Don't value efficiency over effectiveness

Well don’t always value efficiency over effectiveness anyway. Smaller businesses can often create a lot more value on much smaller budgets on much shorter timelines than incumbents. But sometimes being too efficient stops you getting to your goals.

Efficiency vs Effectiveness

Often people say that Swiss trains are efficient, but actually they are inefficient, but effective. Switzerland runs many, many trains. Lots of these (e.g. to smaller towns) run very empty, but they still run every 15 or every 30 minutes. Other countries might look at ticket sales and reduce the number of trains on some lines to save on costs (the cost per passenger on some trains is very high for the train service). Running fewer trains would create less waste (empty train seats), but would make the system less effective (people wouldn’t be able to use the train service to get where they want in a reasonable amount of time, so they would lookto cars or other alternatives instead).

• Efficiency is about not wasting resources (time, money, or anything else that can be optimized)
• Effectiveness is about achieving your goals, without caring about the cost to do so

In a perfect system where you know all the variables and know all of your goals ahead of time, they are largely the same thing. If you have limited resources that you can spend towards getting to a goal, then spending those resources efficiently is also going to help you get to your goal effectively.

But in reality, you might not be able to perfectly measure every resource, and you might not have a perfect definition of your goal. A focus on efficiency can paint you into a corner.

For example, you might take on some side project that’s not part of your core business, because you or your team have some cycles to spare. It’s efficient to not waste those cycles and to try generate some extra revenue with them instead. But then things change and you suddenly miss a core deadline because your resources are busy elsewhere.

In hindsight, you weren’t efficient or effective. You wasted resources on something that wasn’t important at the cost of something far more important, but at the time of making the decision, you made an efficient decision. If you were focused on effectiveness, you would have allowed some slack in the system with a laser focus on achieving your main goal instead.

Efficient and effective team structures

In startups, effective team structures are usually functionally organized. You group people together who have similar expertise - e.g. you have a sales team with sales professionals, an engineering team with software engineers. These people work well together because they understand each other, and each other’s work.

This isn’t always efficient though. Maybe your sales team needs engineering help to implement their CRM and your marketing team also needs engineering help to optimize funnel tracking. Meanwhile, Bob, one of your top engineers finished his project 3 days early and is spending his extra cycles fixing up some technical debt. It would be more efficient to be able to place Bob in the sales or marketing team for a bit, so you implement a cross-functional matrix management system that you read about.

Now you’re not ‘wasting’ engineering cycles any more, so you’re more efficient, but suddenly everyone is confused and it’s taking longer to reach your core OKRs.

Again, in a perfect world, with perfect information, this wouldn’t happen. You’d always deploy the correct person to the correct project and you’d get to your goals with zero waste. In reality, having some ‘waste’ can (counter intuitively) help you get to your goal faster.