Be Efficient or Effective?

Anyone who sets out to meet or exceed targets and solve problems eventually faces the same question: what is the best way to get there? Should you be efficient, or effective?

As an engineer, I was trained from the start of my degree to solve problems and overcome challenges. That may well be the main legacy of an engineering education.

Over more than 35 years in industry, in roles ranging from production engineer and plant manager to industrial director, business leader and executive, I faced many challenges, both in solving problems and in exceeding targets. One question was always present: be efficient, or effective?

To understand the dilemma, it helps to be clear about the difference between the two words:

Efficient

Achieves the result by using resources well.

Effective

Achieves the planned result.

When finding the cause costs more than the problem

Throughout my career, I had the opportunity to lead large teams, many of them with an engineering background. Over time, I realised that technical teams instinctively approached problems by first identifying the causes and only then acting on a solution.

In many situations, the team identified the causes quickly, which allowed them to propose and implement solutions with agility and minimise losses for the company. In other words, a performance perceived as efficient.

In other situations, however, identifying the causes took a long time, delaying solutions and leading to significant losses. The team believed it had been efficient, because it had identified the cause and solved the problem. In reality, the solution had been very costly, because of the losses incurred while the causes were being investigated.

Over time, it became clear to me that this approach needed to change.

The team’s mindset of being efficient, always identifying the causes first, had to be combined with the drive to be effective: pursuing a solution that minimises losses, even without having identified the causes.

A lesson from an electrical substation

A friend once told me about a situation from the start of his career as an engineer. He was called in to solve a technical problem at an electrical substation whose shutdown system kept activating without the prior alarm, taking the substation out of operation and causing significant losses for the company.

After studying the situation, the technical teams concluded that it was a spurious activation of the shutdown, occurring without the prior alarm being triggered. But they had not been able to identify the reason for the spurious failure and, as a result, had not proposed a solution. The losses were mounting, and so was the pressure to solve the problem.

After analysing the situation, he decided to focus on solving the problem rather than on identifying the cause of the spurious failure. He proposed that the substation should only shut down when the shutdown command was accompanied by the prior alarm. It was a simple modification, quick to implement, and it kept the substation operating safely, since the alarm would always be triggered in the event of a real problem.

Once the change was implemented, the unplanned shutdowns stopped, and so did the losses.

This case illustrates a belief that is common in companies: that being efficient means always identifying the causes first and then acting on the solution, because that is the way to achieve results while using resources well. Those who go straight to the solution are seen as effective but not efficient, achieving the goal without paying attention to how resources are used.

Neither path alone

There is no single best path to solving problems, whether by prioritising the causes or going straight to the solution. Over all these years of leading large teams of brilliant professionals through complex problems and major challenges, I have learned that the best way to meet demanding targets and minimise losses is to avoid any bias towards one path at the expense of the other.

That requires real effort from teams: the discipline to keep using a rigorous process for identifying the causes of problems, and the creativity to adopt solutions without necessarily knowing those causes.

Why it matters even more in the energy transition

In the current challenges of energy transition and decarbonisation, this question becomes even more relevant. Pressure on companies is likely to keep growing as climate change advances, regulation evolves and the deadlines for their commitments approach.

Finding solutions quickly that balance emissions reductions, operating costs, the investment required and the time needed to implement them is an equation that is rarely simple to solve.

Most assets in the chemical and petrochemical industry, for example, were built at a time when the energy transition and greenhouse gas emissions were not yet relevant topics and, therefore, were not part of the design premises. Because it is a capital-intensive industry, changing the configuration of assets or the energy matrix to reduce emissions generally requires significant investment in plants and long implementation times.

Being both efficient and effective in defining and implementing an emissions reduction strategy is fundamental.

Five plants, 80% of the emissions

I had the opportunity to help structure the greenhouse gas reduction plan of a company with 40 industrial plants across four countries, with different technologies and sizes. The first step was to base the development of the project portfolio on a balanced equation between efficiency and effectiveness. The company had a demanding reduction target disclosed to the market, with objectives set for 2030, so speed of implementation also carried significant weight in the strategy.

Every plant had its projects mapped out to help the company reach its targets. However, when the consolidated emissions inventory of the 40 plants was prepared, it showed that just five plants accounted for about 80% of the total.

The company therefore decided to concentrate its efforts on those five plants, given their significant potential to reduce emissions with lower capex and the greater speed with which solutions could be identified and implemented.

At first, it was not easy to convince the teams at the smaller plants that, from an integrated perspective, it would not make sense to invest time and money in major changes at their sites. We reinforced the strategy of acting in an integrated way, both efficient and effective, by concentrating efforts on a few plants to achieve the company’s decarbonisation target as a whole within the deadline. After intensive work with the teams of all the plants, the plan was consolidated on this basis and implementation began.

This is an example of the kind of challenge companies have been facing. Reducing emissions and adapting the energy matrix has required them to implement changes with agility, optimise investment and, at the same time, gain competitiveness. It is not an easy journey.

The secret of success is to strike a good balance between being efficient and being effective.

It is a cultural challenge that should not be underestimated.