Compared to my age and the younger generation (^^), I'm good at handling so-called IT machines and software, such as smartphones, smart devices, and Google drive. So I know the world of efficiency. It was the same during the time working for companies. However, at some point, I started to wonder whether pursuing efficiency would make me happy and if the pursuit of efficiency would make a company successful.

So, I came up with a hypothesis that the more efficiency is pursued, the farther away from effectiveness is.

Do you accurately tell the difference between effectiveness and efficiency?

Efficiency means the output value compared to the input value. High efficiency means that the output value is relatively higher than the input value compared to before. If the output value is the same, the input value is decreased compared to the previous value. It can be expressed in several ways. You can make the same denominator even if you increase the numerator or decrease the denominator. Usually, the denominator refers to resources such as time or capital. So, being more efficient means doing more in the same amount of time or less time for the same amount of work. It means doing more on the same budget or reducing the budget if it's the same result.

So what is effectiveness?

Effectiveness means direction. It means vision. If you are an entrepreneur, it means the goal you want to reach through your business. The Harvard Business Review also addresses this issue from a variety of perspectives. "Breaking the Trade-Off Between Efficiency and Service (Frei, 2006)" describes a situation in which a company strives hard for efficiency only to collide with service for customers.

Earlier, I wrote the expression "vision" and "goal." These terms have a so-called hierarchical structure. "Can You Say What Your Strategy Is?" (David & Rukstad, 2008), which is one of the highlights of the Harvard Business Review article, explains it well. A concept above the goal is the vision. There are also concepts higher than vision. That's the mission. Mission the reason to exist.  It is necessary to define the mission at the individual level or at the organizational level. For example, what is your school's mission? According to that mission, a vision, a specific direction toward achieving the mission, is created. Clear goals should be made to achieve that vision. However, the link between mission-vision-purpose is relative. The relative higher concept is always the purpose of the lower one.  The purpose of the goal is to achieve the vision. The purpose of the vision is to achieve the mission. 

The opposite of the purpose, however, is the means. Therefore, the means to achieve the mission is the vision, the means to achieve the vision becomes the goal, and the means to achieve the goal becomes the goal. If you can separate the means from the ends,  you can enjoy the room for life. Suppose Vision A is a means to achieve your mission; in that sense, you can achieve your mission through another means: Vision B. If goal A is a means to achieve your vision, you can achieve your vision through another means, goal B. So you can choose other means from a higher-level perspective. And you should be able to.

The concept of efficiency plays a strange role here. Efficiency doesn't take into account effectiveness by nature. It only takes into account the input and output values. However, the advertisements we see every day don't say that. It convinces people by saying, "Adjusting the relationship between input and output, you can achieve your 'purpose.'"  For example, online shopping can give you happier life than offline shopping for low prices and safety. Then, according to this logic, online shopping is a means, and an end is a happy life. Of course, online shopping improves efficiency. It can be cheaper and faster. But does that lead to a happy life? Is this a causal relationship? Along the way, it is easy to find that you are an addictive online shopper.  You are convincing yourself that you will automatically achieve your goal of living a happy life with efficient shopping. Worse yet, don't doubt online shopping when you need to choose other means for the purpose of a happy life. The relationship between online shopping and happiness becomes causality without a doubt. This is where the intrinsic feature of efficiency, the comparative tendency, comes in. If your performance shows relatively better efficiency, it kind of stands out. It has a noticeable effect and makes you want to brag. Such satisfaction increases. Now, trapped in the trap of pursuing efficiency without thinking about their original purpose, they whip themselves to be relatively more satisfied than others by comparison.

However, the real purpose of life, or the purpose the organization is trying to achieve, can be achieved through other means. Therefore, you should always keep the door open to other means. In other words, the means must be constantly questioned, "What is the purpose? Can this tool accomplish the ends?"  Sometimes it could be better to give up the means in front of you. Sometimes it can achieve its purpose in an inefficient way. This is because, in the process, 'learning' to achieve the goal may occur. The emotional security and bond you get from meeting and observing people through offline shopping can actually be the real purpose of shopping. 

The quest for efficiency leads to a strange phenomenon that doesn't makes us doubt effectiveness. And we are hypnotized that the pursuit of efficiency is the shortcut to effectiveness (purpose). The Causal Loop Diagram above explains why. In other words, the more you pursue efficiency, the less you become concerned about effectiveness.

What happens when you pursue effectiveness? A so-called pivotal change can occur. If you don't like it a certain way, you can change the direction. It gives you the courage to boldly change the means for the end. Sometimes, a restructuring may lead to selling a core business. You may be skeptical of your efficiency-maximizing efforts to keep your core business alive, rethink your purpose, and find other means to that end.

Efficiency and effectiveness are doomed to be trade-offs. Because their goals are different. If we take the military as an example, we can understand efficiency and effectiveness more dramatically. If you look at war and combat, war is effectiveness, and combat is the object of efficiency. When fighting, the enemy's damage must be more significant than the allies' one. You have to deal more damage to your enemies with less effort. This is why cutting-edge equipment and state-of-the-art weapons must be mobilized. This is the way of efficiency. However, effectiveness is to win the war. In other words, even if you lose a small battle, you should win the war. Sometimes, even if you give up or sacrifice small battles in the name of 'strategic choice,' you have to win big battles. That way, you can cut down on a more significant sacrifice. In other words, even if the efficiency is low, you should pursue effectiveness. Of course, achieving effectiveness while increasing efficiency is better than anything, and that's what everyone wants.

However, I'm arguing that the more you pursue efficiency, the more you drive away from it.

If you try to win every battle with cutting-edge weapons and equipment, will you ever win the war? Impossible. Paradoxically, because of the efficiency of resource allocation. Each unit clamors for state-of-the-art weapons. It can be argued that cutting-edge weapons allow you to effectively strike your enemies and win battles. So can we give every unit a state-of-the-art weapon? And oddly enough, the more you try to allocate effectively, the more you lose interest in strategies to win the war. Because our resources (time, manpower, budget, weapons, etc.) are limited, there are trade-offs in allocating resources. Automatically, we are all about focusing on managing these trade-offs. We are weighing whether we are giving our resources for efficiency versus effectiveness. I expressed this discussion about whether to start the efficiency improvement efforts(R1) first or raise the question about the effectiveness (R2) first. Unfortunately, the structure usually works the former first. Since R1 and R2 are facing each other, their traits stimulate each other to amplify. In other words, you will continue to seek efficiency, and you are doomed not to question its effectiveness. It is R3 and R4 that make this tendency bigger, like pouring oil on the fire. R3 expresses the structure of amplifying the pursuit for more efficiency because of standing out compared to others. R4 shows the driving force behind the pursuit of efficiency, and R5 elaborates the satisfaction through efficiency, giving up the satisfaction of achieving effectiveness (of life or organization).

If you keep improving efficiency, someday, you will face burn-out syndrome. You may say that "Is it ok to do this?", "What is the problem?." You get suspicious. These suspicions appear delayed. So, as you will realize later, it is highly likely that you are already stuck in the middle of too big a trouble to recover by then.

One of the characteristics of the structure I expressed is that exogenous variables are not used. Only 9 variables are endogenous variables that interact, and this structure is a closed system. This closed system structure has the advantage of showing the system as it is, which is constantly interacting within the system, but it also has disadvantages. It can make you feel helpless. Because it also means that there is no room for human intervention. 

There is only one balancing feedback, and the other six feedbacks are all reinforcing feedback. That is, this structure is amplified in one direction. As the title suggests, it changes like facing a gale. Then the balancing feedback slowly comes into play.

Since the system works with a delay, there will probably be an effort to change the direction of the amplifying structure only after the regret after experiencing the bitterness of life, probably starting with R2. The destiny of this structure is clear and vivid. The reason for showing this automatically changing structure is to warn you in advance. In a system dominated by reinforcing feedback, the initial value is critical. Suppose the Critical Mind for Effectiveness in the R2 feedback structure is big enough. In that case, efforts to maximize efficiency by comparison with others are curbed. Instead of satisfaction through comparison, you can enjoy the room to live a different life for your own happiness/satisfaction.

I use the term "Policy Intervention" to describe an effort to change something, observing a constantly evolving structure like a living organism. System Dynamics recommends adjusting the system not to flow as it is by kindly extracting exogenous variables and simulating the system while changing the values ​​of those variables. So, if we consider simulations, showing a closed system can be asked the question, "So what?" Yes. If possible, it is better to extract exogenous variables and use them as leverage. However, this is not the only thing that necessarily has policy implications. As explained in the paragraph above, it may be enough to provoke self-reflection while demonstrating the fear of closed systems. The simulations show limited influence only in the range of change in a given value. So it is impossible to express in numbers all policy interventions or policy intentions that cannot have a fixed value.

Ref:
Colllis, D.J., and Rukstad, M.G. (2008) Can You Say What Your Strategy Is? Harvard Business Review, 86. 82-90

Frei, Frances. (2006). Breaking the Trade-off between Efficiency and Service. Harvard Business Review. 84. 93-101