Efficiency and Effectiveness Matrix

efficiency and effectiveness matrix

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

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

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

What does it mean 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 a really great company.
  • To be efficient, in the simplest words, is to do things correctly. As you can see, efficiency is about the way of doing things. So it is not about every kind of thing, but only the right things.
efficiency and effectiveness

Your efficiency and effectiveness

We need efficiency and effectiveness in our business if we want to succeed. But everything starts with us, entrepreneurs.

As entrepreneurs, we must do the right things for our business before everything else. In most cases, we will be the only ones with the power to launch the business successfully. However, sometimes we start doing things without realizing if that’s something important for us or our business.

How we can succeed if we are successful in doing things that are not the right things for our business. It’s so wrong. We will be focused on something that can’t bring us results.

Because of that, as an entrepreneur, you will need first to be effective, doing the right things, and then efficient, doing things correctly.

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


4 Quadrants of Efficiency and Effectiveness Matrix

1. Low effectiveness and low efficiency. 

If you find yourself or your company in this quadrant of the efficiency and effectiveness matrix, it means that you are doing the wrong things in the wrong way. What a catastrophe! You are losing your time on the wrong business activities, and in addition to 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, and you don’t know how to sell them to the customers.

2. High effectiveness and low efficiency. 

This quadrant of the efficiency and effectiveness matrix means that you are doing the right activities in your business. These activities will increase your business’s 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 to 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 the wrong way.

3. Low effectiveness and high efficiency. 

This quadrant of the 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 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 the right way. The customers will probably purchase them for the first time, but it is sure that they will not come back for more.

4. 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 can increase your business potential energy and that things are done in the right way. So, the business potential energy is converted into kinetic energy. These types of activities will give you results that will increase your profitability. For example, this is the case when you choose the right products that you sell in the right way. In such a way, you will ensure the long-term success of you as an entrepreneur and your business at the same time.

✋ Warning

Remember that you will always need to improve yourself and your small business. Only in such a way can you expect to succeed and use all entrepreneurial success factors.

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 in 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?

In conclusion, here I want to share some recommendations on how you can become effective and efficient:

  • List all of your business activities.
  • Assign all activities in quadrants of the efficiency and effectiveness matrix as in the 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 how to carry out all crucial business activities in the right way.
  • Repeat the process from time to time.