Economics and successful management revolves around two key concepts: Efficiency and Effectiveness.
Efficiency refers to the ability to achieve an intended result while minimizing waste in terms of time, effort, and resources. It emphasizes performing tasks in the most optimal manner, such as achieving results quickly or at the lowest cost. However, it’s important to note that efficiency can sometimes be applied to the wrong activities, meaning that while the task may be done optimally, the outcome may not be the desired one.
Effectiveness, on the other hand, is the capacity to produce better results that deliver greater value or achieve more favorable outcomes. It focuses on ensuring that the right tasks are carried out, completing activities successfully, and ultimately reaching one’s goals.
Successful managers should do the right things and make the right decisions. Moreover, they should do the things right and take the decisions into action properly.
Exercise 12.1 Wisdom of the Dakota indians
A well-known piece of wisdom from the Dakota Indians states: “If you realize that you are riding a dead horse, get off!”
Discuss what could that mean in a management context.
When managers are not doing the right thing they sometimes refuse to accept that they have the wrong business idea or the wrong strategy or product. Instead, they often tend to pursue the chosen strategy trying to do things more efficiency. To stay in the metapher:
- They procure a stronger whip.
- They change the rider.
- They argue, “That’s how we’ve always ridden this horse!”
- They form a working group to analyze the dead horse.
- They visit other places to see how they handle dead horses there.
- They raise the quality standards for riding dead horses.
- They create a task force to revive the dead horse.
- They schedule a training session to learn how to ride better.
- They make comparisons between different dead horses.
- They change the criteria that determine whether a horse is dead.
- They hire external experts to ride the dead horse.
- They yoke several dead horses together to make them faster.
- They assert, “No horse can be so dead that it can’t be beaten!”
- They allocate additional resources to improve the horse’s performance.
- They commission a study to find out if there are cheaper consultants.
- They purchase something that claims to teach dead horses to run faster.
- They declare that our horse is better, faster, and cheaper when dead.
- They form a quality circle to find a use for dead horses.
- They revise the performance criteria for dead horses.
- They establish an independent cost center for dead horses.
- They have the horses certified as quickly as possible.
- They freeze the horses and wait for a new technology that will allow them to ride dead horses.
- They form a prayer group to pray for the horse’s health.
- They place the horse in someone else’s stable and claim it as theirs.
- They note that others are also riding dead horses and declare this the norm.
- They change the requirements for riding and movement and issue a new development mandate.
- They outsource the horse.
- They bet that the horse is just pretending to be dead.
- If you can’t ride a dead horse, it can at least pull a cart.