Great companies are both effective and efficient. Being efficient means doing things in the right way but becoming effective takes strong prioritization.
New initiatives must in the beginning focus on being effective rather than being efficient. If your startup is not effective, you will not reach the goal and the initiative will fail. If you are not efficient, you will waste time and money, but it doesn’t mean the enterprise will fail. Therefore it is important to put your mind on effectiveness before efficiency.
Ning Wang, who has helped companies like Lynda.com succeed, and Marten Mickos of the School of Herring discuss the significant difference and of being effective and efficient.
VIDEO TRANSCRIPT
Marten: Here with me today is Ning Wang, an accomplished executive who helped a number of startup companies reach great success.
Ning: Thank you Marten. Thank you for having me at the School of Herring. I’m really happy to be here.
Marten: Let’s talk about the difficult topic of being efficient versus being effective. Two words that both are good but they mean different things.
Ning: I think for all companies, being effective is really important. For startups, it’s particularly important. If you’re not effective, it means life and death. If you’re not efficient, it means you waste some resources, but it doesn’t mean the company won’t succeed. For startups, it’s really important to focus on being effective in the beginning rather than being really efficient.
Marten: Now, you mean that being effective is getting the right outcome done, and you mean that efficient means that you are optimizing the way you are doing something. Is that correct?
Ning: That’s correct. Being effective, to me, means that you do the right thing and that you really have to step back and then look at if the company is doing all the right kind of things. Being efficient means: Have you optimized the way you do it? Is this the least time or the most cost-efficient? That’s what it means being efficient.
Ning: As a startup it’s very important to be effective, in my view.
Marten: What would be a good example of effective versus efficient?
Ning: One example, I think, a lot of companies will see, or I have seen in a lot of companies I’ve worked at is take engineering and product releases as example. The engineering team will spend a lot of effort and time to make sure the release is on time and that they deliver all the features in a particular release. Then often I have seen at several companies the release promises a lot of potential, whether it’s to new customers, better adoption, faster sales, and it didn’t materialize.
The reason it didn’t materialize is because sometimes not enough attention is being paid for what should be in that release. Should one feature be prioritized ahead of another feature? These to me are effective kind of questions on working on the product versus efficient which is just delivering the releases on time.
Marten: You’re saying Ning that in a great company, you are both effective and efficient. You do the right things, and you do them very well. If you really have to prioritize, you start being effective and doing the right things. Only secondarily do you optimize that work.
Ning: Yes. Taking that example about product releases again, right? Let’s say there is a feature that is actually really important in getting the customers or getting more sales. If by doing that or doing it the right way means that you are a week or two later in the release. To me, that compromise should be made, especially for earlier stage companies, while you are trying to get adoption, get market share, get customers.
Marten: I have my own experience when I was a younger manager and I tried to be very efficient. I did many, many meetings in the same day and then I felt proud that I was such an efficient manager. It took some time to learn that, actually, I needed to be an effective manager and do the right meetings and get the right decisions done, and probably do far fewer meetings but get the important ones done and to really be an effective manager. It’s about doing the right things, and then when that’s done, then you can do the things right, but you must start by doing the right things.
Ning: One of the learning, a very concrete example when I think back, is that in my early days, and we were growing so fast and I had to hire 10-15 developers in a very short amount of time. I got all these resumes and of course I didn’t have time to really read them during the day.
Instead of sitting back and asking the question: “How I can get help and learn to recruit at a bigger scale and therefore really be able to recruit engineers at a bigger scale and be effective about it?” I went home. I spent the whole weekend and I read, I don’t know, hundreds of resumes. I think that is such an example where I was dealing and trying to be efficient in reading all the resumes. Instead of sitting back to say, “How can I do recruiting differently so that I can be more effective and then be efficient at it?”
Marten: Yes, so maybe what we’re saying is that it’s easier to learn to efficient than it is to learn to be effective. You become efficient by doing it over and over again and training yourself to the task. To become effective, it seems that you do it only after you’ve had some bad experiences. Meaning that trial and error plays a role in teaching people to become effective, whereas efficiency is something you can train by just training, training, and training. To be effective, you need to have the wisdom of the failures that you do every now and then.
Ning: Yeah, I guess my personal experience is that I feel being efficient, for a lot of the people who have been working at these startups are overachievers, it’s very easy because you try to be incrementally better at something, you become really good at what you do. But being effective means you have to have the discipline to say, “Am I working on the right thing?” By asking that question, it means you have to actually stop and then give yourself the time and the mind space to ask that question. It requires that discipline. At least for me, it didn’t come naturally. Something I actually had to learn by making those mistakes and having people pointing out to me that’s what I was doing. As time went on, I see young people also making the similar mistakes and I just thinks it’s good people are aware of that early on.
Marten: I would say that you can be efficient without knowing what the goal is. To be effective, you must know what the goal is, you must have a vision of the goal that you are reaching. Only then can you be effective.
Ning: That’s right. I agree with that. That’s very good.
Marten: Great. Thank you Ning. That was a great discussion.
Ning: Thank you.
