What could Effectiveness mean?


Answering this question in general and universally valid is difficult – if not even impossible. But there are some important aspects in a broader sense of “effective execution” that might be essential for any organization at any given point in time, because “businesses are different, but business is much the same […]. There is a common business reality(Drucker, 2006a, p. 4).

effectiveness-vs-efficiency-quote-peter-drucker

Efficiency and Effectiveness (Dreas, 2014).

In very simple terms, “effectiveness” means nothing else than “getting the right things done” – in contrast to “efficiency”, which means in equally simple terms “doing the things right”. Both are important for any organization in order to be successful, as illustrated in the following figure:

EffectiveEfficient1

Thrive = High Effectiveness + High Efficiency (Badgley, 2013)

Furthermore, effectiveness means focusing on opportunities that can be converted into economic results by a specific organization, which has been emphasized by Drucker (2006) about 50 years ago:

Economists talk a great deal about the maximization of profit in business. This, as count-less critics have pointed out, is so vague a concept as to be meaningless. But «maximization of opportunities» is a meaningful, indeed a precise, definition of the entrepreneurial job. It implies that effectiveness rather than efficiency is essential in business. The pertinent question is not how to do things right but how to find the right things to do, and to concentrate resources and efforts in them. (p. 6)

An organization or management team that cannot demonstrate economic results has simply failed (Drucker, 2014), but “[….] profit can only be earned by providing something the market accepts as value and is willing to pay for as such” (Drucker, 2006, p. 6). Effectiveness and efficiency foster an organization’s competitive advantage.

4568372067_cdab6de16b

What is efficient? What is effective? (Vinson, 2010)

Effectiveness is the extent to which an organization accomplishes its vision and mission – finally its purpose. It is connected to the question, how an organization is applying its postulated values to daily business as well as the manifestation of these values in corporate culture and, again, the extent to which an organization achieves sustainable, economic results. An organization’s purpose then provides the raw direction that should be used to derive and choose the right things to do that need to be effectively and efficiently executed in order to achieve economic results. Effectiveness does also mean progress and evolution instead of perfection.

In fact, “just as the individual human being, the organization likewise requires a large number of measurements in order to classify their health and performance” (Drucker, 2014, p. 29) and to derive appropriate means and actions for improvement. Additionally, “[….] only the over-all view of the entire business as an economic system can give real knowledge” (Drucker, 2006, p. 11).

Summarizing, it can be said that the key for sustainable results is doing the right things right: Effectiveness + Efficiency. To my mind prio 1 should be set to effectiveness as it is not recommended doing the wrong things very efficient – which is also possible. 😉

References: Bibliography

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