An apparatus and method of drilling a wellbore using a drill string and a smart downhole system that comprises one or more downhole controllers and one or more downhole sensors. The method includes storing, in the downhole controller(s), a target efficiency parameter; drilling the wellbore using the drill string; and measuring, by the downhole sensor(s), a parameter. The method also includes, using the downhole controller(s) to: calculate an efficiency parameter based on the measured parameter; calculate a difference between the calculated efficiency parameter and the target efficiency parameter; generate first instructions to reduce the difference; and send to a surface controller, the first instructions. The method also includes generating, by the surface controller, second instructions based on the first instructions; and implementing, by the surface controller, the second instructions to reduce the difference between the measured efficiency parameter and the target efficiency parameter.