Efficiency vs effectiveness

When building products and changing how you deliver value to your customers it's a good idea to have a really thorough thought on efficiency and effectiveness. The best definition I've seen of the two terms is:

"While efficiency refers to how well something is done, effectiveness refers to how useful something is."
- https://www.diffen.com/difference/Effectiveness_vs_Efficiency

In the industrialization of the goods we today take for granted efficiency has been the key metric to optimize for. In a world with scarce options simply doing something similar to what others do but in a more efficient way has been a simple and safe management strategy. And even today I hear many managers talking about focusing on efficiency.

Optimizing for efficiency eventually means focusing on margins, cutting salaries etc, for digitalization this has frequently been proven to be the wrong strategy. Achieving efficiency used to require high volumes and large capital investments in factories and automation that took many years to accomplish, and to get return on investment on. In the digital world there are fewer barriers to copy products and less of a first mover advantage. If you optimize to much on efficiency you run a constant risk of innovating at a slower pace and to be vulnerable to change (Nokia anybody?).

Effectiveness requires less rigidity and allows for pursuing innovation. This strategy will be less reactive to changes in you operational situation. With increased customer options effectiveness will give your strategy more potential to provide products that are highly satisfying to some customers with possibilities to invest more in product quality, which is becoming increasingly important when "wear and tear" is criticized. For product owners this can limit your scope and allow your team to focus, teams in the organization will together get room to innovate and find ways to support important customer use cases, or as the strategy question for a product manager to solve.

A really good example of effective change is when Henry Ford started mass production of cars when people asked for "faster cars". Typically people will only ask for higher efficiency, this is request that requires no understanding or imagination, it only requires asking for "better". If you lead a development team you should always start by looking for effective solutions, and later when you've found one then you ask yourself if you are doing it efficiently.

A good starting point for development teams to start looking for efficiency is to secure that a lot of the available time is spent on development activities vs other activities. One keep aspect of DevOps has been the automation of repetitive tasks that among many other benefits has a time saving part that gives time to focus on development. Another area where efficiency matters a lot in development teams is to automate feedback as much as possible, in essence all the things created by the team needs feedback to ensure its effectiveness, this can in many (not all) ways be automated as well. This investment will guarantee low effort learning in the team which is a key driver for investing in the team common knowledge and brains which they can use a resource for effective product development.

Note: In swedish efficient as well as effective both translate to "effektiv", using one word for two different things sure doesn't help...