Is it good to be doing the wrong thing brilliantly? Firms can be inefficient yet effective. Few if any can increase effectiveness by increasing efficiency!
Productivity and efficiency are ratios - Output divided by input - But what inputs should we take? None will have any effect on the outputs of an artisan, knowledge worker or service provider. So who knows? Actually, who cares about the efficiencies of these groups?
Because costs are easier to compute than benefits, most will focus on cutting costs in order to increase the efficiency. This may well prove so, but it has little impact on effectiveness. And as noted above, we don't even know how to measure the efficiency of knowledge workers!
Efficiency is meaningless unless we know what was being attempted. It is linked to what people want and what they are willing to pay for it.
“Most will focus on cutting costs in order to increase efficiency. This
may well prove so, but it has little impact on effectiveness.”
Efficiency in the business sense or the 'knowledge worker' sense is not the same as efficiency in the thermodynamic sense. How would you go about increasing the efficiency of an orchestra? Get rid of some of them?
Efficiency is only concentrated on because it can generally be measured more easily than effectiveness, but that doesn't mean we can control it or manage it.
Efficiency and productivity should not be totally ignored, but please note that neither is a competitive advantage.
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