Business Growth: Efficiency vs Effectiveness

Let me introduce you to two importance concepts related to business growth – efficiency and effectiveness. Both are vitally important! In a nutshell, here are the definitions:

Efficiency: Doing things right to produce consistent and rapid results
Effectiveness: Doing the right things to produce the results you want

Efficiency vs Effectiveness

Efficiency is important for profitability. Effectiveness is important for growth. As business owners we are always looking for ways to increase profitability. We should be documenting our processes and systems, and then we should engage our team in brainstorming ways to do things more efficiently. By increasing efficiency we save both time and money, thus making our businesses more profitable.

Effectiveness is important for growth. One of my favorite quotes comes from Peter Drucker. He said:

“There is nothing so useless as doing efficiently that which should not be done at all.”

Some of us are “bent” toward efficiency, which can be a really good thing. Some of our team members are bent toward efficiency which is also excellent. However, if we’re doing the wrong things we will not get the results we want! So stop and honestly ask yourself, “Am I getting the results I really want?”

How To Improve Business Efficiency

The best way to improve efficiency is to measure and evaluate all of your processes and systems. Again, your employees and team members can be great help here. If you ask them you may be surprised how insightful they can be. Also, if they feel like they are making a meaningful contribution, they will have more pride and a higher level of ownership of the outcomes. So engage your team to start documenting, measuring, and evaluating every critical process in your company. As you become more efficient you will discover new capacity for production and profitability.

How To Improve Business Effectiveness

The best way to improve effectiveness is for you as a leader to take time on a consistent basis to evaluate, plan, and focus. This is why we encourage business owners to take a strategic retreat every 90 days. By doing this you can step back and look at the big picture. You can get clear on what results you really want, and then assess how you’re doing at getting those specific results.

Business growth is largely a function of efficiency and effectiveness.

What are you doing to improve efficiency? What are you doing to improve effectiveness? As your virtual business coach let me encourage you to take action today! Contact us to schedule a no-obligation strategy session to improve your business growth.

Glenn Smith is a sought-after Executive Coach with over two decades of experience. Recognized for his strategic insights and leadership training, Glenn has been a guiding force for more than a hundred successful small to mid-sized businesses. Merging data-driven strategies with profound insights into human behavior, he aids business owners and executives in realizing their fullest potential. A respected thought leader, Glenn has contributed to numerous business publications and is a popular keynote speaker. Outside his professional realm, Glenn cherishes family time and outdoor activities. He is a pilot with over 30 years of flight experience. He is also a professionally trained gunsmith and a firearms instructor. His dedication to fostering leadership and driving transformative change marks him as a premier figure in executive coaching.


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