Efficiency and Effectiveness Matrix

Many times in a business world you can hear terms like efficiency and effectiveness. Sometimes when we say efficiency, we think on both efficiency and effectiveness. Let’s look through efficiency and effectiveness matrix to see what exactly they mean for you and your company.

Words efficiency and effectiveness are mutually dependent. It’s not enough to be only effective, without being efficient, or to be efficient without effective at the same time.

These two elements of the business can drastically increase your business potential energy. At the same time, you as an entrepreneur and your business must be efficient and effective.

What really means to be an efficient and effective entrepreneur or company?

Because of the similarity of the terms, many entrepreneurs are confused about the meaning and really practicing to incorporate these terms into their entrepreneurial life.

  • To be effective in the simplest words is to do the right things. If you are effective, you will choose the right activities for your business that will need to be done in order to create and manage the really great company.
  • To be efficient in the simplest words is to do things in the right way. As you can see efficiency is about the way of doing things. So it is not about every kind of things, but only the right things.

Here is presented the efficiency and effectiveness matrix you can use it for your personal and business life.

Efficiency-Effectiveness

4 Quadrants of Efficiency and Effectiveness Matrix

  • Low effectiveness and low efficiency. If you find yourself or your company in this quadrant of efficiency and effectiveness matrix, it means that you are doing wrong things in a wrong way. What a catastrophe! You are losing your time on wrong business activities and in addition of that, you are doing those activities in a totally wrong way. You must immediately stop doing everything that you are doing and reconsider what you really need to do. For example, this is the case when you choose the wrong products that you don’t know how to sell them to the customers.
  • High effectiveness and low efficiency. This quadrant of efficiency and effectiveness matrix means that you are doing the right activities in your business. These activities will increase your business potential energy, but you are not doing them in the right way of doing things. So, you are effective but not efficient at the same time. You need to analyze all those activities if you want to find the right way for their accomplishment. This is important because they are something that will increase the potential of your business. For example, this is the case when you choose the right products that you want to sell, but you don’t know how to sell them, or you sell them in a wrong way.
  • Low effectiveness and high efficiency. This quadrant of efficiency and effectiveness matrix means that you’re doing the wrong things in your business but in the right way. Do you need to lose your time in doing the wrong activities in your business? Analyze immediately all your business activities that are in this quadrant and stop doing them. For example, this is the case when you choose the wrong products that you are selling to your customers in a right way. The customers will probably purchase them for the first time, but it is sure that they will not come back for more.
  • High effectiveness and high efficiency. This is something that each business will need if they want to have a high level of business potential energy. Your business is doing things that increase business potential energy, and that things are done in a right way. So, the business potential energy is converted into kinetic energy. These types of activities will give you the results that will increase your profitability. For example, this is the case when you choose the right products that you sell in a right way. In such a way, you will assure a long-term success of you as an entrepreneur and your business at the same time.

How to Become Efficient and Effective at the Same Time

You must be effective and efficient at the same time. This is important if you want to have a higher level of business potential energy into your company.

In order to achieve the desired level of success, you need to find the best options so that you are efficient and still effective. This is an ongoing process that usually takes years to find the right formula. These decisions can range from finding the best, most affordable options at banks, buildings, and VoIP providers, to securing employees, insurance packages, and other operating costs.

What can we do about this?

As a conclusion, here I want to share some recommendation how you can become effective and efficient:

  • List all of your business activities.
  • Assign all activities in quadrants of efficiency and effectiveness matrix as in a picture above.
  • Analyze all the activities with sign STOP with ABC analysis or 80/20 rule.
  • Exclude all activities that are not important for your business.
  • Choose different ways about how to carry out all crucial business activities in the right way.
  • Repeat the process from time to time.

Posted by Dragan Sutevski

Dragan Sutevski is a founder and CEO of Sutevski Consulting, creating business excellence through innovative thinking. Get more from Dragan on Twitter. Contact Dragan