Where Is The Leverage? Productivity As Marriage Of Effectiveness And Efficiency
“23.06., 179,95 €, BA ÜW.”
“23.06., 4,87 €, BA KK.”
“24.06., 20,31 €, BA LS.”
The printer is humming in the background, stacks of paper in front of me, binders bursting with invoices on the desk next to me.
It’s that time of the month: accounting time. Printing all invoices that we received in the past months, sorting them, labeling them when each transaction took place, and then filing them away.
Not my favorite activity, but after doing it a few time, I became incredibly efficient at it. I was doing it fast, (almost) mistake-free, and it took me less time every month, but it was still a substantial amount.
A few weeks later, I learned that you actually don’t need to retain digital invoices on paper in Germany. You can just save them digitally, in an unalterable manner.
WHAT??? Why did I not know this before? I had spent precious tens (or possibly hundreds) of hours of my life printing out invoices and filing them away (and I hate filing stuff, as my colleagues will attest to)? We were killing trees and running up our printer costs for nothing?
I was livid, but also kind of excited. Being able to do everything digitally made everything so much easier. It made the process so much more efficient.
What I was doing was effective: my goal was to provide all relevant accounting information to our accountant. I achieved that goal — but in a painful and slow manner.
It wasn’t efficient: while I got the job done, it took me four times the time it would have taken me had I just done all of it digitally. I was efficient at doing it the old way, but the process in itself wasn’t very efficient.
Imagine cutting down a tree. You could be the most efficient possible at using a small axe to cut it down, which would be effective — it would get you closer to your ultimate goal of cutting down the tree.
Or you could use a chainsaw. You might not be the best at it, but as long as you don’t cut off your hands, you will be more efficient and reach your goal faster. (Lumberjacks of this world, please correct me if I’m wrong here.)
That’s what being efficient is: doing things in the right way.
Now, let’s say you just started your steak e-commerce startup, in which you’re selling vacuum-sealed cuts of Argentinian beef at a competitive price (actually a thing). Naturally, you want to grow your business and acquire more buyers.
You hire an agency. That’s efficient, because agencies probably know the best way to get the job done. But you also give them the goal to advertise your product in magazines for vegans (actually a huge thing).
That might be nice and give you plenty of aggression from potentially angry vegans who might be outraged that you dare place advertisements on a magazine free of animal products (and yes, I checked, paper is vegan according to Reddit).
But it won’t be effective at all. Chances are, vegan consumers won’t buy your product. You’d be much better off advertising in a magazine like BEEF. That’s where you reach your target group, and will grow sales.
That’s what being effective is: doing the right thing.
The example above was very clear. But many times, in your personal and working life, it won’t be as clear what the right thing to do would be. You will be doing things that might simply be wrong, or you might be doing them in the wrong way.
The question I always ask myself: where is the leverage? What can I do in order to maximize the ultimate goal, i.e. in my case to grow our business?
If I’m not selling enough and am already very good (i.e., efficient) at performance marketing, should I become more efficient? Or should I try new marketing methods? Or is my product simply not good enough?
The leverage isn’t in the performance marketing. It’s in the new channels, and/or in improving the product (probably in both). Therefore, it would be effective to work on the latter two.
Now, what does all this have to do with productivity? I see productivity as the marriage of effectiveness and efficiency. You cannot be ultra-productive without having both; in order to reach the productivity pinnacle, you need to work on the right things in the right way.
That’s hard. It’s probably as hard as it gets. So in order to embark onto your journey towards higher productivity, the first question to answer is: where is the leverage?
The applications to business are endless:
- when your company is struggling to acquire customers, the leverage is somewhere in Marketing or Product Development
- when your company is struggling to produce enough product (always a good problem to have!), the leverage is in making processes more efficient and/or outsourcing parts of it
- when your company has those two figured out, but the finances aren’t right, the leverage is probably somewhere between pricing and cutting operational costs
- in a service company with more demand for projects that you can handle, the leverage is in hiring more highly qualified personnel — or in cherry picking the best, highest-yielding projects
But when it comes to our own personal lives, identifying the leverage might be a bit more difficult. After all, we tend to think a lot more analytically about business than we do about ourselves. Here’s a few examples:
- when you’re struggling with your personal finances, the leverage lies in earning more money. Whether that means switching jobs, asking for a raise or starting a side hustle is up to your discretion.
Quick aside: one could also argue that the leverage might lie in cutting spending. Yes, you should have an eye on how much money you’re spending every month and if it’s worth it (for instance, having a car and living in a big city). But only buying one drink at the night out with your friends because you’re frugal? That’s no fun. Earning more is more fun. You can always earn more, but you can’t spend zero money.
- when you’re trying to advance your career, the leverage lies in learning new things (i.e. reading, online courses) and/or in expanding your network for bigger opportunities
- when you’re trying to find a new romantic partner, the leverage lies in … well, I guess also expanding your network. Whether you do that at your local sports team, at events with like-minded people or through Tinder (a “networking” app, one could say), that’s up to you
- when you realize your parents and grandparents are getting old, the grandparents lies in spending more time with them! Stop trying to be efficient about it — just spend time with them!
- when you’re trying to make friends and get accustomed to a new city, the leverage lies in joining local organizations and having deep conversations with strangers
Some of those things cannot be designed in the most “efficient” manner possible, obviously. But some can. In my opinion, for example, Tinder is a huge waste of time. You encounter a thoroughly unfiltered crowd of women (or men), with which you match based upon photos and maybe a witty bio. Therefore, using Tinder is effective (gets you closer to your goal of finding a romantic partner), but not efficient (because you waste a ton of time on text conversations and dates that lead nowhere). It’d be much better to go do things that you enjoy doing, and then finding a partner who enjoys doing the same things — since there, you already have a highly filtered crowd that will share similar interests.
Therefore, doing these things has the higher leverage, since the likelihood of finding a partner there is much higher (and, as a bonus, accomplishes a lot of other things, such as finding friends and providing diversity in your life).
But sometimes, you just can’t find the leverage. Happens to me all the time, too. Instead of sitting there and chipping away on things, just ask someone. Having a conversation with a good friend, your business partner, your boss, your parents will usually help identifying the biggest leverage in your life right now. It’s amazing how much insight you can gain by having an outside perspective.
In order to be productive, one needs to be both efficient and effective. Effectiveness comes first. Find the leverage, understand what you need to do next, and then start working on it. And while you’re working on it, never stop improving. Identify a process, optimize it, and if you find a more efficient way to do it, pivot to the new way and optimize again — all while asking yourself if you’re still working on the thing with the highest leverage.
Where is your leverage?
Want more content like that? Let me know what you’d like to learn about at hello at dominiknitsch dot com or in the comments.
For all posts and takeaways from the books that I read, simply subscribe to my newsletter here.