Effective vs. efficient

Effective vs. efficient

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Everyone of you knows the dilemma we are confronted with almost every day: Business goals versus customer needs. We think we have to decide for one or the other or put one over the other. Lean Service Design categorically rejects that! Why? Let’s have a look at the following graphic.

Business driven companies want to do things right. Because if they do so, they are efficient at the end of the day. Efficiency means to reduce costs and one expects to gain an advantage over the competition.

Customer-driven companies want to do the right thing. They expect to be their customers favourite and thus to be effective. This way they can stand out from the competition.

So we have efficiency on the one hand – which means doing things right – and effectiveness – which means doing the right things – on the other. What is right?

Let’s take a look at the two scales and put them into perspective. I think we all agree that if you as a company are neither efficient nor effective, you will die pretty soon. If on the other hand you’re efficient but not effective, so you do things right but not necessarily the right things, then you’ll die too, but slower.

If you are effective but not efficient, so you do the right things for the customer but not for you as a company, then you will survive by the skin of your teeth.

Now you can see: The challenge here is to do both. Only those who are effective and at the same time efficient can create growth! We have to do the right thing the right way. And we can only do that if we reconcile customer needs and business goals. It makes no sense to optimize internal processes if we don’t pay for customer needs, just as it doesn’t make sense to fulfill the customer’s wishes without keeping an eye on the company’s goals.

Therefore LSD is structured in such a way that we always treat both sides equally on the Canvases and address appropriate questions. Every idea, experiment or feature is evaluated and prioritized against both sides.

Our experience has shown that most companies are driven by business needs, i.e. feel the urge to act comes out of the company. It is a rare case that a customer’s need is the driver to act. This is not wrong or right. That is simply reality. The only important thing is that these companies have to put on the customer-centric hat once they decided to act. That’s why we say: LSD is business driven and customer centric.

Elam
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Elam
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