Efficiency v. Effectiveness – from Management to Leadership

“The righter you do the wrong thing, the wronger you get.” Russell Ackoff

In an interview with Phyllis Haynes on the Studio 1 Network, Russell Ackoff, Professor Emeritus in Management Science from the Wharton School, discussed one of the central problems in problem solving: addressing the right problem. This issue is well-recognized but often ignored in practice. As Ackoff observed elsewhere, “We fail more often because we get the right answer to the wrong problem than because we get the wrong answer to the right problem.”

Ackoff begins the interview with a reference to his knowledge management hierarchy, “data, information, knowledge, understanding, and wisdom.” He correlates the movement from information to wisdom with the distinction that Peter Drucker draws between efficiency and effectiveness. Drucker calls efficiency “doing things right” and effectiveness “doing the right things.” This tracks with the delineation between management and leadership (managers do things right while leaders do the right things).

The thread that runs through the discussion is that of vision. In order to address problems, we must first identify the real question(s) to be answered. Without the vision to discern the real problem, we are condemned to efficiently dealing with some less relevant issue.

For Ackoff, this involves the proper handling of data in order to move from raw observation to wisdom. In his hierarchy, this means taking the base observations of fact and relating them to each other to make information. From there the information is organized into knowledge which can then be applied to novel situations to produce understanding.

It is the next step that bridges the gap between observation and vision. In moving from understanding to wisdom, we can begin to answer the “why” questions that yield the insight (vision) that allows us to choose the right questions to answer. While we will likely answer the questions with knowledge and understanding, it is wisdom that makes it possible to choose the questions to answer from among the possibilities.

The downside to failing to make the right choices is that our solution – no matter how efficiently applied – may well produce unwanted and even counter-productive results. Ackoff argues that an example of this is the American educational system. He posits that we have set up the system to optimize teaching rather than learning. The system rewards teaching behaviors without regard to learning outcomes. This, he feels, causes the system to work against itself.

By failing to address the right problem we run the risk of channeling system solution resources into non-productive or even counter-productive outcomes. In addition, we leave the real problem unaddressed. It is critically important, therefore, to focus our resources on solving the right problems.

That means doing a good job not only of synthesizing data into information, organizing information into knowledge, and applying knowledge to generate understanding, but of asking and answering the “why” questions as well. It is from the answers to those fundamental questions that we can build the vision that will move us from efficiency to effectiveness and from the management of our problems to leadership beyond them.

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