Trab

Q3-page 65 : while it is true that increase in efficiency generates productivity increase, it is possible to get caught in an " Efficiency improvement trap" explain what this means?

To answer such questions we need define each of these terms firstly Productivity represents a measure of effective use of resources usually expressed as the ratio of output to input while efficiency is about doing things in an optimal way for example doing it the fastest or in the least expensive way. It could be the wrong thing, but it was done optimally. Efficiency is basically finding the best way to attain a given goal. It mainly concerns itself with the way things are done. In most cases, an increase in efficiency is accompanied by an increase in productivity. However, organizations enhancing their efficiency should be vigilant to avoid being caught up in an efficiency improvement trap. While efficiency deals with the quantity and optimal way we find Productivity deals with rate of proper output. It means that an organization that focuses on improving efficiency rather than productivity might overlook other improvements to productivity and thereby fall behind its competitors. How do we avoid this trap?  If focusing solely on operational efficiency is not sufficient, where should company places it's focus?  Some may find focusing on business value is an appropriate perspective that does not minimize the importance of efficiency, but also does not blind you to opportunities to innovate.  How do you focus on business value?  Focus on whatever you do in your organization that directly benefits your customers.  By customers, I am referring to outside customers – the people who pay you for the value you provide.