Difference between Efficiency and Effectiveness

I get asked from time to time about the difference between Efficiency and Effectiveness.

Of course, there’s the old saying of Efficiency between doing things right and Effectiveness is doing the right things.

But it’s easier to understand via an example:

Let’s say we might want to develop and sell a new product.

Efficiency is the cost, time, productivity in producing and selling the product.

Effectiveness is whether we are selling the right product ie. what customers want to buy.

Efficiency = The Right Price

Effectiveness = Whether to buy it at all

How about a product development process?

Effectiveness of a development process = Did the customer get what they asked for and wanted?

Efficiency of a development process = how much time/money/stress is consumed/caused using the development process?

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This entry was posted in alignment, Effectiveness & Efficiency, improvement, innovation, KPI, metrics, problems, process improvement, ROI and tagged , , , , , , , , , , , , . Bookmark the permalink.

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