## Efficiency vs. Effectiveness in Strategy
- Effective = Doing the right thing — highlights links between the organisation and its external environment.
- Efficient = Doing the thing right — essentially introspective (internal focus).
### Key Principles
1. Efficiency is introspective; effectiveness connects the organisation to its environment.
2. Even a technically perfect strategic plan is useless if not implemented effectively.
3. A technically imperfect plan implemented well achieves more than a perfect plan never executed.
4. Successful strategy formulation does not guarantee successful strategy implementation.
### The Efficiency-Effectiveness Matrix
| High Effectiveness | Low Effectiveness | |
|---|---|---|
| High Efficiency | Cell 1: Best position — organisation thrives | Cell 3: Strategic direction present but too many inputs used to generate outputs |
| Low Efficiency | Cell 2: Bad shape — wrong direction executed efficiently | Cell 4: Worst — neither efficient nor effective |
> Key Insight: Cell 2 is worse than Cell 3. In Cell 3, strategic direction (effectiveness) is still present to ensure long-run survival, even if inputs are being overused. In Cell 2, effort is efficiently wasted on the wrong direction.