Efficiency and Effectiveness

The Yin and the Yang of Productivity

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EFFICIENCY VS. EFFECTIVENESSWhen defining productivity, two words come to mind: efficiency and effectiveness. They seem synonymous or perhaps sequential — that the former might lead to the latter — when in reality, they’re two sides of the same coin. Efficiency relates to the speed with which a task is accomplished and effectiveness describes the success of that end product. In order to be truly productive, you need a balance.

In the modern business paradigm, efficiency reigns. In fact, we’re so caught up in the efficiency side of productivity that we often lose sight of effectiveness. Focusing mostly on being efficient rules out the opportunity to be creative. When you set a goal to accomplish a project, for example, the emphasis is usually on the time constraint. From the deadline standpoint, it would be considered inefficient to ruminate for several days or weeks before starting. But from the end product standpoint, the time you spent mulling over the idea might very well lead to a better result. Allowing our brains time to have divergent thinking may not be efficient but it’s quite effective.

There’s a fantastic TED talk on this topic: “The Surprising Habits of Original Thinkers,” given by Adam Grant, a professor at Wharton School of the University of Pennsylvania and New York Times bestselling author.

In his talk, Grant introduces the term pre-crastination, the polar opposite of procrastination. Pre-crastinators get work done quickly and early, but the end result often lacks creativity and innovative thought. Efficient but not all that effective. For the reason, pre-crasination is rated only slightly higher than procrastination, which is neither efficient nor effective.

The presence of technology amplifies the split between efficiency and effectiveness. With technology in our back pocket, we’re expected to be even faster (read: more efficient). With increasing performance pressure as a result of greater competition, it’s far easier to depend on the reliability of technology than risk folding in a human component that is fraught with the potential for error and inefficiency.

Harvard Business Review article “Technology Should Be About More Than Efficiency” discusses the technology efficiency/human innovation trade-off.

“Digital technology has intensified the quest for scalable efficiency and undermined our humanity…. In other words, we suppress our humanity and look longingly at the efficiency and reliability of the machines around us. We tighten our focus on the computer generated data and analytics that offer the promise of greater efficiency within the world as we know it.”   

The article suggests that there’s an inverse relationship between technology and trust, that this technology dependency has made it increasingly difficult to establish trust. As we interact more with machines than each other, trust deteriorates.

Let’s apply this theory to the financial services industry. Human interactions have been replaced by digital, as start-ups reimagine every type of financial activity. These new models are highly efficient in terms of quickly completing transactions and making mobile wealth management possible, but they raise concerns about privacy and trust as the human element fades.

The article doesn’t recommend jettisoning technology but rather harnessing its power to drive human thought, innovation and creativity. Like the article suggests, I believe a happy medium is the intersection between technology and human interaction, where you get the technological advantage of scalable efficiency and the experiential benefit that human financial advisors add.

This combination offers consumers the best of both worlds and it’s the approach we take at LegacyShield. We created a state-of-the-art platform based on security and privacy (technology), and on it consumers and advisors can interact (human element). It allows an individual to have multiple advisors involved in the process, which leads to more options and better decisions. In this case, technology is both efficient and effective.

My experience in helping develop LegacyShield is what initially drew me to the Adam Grant talk I mentioned earlier. We were hardly early adopters. We weren’t the first to develop a platform through which people can take control of their financial futures. We created, tinkered, scrapped and rebuilt – every step of the creative process Grant describes on the road to innovation. Every time we doubted our direction, we stepped back and allowed ourselves time to think. Our process wasn’t quick but our end result was the better for it.

Remember, efficiency is important but it isn’t everything.

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