“Don’t even bother talking about efficiency unless you know what it’s for” – Mariana Mazzucato

Organisations talk a lot about efficiency but very little about efficacy.

• Efficiency: Doing things “right.” This means maximising output with as minimal input (time, money, resources) as possible. It’s about optimising processes and reducing waste.
• Efficacy (or Effectiveness): Doing the “right things.” This refers to achieving the desired results and positive outcomes. It’s about whether the service actually solves the problem it’s intended to address and meets the needs of its users.

Doing things ‘right’ versus doing the right things.

Public services often deal with complex, multifaceted problems (e.g., homelessness, chronic health conditions, social care). An efficiency-first approach tends to simplify these issues into measurable tasks, potentially overlooking the holistic support required for genuine positive outcomes.

When we talk about improving services, efficiency often takes centre stage. It’s about ‘doing things right’ – maximising output with minimal resources. Efficiency is very often a response to demand-led thinking, particularly in the context of public services, where resources are finite.

However, true success hinges on efficacy, meaning ‘doing the right things’. An efficient service might process housing applications quickly, but if it doesn’t actually solve the underlying problem or meet real needs, it’s ultimately ineffective. This narrow view can sacrifice quality, overlook complex issues, and create hidden costs elsewhere in the system.

This intense drive for efficiency stems partly from the New Public Management (NPM) movement of the 1980s. NPM was fundamentally about applying private sector management techniques and principles to the public sector to improve efficiency, effectiveness, and accountability. This included concepts like performance management, output controls, decentralisation, and customer focus (treating citizens as customers).

The “Big Four” consultancies along with other management consulting firms, played a significant role in propagating the NPM movement.

This new breed of management offered ‘ready-made answers’ to difficult social issues, and consultants became adept at advancing the case for NPM as a solution to specific public sector problems.

However, whilst aiming for better value, it often led to fragmented services and an erosion of the public service ethos.

Arguably NPM never worked, and you can see examples of its early failure in the Adam Curtis documentary ‘Shifty’ on iPlayer.

There’s a particularly poignant scene involving the London Zoo and its elephants. The staff are encouraged by management consultants to act as if they are optimising the canning of baked beans, rather than being entrusted with the care of animals.

It makes ‘sense’ in pure efficiency terms to sell off an elephant – as the demand from the public to visit a zoo is the same whether you have two or three elephants.

However, management efficiency ignores soft stuff like relationships or feelings. Indeed in this case the animals are just costs on a spreadsheet – and when one of the elephants is sold off (despite forming a deep bond with one another) the results are sadly predictable.

Curtis uses this small event to illustrate a much larger point: the way in which the drive for efficiency and financial rationality can lead to the fragmentation of established relationships, even in unexpected places like a zoo.

Strangely , despite being so utterly discredited, you’ll find if you look at almost any management or board report you’ll see that elements of NPM are still applied today.

Public sector organisations continue to emphasise measurable performance, customer satisfaction (citizens as atomised customers), and efficiency drives. The foundational idea of delivering services to ‘customers’ in a business-like manner remains deeply embedded in modern public administration and regulation.

Rethinking Efficiency

Mariana Mazzucato, Professor in the Economics of Innovation and Public Value argues that efficiency is “not about outputs it’s about outcomes”.

She advocates for a “missions approach” where the focus is on societal outcomes, not just easily measurable outputs like the number of patents approved or loans dispersed, which can lead to negative societal consequences if quality and oversight are neglected.

Mazzucato challenges traditional cost-benefit analysis, stating it would have prevented missions like the moon landing due to high perceived costs and risks of failure. She points out that the moon landing generated spillovers like camera phones, baby formula, and baby diapers, demonstrating success beyond its initial costs.

So, our services shouldn’t just be efficient; they must be firstly effective. Our goal should be genuine, long-term positive outcomes for citizens, not just streamlined processes or rapidly cleared queues.

The Importance of Efficacy First:

Unlike private companies driven by profit maximisation (where efficiency directly impacts the bottom line), public services aim for broad social outcomes, welfare, and addressing societal needs. Efficacy should be the primary driver, with efficiency as a supporting factor.

An effective service, even if it appears less efficient in immediate monetary terms, can lead to significant long-term savings and societal benefits by genuinely solving problems and preventing future issues.

Success in public services should be measured by the positive impact on people’s lives and communities, not just by how quickly or cheaply a task is completed.

Otherwise we risk falling into demand-led thinking. While understanding and responding to demand is fundamental, a pure focus on it can lead to public services becoming a perpetually overwhelmed and ultimately less effective demand-response machine.

Being constantly reactive to demand leaves little room for strategic planning, foresight, or innovation in how services are designed and delivered. If services are always “putting out fires,” they won’t have the capacity to develop more effective, preventative, or integrated models

As I said in my last post, the future is about dismantling the disconnected empires – and building something truly effective, preemptive, and humane.

Being efficient is not half as effective as conventional management would like to think.