Effectiveness and Efficiency

From up4distribution Wiki
Jump to: navigation, search

The terms effectiveness and efficiency are often used in a similar way. However, they have different meanings to each other in business sciences.

General information:

Background

Effectiveness and Efficiency come from the latin word efficientia -> usefulness

Effectiveness -> Measuring point for the usefulness: How close did the output of the work came to the previously defined goal

Efficiency -> Measures the ratio between current output and current input. Sets guideline for short-term-planning.

Definition Effectiveness

Are we doing right things that help us reach our goal?

Effective = Doing the right things -> strategic focus

Definition Efficiency

Are we saving the most money and/or time while doing the things to reach our goal?

Efficient = Doing things the right way -> economic focus

Calculation

Effectiveness = Result/Goal

Efficiency = Result/Effort

Conclusion:

The efficiency focusses on the economical side, the effectiveness on the operational side.

Inspiration & more information

- Being efficient and effective I Aljoscha Laschgari I 2014

- The Effective Executive I Peter Ferdinand Drucker I 1967

- up4distribution -> the agile startup incubator and accelerator