You would not expect it in 2017, but during my process work I still run into discussions on the difference between effectiveness, efficiency and productivity. And of course what of those three is the goal of process improvement efforts.
To explain how I see these terms, I always use my kitchen garden as an example. I thought it would be nice to share that story.
Effectiveness: Delivering the right result.
So, I have a kitchen garden in which I grow several vegetables. Although it’s just for fun and relaxing, I have some kind of goal in mind.
My goal is to provide my family with fresh vegetables for 3 months per year.
That's what I could call my desired process result and goal: sufficient vegetables for 3 months per year.
And it seems to work. My way of working and allocation of resources are effective; I get the desired result out of my proces(ses).
That's what effectiveness of processes means to me: The processes deliver what I promise.
Efficiency: Same result with less effort
In my opinion, efficiency is about the amount of time, money (or more general: resources) you use to deliver the desired process result.
For the ease of this story, I will only look at money and time as resources (most things can be reverse engineered to these two).
The most time of my gardening is spent at the beginning and the end of the season: at sowing and harvesting, but I did some calculations and on average I spend 12 minutes per day.
On seeds I spend around 20 € per season. I get water from the pond across my street, so that’s for free. And on fertilizer I spend 25 €.
For me efficiency is about “getting the same result by using less resources”. So, delivering 3 months of vegetables stays the result.
But when I only have to spend 11 minutes per day on that, my efficiency has improved.
Or assume I can get fertilizer cheaper. In that way I can reach the same result with spending less money. Efficiency improved.
Improvement in Efficiency: The same amount of vegetables by using less resources.
This also makes clear that “being efficient” is a weird term. I think efficiency is about comparing two ways of working with each other, where one can be more efficient than the other.
Productivity: More result with the same effort.
To me, productivity means getting more out of the same resources. In this case that means I keep spending 12 minutes per day. And keep spending 45 € on seeds and fertilizer.
But assume it is better fertilizer or I bought a better breed of seeds. Or maybe I have improved my watering technique. Or maybe I’m just lucky with the weather.
In that case it might be possible that I can produce vegetables for 3 months and one week.
With investing the same time and money, I got a better result. Of course I assume that one week of extra vegetables has value for me.
Productivity: more vegetables for the same time and money.
More with less?
More with less. I hear it quite often when organizations want to “improve” their processes. That should mean becoming more efficient and more productive. Could that be possible? I think so.
Just some ideas:
§ Because of a better digging technique, the soil can hold more water, which makes the carrots grow better and more carrots are produced.
§ I can harvest seeds that I can use next year instead of buying them
§ I was lucky and got a bargain on fertilizer
Finally I will have more vegetables at less costs. How could I call that; producient?
Besides the things I cán change, the weather has a big influence on my crop. You can be lucky or not. So maybe I will invest in a green house. Talking about investing…
Few things come for free; return on investment
Sometimes I’m lucky and I get an improvement in efficiency or productivity “for free”.
For example when I get a discount on fertilizer or when the weather is good.
But most of the time, improvement needs an investment.
If I want to spend less time, that could be possible by working smarter, but not seldom that also needs investment in things like machines or other tools.
In that case it’s smart to take a look at return on investment.
I told you I walk to the pond across my house to get water. I use the biggest buckets I have, but still it takes quite some time. On average 6 minutes a day (less on rainy days, more during hot times). Those 6 minutes are half of the total time I spent every day.
So, I found a secondhand water pump of good quality. It came with enough hose to cover the distance from the pond to my garden. I agreed with the seller to buy it for 80 euros. Of course I need to set it up. I practiced that and I can save 2 minutes a day by using it.
In fact my spare time is free, but assume I can ask 30 euro per hour as a freelancer, the pump saves me 1 euro a day.
That means I can earn the pump back in 80 days. That’s less than the 3 months I spend on my garden each year. So, the pump paid back within one season.
And I assume I can use the pump for a few more years. What would you do?
Eat your veggies!
(Numbers in this story are made up. For easy calculating. )