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EFFECTIVE and EFFICIENT are two buzzwords that are popularly used by CEOs and Sales VPs in charting the course of their organization. Yet, they are also commonly misused and misinterpreted, not just in the lexicon of business-speak but also in daily use. 

"I need to develop some more effective study habits; I failed my last test."
"We're losing money; we need a more efficient means of production."

Both generally mean "having an effect," but each word has its own distinctive application in careful use. 

"Effective" means adequate to accomplish a purpose; having the intended or expected result. It typically describes things, policies, treatments, arguments, and techniques that do what they are intended to do. People can also be described as effective when they accomplish what they set out to accomplish.

"In this light, the camera is more effective if you use the flash."
"An employee who works the sales floor is effective if they make sales consistently."

In everyday English, people usually say that something works (well), rather than that it is effective:

"The cheaper drugs work just as well."

"Efficient" means performing or functioning in the best possible manner, fast, with minimum waste, expense, or unnecessary effort. It is far more commonly applied to things, such as machines, systems, processes, and organizations but can describe people working in a well-organized and competent way as well.

"The new online banking system offers an efficient way to check your account."
"I have always known James to be highly efficient in all aspects of his job."

"Efficient" is effort, process, goal and time oriented. "Effective" does not focus on how something is done, but rather, if it is done, accomplished at all, so it is only result oriented. 

"I decided to fire Mark. He does the right thing, but he does it poorly. Effective but not efficient. I want my employees to be both."

"Efficient" is often used with other words to create compound adjectives meaning preventing the wasteful use of a particular resource. There does not seem to be any difference between "cost-effective" and "cost-efficient", though, although "cost-effective" is more common.

"My new car is very fuel-efficient, and it gets 40 miles per gallon."
"Energy-saving lamps are indeed energy-efficient solutions, although perhaps not very cost-effective for the consumer due to a higher purchase price."

The difference is often summed up shortly and sweetly – being effective is about doing the right things, while being efficient is about doing things right. This common but confusing way of distinguishing between the terms obscures the more common sense of "effectiveness", so you can try this instead: efficiency is doing things right; effectiveness is getting things done.

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