Why Founders Should Focus on Productivity Instead of Efficiency

May 22, 2019 8 min read

Opinions expressed by Entrepreneur contributors are their own.

Imagine what greater efficiency could look like in your life and work. Maybe you would automate a common email chain or customer inquiry. Run five miles in 35 minutes instead of 40. Or trim business expenses by 10 percent. There are hundreds of different definitions, but ultimately, efficiency means producing the same result with fewer resources — less time, money, or energy.

Now let’s look at productivity. The startup world is currently obsessed with productivity-boosting techniques (and I often write about this topic, too). But what are we actually seeking when we talk about productivity? Why do we want to master our mornings or supercharge our workdays?

“Productivity isn’t just making stuff cheaper — it’s making stuff better,” writes Umair Haque, author of “Betterness: Economics for Humans” and director of Havas Media Labs. “What do real-world productivity breakthroughs look like? Cures for cancer, vaccines, the internet, iPhones. They are not just minor-league conveniences; they truly and dramatically change lives.”

While efficiency means doing more with less, productivity is about doing more with the same — and as Haque explains so eloquently, it’s a pursuit grounded in quality. After all, who cares whether you cross four extra tasks off your to-do list, if those activities don’t move the needle for your business? An effective morning routine or work schedule should help you to do more of what really matters. That’s why I believe founders and CEOs should focus on productivity, not efficiency.

Related: Is Your Business Considered Efficient — or Just Plain Busy?

The rise of an efficiency mindset.

The Industrial Revolution launched the era of mass production. This process hit a new peak in 1913 when Henry Ford introduced the automotive assembly line, and the market continued to embrace an “efficiency mindset” well into the next century. According to Michael Mankins, a partner at the leadership consulting firm Bain & Company, the business world’s focus on efficiency throughout the 1990s and 2000s produced strong results. “Earnings growth for the S&P 500 ran at nearly three times the rate of inflation over this period,” Mankins writes, “despite tepid top-line growth in many years.”

The tide began to turn, however, in 2015. “S&P 500 earnings began falling,” Mankins wrote, “and earnings growth has remained negative ever since.” He argues that in this climate, attempting to achieve higher profits through efficiency is nearly impossible. Today’s business environment now requires a productivity mindset.

Over the last 13 years, elevating productivity over efficiency has helped me to grow my bootstrapped startup, JotForm, into a company that serves more than 3.5 million users. While we often use the words “productivity” and “efficiency” interchangeably, they have important distinctions – especially for entrepreneurs. Here’s how to cultivate a productivity mindset across your business.

Prioritize teamwork over solo efforts.

A creative, motivated, well-functioning team will have a far greater impact on your company than one super-productive employee. At JotForm, we harness the power of collaboration by organizing our 130 employees into small, cross-functional teams. Each group of five or six people includes a lead designer who works side-by-side with UI and CSS developers, full stack developers, plus UX specialists, data scientists, and any other necessary functions.

Each team works on one project at a time, and operates like a small company. We assign tasks and problems, but they’re empowered to make their own decisions, including how they develop solutions, execute and test ideas, and organize their workflows. It works beautifully — and this model could apply to a wide range of different industries. It’s not viable if your business has just a handful of employees, of course, but whenever possible, combining different voices, backgrounds, skills, and strategies increases the power of a team.

Related: Want to Solve Problems More Efficiently? Do This.

Make the most of your MVPs.

Every company has its MVPs — those talented, internally-motivated employees who make everything possible. These sought-after hires often land at renowned companies like Netflix, Apple, Google and Dell. In researching their 2017 book, “Time, Talent, Energy: Overcome Organizational Drag and Unleash Your Team’s Productive Power,” Mankins and co-author Eric Garton found that companies like Apple are also 40 percent more productive than the average organization. It’s logical to think that the MVPs who work at these standout brands are responsible for that major advantage.

However, Mankins research found that these companies have 16 percent star players, while other companies have 15 percent. The difference lies in how top companies leverage their outstanding talent. Hyper-productive organizations identify business-critical roles and fill nearly all of them with MVPs, explains Mankins. That’s why 600 Apple engineers were able to develop, debug, and release iOS 10 in less than two years, while it took 10,000 Microsoft engineers more than five years to develop, refine, and then eventually decommission Windows Vista.

In my experience, every hire can become an MVP with the right circumstances, training, and support. It takes more effort, but ensuring that employees are working in their sweet spot is well worth your time and resources. For example, I try to stay close to our team members and continually ask questions like, “what kind of impact do you want to make? Is there something you think you could excel at, but you haven’t had the opportunity to try? If you were in my shoes, what would you change at this company?”

It’s amazing what you can learn – and I’ve realized that almost no one is truly unproductive. Instead, a stagnant employee is often feeling unchallenged, unfulfilled, or frustrated by the circumstances of their position. Nine times out of 10, these issues can be resolved with a little time and creativity. And as a 2015 study from Bain & Company and the Economist Intelligence Unit discovered, inspired employees are 125 percent more productive than those who are “merely satisfied.” Put that inspired employee in a high-functioning team and you have a formula for success.

Related: How Steve Jobs Inspired People to ‘Dream Bigger’

Slash the red tape.

Startups are lean, nimble creatures that move fast and can change course in a snap. As organizations grow, however, they almost always face “complexity creep.” Processes become clumsy. Layers of bureaucracy grow, and both regulations and time-draining activities pile up. Complexity creep is not only irritating, it also hampers productivity, progress, and revenue.

In other Bain research, the average company loses more than 20 percent of its productive capacity to “organizational drag,” otherwise known as red tape or unnecessary complexity. As founders and entrepreneurs – especially in growing companies – we need to seek every opportunity to get out of the way. We need to minimize our organizational drag.

Try to eliminate unnecessary meetings, like status checks and time-consuming daily huddles. Encourage teams to use clear, outcome-oriented emails instead of instant messaging, which can disrupt focus and flow. Eliminate cumbersome approval systems, outdated hierarchies, and anything that slows or prevents employees from working productively.

Forget the “more is better” mentality.

Entrepreneurs often have a rebellious streak. We question norms and seek ways to disrupt the status quo. Yet, once we hire a team, we often uphold traditional business practices, especially around work hours. For example, the standard 40-hour U.S. workweek was legalized in 1940 when Congress amended the Fair Labor Standards Act.

Work has evolved dramatically since the World War II era. So, why are we still enforcing a practice developed almost 80 years ago? Even if it’s the right choice for your organization, it’s worth considering. Countries like New Zealand, for example, are trying four-day work weeks, based on studies that show there’s no correlation between clocked-in time and employee productivity. And according to the Guardian, Luxembourg is the world’s most productive country, even though workers in this small nation typically average 29 hours a week.

We still have five-day workweeks at JotForm, but we do give our employees the flexibility to set their own schedules – as long as it works for their team. Night owls can start later, while larks are welcome to arrive with the sun. Our employees seem to appreciate the freedom, which in turn, boosts their productivity.

Regular vacations and time off are equally important. I try to walk this talk, too, by taking time away from the office. Frequent breaks during the workday are also essential for focus and motivation. Studies show that the average person can’t engage in critical thinking for more than four hours at a time. Pushing beyond this point is a waste of time and effort.

Shifting from an efficiency mindset to a culture of productivity won’t happen overnight, but it’s a change that’s well worth making. Experiment with what works best for your business, and be sure to engage your staff in these discussions. Happier employees perform better. They’re more creative, more productive, and will deliver the kind of innovations that can set your company apart. In the end, I think that’s far more valuable than squeezing expenses or pushing for irrelevant but good-on-paper efficiency gains.