Efficiency and effectiveness were originally industrial engineering concepts that came of age in the early twentieth century. Management theorists like Frederick Taylor and Frank and Lillian Gilbreth designed time and motion studies primarily to improve efficiency. Work simplification efforts again focused primarily on questions like "How fast can we do this task?" Work simplification also led to terminology like streamlined processes and efficiency experts, but the emphasis was still on time and motion. The concept of effectiveness, which takes into consideration creating value and pleasing the customer, became popular in the United States in the early 1980s when Americans perceived Japanese products such as cars and electronics to offer
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Bringing a balance between efficiency and effectiveness is one of the critical jobs of any owner or manager. In the above example, the company might have been realizing a competitive advantage because it was shipping orders with a higher degree of accuracy than its competitors. When it decided to save some money by streamlining a process and eliminating some positions, it lost that competitive advantage. And in terms of saving money, any savings realized from the streamlining were in all likelihood returned several times over.
It is important for businesses to constantly look for ways to do things right....to become more efficient. But it is equally important that decisions along those lines be made by asking questions about the impact on quality, customer service and employee morale. Bad decisions relative to efficiency can very often have a negative effect on all three of these variables.
With regard to technology and efficiency, does the addition of new technology to any process have a positive impact on these variables? Business processes and what's good for the customer should drive the implementation of technology. Technology should not dictate how a process gets defined. Start with the customer and work backwards. Define the process based on the best way to serve the customer and the best way to accomplish tasks. Once the business