Monday 17 February 2014

Efficiency versus Effectiveness

Have you noticed a difference in buying burgers from McDonald's in recent years to 5-6 years ago?

Now it takes longer to have your orders filled right? 

But the burgers are now hotter ;)

In the past, can you recall you can physically see pre-made burgers sitting in a queue behind the McDonald's counter?

The quicker you move the customer queue, the more $ you make per minute or per hour right?

All in the name of meeting efficiency metrics and KPIs. No? 

Remember leaner, faster, cheaper?

When same stores sales fell at McDonald's 5-6 years ago (and their share price tanked), it must have raised alarm with management.

Kudos to McDonald's management for asking their customers what were they pet peeves eating at their restaurants.

High up on the customers' complaint list was - cold food.

Next time you visit McDonald's, do take a look behind the counter. Can you see your burgers are now made-to-order?

And if the queues are too long, before you complain or whine, ask yourself - do you prefer cold pre-produced burgers instead?

There are many examples of where we push the limits of efficiency so much that it works against effectiveness:

1) When educators (they are not teachers) discourage students in taking certain subjects as it's harder to score distinctions, and may affect the school's ranking... What's the purpose of education again?

2) I hate shopping at a local supermarket chain near Queenstown as it tries to cram everything into extreme narrow aisles and totally forget about the customer experience. 

It's main selling point is "cheap". Nothing else.

NTUC supermaket was once upon a time like them. I am so glad NTUC now offers a shopping experience almost equal to Cold Storage without sacrificing "fair pricing".

3) As employees, especially if you are the sandwiched middle-management class, I'm sure you have lots of examples of idiotic short-term efficiency goals that go counter to the values of the company, and/or the long term strategic plans of the company! 

Well, somebody have to meet the short term goals for the next quarterly report mah...

As investors and traders, there are 3 fingers pointing back at us (when we point our index fingers at others, our thumbs don't point back at us do we? I wonder where the 4 fingers saying comes from???).

Why do we invest or trade in the first place? To make money! Duh!

That's the one effectiveness we should not forget.

Take a count of those "efficiency" targets or concerns you are currently tracking and ask yourself - do they really matter in the big scheme of things?




  1. Hi SMOL,

    Reminds me of something. In the past before the North east line (NEL) was set up, there are many buses plying the punggol, sengkang road. When NEL was set up, a lot of these buses are removed, in the name of making it more efficient and thus wasting less resources. When you remove redundancies and making things run with less, it just makes the whole system less robust when something unexpected happens.

    Maybe in trying to make something more efficient, the whole point of making a transport system that is robust and less prone to breakdowns and congestion is entirely lost.

    I agree we should all try to become less efficient without thinking the cost of being efficient. Good post :)

    1. LP,

      I think our transport planners should visit Hong Kong.

      Regular buses, mini-buses, and their MTR do duplicate their routes - yet at the same time offer different choices for the consumers as each mode of transport have their cons and pros.

      If one breaks down or is delayed, there is a ready alternative.

      The recent flood in Bangkok also exposed the fragility of our global supply chains when key components were concentrated in a single location.

      In my previous life as a buyer, I've always fought against single sourcing.

  2. Life was so much easier in those old days when office communication was so inefficient.

    Memo or work instructions from bosses or supervisors took days to reach us via office boy mail delivery service.

    Another few more days to clarify the jobs before the actual works got started.


    1. CW,

      I know what you mean.

      I learnt from my Swedish mentor (I've always like working with senior colleagues) never to read emails while we were on business trips.

      Other colleagues thought they were efficient by reading and responding to emails on the road. Again missing the main purpose of the business trip...

      They came back empty handed on the first day back to office.

      I came back with kick-ass trip report full of action plans and ideas - ready to send out first thing in the morning ;)

  3. Hi Smol

    I enjoyed this post of yours.

    Even though we are in the advent of emails and twitters, the old days where one could call (voices) more often or even writing letters brings up more sentimental value than what it is today.

    Ohhh bring back those old days ;)

    1. B,

      We can.

      Start with those that matters.

      Try writing little notes to your girlfriend, wife, and lover.

      I hope for your sake all 3 are the same person ;)

      You Romeo you!


  4. l am looking forward to the day whereby l will know the "effective" investment strategies so that my available funds (war chest) can be used in a more "efficient" way to achieve highest possible returns.

    1. Money Honey,

      Hmm.... Pause. Pause. Pause.

      Of course the ideal is to be BOTH effective and efficient.

      But in the real world, being effective may mean we have to "sacrifice" some efficiency along the way...

      It's better to buy fresh flowers for our wives or girlfriends, than to save money by buying plastic flowers that last forever ;)

      In supply chain, we call it optimum result.

      In my investing and trading, I don't push myself to reach maximised returns. Optimum will do fine enough ;)

  5. Trading is like efficiency? How well you turn over your money.

    Investing is like effective? How well you need your financial independence goal

    1. CW,

      Whatever makes you happy :)

      I measure and track less on numbers per se.

      Annual return goal 10% - result 12%

      If STI that year returns 15%, should we be happy or disappointed? Is this benchmarking more about efficiency or effectiveness?

      I am like LP - I focus more on my entries and exits.

      Like a swordsman, if I improve my swordplay, my chances of survival will improve in combat. And that's what matters ;)

  6. ahmm, nothing to write...

    lately very little things came out from my head, need a long break....

    1. coconut,

      Do that.

      Must avoid burnout.

      Listen to our body.

    2. oh dear, i think i mis-write it haha, i mean not much stimulus to my mind, like its empty, nothing comes out, becomes very boring.

      this whole of febuary is incredible boring market, my trading volume also down, still i got to do what i do always, watching the market.

      so its not burnout, its nothing to burn haha.

    3. Greedy coconut,

      January's mini-volatility not enough for you?

      Very tiring to bring laundry in and out you know?

      I just brought the laundry out. If the rain comes I'll be very pissed!

  7. 一 针 见 血 is always best for the doctor. The rest of the businesses is always a compromise. For investor and trader, what's their preference?

    1. temperament,

      Each one of us - be it investor, trader, or hybrid - have to ask the same questions you have asked at CW's post:

      What for trying too hard?
      For whom do you strife?
      Besides for yourself?

      I think some are pushing hard on efficiency for themselves because they value how others see.

      Most seek validation from others even in the realm of investing and trading.

      Just like only a few can make donations silently without much fanfare and publicity - most want their names on buildings and on plaques.

  8. Hi SMOL

    Great post.

    To me efficiency can be trained by doing/experiencing the same things over and over again...but the results(effective) perhaps may vary ?

    1. Thanks Small Time Investor ;)

      Not pausing and asking am I doing the RIGHT THING once in while may mean we are focusing too much on doing THINGS RIGHT.

      Nothing wrong by itself; but we can be moving faster, leaner, and cheaper into the WRONG direction...

      It's like averaging down on a losing stock/position. Each time we add at a lower price, the average entry price moves down (efficient).

      But is it effective?


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