Do you know the difference between effective vs efficient?
Efficiency is how much time effort it takes to do something, while effectiveness is whether your actions have the right impact in the long term.
In business, increasing effectiveness often means:
- To increase revenues
- To review business objectives
- To monitor current progress towards desired results
On the other hand, increasing efficiency often means:
- To work on reducing costs
- To review a business’s work process with key performance indicators (KPIs)
- To revise assets/tools to achieve a short term or long term goal
While both are certainly important, one matters more than the other in certain contexts.
A Short Example
Let me explain with a story:
A man owns a bakery and decides to improve efficiency. His bakery currently makes 200 bread rolls a day. To make more efficient processes, the baker invests in new machines, hires more efficient teams, and develops a new production line.
He increases his efficiency and can now make 600 bread rolls a day.
But there is a problem. No one is buying his bread rolls! 😅
While his bakery is more efficient than ever, his effectiveness is lower than ever.
This might be because he:
- didn’t do proper market research to see what types of bread are in demand
- didn’t put any effort into marketing.
If only he’d known that scones had come into high demand in his town, he could’ve made a really effective decision to increase the amount of scones he made instead of bread rolls.
Should entrepreneurs be effective or efficient?
As an entrepreneur, you need to look at the big picture and decide when to act effectively or efficiently.
Being efficient means doing things right—streamlining processes, optimising tools, and reducing time waste.
Being effective means doing the right things—focusing your efforts on actions that truly drive business success.
Both are essential, but they serve different purposes. Efficiency helps you move faster; effectiveness ensures you’re moving in the right direction. When you align both, you build a business that not only runs smoothly but also achieves meaningful results.
Now, your to-do list probably has a hundred things on it right now.
Instead of mindlessly checking off task after task, pause and ask yourself:
- Is this task necessary?
- Which work will make the biggest impact on my goals?
- Should I be doing this, or can someone else handle it more efficiently at a lower cost?
If you want to see real progress in your business:
- Stop doing tasks that don’t add value.
- Prioritise what truly matters.
- Delegate or outsource the rest to focus on growth and strategy.
