As the name suggest, this objective refers to the efficient use of resources. Minimizing waste from the previous example could be counted not only as an economical solution (more income from additional products) but also as an efficient use of resources, since with the same input there is now more output. In short, efficiency means getting the biggest possible output with the same amount of input.
Efficiency can be achieved through improved processes. You do not add any additional inputs (e.g. raw materials or labor hours) but you increase your output. In manufacturing this could be achieved through process automation. Automation doesn’t mean only robotics. You can automate your workflow as well. Another way to improve efficiency is process redesign.
Process improvement which brings better efficiency can sometimes reduce economy. It is important to evaluate all the cost with a long-term perspective, because more often than not, automation improves the economy as well in the long run.
Let’s think of a simple example, such as email marketing. If you keep your customer base in your excel list and send emails every time manually, this could be economical solution, but not efficient, especially if you rely on email marketing for sales! And then, you decide to invest in CRM (Customer Relations Management) and email platform which allows you to pre-program emails and even personalize them! This would cost you $10 a month and you think it’s not economical. But with a second look, you understand that this $10 a month allowed you to save 20 hours a month, which you can use more productively – creating more products or services.
In a few months you realize that this $10 expense brings additional $100 increase in revenue, because you have a better offer. Makes sense to look at it long-term then! The work you put in is a resource as well and using it efficiently always translates in better financial flow.
Ask the following questions when looking for areas where you can improve efficiency: