Efficient vs Effective

Jackie Zach
January 25, 2024

In this podcast, Mike McKay and Jackie Zach explore the difference between efficiency and effectiveness in business. They discuss how efficiency focuses on achieving goals quickly, sometimes sacrificing important details, while effectiveness emphasizes the best path, even if it takes longer. Jackie notes that, especially in customer experience, the quickest route may miss key touchpoints that add value. Mike highlights the risks of suboptimization, where efficiency shortcuts can harm the overall process, such as skipping steps or neglecting reports, leading to bigger issues down the line.

The conversation also covers entropy, the natural tendency for systems to move toward disorder. Mike explains that businesses must maintain effective practices to prevent this, stressing the importance of continuous improvement, such as through coaching. The hosts agree that while efficiency may seem appealing in the short term, neglecting effective strategies can hinder long-term success. The key takeaway is that businesses should focus on doing the right things consistently rather than cutting corners for quick results.

Do you need an objective person to ask you the right questions? Take advantage of a complimentary business strategy session to find out how your energy is affecting your team’s results today! http://makemoreworkless.actioncoach.com/mmwl-diag-and-questions/ 

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Podcast Transcript:

Mike McKay: Welcome to the Make More Work Less podcast, where we tackle big questions—like whether five is an even number.

Jackie Zach: Haha. Right.

Mike: So, what’s our topic today?

Jackie: We’re talking about efficiency versus effectiveness. As we were recording a couple of episodes ago, this came up. What’s the difference between being efficient and being effective?

Mike: Good question. What do you think?

Jackie: Well, efficiency is about reaching your goal in the shortest possible route.

Mike: Right.

Jackie: But effectiveness is about taking the best route. For example, in customer experience, the shortest route might not be the most effective because it could lack important touchpoints.

Mike: Exactly. I used to work in the Lean world, which focuses on minimizing steps to complete a task. But there’s something called suboptimization. Take a process like quote-to-cash conversion: from the first customer contact through design, build, ship, and getting paid.

Efficiency in each step might mean skipping information during order entry—like leaving out a buyer’s phone number. But if that information is needed later, it can halt manufacturing, which costs much more per hour than order entry.

Suboptimization happens when shortcuts in one area negatively impact the overall process. In business, this ties into entropy—a natural law stating that all systems move toward disorder. Someone recently told me everything in their business was great. That’s a red flag because entropy is always at work.

Efficiency often invites entropy through shortcuts. For example, a building company skipped a two-minute step—adding a screw to a truck. That small “efficiency” caused two hours of downtime on the job when they had to drive back for the screw.

Effectiveness is about sticking to the process as designed to avoid unnecessary penalties, like wasted time or idle workers. In this case, efficiency wasn’t worth the cost of entropy.

Jackie: Right. You talked about entropy at the operational level. What about at the strategic level? How does it leak in?

Mike: It’s often more efficient not to review accounts receivable (AR) than to spend time on it, but that can lead to people owing you a lot of money. It’s more effective to review AR regularly and ensure everyone is within terms.

As a leader, you might delegate this to your CFO, bookkeeper, or accountant, expecting a weekly report showing AR as green or red—a KPI for AR. But if you don’t review it, small “efficiencies” creep in, like skipping the report to save time or failing to code it properly. These shortcuts can backfire, and suddenly, you’re stuck with a million dollars in unpaid AR—money needed for payroll over the next six months.

This is how KPIs can allow entropy to sneak in. The daily grind is full of opportunities for entropy.

For example, we used to hold daily “outboard meetings,” named after a whiteboard listing what we were out of. These meetings took 5–8 minutes, but we stopped doing them, thinking they weren’t needed anymore. That’s when we confused the results with the process. After skipping just a few days, the next meeting could take over an hour because we’d fallen behind in our fast-paced environment.

Entropy also appears when you stop doing what works. I’ve been coached by David Herdlinger for 12 years. It’d be easy to say, “I don’t need him,” or “Why have five coaches?” But my goal is for each session to get shorter as I fine-tune processes, make decisions, and improve execution. If I skip a session, it takes longer because I’ve let entropy creep in.

It’s like long-term medication for epilepsy. The condition is controlled, not cured, but people often stop taking the medication, thinking they’re fine.

Jackie: Right.

Mike: That’s how I feel about the coaching environment. Our business isn’t “cured”—it’s controlled because we’re doing the things that keep it under control. The real enemy is entropy. It’s the easy way out, and it creeps in when you let your guard down.

Time and again, we’ve seen clients stop coaching, and their business slides backward. Six months later, it’s a mess—not because of blame or fault, but simply due to entropy. It’s like gravity; you can’t escape it. Until we figure out time travel or how to bend the laws of physics, entropy will always be there. The things that make a business run well are effective practices. When efficiency shortcuts creep in, that’s entropy undermining the results.

Jackie: Exactly. To your point, entropy doesn’t show up right away—it sneaks in.

Mike: Oh yeah, it’s a sneaky little bastard.

Jackie: Right? It doesn’t show up immediately, but it makes itself known later. When people want to stop coaching for now, I always explain what happens when they do that.

Mike: There’s no “for now.” It’s either stop or don’t stop.

Jackie: Exactly. And here’s the reality: when they stop, they often revert to their old, comfortable habits.

Mike: Yep.

Jackie: And those habits usually don’t lead to the same level of success they had before. That’s the lesson for leaders and business owners—pay attention to what’s working and consider the downstream impact when you make changes for efficiency.

Mike: Right. To clarify, we’re not saying no one can ever stop coaching. But if you want to keep growing, it’s a permanent solution. If you stop focusing on your processes and keeping everything tight, things will slide backward. That’s just how it works.

Running a great business over time takes focus.  It’s not that I jump up and down with excitement when I write those checks to our coaches each month—it’s a significant amount of money. But I’m excited because that investment keeps me focused on doing the things that help me make more money.

At Make More Work Less (makemoreworkless.actioncoach.com), our value proposition is simple: make more money and work fewer hours by doing the right things at the right time.

Jackie: Right.

Mike: It’s not about staying in your comfort zone. We’re not comfortzone.actioncoach.com.

I’m empathetic—we’re going through a huge perturbation ourselves. Last week, I realized the old version of our business is gone. It’s not coming back. The new version is emerging, and we have a choice: let entropy take over and create chaos, or adapt to this new phase and reap the benefits.

There’s really no difference; the only change will be that the business will be better and more fulfilling for the people we coach and interact with. We’re not saying you have to have a coach, but coaching is one of the tools that helps prevent entropy from sneaking back in.

If you’re someone who values growth and high performance, leaving a coaching program often means going backward. There’s no way around it. That’s why we emphasize staying committed to coaching programs.

Jackie: Right.

Mike: If coaching isn’t for you, it’s not for you—and that’s fine. But for those who want long-term success, it’s worth seeing coaching as a long-term commitment. Entropy and gravity are always there, working against you. That’s my story, and I’m sticking to it.

Jackie: Sweet. That’s our discussion about efficient versus effective. Until next time, go kick some ass