Is Our Obsession with Efficiency Backfiring?

We’re constantly told to “do more with less” — but what if that’s the wrong goal altogether?

In this episode, Eric and Jonathan challenge the traditional definition of efficiency and unpack why it can be a trap for social impact organizations. From donor pressure to staff burnout, they explore how the pursuit of efficiency often undermines effectiveness — and what to prioritize instead if you're serious about sustainable, meaningful impact.

➔ Why efficiency and innovation often live at opposite ends of the spectrum.
 ➔ How serving the process can slowly kill your mission.
 ➔ What to say when funders fixate on overhead (and how to shift the conversation to impact).
 ➔ A smarter definition of efficiency: spending time on the right work, not just more work.
 ➔ What systemic inefficiency looks like — and how to fix it without burning everything down.

If you're feeling the pressure to cut corners, over-optimize, or stretch your team thin in the name of “efficiency,” this episode will help you step back, reframe the problem, and refocus on what actually moves the needle.

Don’t chase efficiency. Build for effectiveness.

Episode Highlights:

• [00:00] Redefining efficiency: Doing the right thing at the right time
• [01:49] Innovation vs. optimization: Why efficiency sometimes blocks progress
• [03:30] The cultural obsession with optimization—and its dangers
• [05:35] Real-world ad example: Efficiency as a byproduct of innovation
• [06:32] Smart systems vs. busywork: What efficiency should actually look like
• [08:07] The trap of measurable efficiency—and the loss of trust
• [09:08] “Serving the process”: The red flag that your culture may be off track
• [11:44] Bureaucracy, balance, and unintended harm
• [14:33] The overhead myth and how to push back effectively
• [18:16] When “efficiency” undermines your people
• [21:45] Sector-wide inefficiency: When too many orgs duplicate the same work
• [24:57] Effectiveness as the healthier north star
• [26:25] Diminishing returns: Knowing when to stop optimizing

Notable Quotes:

• “Efficiency is not about doing more with less. I think efficiency is about doing the right thing at the right time.” - Jonathan Hicken [00:00]
• “To be innovative requires experimentation, doing things differently, learning—and all of those things are counter to being very efficient.” - Eric Ressler [01:49]
• “Not all work is created equal; the real test is whether we’re putting resources where they move the mission.” - Jonathan Hicken [06:32]
• “If you start to measure everything based on absolute optimization or absolute efficiency, you may win in the short term, but long-term you end up less effective.”- Eric Ressler [08:58]
• “The overhead myth... damages our ability to actually do our work well.” - Jonathan Hicken [14:33]
• “We need overhead to be a business—to hire people and to have the ability to have resources and invest in our people.” - Eric Ressler [15:06] 

Resources:

• Article - In Defense of Moonshots: True Social Innovation Requires Taking Risks
• Article - Breaking the Starvation Cycle with True Cost Funding 
• Article - Marketing Isn’t Overhead, It’s an Impact Multiplier
• Article - Are You Using Your Power or Giving it Away?
• Article - Philanthropist MacKenzie Scott Proved Unrestricted Funding Works. Follow Her Lead.
• Article - Use Your Niche to Supercharge Your Mission

Transcript

Jonathan Hicken [00:00]:

Efficiency is not about doing more with less. I think efficiency is about doing the right thing at the right time.

Eric Ressler [00:06]:

If you're really going to be innovative in your approach to anything, but especially social impact efficiency is going to have to take a hit.

Jonathan Hicken [00:14]:

I think what happens is that we begin almost naturally, the trap is we begin to serve the process.

Eric Ressler [00:21]:

I think that when I've seen organizations hyperfocus on results and effectiveness over efficiency, they end up becoming more efficient as a result of that.

Jonathan Hicken [00:36]:

Eric, with all of the talk around government efficiency and everything that we're seeing at the federal level, it really got me starting to think about what efficiency means and how to implement efficient systems and efficient work in the social impact sector. So I'm hoping we could spend this episode deconstructing that a bit.

Eric Ressler [00:54]:

Ooh, I have thoughts on this one. Let's do it. Let's go.

Jonathan Hicken [00:56]:

I'll just come straight out the gate. I think in social impact, work efficiency is not about doing more with less. I think efficiency is about doing the right thing at the right time.

Eric Ressler [01:11]:

Go on. I'm curious how you think about that.

Jonathan Hicken [01:13]:

So basically right in our work impact is the game is delivering impact and obviously there's the business side of it too, and you got to make those things the double bottom line so to speak.

Eric Ressler [01:25]:

Sure.

Jonathan Hicken [01:27]:

Nevertheless, in some of these huge intractable problems, sometimes efficiency in the traditional sense, right in the sort of doing more with less I think is actually counterproductive. And so it creates the wrong set of incentives to think about the work, which I think ultimately can be damaging.

Eric Ressler [01:49]:

Agreed. And that's the exact way that I think about this as well because we look at meant with all things, there's always a balance here in my opinion. So should we be wildly inefficient in our work doing social impact? No, I think that's obviously a really bad play as well, but I've thought a lot about this spectrum is the way that I think about it between efficiency and, sorry to use a buzzword, but innovation and I think that those two things are impossible to do at the same time, if you're really going to be innovative in your approach to anything, but especially social impact, especially when you're spinning that up, efficiency's going to have to take a hit because to be innovative requires experimentation, requires doing things differently, it requires learning and all of those things are counter to being very efficient. I do think there's a time and a place to strive for more efficiency, but really I'd rather see us working towards effectiveness, which in my opinion is not the same thing as efficiency.

Jonathan Hicken [02:49]:

So lemme make sure I understand what you're saying. You're putting innovation and efficiency as two ends of a spectrum. The way I take that is efficiency is optimizing. It is like optimizing something you're already doing to do that thing better and innovation is coming up with something new that could potentially drive your impact even more strongly, even more quickly, whatever,

Eric Ressler [03:15]:

Even if it's not efficient,

Jonathan Hicken [03:16]:

Even if it's not efficient. And so I've never thought of efficiency and innovation on the same spectrum before. I would've put efficiency and effectiveness on the spectrum. Why did you go there?

Eric Ressler [03:30]:

I'm trying to remember why. So I think those are two mindsets that I'm constantly having to balance in my own work and that I see our clients trying to balance as well. So I agree that the end result that we should be looking for is effectiveness or results or impact. And I don't think there's one way to get there and I think we are living in a moment where optimization and efficiency is front of mind. You think about even self-op optimization and all these protocol based ways of exercising and living and health and all this stuff that's very top of mind right now in culture. And that is a efficiency, self optimization mindset. And I think that that is bleeding into, or maybe they're all part of the same cultural zeitgeist around hyper optimization and efficiency. And our sector is often criticized for being efficient or ineffective or both wasteful, which I think is kind of hilarious because that leads to the common issue of trying to get one person to do three people's jobs, which is not efficient but can be mistaken for efficiency.

[04:39]:

So when I'm making decisions in how I run Cosmic and the work that we do, and even to a degree how we make investments for our clients or recommend our clients make investments, there are those two ways of thinking about it. Are we trying to do something that's about efficiency? Even something as simple as how do we reduce cost of acquisition for a new donor or how do we make this click-through rate 10% better or whatever. Those are sometimes framed in the mindset of efficiency or optimization. Here's a quick story. So we run advertisements in Stanford Social Innovation Review, SSIR, and we've been running ads consistently over the years, but especially this year we've been really trying to be very consistent in our ads there. And we recently changed copy on our ad and that led to a 400% increase in click-through rates. Damn. And we did not do that in the mindset or modality of efficiency.

[05:35]:

We did the exact opposite and we re-message our ad to really speak to the current state of the space and the market. You could say that that was an efficiency play, but really it was an innovation play in my mind and that's the way that I was thinking about it. I did not change that ad so that I could get a slightly better click through rate. I wanted to do a better job at emotionally reaching people where they are right now. And it led to an efficiency boost if you want to think about it that way. So I don't know, this is the way that I think about it in my daily work

Jonathan Hicken [06:07]:

And the way from my position as executive director, I'm constantly thinking about are we working on the right things? And so for me that is in many ways the measure of efficiency so to speak. Are we putting the resources that we have to the activities that we believe are going to generate the most impact? And in that regard, not all work is created equal.

[06:32]:

So you used the example a moment ago of qualifying donors or you were kind of describing like a donor pipeline and how we're sort of elevating, or for you maybe client qualification. To me, implementing efficient systems or smarter systems is actually an example of spending your time on the right thing because the result of those kinds of tools is that you or I'll just use myself in this example, that I'm talking to the right donor at the right time and I'm getting those conversations when they need to happen or I'm talking to the right people. And in that regard, that isn't the way I think about it is that's an efficient use of my time is to be talking to the right donors fair. But in the same regard, not all works created equal. If we're talking about, hey, how do we do expense reporting more, how do we get our team spending less time on expense reporting and more time on mission delivery? To me that is an efficiency conversation worth having because it ultimately results in people spending more time on the right things. A counter example is something like relationship building, especially in social impact work. There's a lot of just showing up that is required to build relationships, build trust, build partnerships, and those things take time. And if you started measuring relationship development in terms of efficiency, I think that is a recipe for disaster in terms of the strength of those

Eric Ressler [08:07]:

Relationships. I think efficiency is a trap. I think that that example is a perfect way to prove that claim I just made because if you start to look at everything through the lens of measurable efficiency, there's a lot of ways to fall into traps that are very shortsighted and especially I think maybe this comes from my broader perspective of brand building over a more transactional performance-based marketing approach, which I think there's room for both, which we've talked about many times before. But if you look at things in two short of a time horizon or try to measure everything based on absolute optimization or absolute efficiency, you will find a way to be more efficient in the short term. But the long-term is that you are actually less effective, which is not efficient at all.

Jonathan Hicken [08:58]:

I think what happens is that especially over a period of time we begin almost naturally the trap is we begin to serve the process

[09:08]:

Where we show up at work to serve the process. And I think when that shift happens, that's a real bad thing for any organization when you've moved away from showing up to serve the impact or serve the mission and you're there to serve the process. Now I happen to see this happen in my work because the Seymour Marine Discovery Center is situated within a University of California campus, a very big bureaucracy where we are coming up against a really complex web of processes and procedures. And I think unfortunately and somewhat naturally we begin to as and we being like the collective, we as workers can get pulled to this place where it becomes more important that we are following the process.

Eric Ressler [09:58]:

Sure.

Jonathan Hicken [09:59]:

I think that that's one of the risks with over optimizing.

Eric Ressler [10:10]:

So although I just said efficiency is a trap, I also think bureaucracy is real. There is a lot of unnecessary over academic thinking that happens sometimes in this space or unnecessary barriers or processes, especially in the academic world or in larger organizations in general. So it does really come down to a balance at some level, but I think if we get hyper-focused on efficiency, it can be unhelpful. And I think there's a solution to this and maybe you have similar thoughts, we'll see. But I think if we are results oriented, if we measure results and then backtrack, how do we get to those results and are our results trending in the right direction or not? Ultimately that's all that matters at the end of the day. And I think if you look at a lot of the programs or institutions or sectors that are being scrutinized right now around deficiency, if we looked at that instead through the lens of results, there would be situations where there are ineffective organizations that should be improved. Right now, do I think that the solution to improving them is to just come in with a sledgehammer and just break everything? No, I think that's stupid. But are there ways that we can measure results and outcomes and the trends of those and be clear-eyed about those things and not think about it an efficiency exercise, but as a result-based exercise? To me, I think that's a better way to think about it.

Jonathan Hicken [11:44]:

Yeah, I don't want to sit here and dunk on bureaucracies just writ large

[11:49]:

Because I think that they exist for a reason and I think that there are good checks and balances that are necessary in this kind of work in any kind of work, especially when we're dealing with taxpayer money or we're dealing with donor money that it's important that we're being honest in those ways. And I think that bureaucracies can force some honesty. But I agree with you when it comes to making an organization, especially one that's big and maybe has existed a long time, the risk of dismantling bureaucracy or in the name of efficiency is real human suffering in some case or whatever your mission or your impact is. And I think that unfortunately, that's my belief about what's going on at the federal level is like, yeah, on paper I'm not opposed to using taxpayer money in a more effective way, but I personally do not stand behind an approach where the impact of slashing means literal lives.

Eric Ressler [12:57]:

I mean, not only that, but in the name of efficiency, entire departments are being shut down and then right away rehired when we realized, oh, we actually needed those people. The least efficient process you could possibly go through if anyone's ever gone through hiring and firing processes, that is the least efficient thing to do is to lose people that you need to do the work well. So a lot of things happening right now. There's some kernel of truth to some of these initiatives. There's something there and the implementation is just being done piss poorly basically.

Jonathan Hicken [13:31]:

And look, this is not a political commentary show, so I don't think we necessarily need to deconstruct what Doge is doing, but I think that the lessons apply to the social impact space too.

Eric Ressler [13:42]:

Well, I think there's some real risk to our sector right now and to some of these ideas being applied to our sector and our sector is being scrutinized when it comes to like, oh, should we be, nonprofits are being shut down, nonprofit as a tax status is being scrutinized right now. So there is going to be some pressure around effectiveness and efficiency. So I think it's an important conversation to have and yeah, we don't need to get too political with it, but at the same time it's bleeding into our space and into the zeitgeist. So I think for our social impact listeners, it's good to have some responses in mind, some good arguments around the choices that you're making and how you make decisions and thinking about this instead of being caught in a situation where you need to defend yourself and you don't have the tools to do that properly.

Jonathan Hicken [14:33]:

I know I've seen in your writing and in your publishing that you've taken on the overhead myth many a time and I think you do so really well. And I think those of us who are sort of like overhead myth crusaders, now's the time to speak up and stand strong because I think the overhead myth, and for our listeners who aren't familiar this is this idea that when organizations are held accountable to a certain percentage of overhead, rather than being held accountable to delivering results that can damage our ability to actually do our work well, summarized

Eric Ressler [15:06]:

Simply. Sure. And I would just add, we need overhead to be a business to hire people and to have the ability to have resources and invest in our people, invest in research, et cetera, et cetera. And that the real fallacy is thinking that if all we know about an organization is their overhead percentage, we know how effective they are as an organization, which is just obviously not true.

Jonathan Hicken [15:31]:

And so right now with this air of efficiency in our culture in the country, not just federal funders, but institutional funders or private funders, you name it, if I get asked about overhead right now, I feel like it's my responsibility right now to stand up against this overhead dynamic arguably more strongly than I've ever had to

Eric Ressler [15:58]:

Do. You get asked about overhead, I'm just curious.

Jonathan Hicken [16:00]:

I do, yeah. From time to time I do.

Eric Ressler [16:02]:

Do you get asked about your overall overhead number or the percentage of overhead versus program work?

Jonathan Hicken [16:08]:

Well, I get mostly scrutinized because of our relationship to the university and we're beholden to certain percentages and stuff. What I can say is that my organization has been rejected from grant opportunities because of an overhead number that is too high. Proportionally, yeah, maybe a blessing in disguise, maybe a blessing in disguise, whatever. But yes, no, I mean I do get asked about it, but look, I mean you and I are friends. I know I respond very quickly to that with changing the topic of the conversation to results and impact. And I got to say that works. That works. So for those of you who get asked this question frequently and find it to be an obstacle, just change the conversation to results. And more often than not, it's successful.

Eric Ressler [16:57]:

And I mean we should definitely measure our overhead of course. I just think it's been this kind of shortcut in the space for funders and for the general public to assess whether or not an organization is credible or reputable based on this one number, which is not the best number to use because it says nothing about the impact. And this I think bleeds into some degree to like, oh, well, how much should an executive director be paid? And I saw a post the other day on LinkedIn about an executive director, I can't remember the organization that was paid $700,000 a year, which is a very high salary for an executive director. Is that too high? I don't know. Maybe not. There's so many factors that go into that. Is there an argument to be made that, hey, maybe that salary is a bit high and some of that money should be going to other even I would personally argue for other staff members on the team versus unquote program work, but these are not the conversations that are being had about the business world in the same way. And there's obvious reasons for that. So most things, I think there's a natural balance here, but if anything, clearly the balance is skewed towards the nonprofit space and the social impact space being extra scrutinized compared to our profit driven counterparts in a way that is unhelpful to results in impact.

Jonathan Hicken [18:16]:

You mentioned people, and I actually think about how staff and people fit into this equation. And when our incentives, especially from funders, our incentives are to reduce overhead. The result is that we end up asking some individuals to do three jobs. For example, a lot of our listeners, we operate with 5 million or less. We're not huge organizations. And so we're already, it's in a sense we're already thinking about how to do a lot of work with a limited staff. And so if we're incentivized to drive that even harder, drive the team even harder. Now I'm starting to get worried about the people on my team and the loss of efficiency when staff have to turn over.

Eric Ressler [19:03]:

It hurts effectiveness and efficiency when staff turns over or when staff are asked to do more than is a reasonable amount of work because we know that task switching is inefficient and ineffective. We know that burnout is the likely result of that at some point, which means turnover, which is certainly inefficient. So I think that it's really ironic that in the pursuit of efficiency, we ask people to do more than is a reasonable amount, and then the end result is one of significantly less efficiency.

Jonathan Hicken [19:42]:

And lemme just put a real world example on what we're talking about here. If I needed to keep my overhead below whatever, 10%, and so that meant I had to pay my fundraising staff below a certain number in order to remain under my 10% figure, well now I'm paying someone too little and asking them to do a lot and they turn over. If my incentive is to keep my number under 10%, then what I should be doing is just refusing to pay somebody more. I mean the other, I guess in fundraising, we could make more money and that would be another way to make the percentage drop. But if success looks like keeping my overhead low, then what I should do is just allow turnover to happen.

Eric Ressler [20:29]:

Just

Jonathan Hicken [20:30]:

Allow that to happen.

Eric Ressler [20:30]:

You won't have to give raises and yeah,

Jonathan Hicken [20:32]:

Right, exactly. Is a direct blocker to my ability to deliver impact. So yeah, I just wanted to give a good example on that.

Eric Ressler [20:41]:

I think that's a perfect example of the trap of efficiency, right? Because if instead the incentive were how could we possibly raise more and more money for this organization in a way that's going to translate to more and more impact, then all of a sudden you have much more leeway to play with things like the overhead percentage and staff salaries and all of those kind of things. Now, it's not like a magic bullet fix. You can't necessarily do that until you do raise more money. So there's so many catch 20 twos in this space, I feel like, especially when it comes to fundraising and investing and those kind of things. But it changes the mindset within I think the leadership team and potentially that extends into the board and the board chair and whoever else might be making big decisions, maybe even major donors who are part of this. And I think that when I've seen organizations hyperfocus on results and effectiveness over efficiency, they end up becoming more efficient as a result of that.

Jonathan Hicken [21:45]:

Now, there is one kind of efficiency that I do think is worth scrutinizing for any organization, and I would call that a systemic efficiency. So in the town where we live, Santa Cruz, California, I would venture to guess that we are oversaturated on environmental organizations. I think there are too many of us doing the same kind of work. And then it does make me think about efficiency for the collective impact of our work. If we're all paying for rent and we're all paying for HR, we're all paying accounting, all of these sort of duplicated roles. And is that ultimately for the collective good of this particular county, is that the best use of resources available collectively in our space? 

Eric Ressler [22:42]:

I agree, and I think you could look at this from an efficiency framework and lens or an effectiveness framework or lens and come to the same conclusion, which is yes here in Santa Cruz, but probably globally speaking, there's probably too much redundancy in the social impact space, meaning multiple organizations working on the same issue with no meaningful difference or unique approach that makes it logical to have those two organizations exist. I think this is good faith, right? I don't think this is because people are, and I don't think you're suggesting otherwise, but I think often what happens is some leader is really passionate about an issue and decides that the best possible way for them to make an impact on that issue is to start an organization, sometimes a nonprofit, sometimes a B corp, whatever it is, and either because they didn't do enough research or because in their research they didn't find someone already working on that issue, they end up spinning up an org where possibly the more effective thing to do would've been to contribute to an org that was already doing this work that had past knowledge.

[23:54]:

I know we work with a lot of environmental organizations and climate justice organizations who are working even globally, not necessarily locally, sometimes locally too. And we hear all the time that there's a lot of new people coming into the space because they care a lot about the issue, which I think is good, but they don't understand how much work has been done, how many experiments have been done, how many lessons have been learned, which is one of the reasons I'm so passionate about communications in general in this space being better because there's a lot of really good work happening that stays hidden on a Google drive somewhere. It doesn't get shared out to the industry or in a way that cuts through enough that people in this space hear about it or learn about it or whatever. So yeah, I do believe that there is a issue with efficiency and or effectiveness in the ecosystem. I think that's a bigger problem than how can we hyper optimize every process within our organizations at the risk of maybe not actually being impactful in the end anyway.

Jonathan Hicken [24:57]:

So it seems to me that we agree wholeheartedly that efficiency and the traditional definition has its place, but should not be the singular compass point where we're orienting our work in order to drive impact. Agree, fair, fair. So how do we as leaders create strong businesses? When you and I are here saying don't worry about efficiency so much. I mean,

Eric Ressler [25:27]:

I think we do need to worry about efficiency to a degree. I think there's diminishing returns on efficiencies. The way that I think about it, if we look at our internal processes and our internal team and we're just spinning our wheels, we're not really making a big impact, we're wasting time, we're wasting money, that's obviously not good. It's also not effective. And so that's why I much prefer effectiveness over efficiency because I think effectiveness encompasses efficiency and more than just efficiency, it's a more holistic way of looking at it. And I think that's the distinction for me. So I think if you are going to measure based on effectiveness, by the nature of doing that, you are also measuring efficiency in just a more healthy way. So I think efficiency is healthy to a degree. And then once you get, and what is that degree? I don't know, maybe we can riff on that briefly, but at a certain point there's diminishing returns on hyper optimizing for efficiency.

Jonathan Hicken [26:25]:

Yeah, I mean I think that the turning point, I mean instinctually the one that comes to mind is culturally as your organization started to serve the process, right? And if you can notice that that is happening, you've probably gone too far, it's probably time to start breaking stuff.

Eric Ressler [26:42]:

Yes.

Jonathan Hicken [26:42]:

So anyway, efficiency in the social impact space, there's a lot more here, but I really appreciate this conversation.

Eric Ressler [26:48]:

Yeah,

Jonathan Hicken [26:48]:

This was a fun one. 

Eric Ressler:
Thanks Jonathan. 

Jonathan Hicken:

Thank you.