To realize impactful effectiveness? Understanding the efficiency/effectiveness trade-off is the key.

What is it about?

An efficiency/effectiveness trade-off exists in micro-level exchanges. To understand how different focuses on the efficiency/effectiveness trade-off shape the macro-level performance of a market-like organizational system, we develop a complex adaptive systems model for computer simulations. We find that an efficiency-focus institution facilitates a market-like organizational system’s rapid emergence but hinders the system’s effective development.

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Photo by Adeolu Eletu on Unsplash

Photo by Adeolu Eletu on Unsplash

Why is it important?

People are always taught the importance of choosing right goals (i.e., impactful effectiveness). Peter Drucker, the Father of Modern Management, and many entrepreneurs have suggested that we should first choose the right goals (i.e., focus on the effectiveness) and then pay attention to how to achieve the goals (i.e., to obtain efficiency). However, how can we know that the direction we choose is the right one? Especially in this changing era, decision makers need to make a pragmatic analysis of the above question. This research starts with the efficiency/effectiveness trade-off that people need to deal with prudently in economic transaction activities. Combining the principle of similarity and the principle of reciprocity, the paper develops a theory regarding how to realize economic transactions efficiently, which underlies the realization of effectiveness in a competitive way. The paper also indicates the importance of making timely strategic adjustments in maintaining dynamism and sustainability of an economic system. In this study, computer simulation experiments were used to verify and supplement the theoretical assumptions. The experimental results also conform regular phenomena observed in human social and economic activities. This study provides decision makers with a deeper understanding of effectiveness and efficiency and contributes to discussions on how to realize "impactful effectiveness" in a fast-paced environment.

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