out for me:

  • Efficiency = doing something well, accomplishing it in as few steps as possible. 
  • Effectiveness = doing the right things 
  • Productive = doing the right things and doing them correctly. Moving steadily closer to your goals, whether in big steps or little steps.

Notice the difference:

  • Efficiency doesn’t guarantee that you’re working on the RIGHT thing, only that whatever you’re doing, you’re doing well and
  • Effectiveness doesn’t guarantee you’re doing what you’re doing well, even if it is the right thing to be doing.

so essentially, Productivity = Efficiency + Effectiveness. (tweet this)
For example: 

  • You can have someone create the absolute best buggy whip ever.  They’re efficient as all get out, however they’re neither effective (not working on the right thing) nor productive (not a good business decision, no revenue to come from it).

As a business owner, your ultimate goal is always to be productive. 
That said, when you’re just starting out with something, it’s more important to be effective (doing the right thing) than productive (which includes “efficiency” — doing the right thing and doing it well).
Good is good enough.
Look at your action list:

  1. What items are you productive (doing the right things to move you closer to your goals and doing them well) at?  Keep those and prioritize.
  2. What items are you effective at (the right things to do)?  Keep those and, to the extent possible, delegate to someone who is “productive” on that task.
  3. Which items are you efficient at and likely doing to give yourself a feeling of productivity (you do them well, but they’re not the best use of your time in relation to your goals)?  Be harsh and look at which your business needs you to keep and either delegate or do away with the others.

Ready?  Go make things happen in your business and, as always, please hit “reply” let me know if you have any questions, comments or thoughts.