We Are NOT Against Efficiency!

There, I said. I hope everyone is happy now.

Once again the subject of effectiveness and efficiency has created some buzz among the friends and follows of VeraSage especially in the legal world. It began when VeraSage Fellow, Michelle Golden, replied to a tweet by Valorem Law’s Patrick Lamb. Patrick responded with a blog post. To which newly minted VeraSage Fellow, Jay Shepard replied.

I will try, once again, to clarify my (and I think many other fellows at VeraSage) position on efficiency.

  1. Efficiency does not kill innovation per se, rather an over focus on efficiency kills innovation. Too many people and firms worry too much about efficiency at the expense of thinking about being innovative. That is the problem. Also, efficiency happens naturally. It fact biologist call it parsimony. We humans call it, “the learning curve.” You need no efficiency expert to tell you the best way to load the dishwasher. After you do it a few times, you get better at it.
  2. RescueTime (Automated Time Tracking Software)Efficiency is a personal judgment. Thomas Sowell says it this way, “There is no such thing as generic efficiency.” He is right, but I think understanding it as a personal judgment is easier to understand. Peter Drucker never said, “If you can’t measure it, you can’t manage it.” He did say, “Reports and procedures should be the tool of the man who fills them out. They must never themselves become the measure of his performance.” For example, I came across this tool yesterday called RescueTime. I have no problem if someone thinks this will help them, personally, be more efficient. However, I draw the line at allowing to be used by management in any way. And, by the way, I would not use this tool personally. I prefer to just make a judgment.
  3. Efficiency is always a ratio of outputs over inputs and is always a measurement. Effectiveness is the quality of the output itself. Therefore, improving efficiency cannot, by definition, improve effectiveness. Since efficiency is doing the thing the right way. The thing (result) is always the same. If you change the value of the result or the result itself, you are changing its effectiveness, not its efficiency.
  4. Efficiency gains are never a competitive advantage. Despite what many experts opine cost reduction is not a sustainable competitive advantage. In fact, even efficiency gurus, Michael Hammer and James Champy authors of Reengineering the Corporation, believed that the only sustainable competitive advantage is out innovating the competition. True innovation is customer (outwardly) focused. Efficiency gains are always inwardly focused.
  5. Focusing on effectiveness (or more precisely efficaciousness) ALWAYS and EVERYWHERE trumps focusing on efficiency. I used to think this was only true of knowledge work, but the more I think about it, the more I believe it is true about everything. Think about farming. Improving the efficiency, perhaps the speed at which you sow the seed or harvest the crop, does not increase the yield. Developing a seed that would allow for the reduction in distance between seeds, might actually reduce your efficiency (it will take you longer to sow and harvest). However, it will increase your yield, that is, it will be more effective.

Let me try to close on a statement that upon which I hope we can all agree – The only way efficiency helps you become more effective is if you invest the efficiency gains into being innovative.

Your thoughts?


  1. Ed,

    Good comments, but the most important is the first one, “Efficiency does not kill innovation per se, rather an over focus on efficiency kills innovation.” It’s all about balance. That is the essence of leadership, being able to counter-balance seemingly conflicting priorities. There are countless other areas in which a leader needs to do so: short-term vs. long-term financial results; rewarding employees with compensation vs. controlling costs; work-life flexibility for employees vs. maintaining some discipline in the work environment; supporting individual goals while staying in alignment with firm-wide objectives; resources put toward soliciting new clients vs. serving existing ones; balancing the urgent vs. the important but non-urgent; just to name a few examples.

    I enjoyed Patrick Lamb’s blog post;on its face, I don’t believe there is anything in it to be disagreed with, and in fact I shared an excerpt of it with my key people to help them understand the importance of “process”. I like the fact that he recognizes not every activity in a professional knowledge firm is necessarily knowledge work, and it is in those areas where efficiency should be the focus. And I don’t think you are disagreeing with it, I think you’re just saying “hey, I never said to ignore efficiency completely!”

    (On a side note, in the blog post by Jay Shepard that you cite, I do have one point of contention; he talks about how he only cares about the wins of his favorite baseball team, not its efficiency such as on a cost-per-win basis; well, I’ll bet the team’s owners and investors sure care about that and wouldn’t allow the payroll to go so high if they didn’t think they would get an adequate return on their investment from incremental ticket sales, playoff and World Series TV revenue, etc.)

    I respectfully submit that VeraSage can be too zealous and idealogical in its evangelization of effectiveness vs. efficiency, such that it does indeed give the impression that the latter is disdained. Not to try to get into his head, but I believe this is why Patrick Lamb wrote what he did. This seems to be a recurring pattern – VeraSage fellows write about how only effectiveness matters and dump all over efficiency; then someone like Patrick writes in support of efficiency – and the VeraSage response is “I never said efficiency wasn’t important at all!”

    Not to get into a whole other subject, but the anti-billable hours debate is similar. VeraSage is against billable hours (understatement of the day). This is a position I happen to agree with, yet I also do not believe that time (i.e., resource) requirements can be taken completely out of the equation. Here, too, I believe VeraSage comes down on one side to maintain a pure idealogical philosophy whereas the practice (rather than the theory) dictates a more pragmatic approach to balancing the variables and dynamics of a professional knowledge firm.


  2. Jim, thanks for your comments. I agree with most of what you have said, but I have a few minor quibbles that, I hope, will advance the dialogue for all of us.

    1. I agree that balance in many of the cases you have outlined can be an effective tool, but not when it comes to efficiency and effectiveness. Here is why: they are not opposites like the others, they are two different things entirely. You can say that balance between efficiency and inefficiency IS a concern of management, but a focus on effectiveness is tantamount. We should never be OK with a balance between effectiveness and ineffectiveness, wouldn’t you agree?

    Side note: Perhaps effectiveness can be defined as striking the balance between efficiency and inefficiency. Our cited examples being Google Time and the piano at Nordstrom’s – both horribly inefficient, but wonderfully effective.

    2. We are not against efficiency, but we don’t think it requires a focus AT ALL in knowledge work, because it will occur naturally. That we my point about parsimony.

    3. In the last paragraph you state, “I also do not believe that time (i.e., resource) requirements can be taken completely out of the equation.” We agree and we at VeraSage have NEVER advocated otherwise, BUT there is a big difference between using time as a resource requirement which looks forward and a retrospective timesheet which looks backward. So the question is, James, to which equation are you referring? We are all in favor of resource planning, we believe you do not need timesheets to do that. In fact, thousands of firms across multiple professional sectors have jettisoned them.

    Again, I thank you for your comment and hope this continues the conversation in a more positive light.

  3. Ed,

    Thanks for the quick reply. I understand your point #1: efficiency and effectivness are not necessarily opposite sides of the same coin, but neither are all of my other examples; they are just examples of where focus on one thing to the extreme can have an offsetting unfavorable reaction in another area. Either way, my overall point is that we need to manage both effectiveness and efficiency.

    Which brings me to your point #2. I do think efficiency needs SOME focus – not at the expense of effectiveness (a nod to your point about striking a balance between efficiency and inefficiency) but in areas such as Patrick Lamb cites, where it is not a creative or knowledge-based activity. A business such as Nordstrom makes a decision about its strategic positioning and value proposition, and decides that, for example, the piano is going to be a tactic for creating the desired customer experience despite its cost (i.e., its inefficiency). But surely Nordstrom has also looked at other functions within its business, such as aspects of its supply-chain management, decided they do not add value and/or are not competitive differentiators, and pursues ruthless efficiency in those particular areas. With respect to such areas, I do not accept that efficiency occurs naturally. Yes, of course there is the learning curve impact, but in the opposite direction there are plenty of inefficiencies that can creep into a process (or where you can just fall behind your competitors – for example, CPA firms that have not yet moved to a paperless audit approach) if there is NO focus on process improvement and efficiency.

    We probably should avoid the timesheet issue here so that we don’t go “off-topic” 🙂


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