Efficiency vs. Effectiveness: Why You Need Both
The terms “efficiency” and “effectiveness” are often used interchangeably, but to achieve the best outcome, it’s important to understand the difference.
Efficiency, which is defined as “achieving maximum productivity with minimum wasted effort or expense,” is about how you reach a goal. Effectiveness, on the other hand, measures what the goal achieves and whether the right outcome was accomplished — it’s defined as being “successful in producing a desired or intended result.”
Putting these definitions into action, you need to look at both the efficiency of the team and the effectiveness of the work. The ideal solution is to have both.
Timeliness, team size, and resiliency
Although efficiency is measured by how well a team produces quality results in a timely fashion, it is not synonymous with “fast” — any defects or mistakes must be subtracted from the final output. The greatest efficiency means maximum productivity with the highest quality.
So how do you accomplish that?
Team size is a key factor. A team must be large enough to have all the skills needed to be effective, yet small enough for optimal communication and collaboration. Lines of communication become geometrically more complex as you add more people to a team.
The illustration below shows the exponential increase. As you can see, there comes a point when adding more people to a team will decrease its efficiency, so different team configurations should always be considered.
Another important element of efficiency is the team’s Bus Factor, or — as Ray Arell stated in an Agile Coaching Network webinar — the Lotto Factor. The Bus (or Lotto) Factor is the number of people who would stall progress if not available. A team with a Bus Factor of one becomes inefficient as soon as that one person is unavailable. A higher Bus Factor means more people with skills to work on high priority items, which increases efficiency.
This is not to say that every team member needs to be an expert in everything, but for maximum efficiency, a team needs a good set of cross-skills.
Multitasking and prioritizing
Limiting work in progress (WIP) is a proven technique for increasing efficiency. “Stop starting and start finishing,” as the saying goes.
One way to demonstrate this is to write the alphabet and then the numbers 1 through 26. Try again, but this time write a letter, then a number, then a letter, and then a number, and so on. Which was easier and more efficient? Both may or may not have been effective in creating the outcome, but the second approach often takes longer and is lower quality. For maximum efficiency, WIP limits need to be set for individual team members as well as the entire team.
Another key way to increase efficiency is to break up large tasks into smaller slices (“work items”) and then decide what to do first based on what will quickly deliver the most value. Prioritize the other tasks according to what should be done next to reach the overall goal while delivering incremental value along the way. In general, smaller work items create better efficiency — they’re easy to implement, easy to test, and limit multitasking.
Software development techniques such as pair programming, mobbing, and swarming have been proven to increase team efficiency when used appropriately. Employing these techniques help with problem solving, quality, resiliency, and team building, which all should improve team efficiency.
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Psychological safety and teamwork
There are many other team dynamics that can improve efficiency, but the most crucial for both efficiency and effectiveness is psychological safety. Google’s Aristotle Project studied 180 teams over several years and found that psychological safety had the greatest impact on team performance.
So, what exactly is the term “psychological safety,” which seems to be used everywhere today?
It’s about feeling accepted, respected, and empowered to share thoughts, ideas, concerns, and mistakes without fear of being punished or humiliated. When you have psychological safety, you have an environment of teamwork, collaboration, and creativity with the freedom to question the status quo. In short, you have a team that produces the best output with the best outcomes.
Effectiveness through S.M.A.R.T. goals and short feedback loops
To achieve high levels of effectiveness, you need well-defined outcomes and short feedback loops. The S.M.A.R.T. approach, which first appeared in a 1981 article by George Doran, Arthur Miller, and James Cunningham, is a widely accepted tool for planning goals that are…
Specific: Detailed, precise, and easily understood
Measurable: Quantifiable; able to track and verify
Achievable: Realistically attainable
Relevant: Contribute to broader, overarching goals
Time-bound: Reach by a date or within a range of time
Using this approach, the team can plan how to attain the desired outcome with the help of short feedback loops. These loops involve constant evaluation, communication, and adjustments based on leading indicators that reset the trajectory if it doesn’t appear to be leading to a successful outcome. This way, the learning is fast and the pivot is swift.
However, being outcome-focused does not mean success after success. It rather is the ability to measure, learn, and pivot.
The bottom line
High-performing teams are efficient at working together to produce effective solutions, and that success should always be celebrated. The ability to measure and learn is what will determine if you’re effective in the long run.
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