There is no doubt that everybody in today’s world has heard this word in English or another tongue: efficiency (Spanish: eficiencia, German: Effizienz, French: efficacité). And it is not a surprise that this word is overused because in some way it is used as an incredible characteristic of a person or a company. To better understand this tendency nowadays, it is important to analyze the word and its meaning.
The question “What does this mean?” may sound very simple, but often the most simple questions are the most difficult to answer because we are used to thinking in a complex way so much that we forget to think simply. However, to think in a simple and complex way and to switch between these and all the different ways in between is important to be adaptable in life. There are for sure complex things in life, where we need complex thoughts and complex solving skills. There are also simple things in life, and here we need simple thoughts and simple problem-solving skills. A bad application of this will bring no solution, and in the end, talking in modern terms, to a loose of money and time, which is one of the things companies fear the most.
Efficiency
Let’s start with efficiency. This word comes from the Latin term “efficientia”. It means “the power to accomplish, produce, or cause an effect.” The words ‘effect’ and ‘efficiency’ appeared in the late 16th century, meaning ‘the fact of being an efficient cause’ (Oxford Dictionary). I could stop here with the definition, but that would be an uncompleted work. To understand today’s meaning of efficiency means to apply the word, or be mathematical, being able to calculate or describe the efficiency of somebody or something. And here it’s easy to see that there are no absolute values. Only a comparison makes sense to describe if something or somebody is efficient. A company, worker, or process is efficient only if it is possible to say that they are more efficient than before.
Examples: The car and the salesman
And not better to make this point clearer than with an example. If somebody says “A Tesla car is very efficient today.”, what should we understand from it? At least it is more efficient than before. But how much, what is the exact meaning of it? That can be only a very simple marketing strategy, as the increase in efficiency is only 1% compared to before. The word ‘efficiency” can mean thousands of things. Another example: if we hear of a very efficient salesman, what should we think of it? That he can do 100 calls per day? Or that he can close one contract every day? At least we would probably understand that this salesman is one of the best in the market, whatever the word ‘efficient’ means here. However, since efficiency is only describing that something or somebody is doing something in a better way or with fewer resources than before, it doesn’t necessarily mean that this is what we are exactly searching for.
Efficiency must be clearly defined
A company is searching maybe for a salesman who closes contracts because that is what brings the money. For this company, an efficient salesman is somebody who can make as many closes as possible, and therefore above the average. This would be an efficient salesman. Making 100 calls per day could be an indicator that this salesman could make closes above the average, but this must not be necessarily true. If I want to buy an efficient car, I have to define what efficiency is. Let’s say I care about how much money I would spend charging the car, then for me, efficiency is related to the cost of kWh. But if I don’t care so much about money but more about time, that means, I want to charge my car as few times as possible, then the efficiency is related to the travel distance per charge.
What does efficiency mean for the business world?
Here there are also many different definitions. Are we talking about a process or an employee? Both cases are complex. Therefore, since everybody understands the work of an employee, is much easier to understand the business world starting with this. Most businesses are concentrated basically on two things: – it doesn’t mean these are the correct things to concentrate on, but this is the reality today- reducing costs and increasing earnings.
If the company knows that an employee is efficient, means basically that he is doing the same amount of work for less money, or more work for the same money. There are other variants where an employee can become more efficient, without communicating this directly to the employer, meaning that he is doing his work in less time getting the same amount of money. Not a loss for the company but a win for the employee. But this is another topic. Here one more time, independent of which parameters are taken (money, amount of work done, work hours, etc.), the parameters have to be chosen, then a comparison between employees is necessary to be able to talk about efficiency.
Efficiency Beyond the Business Context
In any context, it is important to define the parameters. In the business context, they are often called KPIs (Key Performance Indicators). Whatever fancy names are used to describe something, it must be very clear what it is important. Then, according to the chosen parameters, it is possible to measure efficiency. Applied in life, if somebody has a dream to visit all the countries of the world, because this is his/her life dream, then no matter which position he/she has in the company, or the amount of money he/she accumulates, or how large the personal network is, this person consciously or subconsciously will track this parameter: Number of Countries visited. Now it is easy to understand how this person would feel if the person is maybe 60 years old and has only visited 3 countries. It is also now very easy to exchange this dream with any other possible dream. Similarly, efficiency is applied in every other context: business, life, economics, personal development, sports, etc.
Efficiency is a tricky word that has to be analyzed. There are many different ways to track efficiency, and each way would lead to a different way of working. As it happens with the great companies when they were founded, their parameters were not small at all. They were not tracking insignificant things. They were tracking visions so large that they had the freedom to work on all other infinite parameters, as long as they achieved the large dream. There are many examples, but one that seems to be a great example for it would be Starbucks (Founder: Howard Schultz). The vision was to transform Starbucks into a “third place” between home and work. The vision is so great because it already implies that one of the parameters they want to track is the number of Starbucks stores, maybe after this, the number of customers per Starbucks store. These parameters can change, but the vision remains the same. Maybe if Howard Schultz had started with a vision like “the most expensive coffee in the world”, this parameter (Price/Cup of Coffee) would have led to a disaster.
Sources
- Pixabay (for pictures)
- Oxford Dictionary
Juan Carlos (www.juancarlosps.com)
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