Why Computers Didn’t Improve Productivity

“You can see computers everywhere but in the productivity statistics,” wrote Nobel-Prize-winning economist Robert Solow in 1987. His dictum spawned several decades of economic research aimed at solving the mystery that has become known as the ‘Solow Paradox’: massive investment in computers but no net gain in productivity.

A key to solving the Solow Paradox lies in recognizing that bureaucracy and computers are a marriage made in hell: computers generate a great deal more work, but not necessarily more useful work. In a bureaucracy, there is often no net gain. Until you tame bureaucracy, with more agile management, computers often make things worse.

The Solow Paradox Is Counterintuitive

The usual first response to encountering the Solow Paradox is disbelief: “If I have to write a few emails so that I don’t have to use a carrier pigeon, sign me up!”

But in a bureaucracy, the story of those few emails usually doesn’t end there. So, you send your few emails, and then you soon get email replies and comments. Now, you have to write more emails in reply to those emails, which are then sent up the hierarchy and to a chain of full-time reviewers, who each make a comment to show that they are useful.

So now you have to reconcile all these comments. And maybe you have to send more emails to explain to each reviewer how their particular comment has been dealt with, and you may get replies to those emails. And so on. What began as a few quick emails has turned into days of work by multiple people all over the organization. In a bureaucracy, computers help work spread like a virus.

The First Digital Computers

Digital computing began differently, with a big success. The first digital computer, Colossus, was developed by British intelligence in the 1940s. It deciphered encrypted messages between Hitler and his generals: it helped win the Second World War

Similar one-off triumphs were apparent with NASA’s moon landing in 1969, and with IBM’s computer, Deep Blue, which defeated world-champion chess player Gary Kasparov in 1997 and Watson, which won the game show, Jeopardy, in 2011. Yet widespread economic gains from computing have been harder to find.

Mainframe Computing

When mainframe computer systems began appearing commercially in the 1950s, big firms were thrilled. Suddenly, in a single system, top managers could for the first time see the results of massive amounts of data. Computers were used by firms for critical applications like bulk data processing, enterprise resource planning, large-scale transaction processing, and industry and consumer statistics.

Mainframe computers were expensive and required significant expertise. The computers were physically huge and needed special cooling systems. Access to computing time was strictly rationed. The systems themselves were monolithic and could not interact with other systems. The systems were also difficult to adjust or re-program.

By the 1990s, huge sums of money were being lost in mainframe computing because the work of software development was always late, over budget, and plagued by quality problems. Some big projects were never finished at all. Software programmers were seen as culprits and were punished. They worked harder. They labored evenings and weekends. They were fired. It made no difference. The software was still late, over budget, and full of bugs. Replacements were hired, but they did no better.

Standard management practices did not seem to work with big software systems. Managers found that the more they sought to control things, the less progress they made. The more staff they added, the slower the team became. Complexity did not respond to authority. Billions of dollars were being lost. Something different had to be found. But in the course of the search to find a better way, computer departments acquired a reputation for bad management.

Computers and Bureaucracy: A Marriage Made In Hell

Meanwhile the advent of minicomputers in the 1960s, and then personal computers, in the 1970s, democratized access to computing. Now everyone in the white-collar workforce had access to a computer. And indeed, computers enabled much more work to be done.

One or two redrafts of documents became incessant revisions. Individual reviews turned into multiple levels of reviews and further rework. Staff found themselves preparing, and then sitting through, endless PowerPoint presentations.

Spreadsheets spawned massive amounts of data analysis. Yet different computing programs often couldn’t interact with each other. Data was shipped back and forth, or up and down corporate hierarchies, or across different systems, or unbundled and re-bundled, or transformed into analog and then re-transformed back into digital.

The Spread of Unproductive Work

As anthropology professor David Graeber explained in his landmark book, Bullshit Jobs: A Theory, the workplace became riddled with useless work: “HR consultants, communications coordinators, PR researchers, financial strategists, corporate lawyers, or the sort of people … who spent their time staffing committees that discuss the problem of unnecessary committees.”

Graeber’s analyses suggested that in large organizations, as much as half of all work was being done by five categories of unproductive jobs:

·      Flunkies, who serve to make their superiors feel important.

·      Goons, including lobbyists, corporate lawyers, telemarketers, and public relations specialists.

·      Duct tapers, who fix problems—temporarily.

·      Box tickers, who create the appearance that something useful is being done.

·      Taskmasters, who create extra work including middle managers.

An Explosion of KPIs

As the quantity of useless work grew with the help of computers, bureaucracies developed devices to prove that their work was useful. Key performance indicators (KPIs) that supposedly defined what was important to perform by any person or unit flourished like mushrooms.

In practice, KPIs were mainly used to justify the bureaucracy, rather than to help determine whether any activity was creating genuine benefit for any external customer. Masses of computerized KPIs helped managers prove—to themselves and to their bosses—that what they were doing was useful.

The Solution: Agile Management

In the (good) old days before computers, you didn’t send unproductive emails. You just did what needed to be done.

And that’s what happens now in the winning firms of the digital era that have made the transition to agile management. All work, including computing, is focused on what will add value to external customers. So, you don’t send those unproductive emails: you are working in a team with a clear mandate on a customer-focused set of tasks in a sprint—i.e. work with a short deadline. You don’t need to continually check in with a steep hierarchy or with an army of reviewers. You just get on with it and get it done.

It’s not that computers aren’t potentially capable of great gains. But like most new technology, they need a different kind of management to realize that potential.

 

Collaboration Overload Is Sinking Productivity

Collaborative work — the time spent on email, IM, phone and video calls — has risen 50% or more over the past decade to consume 85% or more of most people’s work weeks.
The Covid-19 pandemic caused this figure to take another sharp upward tick, with people spending more time each week in shorter and more fragmented meetings, with voice and video call times doubling and IM traffic increasing by 65%. And to make matters worse, collaboration demands are moving further into the evening and are beginning earlier in the morning.
These demands, which can be invisible to managers, are hurting organizations’ efforts to become more agile and innovative. And they can lead to individual career derailment, burnout, and declines in physical and mental well-being.
In response, forward-looking organizations are taking action to protect employees from the volume of collaborative demands by employing organizational network analysis (ONA) – (O NO – not another unnecessary TLA!)
For example:
  • Two major life sciences organizations have used network analysis (aka ONA?) to systematically analyze calendar data and identify ways to reduce redundant meeting time.
  • One global software organization has focused on email to reduce volume, length, and cc’ing redundancies.
  • A globally recognized insurance organization has employed network analysis (aka ONA?) to identify the most overwhelmed employees and educate them on practices to reduce overload.
  • And, on a more dubious front, one global services organization implemented a 60-second timeout button – after a particularly difficult time, employees can hit a button that lets others know they are taking a mindfulness break — although one must wonder if this is akin to giving a band-aid to an amputee
This exclusive focus on quantity of collaborative demands misses two important drivers of collaborative overload:
1. The inefficiencies and subsequent cognitive switching costs of always-on cultures – i.e. the costs of being disrupted – the time needed to ‘get back up to speed’ – the increase in meetings and the number of participants per meeting from the use of Zoom or Slack, and the decrease in focus on results
2. The personal motivations that lead us all to jump into collaborative work too quickly – and unnecessarily – much of the blame lies with the individual, not others, by responding to most requests or perceived opportunities to feel one matters and/ or is in control – or from wanting to help somehow

 

To avoid these negatives, General Mills took the following action:
  • Implementation of “free-form fridays” – employees were instructed to leave their calendars blocked starting at 2.00pm every friday, so they could engage in “deep work,” catch-up on emails, and recharge
  • More frequent surveys of employees’ well–being and stress levels, with senior leaders emphasizing the need for prioritization and self-care
  • The development and deployment of “Ways of Working” training and tools for teams with high levels of collaboration, stress, and negative mood
On average, General Mills claim to have reduced collaboration time by eight hours per employee per week , and cut many non-value-added meetings — all without any negative effects on stress levels or moods
The authors thus claim ‘leading organizations that equip their employees to work more efficiently in this context will have an important advantage in terms of both performance and retention’

 

4 reasons hybrid offices won’t work

A provocative article by Joseph Woodbury, CEO of Neighbor, and published by fastcompany.com – arguing that WFH full-time is not a sensible productivity tactic

In a singular (and hopefully rare) global pandemic, we seem to have collectively forgotten our need for each other. Without thinking twice, companies are rushing to roll out remote work policies as if employees are robot machines that don’t need the human interaction of an office. As a result of one major unfortunate disaster, we have rashly set aside centuries of collective learnings about collaboration and teamwork.

Contrary to these split-second policies, the famous Westgate studies conducted at M.I.T. by social psychologists Festinger, Schachter, and Back proved that propinquity, or the state of being close to someone, heavily influences the likelihood that a close relationship will form.
Management Professor Thomas J. Allen later applied this concept to employees when he created the Allen Curve, which demonstrates that as the distance between engineers within an office increases, the communication between those same engineers falls exponentially, dropping off almost entirely after a distance of just 50 meters.

 

Here is my advice for leaders who prize speed, innovation, and trust, as they determine their return to office plans.

PROPINQUITY FOSTERS INNOVATION

But wait, hasn’t technology progressed so much that virtual relationships can be the same as physical ones?

Not quite.

A major study entitled “Distance Matters: Physical Space and Social Impact” set out to measure the effect that advances in communication technology have had on the power of propinquity in social influence. The study concludes: “We have presented evidence from three divergent samples showing that the empirical relationship between distance and social influence, first documented 50 years ago, still holds despite remarkable changes in the technology of communication.”
Behavioral scientist Jon Levy added earlier this year, “Even in the age of Slack, email, and Zoom, the fact remains: Out of sight is often out of mind.”

 

Innovation often happens when you overhear your colleagues talking about issues, during quick chats walking to the elevator, or the small talk before and after the meetings. These in-person, real-time conversations help get the creativity flowing. These close relationships and innovative conversations are essential ingredients of success, especially for ambitious startups.

BEING TOGETHER IS ENERGIZING

Deep down inside of us, we all feel the importance of human connection and community. As management consultant Meg Wheatley once observed, “There is no power for change greater than a community discovering what it cares about.” Humankind has long sought closeness in every aspect of life, from neighborhoods to social clubs to P.T.A.s to religious groups. Our natural intuition tells us there is something more connecting about a face-to-face interaction than a digital one:

  • It’s one thing to watch an important sports game on TV, but it’s another experience entirely to attend the game in person cheering shoulder to shoulder with fellow fans.
  • It’s one thing to hear a song on the radio and another entirely to see it performed in full concert alongside other enthusiasts.
  • It’s one thing to develop a friendship or relationship online, and another to build that friendship or relationship in person, face to face, especially with a colleague in a company.
  • It only takes one glance at Facebook to see that people talk to each other very differently (and make very different assumptions) online than they do in a face-to-face, personal interaction.

 

Throughout human history, great things have been accomplished by individuals coming together around a shared vision, from government initiatives like NASA’s space race to land a man on the moon to private endeavors like building Amazon, a company that reshaped the global economy. All of the most ambitious projects in human history were driven by a team working in close proximity to build and collaborate towards an audacious goal. Will your startup be different?

PROPINQUITY CAN FUEL PRODUCTIVITY

So much of the debate encircling the remote vs. office discussion has centered around worker productivity. Advocates of remote work describe periods of intense focus and deep work that contribute to productivity, while advocates of the office cite studies that show employees working remotely put in longer hours due to much less efficient productivity during the day.

At Neighbor, productivity is not relevant to the debate. Productivity is more about hiring great people than it is about the setting. With a strong internet connection, we trust that each of our employees would be just as productive in Antarctica as they would be in our office. Employers should trust their employees enough that productivity is a non-issue.

COMMUNITY IS A NETWORK EFFECT

Being in an office and working together in person demonstrates a network effects principle. Network effects occur when something becomes more valuable (often exponentially) as usage increases. This is certainly true of communities and teams.

As we’ve explored here, everyone benefits from face-to-face, physical interaction. Yet if a company simply provides an office and only a few individuals show up, then those exponential network effects aren’t able to take effect. An office simply becomes a lonely place to do work, no better than a home office.

True human and employee flourishing occurs when the conditions and culture are put in place to create a strong physical community, where no one is left out. In 2021, we need less digital interaction and more human interaction. That’s what we’re building by embracing an in-office culture.

 

History tells us what will decide whether we work from home in the future

Productivity Commission boss Michael Brennan and his troops have been giving the matter much thought and, as he revealed in a speech last week, such a radical change in the way we work would be produced by the interaction of various conflicting but powerful forces.

After all, it would be a return to the way we worked 300 years ago before the Industrial Revolution. Then, most people worked from home as farmers, weavers and blacksmiths and other skilled artisans. And, don’t forget, by today’s standards we were extremely poor.

What’s made us so much more prosperous? Advances in technology. But technology is the product of human invention. That invention could have pushed our lives in other directions.

What underlying force pushed us in the direction it did? As the Productivity Commission boss was too subtle to say, our pursuit of improved productivity.

Productivity isn’t producing more, it’s producing more with less. In particular, producing more of the goods and services we love to consume using less labour.

Why among the three “factors of production” – land and its raw materials, capital equipment and labour – is it labour we’ve always sought to minimise?

Illustration: Simon Letch
Illustration: Simon Letch

Because we run the economy to benefit ourselves, and it’s humans who do the labour. We’ve reduced physical labour, but now automation allows us to reduce routine mental labour.

It was the Industrial Revolution that increasingly drove us to the centralised workplace. Initially, the factory and the mine, then the office.

The move to most people working in a central location was driven by economic forces. Businesses saw the benefits – to them and their customers – of combining labour with large and expensive machinery, powered by a single source. Initially, steam.

“The factory provided a means for bosses to co-ordinate activity in real time, supervise workers and it also provided an efficient way to share knowledge – as did the office,” Brennan says.

So the central workplace reduced the cost of combining labour and capital, but did so by imposing transport costs – mainly on workers who had to get themselves from home to the central location and back.

For most of the 20th century, however, it got ever-cheaper to move people around, via steam, electricity, the internal-combustion engine and the aeroplane. So advances in transport technology reinforced the role of the central workplace. Over the past 30 years, however, the cost of moving people around has stopped falling. “We seem to have hit physical limits on speed; and congestion has meant that today it takes longer to move around our cities than was the case a few decades ago,” Brennan says.

This, of course, is why we fancy the idea of continuing to work from home. It’s only advances in computing and telecommunications technology that have made this possible. The cost of moving information has plummeted, while the cost of moving workers – in time and discomfort – has gone up.

 

How Artificial Intelligence Will Shape Our Future

A prescient and wise article just published in entrepreneur.com and penned by Archil Cheishvili claims we’ll witness the creation of industries that are unimaginable now, thanks to AI

As AI improves and becomes more powerful, its impact on the world economy will become vastly more significant. It will affect virtually every aspect of the world economy  from unemployment rates to economic growth, productivity, income inequality and more.

Some argue that so far, AI has not had a large enough impact, but as its development accelerates, its effects will grow exponentially. Whether we like it or not, automation and job displacement are already here, slowly pushing the human workforce into different domains. Similar patterns can be found throughout history; new technology made certain products and jobs obsolete, and eventually humans were forced to switch to more innovative products and new jobs.

For instance, occupations such as a milkman, switchboard operator and knockerupper (a human alarm clock that used to tap on windows) no longer exist today. Steam engines were replaced with internal-combustion engines, and coachmen became chauffeurs. It’s a natural process: As technology advances, it doesn’t make sense to have humans work the same old jobs.

Higher productivity at a relatively cheaper price

When we examine the job displacement, we should analyze the phenomenon referred to as “The Great Decoupling,” which reveals that up until the 1970s, productivity and hourly wage increased at the same pace; since then, however, the hourly income has not been able to keep up with the productivity increase. This disparity between the two curves might get even worse with AI automation.

Moreover, when we look at other economic indicators, such as returns to capital and labor, we can see that the former has been outperforming the latter consistently for the past decades. If we combine the mentioned indicators, we can infer that investors are getting higher productivity from employees at a relatively cheaper price due to the improvement in capital assets and technology used by the employees.

Furthermore, if we add AI automation to the premises above, we get super-high productivity from a fraction of employees for a fraction of the cost. The implications of this can be huge for the world economy. Will the rich get richer, leaving the ones without capital even more powerless? Or maybe it will level the playing field, and nobody will have to work for a living? The outcry that jobs will be lost has been there forever, but we clearly see that the world is a better place to live than ever before. Overall poverty levels have been declining across the globe, and the average human lifespan has been increasing.

When computers became cheaper, they served as the foundation for a variety of industries

In the mid-term perspective, AI advancement will enable products to be produced cheaply and in abundance. This, in turn, will lead to demand quantity increase for the cheaply produced products. That’s just economics: When the price of a product decreases, more people can afford it, and the demand quantity increases. This demand drive might mitigate the severity of the job losses — offsetting it to some degree. Additionally, when certain technologies become cheap, it sparks the creation of completely new industries, in which money is invested and jobs are created. For example, when computers became cheaper, they served as the foundation for a variety of new industries.

According to Moore’s Law, the number of transistors on a microchip doubles every two years; hence, the cost of computers is more or less halved. When computers become cheap, this means that the computational power can be utilized in ways never imagined before: smart watches, smartphones, tablets, smart glasses, smart homes, automotive self-driving systems and more. The fact that this much computational power became available at such a cheap price kick-started whole new industries and application ideas. Consequently, new products and jobs were created to satisfy the growing demand for such novel technology and products.

In economic terms, the supply curve shifted, meaning that at any given price, consumers would be able to purchase more of the computational power embedded in various products.

It cannot be refuted that so far humans have been able to create more jobs and income opportunities for an ever-growing population despite the fact that some of the older professions have been replaced by robots and technology. We cannot say for sure, but this trend may continue for the next 50 to 100 years at least.

We will witness the creation of industries that are unimaginable now

In the long term, AI will be able to perform more of the tasks that humans do right now, but for AI to replace the majority of the current jobs, it will take 80 to 100 years, maybe even more. Eventually, humans might be pushed out from most traditional jobs, but since we’ve been creating whole new industries and an increasing number of jobs, we might not care at all. Total human replacement is unlikely in the foreseeable future.

But if AI ends up in the hands of a few companies, then these companies will essentially take over the world. Although the economic pie will get larger, which in its turn should lift more people out of poverty, the income inequality might worsen. On a positive note, we will witness the creation of industries that are unimaginable now. Two decades ago, it was impossible to imagine that we would see an increasing number of people making a living by creating online content on platforms like Youtube and Instagram. The same way internet brought completely new domains and displaced some of the workforce, AI and automation will lead to the creation of totally new jobs.

The future of AI is both exciting and frightening

The future is not so bright

Realism or pessimism from Martin Wolf in the Financial Times – read on and decide?

The 2020s will determine whether we have a chance of averting irreversible damage to the climate. But, for the UK, this comes together with other big challenges. Its response will also determine what happens to the wellbeing of its people.

Dominic Cummings’ brutal testimony this week suggests that its leadership’s ability to deliver is very much in doubt.

The Resolution Foundation and Centre for Economic Performance of the London School of Economics have, to their credit, just launched an important inquiry into The UK’s decisive decade. It is decisive, because the country must grapple with recovery from Covid-19, the aftermath of Brexit, an ongoing technological revolution and the transition to net-zero emissions of greenhouse gases.

Moreover, it does so from a base of stagnant productivity, high inequality, rapid ageing and high debt. Only a frivolous person would assume that this is sure to work out.

Remember: in 1987, Italians celebrated il sorpasso, the year when their nominal incomes per head surpassed those of the UK. But today, after two decades of stagnant real incomes, Italy is well behind. Its gap with Germany has become bigger still.

Yet over the past decade, UK productivity has also stagnated. If that is not reversed, a declining UK will lose not just prestige, but the ability to give rising living standards to its people. The report spells out in sobering detail the challenges and the legacy.

On the aftermath from Covid-19, for example, there has probably been a permanent shock to high-street retail, a particularly important source of jobs for women. On Brexit, the impact on trade with EU countries is already visible, with little chance that trade with the rest of the world will soon (if ever) offset these losses. On technology, we must assume large and continuing shifts in the structure of employment and competitive pressures, with many firms disappearing. On the transition to net zero, the country must make huge investments well before any gains from lower operating costs become apparent.

Then there is the dire legacy. The low rate of growth of productivity reflects, among other things, weak investment and the slow adoption of new technology. The report notes that, “In 2017, the UK had only 71 robots installed per 10,000 manufacturing employees, compared to 309 in Germany and 631 in Korea.” Mainly as a result of slow productivity growth, the growth in real household incomes fell from 22 per cent in the 2000s to only 9 per cent in the 2010s.

Again, inequality soared in the 1980s and never reversed. As a result, “The UK Gini coefficient [a measure of inequality] is higher than in all countries in the EU, except Bulgaria, and the second highest in the G7”. The UK also has exceptionally big regional inequalities in productivity, which leaves the rather less unequal regional distribution of household incomes dependent on transfers from London, whose most competitive industry, services, has been gleefully sacrificed on the altar of Brexit.

In view of all this, the facile boosterism of the prime minister is a luxury the country simply cannot afford. What is needed instead is the “ruthless truth telling” recommended by Keynes to the then nascent IMF. As the report indicates, the UK has some important assets, notably its language, first-rate universities, a strong science base and largely non-corrupt politics. The government has also already laid down a “plan for growth” that has some welcome elements, including somewhat higher public investment, a plan for life-long learning, a focus on innovation and science and some targets for decarbonisation.

Yet there is no recognition of the costs of Brexit or of the obstacles to spreading prosperity more broadly. There is no certainty that the needed money will be spent on skills. There are big holes, too, in the plan for decarbonisation. Possibly most important, instead of ideas on how to raise private investment the chancellor intends, after a brief period of generous allowances for investment, to raise corporation tax substantially. This will reduce already low investment. Yes, we will get “freeports”. But these will prove a zero-sum gimmick.

When we look back at Covid-19, we see one blunder after another, partially redeemed by a flash of inspiration: the vaccination programme. But one inspiration will not secure the development of an economy in such challenging circumstances. That takes far-sighted policymaking and resource mobilisation by a competent political and administrative machine in a supportive relationship with a dynamic private sector. It takes policy, not gestures, and respect for reality, not slogans.

Is this feasible in the UK? Perhaps. Is it likely? No.

Britain is running out of new ideas and it’s killing productivity

Writing in Cityam.com, Sam Dumitriu, Research Director at the Entrepreneurs Network, addresses a longer term problem with current efforts to improve national productivity – the problem being that, despite more brainworker inputs, the impact of their new-ideas is becoming more and more marginal 

It is no secret that Britain is in a productivity slump (if one is to completely accept the ONS data, which we do not). The statistics should be familiar. In the decade before the pandemic, productivity grew at just 0.3 per cent per year. Before the financial crisis, it grew at 2 per cent. That might sound like an abstract or wonkish concern, but it is the difference between wages doubling every 35 years and wages doubling every 231 years.

In the short run, there are clear ways to lift our productivity levels closer to American or German levels. To their credit, the Government is implementing many of them. Reforming the planning system, a super-deduction for investment in productivity-boosting machinery, and a Help to Grow scheme to improve management skills will all help.

The above policies will bring us closer to the frontier, but pushing the frontier forward consistently is what really matters. In a way, the solution is simple: have more ideas. But it’s easier said than done.

When economists from Stanford and the LSE investigated whether ideas are getting harder to find, the answer was a clear “yes”. We now need eighteen times as many researchers to achieve a doubling of computer chip density, the famous Moore’s law, than we did in the 70s. Economists Ben Southwood and Tyler Cowen find similarly concerning trends across a range of scientific fields. We are getting fewer transformative discoveries even though the number of PhD researchers has surged over the past few decades.

If we can’t figure out how to reverse these worrying trends, then we will remain stuck. Our ability to solve our greatest problems from climate change to pandemics will be limited.

The Nobel Prize-Winning economist Robert Lucas once said of economic growth: “The consequences for human welfare involved in questions like these are simply staggering: once one starts to think about them, it is hard to think about anything else.”

In a foreword to a new essay collection, Patrick Collison, the co-founder of Stripe, observed that “many of the most important considerations that will determine the long-run rate of economic growth are not the foremost policy issues of our day.” How long do journalists spend reporting on the way we fund research? Even Dominic Cummings struggled to get it on the agenda.

It’s a concern shared by former Prime Minister Tony Blair. On technology he writes in the preface that “too often policymakers either ignore its importance or focus on questions like those to do with privacy which are important but limited; when the real debate should be around how we use technology to usher in a new advance for humankind.”

There may be a silver lining to the neglect: there is no culture war or partisan fight to worry about. In many cases, the low-hanging fruit has not been picked.

Take the way we fund scientific research for an example. A few recent studies suggest that radically different funding mechanisms could deliver substantial gains and liberate researchers from bureaucratic grant applications. Yet, the topic is under-studied. We ironically don’t apply the scientific method to science funding itself.

Or look at our approach to high-skilled immigration. We take a “build it and they will come” approach. At a stretch, we might create specialist visas. But we are in competition for global talent. Why not take a leaf out of the Premier League’s book? They invest serious money into scouting the next Neymar, Messi, and Salah. We could take a similar approach to scientific talent. The Government could fund scholarships at top universities for high-achievers at the International Math Olympiad.

These are just two ideas. We also need to make government procurement more open to new ideas, digitise the state to eliminate unnecessary frictions in civic life, and promote innovation to the next generation – through a 21st Century Great Exhibition.

In some fields, we have seen dramatic technological progress in the past year. CRISPR gene-editing is curing fatal genetic disorders, mRNA vaccines are bringing an end to the pandemic, and falling sequencing costs are enabling us to track new variants. Each technology is in its infancy, but has the potential to transform our lives. Imagine a world where every genetic disorder was easily treatable, where routine blood tests allow us to stop cancers at an extremely early-stage, and where infectious diseases are stamped out altogether.

It’s a future that is within reach. But we should be more impatient, more urgent. Boris Johnson wants to make the UK a science superpower. It’s the right rhetoric, but now is the time for action.

 

City A.M.’s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

World’s largest trial of a shorter work week

In an article for Mashable.com, Amanda Yeo reports that Iceland ran the world’s largest trial of a shorter work week – and says ‘the results will (not) shock you’

The trial was run from 2015 to 2019. An analysis of the results was finally published this week, and surprise! Everyone was happier, healthier, and more productive. Please pretend to be surprised.
The report was jointly prepared by the Association for Sustainability and Democracy (Alda) in Iceland and UK think tank Autonomy, who note that Iceland’s experiment could be used as a blueprint for future trials around the world.”This study shows that the world’s largest ever trial of a shorter working week in the public sector was by all measures an overwhelming success,” said Will Stronge, Autonomy’s director of research. “It shows that the public sector is ripe for being a pioneer of shorter working weeks — and lessons can be learned for other governments.”

Iceland’s test consisted of two trials run by Reykjavík City Council and Iceland’s national government. The former involved over 2,500 people while the latter had 440, together making up more than one percent of the country’s workforce. Workers were moved from 40-hour work weeks to 35- or 36-hour weeks with no reduction in pay, and a wide variety of workplaces took part, including offices, preschools, social service providers, and hospitals. Not all participants worked traditional nine-to-five jobs either, with workers on non-traditional shift times also included.

Regardless of these variables, the results of the trials were overwhelmingly positive. Productivity either remained the same or actually increased, and worker wellbeing was considerably improved. Perceived stress and burnout went down, while health and work-life balance went up, as employees were given more time for housekeeping, hobbies, and their families. Both managers and staff considered the trials a major success.

“For me it is like a gift from the heavens,” said one manager in Reykjavík, according to the report. “And I like it a lot.”

Workplaces tried out various time reduction strategies to accommodate the shorter work hours. These included delegating and prioritising tasks more effectively, having shorter and more focused meetings, and yes, letting meetings that could have been emails just be emails.

The trials’ success has helped Iceland’s trade unions negotiate for permanently reduced working hours since 2019, affecting tens of thousands of their members. The report states that around 86 percent of the country’s entire workforce now either has shorter working hours, or the right to shorten their hours.

“The Icelandic shorter working week journey tells us that not only is it possible to work less in modern times, but that progressive change is possible too,” said Alda researcher Gudmundur D. Haraldsson.

This is far from the first time the benefits of a shorter work week have made themselves known.

When Microsoft Japan trialed a four-day work week in 2019, productivity increased by almost 40 percent.

New Zealand firm Perpetual Guardian permanently switched to a four-day work week in 2018 after their own trial saw productivity increase 20 percent.

Companies around the world have tried shorter work weeks again and again, continually confirming the International Labour Organisation’s 2018 report that shorter work hours typically produce happier, more productive workers.

“We should continue on this journey, and I believe the next step is to reduce working hours to 30 hours per week,” said Icelandic parliament member Bjarkey Olsen Gunnarsdóttir.

Across the board, shorter work weeks have proved better for employees, employers, and society in general.

It’s high time life caught up to the science.

 

High productivity figures pre-Covid masked some underperformance

Martin Wall, writing in the Irish Times, reports that Leo Varadkar, Tánaiste (Irish Deputy PM) says the government is seeking to have a record 2.5m people in work in 2024 – he offers some ideas which other nations might consider

Ireland’s high national productivity figures before the Covid crisis masked significant areas of underperformance in some parts of the economy, Tánaiste and Minister for Enterprise and Employment, Leo Varadkar has said.

Addressing the second day of the national economic dialogue he [said] while productivity was not a term to grab the imagination, it was “crucially important”.

He said competitiveness and productivity needed to be improved, that there should be a “pandemic-dividend” for workers , He said the Government wanted to see record numbers of people – about 2.5 million –in employment within the next two to three years.

He said not all previous jobs would return after the pandemic and also warned that “capacity constraints may emerge quickly in certain areas, especially given the scale of investment required in areas like housing and climate”.

Mr Varadkar said that as well as helping businesses and workers through the immediate challenges facing them, the Government also had to look to the longer term.

“We need to put in place forward-looking policies that will create the right environment for an inclusive jobs-led recovery. That means helping business become more resilient and agile.”

“It means increasing Ireland’s competitiveness and productivity, placing a focus on expanding sectors, such as green and digital, life sciences, the creative industries and the health and social care economy.”

Mr Varadkar said that coming into the Covid-19 crisis, Ireland had ranked high in terms of international competitiveness and productivity. However he said “our high national productivity figures had masked significant areas of underperformance”.

“There is a long-standing and, also, growing productivity gap between high-performing ‘frontier’ firms, often foreign-owned – and the rest of the economy.”

“If we want higher levels of productivity in our SME sector, we need to figure out how those companies can learn from the high performing multi-national cohort. “

Mr Varadkar said the Government wanted to restore employment numbers to pre-pandemic levels and to then go beyond this “by targeting a record 2.5 million people in work in 2024”.

He said the Government wanted “to treat workers better after the pandemic”.

“Essential workers – from doctors, nurses and gardai – to delivery riders and supermarket staff – have got us through this difficult time. And we must do more for them.”

Mr Varadkar said he would be bringing forward new legislation to introduce sick pay for almost all workers. He said the the Low Pay Commission had formally begun work on examining how Ireland can move towards a living wage.

He said a series of reforms were also being progressed “to unleash the potential of remote working, including the right to disconnect and the right to request remote working”.

“I believe these reforms can form part of a pandemic dividend – a positive legacy which can emerge from the hardship and sacrifice endured by the Irish people during the pandemic.”

Prioritise employee wellbeing

A chap called Barney Cotton, writing in the Business Leader, recommends prioritising employee well-being, the latest hot business topic, or companies may suffer greatly

 

Personio, a European HR software for SMEs, is calling for businesses to prioritise employee wellbeing alongside company culture – or risk a boom of burnout, and in the worst cases, a talent retention and productivity crisis.

Despite the Covid-19 crisis having put people’s mental and physical wellbeing under immense pressure, the latest research from Personio finds that many businesses have not adapted their practises and principles accordingly. Only 25% of HR decision makers believe that mental health / employee well-being initiatives are a top priority for the HR function over the next 12 months, whilst just 15% stated that workplace culture initiatives were a priority. (If so, yet another demo that many HR departments are still being filled with those who cannot hack it in the mainstream – when they are the most important and so need the very best)

These figures stand in stark contrast to the sentiments of employees – who stress that feeling happy and healthy at work is a top priority. 58% of employees state that good work/life balance is a priority, and 39% say that a good workplace culture is a priority for them, indicating a clear disconnect between the priorities of employees and employers.

The research – released during World Wellbeing Week (first I’ve heard of it!)– also highlights the importance of employee wellbeing and company culture when it comes to talent retention and productivity. 23% of employees say that worsening work/life balance would encourage them to look for a new job if this were to happen in the next 6 months – and 21% say that a toxic workplace culture would encourage them to look elsewhere. (Only 23% and 21%?)

Zooming in on productivity, 83% of employees state that a good workplace culture helps them to be more productive. Meanwhile, employees say that low levels of motivation and morale (28%) and burnout – from overworking or being ‘always on’ (22%) are the top two factors that negatively impact on their productivity. (Hardly headline %s!)

Ross Seychell, Chief People Officer at Personio, commented: “After what has been a very difficult period for employees and businesses alike, these findings highlight how important it is for businesses to prioritise their people’s wellbeing, together with their company’s overall culture. Indeed, as we begin to put the worst of the pandemic behind us, employees will once again feel empowered to assess their employment options and look elsewhere if they feel unsatisfied – whether because they’re burned out, or they don’t feel appreciated.

The bottom line is that if businesses fail to implement a holistic people strategy that really places all aspects of employee wellbeing at its heart, particularly at this critical juncture, they will face the consequences of employee burnout, discontentment, and in the worst of cases, an exodus of valuable talent – and resulting productivity dive.”

Back to dreary normal?

, finishing on a ‘slender’ positive note 

Which isn’t as good as you might think. Before the pandemic, the economy was stagnant. Labour productivity, for example grew only 0.3 per cent per year in the 10 years to 2020, compared with 2.2 per cent in the 30 years before the financial crisis. That’s why real wages were flat.

Yes, the economy is recovering well now. But we must not confuse short-lived expansions for the trend. Before 2020, trend growth was weak. Why should the pandemic have changed this fact?

It might have made things worse. It has left many companies with huge debts: the Bank of England estimates that small and medium-sized enterprises (those with under £25m in turnover) have seen their bank debt rise 25.5 per cent in the past 12 months. That will limit any expansion plans they had. And the pandemic might have a scarring effect: it could permanently reduce optimism and the willingness to invest and innovate.

It’s not just SMEs that have been left with a debt overhang, though. So too has the government. And it plans to tighten its belt. The OBR foresees cyclically-adjusted borrowing falling from 6.9 per cent of GDP this year to nothing by 2024. This retrenchment will hold back demand growth.

So, what offsets these drags? We can disregard the government’s talk of building back better. Economists such as Dietz Vollrath, Peter Robertson and John Landon-Lane have shown that national economic policies actually have little impact upon longer-term growth.

Instead, there are other reasons for optimism. One is that as the IMF recently pointed out the pandemic has accelerated progress towards a digital economy, such as working from home, which could raise productivity.

Another is that if companies’ debt overhang forces enough of them out of business, it’ll raise the profits of their surviving rivals thus enabling them to invest – all the more so as they’ll be able to get cheap empty premises and equipment vacated by the dying companies. This lays the foundations for faster growth.

This is an old-fashioned viewassociated with economists such as Hayek and Schumpeter. It fell into disrepute in the 1930s, when the depression then proved not to be self-correcting. But it was a decent description of earlier recessions. And the previous two US recessions, in 2001 and 2008, did indeed greatly restore profitability, if only temporarily. Recessions can have what the MIT’s Ricardo Caballero has called a “cleansing” effect.

You might object here that the companies hardest hit by this downturn aren’t lame ducks – the best restaurants and hotels have had to close as much as the worst ones – and so killing them off won’t help raise productivity. True. But firm closure is only part of the story: there’s evidence from the US that companies that start up in hard times are unusually efficient – a fact that can raise productivity growth.

Perhaps, then, the new normal will be better than the old. Given how powerful the pre-pandemic forces for stagnation were, however, these are slender hopes rather than expectations.

A 5-hour workday is most productive?

Douglas Perry, writing in the Oregonian, claims the 8-hour workday is a ‘holdover of old ways; research suggests 5 hours is the office time sweet spot’

Eight hours is too long to spend at work. Recent research says so.

The 8-hour workday has been the norm for more than a century, but employee surveys suggest that most people are truly productive only for about three hours every day. This has led to calls for the workday to be reduced to five or six hours, with proponents saying it would increase employee well-being and ultimately productivity.

2019 survey of nearly 2,000 British office workers found the usual suspects accounted for what people most commonly did during the workday when they weren’t actually working: checking social media, reading news websites, talking about “out-of-work activities” with co-workers, making hot drinks, taking smoking breaks. Searching for a new job even snuck into the Top 10 list of non-productive office work time.

An Inc. magazine piece published shortly after the study’s release embraced the findings, insisting that with a six-hour workday “people would be better rested, more focused, and likely more productive.”

The coronavirus pandemic, which over the past year has forced millions of office workers to set up shop from home, has reignited the call for shorter hours.

new piece in Wired’s British edition says five hours, rather than six, is the ideal, calling this schedule “compressed working.”

“Research indicates that five hours is about the maximum that most of us can concentrate hard on something,” productivity consultant Alex Pang told the magazine. “There are periods when you can push past that, but the reality is that most of us have about that [amount of] good work time in us every day.”

The 8-hour workday is a remnant of the industrial age, and it came about in part because it made for a snappy labor-rights slogan: “Eight hours labor, eight hours recreation, eight hours rest.”

For millions of people, the information age has different requirements.

A few companies have experimented with shorter office hours in recent years, The Wall Street Journal has reported. The results apparently have been mixed. For some, productivity spiked; for others, it didn’t.

One CEO thought “team culture” and office relationships took a hit. That company considered banning distractions like personal cell phones to get the full productivity pop from a 5-hour workday.

For those companies out in front of the curve on shorter hours, the pandemic actually upended the experiment.

Working from home provided staffers “the flexibility to fit their personal lives around their work commitments,” Wired pointed out, “but it also means the key element that makes five-hour days a success — a solid period of unbroken concentration — is harder to achieve.”

— Douglas Perry

dperry@oregonian.com

@douglasmperry

The coming productivity boom

An article of optimism in the MIT Review by Erik Brynjolfsson and Georgios Petropoulos – AI and other digital technologies have been surprisingly slow to improve economic growth, but that could be about to change.

Productivity growth, a key driver for higher living standards, averaged only 1.3% since 2006, less than half the rate of the previous decade. But on June 3, the US Bureau of Labor Statistics reported that US labor productivity increased by 5.4% in the first quarter of 2021. What’s better, there’s reason to believe that this is not just a blip, but rather a harbinger of better times ahead: a productivity surge that will match or surpass the boom times of the 1990s.

Annual Labor Productivity Growth, 2001 – 2021 Q1

Annual Labor Productivity Growth 2001 - 2021 Q1
For much of the past decade, productivity growth has been sluggish, but now there are signs it’s picking up. (Source: US Bureau of Labor Statistics)

 

Our optimism is grounded in our research which indicates that most OECD countries are just passing the lowest point in a productivity J-curve. Driven by advances in digital technologies, such as artificial intelligence, productivity growth is now headed up.

There are three reasons that this time around the productivity J-curve will be bigger and faster than in the past.The productivity J-curve describes the historical pattern of initially slow productivity growth after a breakthrough technology is introduced, followed years later by a sharp takeoff. Our research and that of others has found that technology alone is rarely enough to create significant benefits. Instead, technology investments must be combined with even larger investments in new business processes, skills, and other types of intangible capital before breakthroughs as diverse as the steam engine or computers ultimately boost productivity. For instance, after electricity was introduced to American factories, productivity was stagnant for more than two decades. It was only after managers reinvented their production lines using distributed machinery, a technique made possible by electricity, that productivity surged.

The first is technological – The past decade has delivered an astonishing cluster of technology breakthroughs. The most important ones are in AI: the development of machine learning algorithms combined with large decline in prices for data storage and improvements in computing power has allowed firms to address challenges from vision and speech to prediction and diagnosis. The fast-growing cloud computing market has made these innovations accessible to smaller firms.

Significant innovations have also happened in biomedical sciences and energy. In drug discovery and development, new technologies have allowed researchers to optimize the design of new drugs and predict the 3D structures of proteins. At the same time, breakthrough vaccine technology using messenger RNA has introduced a revolutionary approach that could lead to effective treatments for many other diseases. Moreover, major innovations have led to the steep decline in the price of solar energy and the sharp increase in its energy conversion efficiency rate with serious implications for the future of the energy sector as well as for the environment.

The costs of covid-19 have been tragic, but the pandemic has also compressed a decade’s worth of digital innovation in areas like remote work into less than a year. What’s more, evidence suggests that even after the pandemic, a significant fraction of work will be done remotely, while a new class of high-skill service workers, the digital nomads, is emerging.

As a result, the biggest productivity impact of the pandemic will be realized in the longer-run. Even technology skeptics like Robert Gordon are more optimistic this time. The digitization and reorganization of work has brought us to a turning point in the productivity J-curve.

 

When you put these three factors together—the bounty of technological advances, the compressed restructuring timetable due to covid-19, and an economy finally running at full capacity—the ingredients are in place for a productivity boom. This will not only boost living standards directly, but also frees up resources for a more ambitious policy agenda.

Erik Brynjolfsson is a professor at Stanford and director of the Stanford Digital Economy LabGeorgios Petropoulos is a post-doc at MIT, a research fellow at Bruegel, and a digital fellow at the Stanford Digital Economy Lab.

A government review of social care

The following impressive, yet depressing, article from John Seddon, head of Vanguard Consultants – I have no connection with them, and never even met him, but regular readers will know I’m an admirer of their approach to productivity improvement which seems far more efficient and effective than all others peddled by the bigger consultancies, including my alma mater nowadays – let me first apologise for some of the language used but hope it does not detract from the vital points made

I’ve always been a fan of Private Eye. Forty years ago I worked for the BOC Group. The chairman Sir Leslie Smith would say he’d read the Financial Times to find out what’s happened and he’d read Private Eye to find out what was going to happen. Private Eye does a better job of scrutiny than many of our institutions.

It was a small item in a recent issue of Private Eye that got my attention; I learned that Brendan Martin, the man who runs Buurtzorg UK, had withdrawn his support for what was described as a Blueprint for social care. I like Brendan; he’s a good man with worthy intent. I also rate Buurtzorg – a Dutch care-service organisation – as amazing, a true innovation. Private Eye reported Martin withdrew his support because the Blueprint proposed a structural change whereas he believed the reform of care services must start with the needs of the care recipients. He’s right.

So I got hold of a copy of the Blueprint. It was authored by Josh MacAlister, CEO of Frontline, an organisation funded by public money to recruit and train social workers, in conjunction with Boston Consulting Group. The Blueprint has Buurtzorg all over it; representing the UK pilots of Buurtzorg as successes. Absolute rubbish; they were shocking failures. So I did a Podcast to argue that, compared to Buurtzorg in the Netherlands, the UK pilot results were, at best, pathetic – and I described the reasons for Buurtzorg’s success which, in short, began with the leader realising that the problem was the system; I also described how Vanguard’s clients in care services had learned the same; that the starting-point for designing a better system is understanding what’s wrong with the current system.

Then I wrote to the people listed as interviewees for the Blueprint, sharing the transcript of the Podcast with them. What astonished me was that everyone who replied – and bear in mind these were all significant people in the care-services world – told me they did NOT concur with the Blueprint’s plan of action. One or two were even quite cross to have been cited. One would have thought that with this lack of consensus, as the Blueprint places such heavy emphasis on Buurtzorg whose leader had withdrawn support, the whole thing should have been re-written, shelved or at least paused for reflection.

But then I think about what I’ve learned about policy-making in Whitehall. It’s like this: you have an idea; then you get other people in the Whitehall bubble to enthuse about your idea. And once you have a body of people onside you stand a good chance of the idea becoming policy. There’s neither desire nor means to base policy on evidence. In that crazy world you’d want to list lots of people in any proposal to give the impression that your idea is widely supported and you’d want to ignore the inconvenience of the main argument being torpedoed by its representative in the UK.

So I began to take the view that this Blueprint is a pitch; a pitch for public money. According to Private Eye MacAlister’s organisation has already received £72m over recent years for social-worker training. That too was a plausible pitch. We have a problem… turnover of social workers is too high… it must be a training problem… that’s how Ed Balls saw it when he was the minister. It wasn’t a training problem then and it isn’t a training problem now. Social workers leave because the system is rotten. Did the £72m have any impact?

Clearly not, the Blueprint reports that as many as 55% of social workers have had enough and are planning to leave. You might have thought that Josh MacAlister would have reflected on that as his organisation was set up on the basis that training would solve the morale problem.

The Blueprint uses the word ‘system’ but shows no understanding of how the system needs to change. For example, it acknowledges the current problems of bureaucracy, form-filling, mistrust, overbearing reporting to regulators and low morale and yet, again astonishingly, it asserts that the plan will adhere to all existing regulatory frameworks. Forgive my cynicism but this is either a ploy to avoid any opposition amongst the consensus-builders or MacAlister hasn’t got a clue about work as a system.

Perhaps he thinks his proposed structure represents a different system. His plan is to create a series of self-managed teams. A family-facing team that does the social work, a referral team that allocates work, an enabler team that helps the family-facing team by handling administration, an insight team that helps family-facing teams do best practice and a strategy team that guards the culture and ensures the teams are empowered.

Really? This is Big-Consultancy speak; lots of words with indistinct meaning. But then, eventually, I find out where it is going. You have to plough on to the end of the huge document, which has abundant repetition and is a tiring read, to find this: To deliver the plan in an initial 12-month phase for 2 family-facing teams the cost estimate is between one and one-and-a-half million pounds. What is delivered for this eye-watering fee? The 2 family-facing teams get 5 initial training days and 2 monthly training days in their first year.

Forgive me. But all I can say is fuck me. What a rip off. The estimate for a complete transformation of each local authority’s children’s service is 5 to 7 million.

Now here’s the thing: we have helped leaders of care services transform their services into systems that have results on a par with Buurtzorg for tens of thousands of pounds, with results in months, not years.

Camilla Cavendish (I admired her good-sense articles when she was an economics journalist) is working for the minister on the future of care services and chairs the Frontline organisation – in other words she is a collaborator with MacAlister – she came across one of our clients and was impressed. My team introduced her to another client who’d taken even further strides; they sent her my Podcast on Buurtzorg as she too was a fan and had eulogised about Buurtzorg as a journalist. She replied to say she’d read the script in one gulp. Maybe it gave her indigestion. She arranged for us to speak but on the day she was busy and instead sent an American student, who is working with her, to interview me. It was a bloody awful experience. Her questions showed she either couldn’t listen or had no ability to grasp what I was talking about; I gained the impression she’d been tasked with asking me some questions Cavendish wanted answers to which, given what I’d been saying, were neither good nor useful questions.

My central argument concerned the way regulation is the fundamental cause of sub-optimisation of these services. The bureaucracy MacAlister describes demands reports up the hierarchy, and many of them. Failure to report and reporting poor results both risk damage to reputation. I have published many examples of adherence to referral, assessment and care-plan targets, a focus on budget management and the methods of commissioning, all causing sub-optimisation and the signal that things are awry is the volume of failure demand hitting care services (failure demand is demand on the service which would and should not have occurred if things had been done right in the first place) – often over 80% of all demand.  Yet managers of these systems get the green light from regulators. Boxes ticked.

Ofsted is the primary regulator of children’s services; many of the measures that drive the bureaucracy are questions you would want to ask if you want to know the extent of what’s going on with children in need. You can understand why governments might at least want to know the extent of the problem. The regulator asks: How many assessments are occurring? Are children referred and assessed in a timely manner? Do the children have care plans in place within defined timescales? Is there evidence these are reviewed? How many children are be labelled as ‘Looked-after Child’ (LAC) and ‘Child in Need’ (CIN)? How many are there in terms of percentages per 10,000 of the population? And the like. These controls help no one understand or improve the system; instead they work against any such understanding and frequently can serve to make performance worse. But adherence to these controls protects reputation. Yes, you can have a lousy service and a good rating from the regulator. The controls focus leaders on activity at the expense of purpose. So it matters that activity targets are met rather than each and every child in need being understood.

The questions you would ask if you wanted to know how we are actually doing with helping children in need would be related to purpose, not activity. I shall return to this.

But first something that came to my desk recently – a manuscript of what I hope will be published as a book, describing one family’s experience of children’s services. It began with a tragic event: A family happily agreed to take in their friend’s three children for a couple of weeks when she was admitted to hospital. She deteriorated rapidly and unexpectedly died. What began as a two-week arrangement became extended and tragic. The family wanted to take the children in and the children wanted the same but there were two issues: the family had limited resources, so funding would be necessary, and the children had an estranged father who had been sent back to his home country, Latvia, for criminal behaviour.

The protection of children is, quite rightly, governed by law. In such circumstances the law provides for our statutory services to appoint the family as connected foster carers immediately, then later as Special Guardians, leaving more formal matters of suitability to later and to offer discretionary payment. It could have been very normal very quickly. But that didn’t happen. The motivation for the book was to share the horror of that result taking 18 months.

A hierarchy of social-work actors delayed, failed to act as agreed, told lies, threatened the family with taking the children away, contravened a judge’s direction, only to, eventually, do what mattered. It illustrates how the social work hierarchy sought to avoid bad news, for fear of personal and corporate liability. The book shows how mistakes and lies couldn’t be admitted; instead were denied, and further lies were generated to cover up; it being impossible to acknowledge the truth.

So you have to ask why. How can these people, who joined a vocational service, act this way? It’s how you survive; it’s how you climb the tree. Adherence to regulation, adherence to budget, avoidance of bad news – we have seen how scandals have driven up the number of children taken in to care, simply because it avoids loss of reputation.

Ofsted’s web site proclaims its regulatory function is insuring that services help children in need. It asserts that prerequisites for leadership, note that, prerequisites – you’d better have them – include a vision and values statement, a statement of philosophy, documentation for the structure of teams, controls on how cases move through the system, descriptions of how social work practice will be carried out, arrangements for the provision of help, protection and care for children, what the thresholds for providing services are, what services are expected to do and how services are monitored for quality and effectiveness.

And this is where regulation gets into deep water. One way to deal with all the above is to have documentation for everything, in spades. Regulators like documentation. But what constitutes ‘good’ in any of the above edicts is open to subjective judgement. Much of what is promulgated as ‘good’ isn’t good at all. Misjudgements, conflict, stress, staff turnover and claims for retribution are inevitable consequences.

It is the primary fault in our system of regulation: regulators bring theory. So adherence to their theory is the route to a good reputation. But their theory is wrong. Any of us can point to vision and values statements that are meaningless and not lived by. How cases move through the system encourages an industrial, specialised, cost-controlled design; specifying how work will be carried out impedes the system’s ability to absorb the variety of demand, the very idea of thresholds is to misunderstand how value is created for care recipients, and effective monitoring depends entirely on the measures in use; activity and budget measures do nothing to help us understand effectiveness.

Ofsted also publishes examples of good practice on its web site. In its view these things are good: Being child-centred, ensuring stable relationships (continuity) with social workers, co-producing plans with families, ensuring children grow up in their own families or extended families where possible, having a relationship with the whole family.

Well blow me down, who’d have thought? Having published this insightful list of the bleeding obvious, and despite publishing its view on prerequisites, Ofsted is at pains to point out that it favours no particular method.

And neither should it. In fact Ofsted – and all regulators of public services – should have NOTHING to say about how services should be run.

What we need is a complete re-think of our philosophy and method of regulation. We can only justify regulations if the controls they disseminate are economically and socially advantageous.  The way we regulate today fails both tests. Regulation today amounts to a plethora of specifications inspected for compliance. The specifications amount to opinion; the ideas ministers, administrators and regulators like. Instead of regulation by specification and compliance we need a regulatory system that drives innovation.

There is a systemic relationship between purpose, measures and method. To say it is systemic is to assert that it exists in all organisations for good or ill. When regulators specify measures and methods they create a culture of compliance (usually with bad ideas). Regulators need to limit their edicts to statements of purpose. The leaders of services must be free to choose how to work to achieve that purpose, determining for themselves what measures and methods they will employ. When inspection comes around inspectors need only to ask what choices of measures and methods have been made, and the inspector should go see for themselves how well it is working. The consequences are that transparency will increase (the usual hiding places are removed) and the reliability and validity of inspection reports will increase. Moreover it lays the foundation for innovation. It is to change the locus of control from the centre to those who are paid to run the services.

As I said many UK local authorities have adopted the Vanguard Method to improve care services despite having issues with regulators. But regulators can’t argue with the results: significant improvements in capacity – they provide better help for more people – improvements in service – they learn to give only what is required to meet the needs of care recipients – and significant reductions in the cost of service provision. These services have been subjected to scrutiny by local scrutiny panels. But there is an example of our work that has been subjected to external scrutiny by a number of bodies including the OECD; and that’s the youth service in Amsterdam. (An easier-to-read version, written as a case study is here.) Academics who are critical of the Blueprint for its lack of evidence, among other issues, argue in a recent article that this is the example from the Netherlands that MacAlister should have paid attention to, as it is more akin to children’s services than Buurtzorg.

And here are the results: Overall savings of 30m Euros across the Youth Protection system in Amsterdam; a 50% reduction in the number of families under care; a 61% reduction in protective measures; a 53% reduction in the number of out-of-home placements; a 46% reduction in youth parole measures; a 16% reduction in child custody; a 28% reduction in referrals to youth care providers; a 75% reduction in unnecessary administration. And, of course, many more lives more quickly back on the rails.

All achieved because the service focussed on doing what matters for each and every child. They changed the whole system to respond effectively and efficiently to the children’s needs. There’s the thing: high-quality services are always lower cost. Efficiency comes from effectiveness. All of the New Public Management paraphernalia went, thrown away, by leaders who learned how irrelevant and harmful it was to performance; supported by a government that had given up on New Public Management.

My current copy of Private Eye reports that the Department for Education insists that any recommendations in the “independent” review of children’s social care – chaired, would you believe, by MacAlister – requiring funding must include ‘as robust and detailed an evidence base as possible to demonstrate how, and over what period, this would be offset by savings’. So you might assume that MacAlister’s Blueprint is dead in the water. I wouldn’t bank on it; Big Consultancies are adept at creating fictitious spread-sheets and equally adept at avoiding blame when the savings don’t transpire.

But here we are, us who never went to school with anyone in government, with an evidence base that is as robust as anyone could want, with a method that any leader can follow, that results in far better services at much lower costs, and, in services where children can be separated from families, far fewer separations and thus much lower costs across the whole system. And, in every example, demand for services falls. Happier people and communities, isn’t that the purpose of public services?

Ours is delivered, MacAlister’s is entirely speculative.

The best thing we can do with the Blueprint is chuck it in the bin.

So what do you think about my arguments on regulation?

Thanks in anticipation…

John

john@vanguardconsult.co.uk

P.S.1 The academic article arguing our work in Amsterdam should have been MacAlister’s model can be purchased here: Dismantling the Blueprint: Buurtzorg in English child protection social work: European Journal of Social Work: Vol 0, No 0 (tandfonline.com) – One of the authors has agreed to provide free copies; contact joe.hanley@open.ac.uk

P.S.2 The OECD report that includes the Amsterdam work is here:  https://www.oecd.org/media/oecdorg/satellitesites/opsi/contents/files/SystemsApproachesDraft.pdf

P.S.3 An easier read of the case study in Amsterdam is here:  https://vanguard-method.net/wp-content/uploads/2021/05/88-European-Social-Fund-case-study-ChildProtect-Netherlands.pdf

***

Pandemic provides unexpected boost to UK’s productivity prospects

Valentina Romei offers the following in the Financial Times

Technology and machinery investment is up 3.2% compared with pre-pandemic levels

The shift to homeworking, online consumption and social distancing during the Covid-19 pandemic has driven increased investment in new technologies that could deliver an unexpected lift to the UK’s long-term productivity slump.

Britain has been experiencing a productivity crisis since the financial crash in 2008-09 — a slowdown that has been more acute than in any other western country. Economists say low productivity growth matters because it is the rising value of output per hour worked — or productivity — that enables businesses to increase wages to workers and ultimately boost living standards.

Higher productivity also increases government resources to improve public services or cut taxes. But according to Office for National Statistics data for the first quarter of 2021, UK investment in machinery and in information and communication technology rose 3.2 per cent compared with the last quarter of 2019 — the last three-month period before the pandemic hit Britain. In contrast, overall investment over the same period fell 4.8 per cent while UK output declined 8.7 per cent.

What has offered encouragement to economic experts is the degree to which the investment in new technologies and machinery has been accompanied by a greater degree of business innovation and staff retraining which, in turn, has boosted productivity levels.

Spending on intellectual property products, such as software and patents, also surged in 2020 while official statistics showed labour productivity rising in 2020 and in the first quarter of this year.

Mark Posniak, managing director of Octane Capital, a specialist lender, said the first national lockdown last year acted as a “trigger” to automate their processes. “We are now a much more streamlined and digital-first lender, which is really proving its value with our borrowers and partners alike.”

Meanwhile, Craig Bunting, co-founder of coffee shop chain Bear, said that before the pandemic they were focused on the high street market. “Covid-19 changed everything,” he said. “We built an entire ecommerce platform in a matter of a few months.”

Andy Haldane, chief economist at the Bank of England, said earlier this month that spending on R&D and digitalisation “has actually picked up quite maturely and indeed quite unusually for a weak activity period”, which “may provide some clues to productivity doing a bit better than we might otherwise have thought”. He added that the shift to homeworking during the pandemic had provided a boost to productivity.

Nearly half of UK businesses are planning to shift towards greater homeworking as a permanent business model because of increased productivity, according to a recent ONS survey.

Martin Spring, director of the Centre for Productivity and Efficiency at Lancaster University Management School, said coronavirus had provided an incentive to companies to introduce changes that they might otherwise have put off. “That’s really the important point, those organisational changes, skills changes, capabilities changes have had to happen and that’s what makes the difference . . . if the pressure was not on . . . you would probably get away without bothering,” said Spring.

David Owen, economist at Jefferies, said the notion of the UK as a low productivity growth country could be challenged by the pandemic which had forced “new ways of doing business and innovation”.

The UK’s productivity crisis has long been a concern to economists. The UK’s prospects have been further limited by high Brexit uncertainty and low business investment since the EU referendum in 2016. Despite the boom in digitalisation in 2020, UK business investment was down 18 per cent compared with the second quarter of 2016, while it registered a double-digit growth rate in the US.

However, companies’ investment intentions, including spending in buildings and transport equipment which is currently very low, have picked up in April, according to the BoE agents’ survey, largely reflecting the waning of uncertainty related to Brexit and the pandemic as well as a brightened economic outlook.

According to Oxford Economics, UK business investment is expected to grow much faster over the next two years than in other G7 countries, driven by the government’s two-year tax break which allows companies to deduct 130 per cent of their investment from their taxable income. But Andrew Goodwin, economist at Oxford Economics, warned that business investment would still be limited by the costs of servicing debt that companies were forced to take on during the pandemic. “Brexit is also likely to prove a key headwind,” he said. Goodwin added that the “super deduction” was “relatively narrow focus and is temporary in nature” and “it’s hard to believe that it will have a significant long-lasting positive effect”.

Global economic impact tracker Ben Broadbent, a member of the BoE monetary policy committee, also raised a note of caution and said the lower use of capital such as offices and transport infrastructure would be a drag for productivity in the short term. Others noted that a one-off adjustment in innovation was unlikely to have long-lasting effects on productivity if the trend did not continue. “The trick now will be to hang on to those changes and build on them further, even as the expediencies of the pandemic diminish,” said Spring.

Bart van Ark, managing director of The Productivity Institute, a research organisation, said that while the change in digital transformation put the UK in a better place to reap the benefits from new technologies in the future, “digital transformation is not a one-off investment but a journey”. He added that UK productivity was so much lower than in France and Germany that even assuming a stronger productivity growth in the coming years, “it would require the UK outperform on investment and business practices for quite some time to visibly narrow the gap”.

 

How to solve the puzzle of missing productivity growth

A perceptive article published by the Brookings Institution and written by the well-known economist Erik Brynjolfsson and two colleagues, Seth G. Benzell and Daniel Rock

Despite the economic damage wrought by the novel coronavirus over the past year, an analysis published by The Economist in December 2020 argues that the COVID-19 pandemic may have made a boom in productivity more likely to happen because “new technologies are clearly able to do more than has generally been asked of them.” This would be welcome news to observers who have scratched their heads about why supposedly innovative technologies like cloud computing and artificial intelligence have struggled to materially affect topline productivity growth numbers or the rate of overall GDP growth.

Office closures have made firms invest in automation and digitization and make better use of existing resources. Survey data collected by the World Economic Forum during the pandemic show that more than 80% of employers are planning to accelerate the adoption of advanced technologies and provide more opportunities for remote work, while 50% plan to accelerate automation of production tasks. In a way not seen for the last two decades, this turn has the potential to provide sustained productivity growth—the ultimate engine of economic activity in the long run.

To take a step back, in the past decade digital goods and services have been criticized for under-delivering on their enormous economic promise. In spite of the emergence of new technologies capable of diagnosing diseases, understanding speech, or recognizing images, these tools have had startlingly little effect on the disappointingly slow productivity growth rate of advanced economies, critics argue. Indeed, the pace of productivity growth has decelerated in the past two decades—from an average of 2.8% per year in the decade ending in 2005, down to 1.3% per year from 2006 through 2019.

In a recent Stanford HAI and Digital Economy Lab policy brief, we took stock of the latest research and identified four potential reasons why productivity growth is slowing. Besides examining each of these four explanations, we want to sketch out what policymakers can do to reverse this trend, reduce income inequality, and make the United States more competitive. This set of policy actions falls into three broad categories:

  1. Increasing investments in research and development through direct grants and tax credits.
  2. Expanding the human capital available to the economy by boosting our education system and expanding immigration of high-skilled labor.
  3. Removing the legal and regulatory bottlenecks that currently exist to entrepreneurship and business innovation.

Establishing root causes

To begin, why has productivity growth slowed in spite of immense technological innovation? First, we have to consider the possibility that today’s technological advances simply fall short of the promise envisioned by their developers and that they will never fulfill their expected economic promise. Second, economists might be failing to measure properly all the aspects in which technological changes are affecting the economy. Third, the new technologies under consideration may be privately beneficial to the companies that developed them but have fewer positive effects on the broader economy. Lastly and most compellingly from our perspective, transformative technologies take time to diffuse throughout the economy and must be accompanied by appropriate investments and adjustments. They don’t typically translate into improvements in productivity until complementary innovations have been developed.

The argument that tech hype is overblown and will never fulfill supposedly irrational expectations rests on the contested observation that the rate at which innovations are being created is decreasing. This is borne out in some respects, since it is increasingly difficult for researchers to reach the frontiers of their discipline as more specialization is needed per innovation than before. But we do not find as compelling the parallel argument that productivity gains from the adoption of I.T. systems installed early in the 21st century have run their course and that no additional technological improvements to productivity should be expected.

Moreover, as information flows and knowledge-based work increases in importance, accounting for digital goods and services has become an increasingly important part of the economic conversation. While traditional growth accounting handles the case of economic activity like manufacturing pretty well, instances of unmeasured inputs and unmeasured outputs that stem from what are known as intangible or hidden assets—assets like corporate culture or business processes that are not documented on balance sheets, not kept as inventory in a warehouse, and not easily transferable between firms—have upended the mechanics of economic measurement. This raises questions about whether growth accounting is properly capturing the ways in which digital technologies are changing the economy.

The second explanation, that we may be failing to properly measure new sources of economic activity, enjoys broader support than the overblown hype argument. Since the beginning of the productivity slowdown, the way consumers choose to value search engines and social networks demonstrates considerable fluctuation, as has consumer dependence on goods like mapping software and encyclopedias that were not free before they became digital goods. Improper or uncertain measurement must also be seen in conjunction with the fact that prices for goods such as semiconductors and other specialized computational hardware are increasingly being mismeasured. If economists’ estimates of price changes for these new technology products were rising too quickly or falling too slowly over time, the overall amount of productivity growth observed would be understated.

Improper and uncertain measurement is related to the third hypothesis, that lucrative technologies are increasingly used in zero-sum applications that merely shift wealth around and have fewer positive effects on the economy generally. An example of this can be seen in the misalignment of incentives in tax policy that subsidizes capital at the expense of labor and crowds out investment in labor generative technology. Capital subsidies result in firms developing technologies that are only marginally more efficient than workers but not sufficiently better to incentivize additional investment that could complement workers. This can be seen in the case of recent innovator companies who have focused on developing technologies that are just better enough than a worker to lower labor demand, but not better enough to free up additional capital for complementing workers.

Lastly—and most importantly—slowing productivity growth may be the result of technologies taking time to reach their full economic potential. We find this argument most convincing because of the nature of general-purpose technologies (GPTs) like artificial intelligence—those that are generally pervasive and can improve over time but require complementary investments that are both intangible (e.g. in data collection, employee training) and physical (e.g. computers, 5G towers). In the early stages of GPT-related economic activity, it can appear increased tangible costs are required to achieve the same outputs as in the past—before unmeasured capital service flows and unmeasured costs to create that capital start to balance each other out. This is because of the substantial need for complementary innovations to many intangible assets, especially in the case of fundamental technology advancements such as AI. We have termed this phenomenon the “productivity J-curve.” As we have seen, complementary innovations for productivity enhancing technologies can take years or even decades to create and implement. In the meantime, measured productivity growth can fall below trends since real resources are devoted to investments in these innovations.

Supercharging productivity growth

Taking the above analysis into account allows us to develop the following recommendations policymakers should take to enhance productivity growth. In order to ensure that the economic gains from integrating these hard-to-measure intangible assets are not consumed entirely by the wealthy and privileged, we propose a set of interventions across three broad issue areas that are designed to share prosperity among the entire population.

First, to address inadequate research and development (R&D) efforts, boost levels of spending in both public and private R&D by authorizing large, government-directed research projects, government grants through the National Science Foundation or the National Institutes of Health, and through tax credits for private businesses. Fundamental science is often best carried out by government, academia, or nonprofits while marketable applications of that basic research are often optimized through private development. Thus, the federal government should adopt a diversified approach in building this program in order to reduce overall risk and fund early stage or large-scale projects that the private sector either would not be able to pursue or would not want to pursue. This will increase the likelihood of positive effects from at least one avenue.

The second category of policy actions we recommend involve increasing U.S. human capital. This can be accomplished through shoring up our education system and encouraging high-skilled immigration. Boosting the attractiveness of the United States to high-skilled immigrants is the most simple and important action the country could take today to increase growth. This includes immigrants and refugees who do not have university degrees. Those who come to America tend to be entrepreneurial and ambitious and represent some of the most talented and tenacious individuals in their home countries. Immigration also has the added benefit of expanding market size and providing opportunities for entrepreneurs to serve specialized markets.

The United States should also boost funding and support for schools and universities, including by potentially funding new universities, updating the land-grant process used to create institutions like the University of California system, or by allocating appropriately sized endowments to be administered by the states. In order to better prepare children for college, the United States should do more to improve the quality of primary- and secondary-school instruction through better accountability for teachers, extending the length of school days and the school year, offering optional weekend classes, and providing one-on-one math tutoring. The goal here is to not only produce more STEM PhDs in the United States, but to promote the training of scientists abroad as well, since R&D conducted abroad is likely to produce positive spillovers in this country.

Our third category of policy interventions involve eliminating bottlenecks to innovation in the legal, regulatory, and tax realms. In order to reduce adjustment costs and lags to the benefits of new technologies, policymakers should pursue legislation to eliminate or weaken the non-compete clauses that prevent skilled engineers from bringing their talents and insights to competitors. Policymakers should further enact intellectual property reforms that push more technologies and artistic concepts into the public domain. Besides investing in infrastructure and public goods, the United States should also reinvigorate antitrust enforcement, including by empowering the Federal Trade Commission to subpoena information needed for better understanding and regulating monopolies.

Rather than focusing on breaking up digital platforms—which might destroy productivity-enhancing network effects—the federal government should promote standards that enable easier market entry and interoperability among competitors. Where this is impossible, regulators should focus on tax policy, regulation, and collective bargaining tools to ensure the benefits from these platforms are more widely distributed. Decoupling healthcare from employment and reforming occupational licensing will help make it easier for people to start a new business and boost entrepreneurship. Lastly, the United States should correct the subsidy it currently provides to capital-intensive automation over the invention of new tasks for labor. Washington should also collaborate with other countries on corporate tax reform in order to prevent a race to the bottom with respect to corporate tax havens in the international contest to attract capital.

Pursuing these policies will reward firms for creating new jobs instead of economizing on labor costs and will ensure that the innovation provided by GPTs accelerates productivity growth across the entire economy. This in turn will help expand wages, reduce income inequality, and ensure that more equitable growth is enjoyed across the country. Addressing the productivity paradox will contribute to the speedy integration of scalable machine intelligence into the global economy and ensure that its integration reflects our fundamental values about the dignity of human work. In sum, we are optimistic that the coming decade will be one of higher productivity growth as firms continue to adjust their business practices because of the COVID-19 pandemic and as policymakers take the reins in making a plan for equitable growth a reality.

Erik Brynjolfsson is the Jerry Yang and Akiko Yamazaki Professor and Senior Fellow at the Stanford Institute for Human-Centered AI (HAI), and Director of the Stanford Digital Economy Lab. He also is the Ralph Landau Senior Fellow at the Stanford Institute for Economic Policy Research (SIEPR), Professor by Courtesy at the Stanford Graduate School of Business and Stanford Department of Economics, and a Research Associate at the National Bureau of Economic Research (NBER).

Seth G. Benzell is an Assistant Professor at the Argyros School of Business and Economics at Chapman University. He is a Fellow of the Stanford Digital Economy Lab, part of the Stanford Institute for Human-Centered Artificial Intelligence (HAI).

Daniel Rock is an Assistant Professor of Operations, Information, and Decisions at the Wharton School of the University of Pennsylvania and a Digital Fellow at both the Stanford HAI Digital Economy Lab and the MIT Initiative on the Digital Economy.

Don’t Underestimate the Power of Kindness at Work

Everybody wants to be happy. But how can we meet that sometimes elusive goal? This was a difficult question even before the global pandemic, but nowadays just thinking about it can seem futile. Parents are trying to balance the demands of remote work and online schooling; people who live alone try to keep their focus in isolation. When life is measured by back-to-back Zoom meetings, even taking a shower can seem like a win.

The transformation of the workplace into scheduled online meetings has led to another source of deprivation: The removal of serendipitous encounters. For many people, hearing a colleague say, “Thank you so much” in the hallway, or a manager telling you “Great job” after a presentation were a highlight of office life. Now, these seem like traditions from another lifetime. Without water cooler interactions, casual lunches, and coffee breaks with colleagues, we don’t have the same opportunities for social connection as before. Without them, it can be much harder to find joy in our work. So, what can we do about it?

We offer a humble suggestion: Kindness. This past year, most management advice has focused on how to sustain productivity during the pandemic, yet the power of kindness has been largely overlooked. Practicing kindness by giving compliments and recognition has the power to transform our remote workplace.

The Benefits of Kindness

A commitment to be kind can bring many important benefits. First, and perhaps most obviously, practicing kindness will be immensely helpful to our colleagues. Being recognized at work helps reduce employee burnout and absenteeism, and improves employee well-being, Gallup finds year after year in its surveys of U.S. workers. Receiving a compliment, words of recognition, and praise can help individuals feel more fulfilled, boost their self-esteem, improve their self-evaluations, and trigger positive emotions, decades of research have shown. These positive downstream consequences of compliments make intuitive sense: Praise aligns with our naturally positive view of ourselves, confirming our self-worth.

Second, practicing kindness helps life feel more meaningful. For example, spending money on others and volunteering our time improves wellbeing, bringing happiness and a sense of meaning to life, research finds. Being kind brings a sense of meaning because it involves investing in something bigger than ourselves. It shapes both how others perceive us — which improves our reputation — and how we view ourselves. We draw inferences about who we are by observing our own behavior, and our acts of kindness make us believe that we have what it takes to be a good person. In the remote workplace, where cultivating moments of joy is difficult, this may be a particularly important benefit that translates into long-term job satisfaction.

Third, as we found in a new set of studies, giving compliments can make us even happier than receiving them. We paired up participants and asked them to write about themselves and then talk about themselves with each other. Next, we asked one of them to give an honest compliment about something they liked or respected about the other participant after listening to them. Consistently, we found that giving compliments actually made people happier than receiving them. Surprisingly, though, people were largely unaware of the hedonic benefits of being kind.

Why does giving compliments boost our happiness to such a degree? A key ingredient of well-being that we’ve sorely lacked during the pandemic plays a role: social connection. In our studies, we found that giving compliments engendered a stronger social connection than receiving compliments because giving them encouraged people to focus on the other personSure, receiving a compliment feels great, but making a thoughtful, genuine compliment requires us to think about someone else — their mental state, behavior, personality, thoughts, and feelings. Thinking about other people is often a precondition to feeling connected to them. In this way, compliments can become a social glue, enhancing connections and positivity in relationships, and making us happier.

Nonetheless, people are often hesitant to give compliments. Why? The idea of approaching someone and saying something nice can trigger social anxiety and discomfort, recent research by Erica Boothby and Vanesa Bohns shows. For this reason, we assume people will feel uncomfortable and be bothered by receiving a compliment, when the opposite is true.

In addition to these psychological barriers, working remotely has added more structural barriers to random acts of kindness, compliments, and recognition. Before the pandemic, organizations often recognized employees through formal programs, while serendipitous encounters could easily generate a simple thank you or words of praise. By contrast, today’s Zoom meetings tend to follow strict agendas that leave no room for any other topic, let alone compliments.

Organizations benefit from actively fostering kindness. In workplaces where acts of kindness become the norm, the spillover effects can multiply fast. When people receive an act of kindness, they pay it back, research shows — and not just to the same person, but often to someone entirely new. This leads to a culture of generosity in an organization. In a landmark study analyzing more than 3,500 business units with more than 50,000 individuals, researchers found that acts of courtesy, helping, and praise were related to core goals of organizations. Higher rates of these behaviors were predictive of productivity, efficiency, and lower turnover rates. When leaders and employees act kindly towards each other, they facilitate a culture of collaboration and innovation.

Bringing Kindness to Work

How can leaders promote kindness in the remote workplace? First, they can lead by example. People are naturally sensitive to the behaviors of high-status team members. By giving compliments and praising their employees, leaders are likely to motivate team members to copy their behavior and create norms of kindness in teams.

Second, leaders can set aside time during Zoom meetings for a “kindness round” in which team members are free to acknowledge each other’s work. This need not take much time — even a few minutes a week will suffice. But these few minutes can boost morale and social connection, especially when months-long projects are mostly completed over Zoom.

Third, consider small spot bonuses. Companies such as Google have used “peer bonus” systems to encourage employees to send small amounts of money (from a fund in the organization) to each other to show appreciation for particularly effective work. Even a few dollars could have a positive effect; research finds that people appreciate small acts of kindness as much as large ones. A gift card or a small gift sent through the mail might work just as well. Simply knowing that one is appreciated can trigger the psychological benefits of kindness without costing the organization substantial sums.

The power of kindness can mitigate the ill effects of our increasingly online social world. It is an essential leadership skill that can cascade through people, changing the culture of the workplace along the way.

  • Ovul Sezer is a behavioral scientist, stand-up comedian, and Assistant Professor of Organizational Behavior at UNC Kenan-Flagler Business School.
  • Kelly Nault is a PhD candidate in Organizational Behavior at INSEAD. Her research focuses on person perceptions and social decision making affecting status dynamics in organizations.
  • Nadav Klein is a behavioral scientist and Assistant Professor of Organizational Behavior at INSEAD.

AI and productivity

Extracts follow from a ‘cover story’ just published in the Financier Worldwide Magazine

The global AI market has rocketed in recent years:
  • According to UBS, the AI industry was a $5bn marketplace by revenue in 2015. By 2025, the size of the AI software market is forecast to reach $126bn
  • McKinsey Global Institute reckons AI techniques could create between $3.5 and $5.8 trillion in value annually across nine business functions in 19 industries in the coming years. This accounts for about 40% of the overall $9.5 to $15.4 trillion annual impact potentially enabled by all analytical techniques.
  • Accenture claim that by 2035 AI will double growth rates for 12 developed countries and increase labour productivity by as much as a third.

 

Automation evolution

AI itself has evolved dramatically, particularly over the last 10 years.

“Machine learning, a subset of AI, has been an area of research for over half a century but has only achieved transformational success with recent increases in processing power and memory and the availability of very large training data sets, sometimes by-products of the internet age,” explains Matt Hervey, a partner and head of artificial intelligence at Gowling WLG. “This has vastly improved computer vision and language processing, in turn enabling unprecedented automation of previously human-only tasks. High-profile examples include self-driving cars and medical diagnosis, but vision and language perception enable automation of a vast range of low profile, menial tasks across all sectors.

“The effects of such automation are unclear to experts and the public alike, so current attitudes to AI may not last,” he adds. “What is abundantly clear is that governments, regulators, lawmakers and companies around the world are conscious of both the economic potential of AI and the risks to society, including fake news, mass unemployment, loss of privacy, and challenges to human autonomy and dignity.”

More recently, the coronavirus pandemic has had a significant impact on adoption of AI, as companies responded to the challenges of worker productivity during the crisis. “COVID-19 has accelerated AI and its applications by decades,” says Clare Lewis, a partner at McGuireWoods. “With the unprecedented move online, from tele-medicine, e-learning and remote working, the demand for AI and machine learning has never been greater.” Indeed, AI can help remote workers stay focused on their most important duties by eliminating tedious tasks.

Sector-specific trends have also emerged during the COVID-19 crisis, with healthcare one obvious beneficiary. “The beauty of AI is that it can benefit all sectors that rely on data,” says Giles Pratt, a partner at Freshfields Bruckhaus Deringer LLP. “But the healthcare sector, and particularly pharmaceutical and biotech, may have the most to gain, as ‘failure rates’ in drug research and development (R&D) remain high and costly. “AI is increasingly being used in drug development, analysing and learning from large data sets to identify suitable compounds and to predict efficacy and side effects of new treatments,” he continues. “Reducing the time and cost involved in R&D can make a tangible difference in this space – and the importance of efficient drug development has really been put in the spotlight during the COVID-19 pandemic.”

In manufacturing, AI can monitor and analyse equipment to issue alerts when a service is necessary. This predictive maintenance enables businesses to cut out scheduled services. In turn, downtime and overall maintenance costs are reduced.

Across a range of industries, automation is being targeted to replace specific tasks within a role, particularly repetitive tasks considered ‘low-value’. “AI can make certain jobs more efficient and interesting,” says Ms Lewis. “In the legal realm, for example, lawyers use AI tools for mundane document review and due diligence tasks which previously needed to be reviewed manually. When workers are freed up from menial tasks, they can focus on increased client service and innovation.”

 

Cyber strength

Cyber security is another key area of AI application – indeed, it is the leading area according to the Consumer Technology Association, with 44% of all AI applications being used to detect and deter security intrusions. AI can provide an ‘always on’ solution to help protect businesses from malicious attacks. It can monitor systems to identify and fix vulnerabilities, allowing the IT team to concentrate on key risks.

“The scale and complexity of large organisations’ IT environments means the task of monitoring systems for irregularities is becoming increasingly difficult,” points out Mr Pratt. “As part of a multi-layered cyber security strategy, we see AI playing a significant role in detecting and responding to threats by first learning what is ‘normal’ for a specific IT environment, and then identifying anomalies. That makes AI an important line of defence against attack, and in managing the legal and regulatory risks associated with cyber security incidents,” he says.

Workforce worry

There is, however, so much that we do not know about the implications of AI. One thing is increasingly clear, however: AI will be profoundly disruptive. Some already view the proliferation of AI and its potential future applications in a negative light.

In terms of productivity and employment, for example, robots have been depicted as taking jobs from workers. Concerns about AI making human labour obsolete are understandable. According to a recent study from MIT and Boston University, robots could replace as many as 2 million workers in manufacturing alone by 2025.

“Whenever you have a leap in efficiency, there are large strides made in terms of economic growth,” says Ms Lewis. “However, the dark side to AI is that some workers, such as truck drivers for example, will need to re-tool their skills very quickly and be able to relocate to find new jobs. Software developers around the world are developing software specifically geared to replace well-paid managers who perform repeatable tasks. The AI technology being developed is very exciting, but the collateral damage will have long-term repercussions in terms of poverty and inequality. Innovative solutions are needed for those who fall through the cracks.”

COVID-19 has exacerbated this issue. In the US, for example, around 40 million jobs were shed at the height of the pandemic, and according to the University of Chicago, around 42% of those losses will be permanent. With many companies in survival mode for the foreseeable future, the pandemic has provided further incentive to increase automation levels. AI, after all, does not need to socially distance.

On the other hand, there are suggestions that AI will actually have a net positive impact on jobs. According to PwC, for example, AI is projected to create as many jobs as it displaces in the UK over the next 20 years – in absolute terms, around 7 million existing jobs could go, with around 7.2 million engendered.

In the short- to medium-term, AI is more likely to automate certain tasks within a role, rather than the entire role itself. There will be a focus on AI for complex calculations, routine processes and pattern recognition, for example, which can boost profitability and free up employees. Ultimately, AI can exist symbiotically with humans. The technology does not operate in a vacuum; it requires humans to function properly and deliver the desired efficiency and productivity gains.

Implementation hurdles

To date, AI has typically been deployed in the form of industrial and collaborative robotics, as well as machine vision and machine learning. But it is continually evolving. For example, industry leaders expect significant growth in predictive systems which use AI to manage intelligent supply chains. Manufacturers also predict increased use of robotic process automation (RPA) in their operations.

At present, the most significant barrier to deployment of AI solutions is that many organisations lack clarity on how to implement them. There is also a lack of employees with the necessary digital skills to implement AI, or even to define what skills are needed.

To overcome such issues, companies must adopt a holistic approach. This may entail a workforce transformation strategy which considers what AI-specific jobs need to be created and how to provide relevant AI training to employees at every level.

“Some companies are proposing their own ethical frameworks to protect workers,” explains Mr Hervey. “Rolls-Royce recently launched its Aletheia Framework for AI. This requires the company to consider the impact of AI on its workers, such as to deploy AI ‘shown to improve the well-being of employees, such as improved safety, working conditions, job satisfaction’, to analyse ‘potential job role changes or potential human resource impacts and the opportunities for retraining’, to explore ‘upskilling opportunities’ and so on.

Currently, the topic is a source of debate and speculation, with competing arguments on all sides. “The impact on labour markets remains to be seen,” says Mr Hervey. “Some futurists predict mass unemployment, some predict that new forms of work will be invented, while others predict that AI will be used to ‘augment’ rather than replace human employees.

Thinking regulation

As with any disruptive technology, the dawning of the age of AI has sparked calls for greater regulation. The need for increased regulation is becoming clearer, given the speed of AI development and uptake.

The European Commission is currently developing a regulatory framework that could have an impact on any company looking to do business in the EU. It hopes to promote a human-centric approach, where AI primarily services people and increases their wellbeing.

In anticipation of regulatory developments, it is prudent for companies to pre-emptively introduce a vetting process for AI products and services, to reduce disruption and drive productivity.

Rewards

AI stands to play an increasingly significant role in the day-to-day operations of many businesses, helping them to create value by generating profit, reducing costs and improving customer experience.

Increased integration of AI into workstreams seems inevitable, enabling companies to eliminate tedious tasks and focus employees on more productive activities, boosting speed, efficiency and accuracy.

Overall, AI-enabled technologies have the potential to dramatically increase economic output.

How We Work Has Changed Forever

Keir Weimer pens his thoughts in a Forbes magazine article – he adds that he is founder of Keir Weimer Multimedia, a real estate & lifestyle entrepreneur, No. 1 bestselling author, keynote speaker & high-performance coach.

The following are three trends I have seen emerge and that I predict will continue to grow in the coming months and years.

Individualism and self-productivity will rise in importance.

Never before has there been such a spotlight and a focus on the individual work and output of singular members of an organization. Many of us have been working remotely and have been on our own island creating, interacting and collaborating through Zoom and other technology with our teams and companies, all scattered across the country and the world. We had to find new ways to stay motivated, foster our creativity, stay organized and continue to be productive members of our companies.

However, many people have felt more of a spotlight and added pressure to prove themselves and make sure their bosses and teams know that they are staying productive and focused on the goals even though there’s nobody looking over their shoulder anymore. The level of accountability and the system of accountability has changed. It’s more important for us to be proactive and take initiative in making sure our work and our output are not only valuable, but it’s also acknowledged and recognized in ways that we didn’t have to before. This will likely only continue. The focus on our individuality and singular individualism has never been more apparent.

Deliberate and intentional connectedness will be more valued and rewarded.

Another trend we’ve seen emerge and appears to be growing is the value of leadership, proactive communication and work by individual team members. It’s a lot easier to hide behind a computer screen on a Zoom meeting with your camera off than it is to show up prepared to an in-person meeting where you’re expected to contribute meaningfully and positively to the dialogue and the solutions that are to come from that meeting.

Those that get ahead in this new remote world will be those that possess and prioritize a level of deliberateness in their connectedness to management, to their colleagues and to their organizations’ missions. This will be what is rewarded and noticed, and a class of so-called digital leaders will continue to emerge.

In-person team retreats will grow in importance and frequency.

Something else I predict will start to grow in popularity and importance is the need for in-person team retreats and other organizational events to bring people together in person again. It doesn’t matter how good the technology and the remote infrastructure are; at the end of the day, we’re all still humans, and we need the human and emotional connection that being together with our peers brings. This will continue to grow in importance and influence, and so too will companies’ and organizational budgets for event space and services to provide a creative venue and outlet for teams to get together, even when they aren’t working in a physical office.

Even before the pandemic, it was well-documented that social interaction is good for our physical and mental health. This trend of in-person team retreats will likely pick up steam as we start to head into this next chapter of reorganizing the working world with new priorities and new frameworks guiding the organizational behavior and patterns of tomorrow.

While the landscape of how we work has fundamentally changed and will continue to be altered for years to come, it represents unique opportunities for organizations and their employees if they are identified and creative solutions implemented in a proactive way that fosters connectedness, collaboration and productivity.


 

Productivity After The Pandemic

Interesting views  expressed in the Financial Advisor magazine from Laura Tyson, former chair of the U.S. President’s Council of Economic Advisers, is Professor of the Graduate School at the Haas School of Business and Chair of the Blum Center Board of Trustees at the University of California, Berkeley. Sadly, as ever, they all hinge on the flawed national labour productivity statistic, even though most forecast growth will be due to capital investment 

Summary:

After years of disappointing productivity growth, the Covid-19 pandemic has shaken something loose, with surveys of business executives showing most reporting increased investments in technology. The danger now is that the pandemic-era acceleration of automation and digitalization impedes growth in labor income and consumption.

 

With Covid-19 vaccines being rolled out and supportive fiscal and monetary policies fueling aggregate demand, the U.S. economy is poised to return to its pre-pandemic output level later this year. The labor-market recovery, however, will be much slower and unevenly distributed, with employment unlikely to return to its pre-pandemic peak until 2024.

If output growth exceeds employment growth over the next few years, productivity will increase (at least temporarily). The Congressional Budget Office’s most recent forecast predicts labor-force productivity growth of 1.5% per year for the 2021-25 period, up from an average of 1.2% per year between 2008 and 2020.

In response to the pandemic, many firms—but especially large ones—have made significant strides toward boosting productivity through automation, digitalization, and the reorganization of operations, including a rapid shift to at-home work, to boost efficiency and resilience.

 

In a December 2020 McKinsey & Company survey of business executives in North America and six European countries representing about 40% of global GDP, 51% of respondents said they had increased investment in new technologies in 2020, and 75% said they planned to do so in 2020-24.

By contrast, just 55% reported increased investments in 2014-19. Moreover, a 2020 survey conducted by the World Economic Forum (WEF) found that 80% of firms plan to increase the digitalization of their operations and expand their use of remote work, and 50% intend to accelerate the automation of production tasks.

More broadly, recent research by the McKinsey Global Institute (MGI) (N.B. still the only big consultancy interested in productivity issues and improvement) identifies opportunities for incremental productivity growth across a wide variety of sectors that account for about 60% of the non-farm economy. These include health care (telemedicine), construction (digital twins and offsite modular construction), retail (e-commerce and warehouse automation), banking (digital payments and hybrid remote working), manufacturing (robots, digital channels, and connected autos), and even the hard-hit travel industry (more agile working).

If all of this potential is realized, annual labor productivity growth in the United States and several European economies could increase by about a percentage point between 2019 and 2024. But achieving such a dramatic supply-side improvement requires that the productivity-driving changes spread from the large firms where they have been concentrated to small and medium-size enterprises.

Many in this latter group have so far been unable or reluctant to increase their investment in automating or digitalizing their supply chains, operations, and delivery models. And without such investment, the productivity gap between big “superstar” firms and a long tail of lagging competitors will increase, diminishing economy-wide productivity gains and exacerbating the post-2008 trends toward greater inequality in economic performance across firms and regions and more market concentration.

Equally important is the trajectory for aggregate demand, which will depend on what happens to employment and income growth. The most convincing explanation for the disappointing productivity growth in the decade following the 2007-09 global financial crisis was chronically weak consumption and investment demand. While the pandemic-era acceleration of automation and digitalization may boost productivity on the supply side, it could have a detrimental effect on demand, by hampering growth in labor income and consumption—a major determinant of economic growth generally.

During the next year, consumption growth is likely to be strong, owing to the post-pandemic release of pent-up demand and massive injections of fiscal stimulus. But, over time, the effects of efficiency-focused productivity measures and accelerated digitalization could dampen employment and income growth, cause polarization within labor markets to deepen, and eliminate middle-skill jobs, thereby constraining consumption growth among those with the highest propensity to spend.

The long-run effects could be substantial. About 60% of the productivity potential identified in the most recent MGI report reflects efficiency-boosting cuts to labor and other costs. The WEF survey found that 43% of the businesses surveyed anticipate net reductions in their workforce as a result of pandemic-accelerated automation and digitalization. In a related report, MGI estimates that an additional 5% of workers (eight million) could be displaced by automation/digitalization by 2030, on top of the 22% of workers estimated to be vulnerable before the pandemic.

In the U.S. and other industrialized economies, the largest negative impact of the pandemic on jobs and incomes has been in food services, retail, hospitality, customer service, and office support. Many of these low-wage jobs could disappear altogether if pandemic-induced reductions in professional office time and business travel diminish demand for myriad services such as office cleaning, security and maintenance, transportation, and restaurant and hospitality services. Prior to the pandemic, these occupations accounted for one in four U.S. jobs and a growing share of employment for workers without a post-secondary education.

Weak investment poses another demand-side risk to potential productivity growth. Business investment rates overall were already in long-run decline before the pandemic (hence the post-2008 productivity slowdown), and investment has since contracted further, owing to a decrease in private non-residential investment from its 2019 peak. That said, the decline in investment during the Covid-19 recession has not been as large as that of the 2007-09 financial crisis.

To realize the potential for higher productivity growth, fiscal and monetary authorities should shape recovery policies with two broad goals in mind: fostering strong and inclusive income and consumption growth, and boosting public and private investment in physical capital (infrastructure and affordable housing), human capital (education and training), and knowledge (research and development).

Given the significant shortfalls in public infrastructure that have developed over decades of under-investment, the Biden administration’s infrastructure plan could crowd in private investment, boosting overall investment in the short run and increasing the economy’s long-run potential productivity growth.

 

Counting hours worked isn’t cutting it anymore

Commentary-Hours Clocks-Measuring Success

If you are reading this, do you really care how many hours I took to write it? Or do you just care about the freshness of my ideas and the clarity of my writing?

As this example illustrates, counting hours is not a sensible way to gauge the productivity of professionals in knowledge-based industries like finance, software, biotech, or journalism. Those professionals may generate a great idea in a few hours, or take days to come up with a mediocre one. A much better measure is the quality of their results.

Yet many companies are still counting hours spent working—traditionally enforced through timesheets and standard office hours. When the pandemic struck, some companies even inserted software into the home computers of their employees to monitor how many hours they stayed online each day.

The pandemic and its aftermath should ring the death knell of hours as a useful proxy for productivity. With most employees working from home, the boss no longer can walk around the office to check on who is sitting at their desk. And, going forward, the boss will not be able to monitor the hours of the team as they move to a hybrid model, working sometimes in the office and sometimes at home.

As counting hours becomes less relevant, managers are searching for alternative ways to hold their team members accountable for doing a good job. After all, how can the manager know whether team members are working diligently from home, or using the time away from the office to practise their golf swing? In other words, to replace the counting of hours, organisations need a more effective system of accountability tied to results.

Both new and old companies are moving to systems emphasising results rather than hours.
For instance, Matt Mullenweg, the founder of Automattic, says that its employees are accountable for what they accomplish rather than the number of hours they log. Similarly, the new mobile work policy of Siemens focuses on outcomes rather than time spent on the job.

To provide accountability based on results, I’ve developed an approach called success metrics. Under this approach, the manager sets objectives for their team as part of the effort to fulfill the organisation’s goals. Then the manager and team members discuss how they will know at the end of the relevant period whether they have been successful in achieving these objectives. That discussion should lead to an agreed-upon list of specific deliverables with time targets.

Using success metrics has many benefits. First, it forces a clarification of objectives. When I headed two investment organisations, I was constantly amazed by the failures of communication among dedicated, smart, and loyal colleagues. These communication glitches are minimised when the manager and the team must agree on specific deliverables.

Second, using success metrics helps maintain a high level of job satisfaction and productivity. Once the managers and team members agree on a list of specific deliverables, it’s up to the team to decide how, when, and where they get the work done. This high degree of autonomy and flexibility not only frees up team members to do their best work, but also promotes their work/life balance.

Third, with general objectives translated into a set of specific deliverables, the manager no longer needs to micromanage the activities of their team every day or every hour. As long as the team members deliver the scheduled results, it does not matter how they utilise every day or hour. Instead, managers can use their time more constructively to find new clients or develop new products.

Nevertheless, a good manager won’t ignore the team and just wait for the scheduled results. A good manager should meet with the team every week to ascertain their progress and offer assistance if needed.

For example, the manager might help solve difficult analytic problems, assign more resources, or persuade other units to cooperate with the team. At the end of the project, the manager should celebrate the team’s victories and understand any deficiencies to prevent them from happening again.

In short, while we should all applaud the demise of the eight-hour workday as a relic of a bygone era, we need to replace it with a productivity measure more relevant to a knowledge economy. Out with timesheets and in with success metrics!

 

Flexible work schedules are attractive to many remote employees. 

Jesper Schultz is  CEO of BasicOps, a San Francisco internet-platform, who allowed his remote employees to set their own working hours and found they were way more productive and much happier as a result. During the pandemic, he allowed his small team to adjust their preferred working hours. The flexibility encouraged workers to prioritise their own wellness and be more motivated and productive while working.

Jesper Schultz is the CEO and cofounder of BasicOps

A year of postponed weddings, torn-up plane tickets, and far too many Zoom calls has forced us all to adapt to a new way of life. Beyond personal changes and too much time spent perfecting the art of sourdough bread baking, the workforce has also adapted.

For better or worse, we’ve said goodbye to long commutes and water-cooler chats. A new era of remote work has taken its place, bringing far more flexibility than the traditional 9-to-5 ever gave us.

While juggling childcare and crafting an office out of your bedroom closet probably wasn’t your idea of work-life balance, there are two sides to every coin, and the pandemic has forced some positive changes in the way we work, too.

Flexibility has become a necessity rather than a luxury. After permitting work schedule flexibility, I’ve seen positive shifts in our employees’ overall mindsets and productivity.

Here are the top five benefits of this flexibility that I’ve witnessed reshaping our workplace.

 

1. Flexibility leads to higher productivity

There’s a myth perpetuated by traditional office culture that our most productive hours happen between 9 a.m. and 5 p.m. This schedule may work for a portion of the population, but there’s growing evidence that at least half of us operate on an altogether different productivity timeframe — and much that is calculated by our circadian rhythms.

In “Why We Sleep,” sleep researcher Matthew Walker describes how up to 50% of us aren’t programmed to wake up early. Our genetics determine our circadian rhythms: While you might have no trouble turning in at 10 p.m. and rising at 7 a.m., these hours may force your colleague to wake up far earlier than their natural sleeping patterns.

Losing early morning sleep has been linked to poor memory recall, trouble concentrating, poor communication, and lost productivity. Beyond the cognitive difficulties, it’s also costly for companies: In a study across four large US companies, researchers found insufficient sleep costs employers almost $2,000 per employee per year.

Companies including Nike and Google allow employees to time their work hours to match their circadian rhythms. Employees at these companies are even encouraged to take cat naps during their workdays, with “nap pods” scattered throughout corporate headquarters. Other than scheduled meeting times, my employees can plan their days as they please. If they’re tired after lunch and need a nap, I’m totally fine with that.

2. Remote workers take fewer sick days

The standard workday leaves very little room for the unexpected. The 9 a.m. punch-in doesn’t account for a feverish child at home or a rough night of sleep, meaning it’s likely your employees will opt to call in sick.

With flexible scheduling, your employees will feel comfortable starting later to get a few extra hours of sleep or tend to a sick child at home. Rather than losing an entire day, employees can start when it suits them.

Rigid working hours lead to higher stress levels, and higher stress weakens our immune systems. One powerful way to help keep your employees healthy is by providing flexibility — that alone will decrease stress and anxiety in their daily lives. They’ll take fewer sick days, and you’ll likely see more motivated workers, too.

3. Flexible schedules lead to happier employees

If you’re sceptical that a flexible schedule can improve happiness levels, look no further than Finland, the happiest country in the world.

Finnish workplace culture is a far cry from the American standard: For nearly 25 years, the Finns have been able to set their work hours — by law. The Working Hours Act, put into law in 1996, allows most workers in Finland to adjust their hours as needed. With that much flexibility and control over their lives, it’s not surprising that the Finns are happier than, well, everyone.

By offering a working agreement that mimics the Finns, you’re allowing your employees to incorporate personal errands such as picking up the kids, attending courses, or exercise, all of which will make it far easier for your employee to juggle life and work. They’ll be less stressed, more productive, and feel more balanced.

At BasicOps, all employees have the opportunity to take weekdays off and make up the time over the weekend if that works better for them. One of our employees takes hikes every Wednesday, which I think is great.

4. Communicate more effectively with flexible work

This may come as a surprise, but communication is far more efficient when an employee works from home or works on a flexible schedule. Between excessive coffee breaks and idle chit-chat, there’s a surprising amount of time wastage in the office place.

With the pandemic has come a heavy adoption of workflow management software programs. While these programs existed pre-pandemic, the work-from-home mandates made them all the more necessary to keep projects and collaboration flowing.

Flexible and remote workers are far more likely to use these platforms to connect with colleagues than those who are in the office on a rigid schedule. By adopting such platforms, communication among teams becomes far more streamlined and efficient, saving everyone time and energy.

5. A flexible work culture improves employee retention

Work-life balance is the Holy Grail of today’s professionals. Millennials , who now make up the largest generation in the US workforce, and Gen Z both place a high value on achieving that balance, so finding and retaining new talent will be likely more successful with flex work.

Perhaps most importantly, a flexible working agreement indicates trust and transparency between employee and employer. That not only puts employees at ease but also improves productivity.

While flexibility has been somewhat forced upon all of us during these pandemic times, it’s become clear that there is a silver lining for both business and employees.

The era of micromanagement is dying and flexibility must be embraced in order to keep moving forward.

 

U.S. May See Post-Pandemic Productivity Surge

The U.S. has a good chance of shucking off the secular stagnation of the last decade and entering a period of markedly faster economic growth as companies take advantage of lessons learned during the pandemic and strong demand fueled by the government to become more efficient.

That’s one of the takeaways from a new report by the research arm of global consultants McKinsey & Co. that takes an in-depth look at prospects across a swathe of industries, from construction to health care. It sees the potential for a 1 percentage-point acceleration in annual productivity growth over the next four years, roughly doubling the average increase seen in the post-financial-crisis expansion.

“It’s quite an optimistic picture,” Jan Mischke, a partner at the McKinsey Global Institute in Zurich and one of the authors of the report, said in an interview.

The super-charged federal budgetary boost championed by President Joe Biden plays a key role in the more upbeat future envisaged by McKinsey, as the high-pressure economy it fosters encourages companies to boost capacity by increasing research, development and investment.

“This is about getting on a virtuous cycle where higher productivity fuels incomes and investments and that again fuels higher productivity,” Mischke said, adding that increased efficiency lessens the chances of the economy overheating by boosting its capacity to grow.

The 108-page report sees “early evidence of dynamic changes” to the economy as businesses were forced to take extraordinary measures to deal with the fallout from efforts to contain the pandemic. They range from increased automation of warehouses and more online marketing to wider use of telemedicine and digitization.

“The pandemic pushed companies to reorganize and become more agile,” the report said.

More than half of North American and European company executives contacted in a December survey by McKinsey said their speed of making and implementing decisions was somewhat or significantly faster compared with December 2019.

“The crisis has unleashed” more rapid change, Mischke said. “Digitization is happening in some instances 20 to 25 times faster than was thought possible prior to the crisis.”

While the advances in the U.S. have so far been concentrated among larger companies, the McKinsey Institute partner voiced hopes that they could spread to other firms, including small and medium-sized businesses. The industries with the biggest upside, according to the report, are health care, construction, information and technology, retail and pharmaceuticals.

“As the disruption eventually recedes, significant productivity acceleration could be possible if action taken by firms enhances productivity, if the action spreads, and if demand strengthens,” McKinsey Global Institute said, in summing up the results of its report.

Looking To The Future: Redefining Work

Aruna Ravichandran, a

 

More than 10 years ago, a beer commercial captured the essence of how to look busy. Staged as a scientific lab, the humorous spot described its new invention, the fake steaming cup of coffee. This innovation allowed a bored employee to sneak out of the office to catch a baseball game or go to the bar, while co-workers and, most importantly, the boss remained impressed by the employee’s so-called dedication. Even though the employee was not at his desk, his steaming mug of coffee was, and that was enough to convince everyone he was there.

As with most humor and parody, there is a kernel of truth in this commercial. It focuses on the inaccurate definition of work as being equal to face time: If you’re in the office, you are working, but if you’re elsewhere, you can’t possibly be.

This concept has always been a fallacy, and there are myriad examples of how people have found ways to not work at the workplace. There’s even an entire subgenre of articles on how to look busy at work. And the reverse of this was also true — if you weren’t at the office, you couldn’t possibly be working. In fact, there were even pointers on how to do that effectively.

To be fair, for much of the last century, office work centered around desks, telephones and computers. It was essential for employees to come to a central location, and it was equally inconvenient and counterproductive for them to try to do the same work at home. The technology just wasn’t able to balance these two scenarios out.

But here we are, emerging from a year in which almost everyone was sent home and companies had to review every aspect of their operations in light of a pandemic. It was a turning point.

Prior to 2020, we were already well on the way to establishing virtual workspaces with improvements in meeting and collaboration technology that allowed people to work from anywhere and connect with clarity.

But what has been slower to evolve is the definition of work. As employees struggled to do their work from their home office, kitchen or bedroom, many were forced to contend with the needs of children, pets and other family who had no concept of the traditional 9-to-5workday. This did not sit well with some managers, who believe that work cannot be done in pockets of time but must fit the contiguous 9-to-5framework.

But the 9-to-5model never worked. Physiologically, it is not possible for any human to deliver eight hours of consistent, high-quality output per day. Even those who try will succumb to the natural rhythms of the body, which delivers peaks and troughs of energy. According to Inc, “Research suggests that in an eight-hour day, the average worker is only productive for two hours and 53 minutes.” The rest is filler, disguised as overly long meetings, excessive emails and checking social media.

Kaizen For Knowledge Workers

To redefine work, we should first look back to the scientific studies done by Toyota in the development of continuous improvement (kaizen), just-in-time manufacturing and lean manufacturing, all of which focused on the smoothing of the workflow through the identification and elimination of muda (wasteful habits), muri (unreasonable work placed on people and operations) and mura (unevenness and irregularity).

These concepts can be applied to knowledge work delivered in the modern office.

We’ve had a transitional year that proves that work can be done in locations other than the office. We are still able to meet, communicate and collaborate. And the opportunities provided by virtual workspaces allow individuals to curate a schedule to deliver their best work while addressing muda, muri and mura.

Resetting And Redefining Work

This last year also offers itself as an opportunity to reset; an opportunity to redefine work. Managers and staff can look at the nature of work as blocks of focused time that may occur at different times of the day — and in which the outcome is valued more than any number of contiguous hours elapsed.

Such a change demands heightened amounts of trust, genuinely felt and copiously demonstrated, with managers empowering employees to deliver. That, too, is possible in a dynamic and virtualized workspace.

One final point: Part of the aforementioned commercial’s humor came from the fact that the “steaming coffee mug” was being marketed to employees who really did not want to be at the office. The work held no appeal. The mug was their tool for escape.

This bodes the question as to why a job should represent 40 hours a week of boredom, when engagement and empowerment generate far superior output.

A new definition of work can be one that embraces the human elements of passion, respect and autonomy — and these become the new raw materials for quality deliverables, even if the hours worked by each team member vary to better fit their own lives.

The technology exists to make this happen. It is now up to management to envision work in terms of output rather than process. This is how we redefine work for the future.


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Now is the time to embrace a four-day workweek

  • Within a century, the standard of living in Europe and the United States would increase 400% to 800%
  • And with technological advances, we wouldn’t have to work much any more more – only three hours a day.

“We shall endeavour to spread the bread thin on the butter – to make what work there is still to be done to be as widely shared as possible,” he wrote in his essay “Economic Possibilities for our Grandchildren.”

On the first prediction, he was remarkably accurate. The standard of living in the West has increased fivefold since 1930 (as measured by inflation-adjusted GDP per capita). But despite leaps in technology, the three-hour workday has yet to pan out.

Our workweek today, in fact, isn’t that different than in Keynes’s time. The five-day, 40-hour week is standard in Canada and many other countries and goes back to the 1920s, when it was introduced by Henry Ford for his assembly lines. It was a radical shift at the time, as most factory employees worked gruellingly long hours six days a week. By giving workers a proper weekend, Ford saw an immediate return: increased productivity.

A century later, the five-day workweek is still with us.

Since the onset of the pandemic, however, there have been calls for change. A number of companies, faced with financial challenges, have imposed shorter workweeks coupled with pay cuts as a way to avoid layoffs. Others have compressed their 40-hour workweeks from five days to four to give staff more flexibility for child care and homeschooling duties. But with the end of the crisis hopefully in sight, we should be looking at the four-day week not as a temporary fix but as a permanent shift in the way we work.

Last May, New Zealand’s Prime Minister, Jacinda Ardernfloated the idea of a four-day workweek as a way to bring back her country’s economy. Ms. Ardern, who was speaking via live video on Facebook, pointed to the importance of tourism, which employs 15% of New Zealand’s population and gets a large portion of its revenues domestically. A post-pandemic four-day workweek, she suggested, would give people more opportunity to travel within New Zealand and spend money.

It’s an intriguing idea that Canada should consider as well. And not just to support our own domestic tourism industry, which has been similarly hard hit by the pandemic. A compressed workweek – in which employees retain the same income – has been shown to improve employee well-being and reduce workplace stress. It’s been correlated with improved productivity. And, to a lesser degree, it’s a way to reduce traffic congestion and carbon emissions.

Some of the resistance to a four-day workweek has been rooted in the long-held belief that working longer hours means getting more accomplished. But research has shown that’s not necessarily the case. A study from Stanford University, for example, noted a significant drop in productivity and creativity when employees worked more than 45 hours in a week. After 55 hours, the researchers found, productivity dropped so much that it was relatively pointless to keep working.

According to the OECD, Canadians work about 1,670 hours a year. That puts us about average for developed countries, just below the U.S. and significantly less than hard-working South Korea. But compared with Northern European counties such as Denmark (1,380 hours) and Norway (1,384 hours), we’re working almost 300 hours more every year. Yet both Norway and Denmark have significantly higher productivity rates than Canada. They also rank above us in the latest World Happiness Report.

The most widely reported corporate trial of a four-day workweek was that of Microsoft Japan. The company tested it in 2019 and reported a productivity boost of 40%, as well as cost savings in several areas, including electricity, which fell almost a quarter. The trial wasn’t strictly about reducing the number of workdays; it was also about working more efficiently. The standard duration of meetings was cut from 60 minutes to 30, and attendance was capped at five employees.

Perpetual Guardian, a New Zealand trust management company, likewise saw a 20% boost in productivity when it shifted to a shorter workweek. Perhaps more importantly, though, the company also reported a 45% increase in employee work-life balance and measurable improvements in job satisfaction and staff retention.

The Henley Business School at the University of Reading found similar results in 2019 when it surveyed some 250 companies in the U.K. that had adopted a four-day week. “A shorter working week (on full pay) could add to businesses’ bottom lines through increased productivity and an uplift in staff physical and mental health,” the study’s authors wrote.

It’s these employee wellness outcomes that may be the most compelling argument of all.

In Canada, workplace stress and burnout are rampant. In many ways, the pandemic has only heightened that – blurring the lines between home and work and leading many of us to check our laptops and phones at all hours. For this reason alone, a three-day weekend every week may be just what this country needs right now.

A recent survey by the Angus Reid Institute suggests that Canadians are ready for a break. 53% of survey respondents said it’s a good idea to make a 30-hour workweek standard in Canada, while just 22% were opposed (the remainder were undecided). “The concept of a shorter work week, much like that of the universal basic income, finds its highest levels of support among younger Canadians, with six-in-ten of those aged 18-34 saying a four-day work week would be a good idea,” the study reported.

A compressed workweek may not be for everyone – or for every employer. But, with the end of the pandemic almost in sight, we have a unique opportunity to try something different. And as Ford discovered a century ago, we might be pleasantly surprised by the results.

 

The Pandemic Is Widening a Corporate Productivity Gap

 

During the Covid-19 pandemic, most businesses have adopted new ways of working. Many employees have gone remote, interacting with customers and coworkers virtually. Others continue to go to a workplace each day, but perform their jobs very differently. Everyone is doing their best. But how productive have companies actually been during the pandemic relative to where they were before Covid-19?

The short answer: It depends on the company.

Some have remained remarkably productive during the Covid-era, capitalizing on latest technology to collaborate effectively and efficiently. Most, however, are less productive now than they were 12 months ago. The key difference between the best and the rest is how successful they were at managing the scarce time, talent, and energy of their workforces before Covid-19. The companies that are the very best at managing these three factors are 40% more productive than the rest.

Claim 1 – The best companies have minimised wasted time from excessive e-mails, meetings and processes – the rest have not.  

Stay-at-home orders liberated time previously spent commuting and created flexibility in work schedules, enabling many employees to devote additional time to their jobs.

We estimate that the best organizations have seen productive time increase by 5% or more.

However, for companies that struggled to collaborate productively before the pandemic, work-from-home orders only made matters worse. Time consumed in virtual meetings exploded. Poor collaboration and inefficient work practices reduced productive time by 2% to 3% for most organizations.

Claim 2 – The best have capitalized on changing work patterns to access new talent.

Exceptional talent ― people with the ability to bring creativity and ingenuity to their work ― is a scarce and valuable resource. Our research suggests that the best companies are 20% more productive than the rest due to the way they acquire, develop, team, and lead such talent.

Remote work has created opportunities for organizations to access talent that may have been out of reach prior to Covid-19. Physical proximity to work is no longer a primary factor in determining the pool of available labor for most companies. The best companies are capitalizing on new and different sources of talent to build the capabilities they will need to win in the future.

Remote work has also enabled an organization’s most skilled workers to engage virtually in a broader range of initiatives and teams than they could physically — multiplying the influence these individuals have on performance.

However, most companies have struggled to tread water during the pandemic. A dearth of demand for products and services has kept them out of the labor market, unable to capitalize on opportunities to acquire new talent. Meanwhile, their current employees have faced mounting pressures at home, as they juggle work and family. As a result, some organizations have seen many of their star performers leave the workforce — at least temporarily — reducing overall productivity.

Employee engagement and inspiration matter. According to our research, an engaged employee is 45% more productive than a merely satisfied worker. And an inspired employee — one who has a profound personal connection to their work and/or their company ― is 55% more productive than an engaged employee, or more than twice as productive as a satisfied worker. The better an organization is engaging and inspiring its employees, the better its performance.

However, most organizations have struggled to engage their employees during the pandemic.

As Covid-19 and work-from-home orders persisted, regular surveys revealed that employees were growing tired, balancing the new realities of work and home. In response, Adobe, for example, gave all employees an extra day off — the third Friday of each month — to unplug and recharge.

Conclusion:

The productivity gap between the best and the rest has widened during the pandemic. We estimate that the best companies — those that were already effective in managing the time, talent, and energy of their teams — have grown 5% to 8% more productive over the last 12 months. Additional work time, access to new star talent and continued engagement have bolstered productivity at these companies. Most organizations, however, have experienced a net reduction in productivity of 3% to 6% (or more) due to inefficient collaboration, wasteful ways of working, and an overall decline in employee engagement.

This all sounds logical and sensible – just don’t ask for details about how they actually measure the productivity of any one company (you can’t) in order to establish the above % differences – nor how they can ignore other drivers of productivity such as management quality, process efficiencies, invention and innovation from any source, capital investment in machinery/ IT/ AI/ robotics and not just Zoom – and luck

 

We’re Productive, But Are We ‘Okay?’

Rick Western, CEO at Kotter, is an expert in transformational change in complex global organizations and has spent more than 35 years assisting Fortune 100 companies with strategic initiatives, leading development activities and managing business units – he raises some interesting points about human capital well-being in an article for the ‘Chief Executive’ magazine which should be the concern of all organisations as they work through the CV pandemic 

Rick Western

 

Your company may appear to be functioning heroically in the midst of a pandemic, but it pays to look under the surface to make sure all is truly well

Leaders across industries have done a miraculous job in shifting to a virtual work model, while keeping productivity high, IT functioning and customers served.

 

Yet this leads me to ask: are we spending enough time understanding the deeper psychological needs of our human capital, who now find themselves in a fully remote working environment? Are we, as leaders, too focused on keeping the engine running and therefore failing to ensure the emotional needs of our employees are being met during this strange and difficult time?

From what I have seen over the past year, the following themes have risen to the forefront:

• A “Them vs. Us” phenomenon. Some people who must continue to work from a physical location, such as construction, manufacturing or healthcare workers, hold concerns about safety. These employees might even envy those who can work from home. Yet the employees who are working from home may long for the kind of structure and social interaction that a physical work venue might provide. This has the potential to create a “them vs. us” division within the workforce—a rather odd cultural issue that leadership needs to address, to ensure they aren’t unknowingly creating two competing cultures within the same organization, with each group of employees thinking the grass is greener on the other side.

• Your valuable female employees may be “flight risks.” A startling result of the impact of Covid-19 is that women are leaving the workforce at a significantly higher rate than men. Recent data released by the U.S. Department of Labor indicates the rate could be as much as four times that of men. The burden of parenting, running a household, schooling and caring for elderly relatives has taken a disproportionate toll on women. Many women are finding that this burden, coupled with career demands, is simply too great and are making the difficult decision to withdraw from the workplace. If unaddressed, this talent drain could have a devastating impact on organizations and set back decades of achievements in diversity efforts across corporate America.

• The interplay between isolation & low morale. That palpable sense of team spirit we once felt while hanging out around the water cooler is harder to cultivate when connecting through a screen. Regardless of the business you are in, physical distance makes it more difficult for human beings to foster a true collaborative spirit. We can no longer feed off each other’s energy in the room, and meetings have become more transactional in nature. With video as our primary mode of communication, we see each other only in little boxes. We spend less time wandering off the agenda and checking in with one another on a personal level. But—at what cost? Are employees feeling increasingly isolated? How is their morale?

• Blurring of work & personal lives—Rather than packing up one’s bags and commuting to work, most now start their day by turning on the computer at the crack of dawn. What’s more, workdays often stretch longer into the evening than they did pre-Covid-19. The fact that work and personal lives are being experienced by many in the same physical setting can make it hard to create that much-needed separation between career and personal life. Commuting time, which many of us used to complain about, has, in many cases, become an “extension” of the workday. Yet that time we once spent listening to music while driving or reading a book on the train provided a psychological barrier between life inside and outside of the office which has now dissipated.

So, how can leaders chip away at these issues, all while being constrained by a relatively inflexible set of pandemic-related factors which fall outside of their control?

• Pull down the veil.

Many leaders may shy away from having open conversations with their employees about their feelings and needs, for fear that they will be unrealistic in their requests and, if not properly addressed, employees will grow even more unhappy. But this pattern of thinking and behavior creates a vicious cycle of leaders not listening to employees, and employees, in turn, not approaching leaders with their questions and concerns. Yet, at the end of the day, everyone knows what we are going through—everyone knows this is hard. Rather than seeking to get every problem solved, what employees might be looking for from their leaders is simply a listening ear, to feel heard. They want someone to share in their experience and perhaps brainstorm potential solutions for incremental improvement. Now more than ever, employees are longing for that sense of community and to see the human side of those leading them through this crisis.

• Show how the grass is green (and a little brown) on both sides.

To me, the “us vs. them” culture issue can be addressed by making sure people understand that whatever their needs are, based on their work situation, those needs are actively being addressed. For example, if safety arises as a key concern among on-site workers, taking steps to create a safer work environment will add comfort to those employees’ lives. Similarly, taking steps to address isolation can be comforting to remote workers. Rather than talking to each group in isolation, transparency across the entire organization can work in leaders’ favor. If one group of employees understands what the other group’s needs are, and how they are being met, leaders can subliminally communicate that the grass isn’t necessarily greener on the other side—that no situation is perfect—and that there’s reason on all sides to be grateful.

• Address the burden Covid-19 has placed on parents.

At Kotter, we recognize the disproportionate burden Covid-19 is placing on our employees who are parents of younger children or caring for elderly parents. As a result, we have offered any employee in this situation the ability to take off up to 20% of time with full pay and benefits. We are hoping this additional flexibility will be sufficient to allow these valuable employees the ability to manage the increased demands of family and career and remain a critical component of our workforce. We fully recognize the perception of treating one employee group more favorably than another, but we see it as treating people “differently” as opposed to “favorably,” based on their needs and circumstances. This may also result in the need to hire additional resources. But, in the end, we believe we are doing what is best for the entire organization and employees.

• Create small opportunities for change.

The more leaders truly understand what challenges their employees are dealing with, the more likely they will be able to imagine relatively easy-to-implement, but impactful, changes that could improve the lives of their employees. At Kotter, our consultants were complaining about their workdays being filled with back-to-back calls, with every moment scheduled. As leaders, we raised the idea to consolidate calls where possible, making 30-minute calls 20 minutes and hour-long calls 45 minutes, to intentionally create moments of space when people could catch their breath, get a snack, use the restroom or walk outside. Yet we wouldn’t have identified this obstacle or implemented a solution if we didn’t have an open conversation with our employees to begin with.

• Take advantage of the flexibility.

We have encouraged people at Kotter to take advantage of the flexibility of working from home by blocking out personal time—time which would otherwise fall within the “normal” workday—to run an errand, go for a walk, or take an uninterrupted lunch break. If it’s true that we are signing on earlier and powering down later, why couldn’t we take advantage of this more flexible schedule to take some time for ourselves in the middle of the day for self-care, cleaning, cooking, or walking the dog? If leaders merely give employees permission for these types of mid-day breaks, and if workers give permission to their fellow workers to step away from their computers, we could collectively shift those “unwritten rules” that were followed in a pre-Covid-19 setting to take advantage of the more flexible, virtual environment.

Ultimately, by addressing these issues, leaders can differentiate themselves in a time of crisis, showing compassion for their employees’ emotional wellbeing, which could result not only in higher productivity, but also, more importantly, in greater loyalty, collaboration and retention in the long-term. When the Covid-19 crisis is finally behind us, workers will long remember, and much will be written about how organizations responded on their behalf.

Leaders, begin writing your legacy today.

It’s time to redefine workplace productivity

By rienne Gormley – an article in Techradar.pro fully supporting our view that, apart from the huge increase in the amount of time available for productive work caused by the pandemic, there’s also a huge increase in productivity on the way as people focus on why they’re paid, not the time they input

Business leaders and futurists have been talking about how we need to change the way we work for some time. This is because, long before the Covid-19 pandemic swept across the world, working life was already in transition, with the ability to work from home increasing both attractive and practical for managers and employees alike. Our relationship with work has been reshaped by social, economic and political influences—and, of course, by technology.

Millennials are now the largest generation in the US workforce; in England, there are over a million more mothers in the workplace than there were 20 years ago; and freelancers are now the fastest-growing group in the European labor market.

But despite these wide-ranging changes, the way we measure our work has largely stayed the same. We are still disproportionately focused on the hours we spend at work or online, and many of us are used to joining back-to-back meetings and sharing status updates or internal notes, as it creates the sense that everyone is ‘getting things done’. But are we actually? Not according to a study Vanson Bourne carried out for Dropbox at the start of 2020, which found we waste 29% of time at work on tasks that don’t add critical value to the business.

Today, however, the pandemic is creating anxiety and an increase in background noise – in fact, before lockdown even began in the UK, more than six in ten people said they’d felt anxious about coronavirus. It’s not just the constant news alerts, but millions of employees worldwide are juggling their work with always-on childcare, homeschooling, or other caregiving responsibilities.

This creates an imperative for businesses to acknowledge employees’ reduced bandwidth and to ensure precious time is spent on only the most important tasks. For too long, we have been bound to an hours-based model of work that puts too much focus on the how of getting things done, rather than what is ultimately accomplished.

Let’s measure what matters

Today, however, we have entered a moment that calls for managers to be supportive of their teams as they work in a fully distributed environment for (what is likely) the first time—and innovative with how they get things done. Now is the time to upend our traditional ideas about productivity and embrace an output-based way of working.

Expecting employees to be “logged on” for fixed office hours has become senseless and, likely, impossible; asking them to churn through tasks that don’t have a discernible impact on business objectives will be a waste of the precious time we have left, between looking after ourselves and others.

Instead, we’ll turn to what truly matters when it comes to our business goals: output. What has been achieved? How does a task take us closer to our goals? What do we need to do next? These should be the key questions that measure our progress and help us choose how to spend our time.

Ruthless prioritization and freedom to focus

To prioritize effectively, business leaders will need to ensure that everybody is aligned on the goals, building in touch-points that enable team members to stay on the same page. Leaders also need to interrogate team to-do lists and OKRs, and ask themselves ‘what can we not do?’ to drill down into what’s really necessary.

Once we’ve aligned on our goals, managers need to prioritize the requests we are making of our team’s time so they have the space for deep work. Heading into April, we at Dropbox saw an over 2,000% increase in usage of our Zoom integration compared with February levels. People have rushed to find solutions for the many synchronous communications we still need to have in this new world, but it’s imperative to strike a balance to allow for focus.

I suggest asking ‘can this meeting be an email?’, so that we schedule meetings only when absolutely necessary. I find the “inform, discuss, or decide” model a useful guide. If you are ‘informing’—i.e. giving an update or providing information—this should be an email. If you are ‘discussing’—multiple parties sharing feedback or perspectives—this can be done via collaboration tools like Dropbox Paper or Slack. If you are ‘deciding’—making a key decision with a number of stakeholders—a meeting may be warranted. But use this time wisely and ensure everyone has the information they need in advance.

Trust in our teams

Once teams are aligned on the major milestones, and we’ve prioritized the asks we’ve made of people’s precious time, we need to allow our team members to work in the ways that work for them. This means trusting them to manage their own schedules, knowing that the expectations are clear and check-ins are in place to ensure results.

And if we’re allowing employees to manage their schedules, we should also allow them to use the tools that work best for them. Today, the average employee is innately more aware of the tools that are available to them in the world outside of work; as demonstrated by a recent survey that found that 41% of UK workers have used Whatsapp for work purposes.

Once employees feel they are trusted to manage their own time and tools in order to reach their business goals, we will have cleared a path to optimal output, and these results in turn will lead to an increase in trust from their managers—it’s a virtuous circle.

The end of presenteeism

If we can adopt an output-based approach, these difficult times could bring about a positive in the workplace—a broad realization that not everyone has to be physically present to make their professional and personal presence felt, and to move the dial on a company’s goals.

This will be a welcome change, signalling an end to an outdated stigma around remote-workers’ contributions. A third of remote and flexible workers surveyed by Deloitte in 2018 felt that they were regarded as having less importance, while a quarter felt they were given access to fewer opportunities and missed out on progression and promotion opportunities.

This could mean more opportunities for parents, freelancers, and anyone who wants flexibility—as well as more varied and distributed teams, where everyone works towards the same goals, beyond the restrictions of a traditional office environment.

The way we measure our work lives in terms of hours spent at a desk and boxes ticked is an outdated concept that is no longer fit for purpose. It reminds me of our QWERTY keyboards. There are actually more efficient and faster ways to type, but the reason the keyboard is setup this way today is because, on old-style typewriters, the keys that were used the most often couldn’t be beside each other or they would catch. Now that keys no longer catch, it’s actually a highly inefficient set up, but we’re used to it so we don’t change it.

We have an opportunity to go back to the drawing board on productivity. Let’s not waste it.

Adrienne Gormley, Head of EMEA & Vice President of Global Customer Experience at Dropbox.

COVID’s creative destruction is cause for productivity optimism

Amid the human carnage and economic pain caused by the COVID-19 calamity, it is tempting to search for silver linings.

One that is attracting interest among some economists is the prospect of a productivity resurgence once the pandemic is firmly in the rear-view mirror.

At first glance this may seem unlikely. Among the casualties of the economic slump of 2020 and the ongoing challenges posed by rising global infection rates has been a drop in business investment and a related slowdown in capital formation. This trend will dampen upside growth potential as the recovery from COVID-19 unfolds. Because investment in many categories of capital has fallen in 2020, two and three years from now the economy will be operating with a smaller and less up to date “capital stock” than if COVID-19 had never happened. Productivity growth is essential to delivering sustainable increases in real incomes and living standards over time. Reduced investment and slower capital formation due to the pandemic will serve as a headwind to these gains.

But adopting a longer-term view may suggest a more hopeful scenario.

History furnishes numerous examples of job-destroying economic shocks that – eventually – help to lay the foundations for significant advances in productivity and business innovation. The latter years of the long Depression of the 1930s saw an impressive surge in economy-wide productivity growth in both the United States and Canada. What the great economist Joseph Schumpeter called “creative destruction” plays an important role in this process by fostering the rise of new firms and reallocating resources from declining to expanding industries. Creative destruction tends to be most visible in the aftermath of extended periods of economic dislocation.

Certainly, a great deal of change is afoot in today’s economic environment. As the pandemic rages, the pace of digitization has accelerated as workers, consumers and organizations have quickly turned to digital platforms. New and improved digital communications tools and other technologies are allowing firms to serve customers in different ways and enabling many employees to remain productive, connected and engaged without the need to congregate at central work sites. By the end of 2020 hundreds of millions of people were toiling remotely. In most cases, they and their employers have learned to adapt and even thrive in an increasingly digital world.

McKinsey estimates that once COVID-19 is under control, 15% to 20% of employees will continue to work remotely at least half of the time, a dramatically higher share than in pre-pandemic times. This should generate sizable cost savings for businesses that want to scale back their real estate footprint. Savings on physical space can then be redirected toward more useful productivity-enhancing investments. The spread of remote work will also make it easier for companies to access dispersed pools of talent – which should provide a further productivity boost.

Beyond remote work, the pandemic also looks to be speeding the development and take-up of new technologies and innovations more broadly. This can be seen in the progress being made in fields like artificial intelligence, robotics, data analytics, new materials, 3D/4D printing, genomics, biotechnology, and low-carbon energy. In addition, the COVID-19 crisis has led to the production of multiple targeted vaccines in record time. Advances in all of these areas hold the promise of faster productivity growth in the coming decade and beyond.

There are forces that could militate against a productivity revival, however. One is deglobalization – a mix of mounting trade restrictions, slower growth in international commerce, thicker borders and less travel. Some recalibration of far-flung supply chains makes sense given the need to lessen reliance on China and to respond to the difficulties many countries encountered in securing key inputs as COVID-19 took hold. But a widespread retreat from participation in international markets would not be positive for productivity.

Another development that could undermine a hoped-for productivity rebound is bigger and more intrusive government. Governments have had a central role in battling COVID-19, and in the post-pandemic era they may assume a larger place in economic and social affairs. Huge public sector deficits incurred in 2020 suggest that governments will be hungry for new sources of revenue once the virus fades. The risk is that policymakers will lose sight of the necessity of creating the right conditions for businesses, entrepreneurs and innovators to invest in assets and activities that are critical to building a high-productivity economy.

Jock Finlayson is the Business Council of British Columbia’s executive vice-president and chief policy officer; Ken Peacock is the council’s chief economist.

Productivity is almost magical, but don’t forget the side effects

Ross Gittins, economics editor of the Sydney Morning Herald, highlights the benefits of national productivity improvement in his article below – in particular, he applauds the effectiveness of Australia’s  very own ‘Productivity Commission’ – however, he rightly reminds all that mental wellbeing is at least as important as material wellbeing 

When you put the word “productivity” into the name of a government agency, you guarantee it will spend a lot of its time explaining what productivity is – a lot of people think it’s a high-sounding word for production; others that it means we need to work harder – and why it’s the closest economics comes to magic.

Earlier this year the NSW Productivity Commission issued a green paper that began with the best sales job for the concept I’ve seen. Its title said it all: Productivity drives prosperity.

The hidden consequences of a drive to greater productivity are often overlooked.
 

Its simple definition of productivity is that it “measures how well we do with what we have”. In other words, productivity is the most important tool we have for improving our material wellbeing

“Our productivity grows as we learn how to produce more and better goods and services using less effort and resources. It is the main driver of improvements in welfare and overall [material] living standards.

“From decade to decade, productivity growth arguably matters more than any other number in an economy . . . Growth in productivity is the very essence of economic progress. It has given us the rich-world living standards we so enjoy.”

Productivity improvement itself is driven by increases in our stock of knowledge and expertise (“human capital stock”) and by investment in physical capital (“physical capital stock”)

The biggest long-term driver of productivity is the stock of advances known as “technological innovation” – a term that covers everything from new medicines to industrial machinery to global positioning systems

Technology’s contribution to overall productivity growth has been estimated at 80 per cent, the paper says

“Our future prosperity depends upon how well we do at growing more productive – how smart we are in organising ourselves, investing in people and technology, getting more out of both our physical and human potential”

The Productivity Commission has pointed out that on average it takes five days for an Australian worker to produce what a US worker can produce in four. That’s not necessarily because the Yanks work harder than we do, but because they have fancier equipment to work with, and better organised offices and factories – not to mention greater economies of scale

The paper notes that productivity improvement hinges on people’s ability to change. “Unwelcome as it has been, the COVID-19 pandemic has shown that when we need to, we can change more rapidly than we thought. There is no reason we can’t do the same to achieve greater productivity and raise our future incomes”

Technological innovation is the process of creating something valuable through a new idea. You may think that new technology destroys jobs – as the move to renewable energy is threatening the prospects of jobs in coal mining – but, if you take a wider view, you see that it actually moves jobs from one part of the economy to another and, because this makes our production more valuable, increases our real income and spending and so ends up increasing total employment.

“All through history,” the report adds, “technological innovation has been a huge source of new jobs, from medical technology to web design to solar panel installation. And as these new roles are created and filled, they in turn create new spending power that boosts demand for everything from buildings to home-delivered food”

But the thing I liked best about the NSW Productivity Commission’s sales pitch was the examples it quoted on how technology-driven productivity has improved our living standards

Medicine:

“The French king Louis XV was perhaps the world’s richest human being in 1774 – yet the healthcare of the day could not save him from smallpox. Today’s healthcare saves us from far worse conditions every day at affordable cost.”

 

Farming:

“In 1789, former burglar James Ruse produced [Australia’s] first successful grain harvest on a 12-hectare farm at Rose Hill. Today, the average NSW broadacre property is 2700 hectares and produced far more on every hectare, often with no more people.”

(Pre-pandemic) travel:

About “67 years after the invention of powered flight, in 1970, a Sydney-to-London return flight cost $4600, equivalent to more than $50,000 in today’s terms. Today, we can purchase that flight for less than $1400 – less than one-30th of its 1970 price.”

Communications:

“Australia’s first hand-held mobile call was made at the Sydney Opera House in February 1987 on a brick-like device costing $4000 ($10,000 in today’s terms). Today we can buy a new smartphone for just $150, and it has capabilities barely dreamt of a third of a century ago.”

There are just two points I need add:

  • The first is that there’s a reason we’re getting so many glowing testimonials to the great benefits of productivity improvement: for the past decade, neither we nor the other rich countries have been seeing nearly as much improvement as we’ve been used to
  • Second, economists, econocrats and business people have been used to talking about the economy in isolation from the natural environment in which it exists and upon which it depends, and defining “economic wellbeing” as though it’s unaffected by all the damage our economic activity does to the environment.
As each month passes, this blinkered view of “the economy” is becoming increasingly incongruous, misleading and “what planet are you guys living on?”

What’s more, the growing evidence that all this year’s “social distancing” is having significant adverse effects on people’s mental health is a reminder we should stop assuming that ever-faster and more complicated economic life is causing no “negative externalities” for our mental wellbeing.

 

Improve Productivity By Getting Better At Being Better

Some practical suggestions follow from Peter Bendor-Samuel , a c

Companies spend time getting work done. Leaders focus attention on getting through the backlog and responding to today’s challenges. Teams focus on executing the work. Leaders evaluate teams on whether they completed the work, the quality of the work, whether it was timely, whether it pleased customers and whether it drove the desired results. Almost all energy and time in the company focuses on these factors.

But we do not spend enough time on getting better at doing all that.

The tyranny of the urgent – to just get the work completed – especially in difficult COVID-pandemic circumstances – is what drives the focus. Companies do not set aside time or resources to get better at being better. Consequently, they are in a rat race.

So, how can your company get better at being better?

Typically, the first remedy companies look to when seeking to be better is technology. And that has a lot of validity. The story of human progress is one of technology innovation resulting in increased productivity.

Consequently, large-scale technology investments typically take many years before an organisation fully leverages its technology investments (and sometimes it never happens). To the extent that they do leverage the technology, it often takes quite a few years for the organisation to fully understand how to do that and change its operating model to fully benefit from technologies.

All experienced executives were involved in major technology investments in the past when they felt like they took a step back in productivity as the new technology came in. These investments seldom yield the promised results that the vendors or people sponsoring them hold out as the potential.

The same phenomenon happens when companies implement outsourcing, managed services or as-a-service solutions. The service provider comes in and changes the status quo. The provider takes over a process or function the client was doing and leaves the rest of the organisation trying to figure out how to fully utilise that service. It often happens that the client ends up duplicating functions that it pays the service provider to do – not because the service is inadequate but because the client organisation has not yet accommodated fully relying on that managed service. So, the technology comes up short on the promise of delivering better value.

So what’s the answer to how to get better at being better?

It requires time, resources and discipline, particularly on how the organisation implements technology and subsequently changes its processes or services.

Underpinning the effort to be better is the concept of a team – the group that is responsible for delivering value or doing the work – they must take responsibility for getting better at doing that work. This goes beyond receiving training to use technology.

First, leaders must challenge team members with how to improve what they do because only they can really see all the steps required to fully utilise it. But, and often, leaders distract teams by piling more work on them and focusing on getting more throughput, rather than giving them the challenge to get better or giving them the resources to do that.

Second, leaders must recognise that the challenge of getting better at being better is a journey, not a destination. There is always the opportunity to get better at being better. Leaders often make the mistake of thinking about this as a large project to run through to completion and that the result of completing the project will be being better. That mindset is a mistake. Rather, leaders need to think of efforts to get better at being better as a continuous journey in which every month they invest some part of the company’s time and resources so that the team can get better at being better.

The formula for your company getting better at being better is simple. Just follow these steps:

1.     Measure the results you want the team to accomplish (not the team activities, because the activities will need to change).

2.     Trust and empower the team to focus on those results and allow the team to build ownership in driving towards the results.

3.     Work monthly with the team to devote a portion of their time and provide them with resources so they can get better at being better.

4.     Recognize this effort as an ongoing journey that can give the company tremendous return on its investment and your time.

5.     Be patient.

6.     Be consistent in doing something to improve every month.

7.     Be consistent in inspecting or working with the team monthly.

By following this strategy, your company will achieve remarkable progress in getting better at being better.

 

The Silver Lining of 2020*

More reasons to be optimistic on this great day when the UK regulator passed the Oxford CV19 vaccine which could enable billions to look forward to a more normal, even better, life – this time from Tyler Cowen, economics professor at George Mason University, writing for Bloomberg.com – despite the pandemic, Tyler believes 2020 saw great scientific progress which will be of great benefit to all in the coming decade – Happy New Year

Maybe they had the right idea.

For obvious reasons, 2020 will not go down as a good year. At the same time, it has brought more scientific progress than any year in recent memory — and these advances will last long after Covid-19 as a major threat is gone.

Two of the most obvious and tangible signs of progress are the mRNA vaccines now being distributed across America and around the world. These vaccines appear to have very high levels of efficacy and safety, and they can be produced more quickly than more conventional vaccines. They are the main reason to have a relatively optimistic outlook for 2021. The mRNA technology also may have broader potential, for instance by helping to mend damaged hearts.

Other advances in the biosciences may prove no less stunning. A very promising vaccine candidate against malaria, perhaps the greatest killer in human history, is in the final stages of testing. Advances in vaccine technology have created the real possibility of a universal flu vaccine, and work is proceeding on that front. New CRISPR techniques appear on the verge of vanquishing sickle-cell anaemia, and other CRISPR methods have allowed scientists to create a new smartphone-based diagnostic test that would detect viruses and offer diagnoses within half an hour.

It has been a good year for artificial intelligence as well. GPT-3 technology allows for the creation of remarkably human-like writing of great depth and complexity. It is a major step toward the creation of automated entities that can react in very human ways. DeepMind, meanwhile, has used computational techniques to make major advances in protein folding. This is a breakthrough in biology that may lead to the easier discovery of new pharmaceuticals.

One general precondition behind many of these advances is the decentralized access to enormous computing power, typically through cloud computing. China seems to be progressing with a photon method for quantum computing, a development that is hard to verify but could prove to be of great importance.

 

Internet access itself will be spreading. Starlink, for example, has a plausible plan to supply satellite-based internet connections to the entire world.

It also has been a good year for progress in transportation.

All this will prove a boon for the environment, as will progress in solar power, which in many settings is as cheap as any relevant alternative. China is opening a new and promising fusion reactor. Despite the absence of a coherent U.S. national energy policy, the notion of a mostly green energy future no longer appears utopian.

In previous eras, advances in energy and transportation typically have brought further technological advances, by enabling humans to conquer and reshape their physical environments in new and unexpected ways. We can hope that general trend will continue.

Finally, while not quite meeting the definition of a scientific advance, the rise of remote work is a real breakthrough. Many more Zoom meetings will be held, and many business trips will never return. Many may see this as a mixed blessing, but it will improve productivity significantly. It will be easier to hire foreign workers, easier for tech or finance workers to move to Miami, and easier to live in New Jersey and commute into Manhattan only once a week. The most productive employees will be able to work from home more easily.

Without a doubt, it has been a tragic year. Alongside the sadness and failure, however, there has been quite a bit of progress. That’s something worth keeping in mind, even if we can’t quite bring ourselves to celebrate, as we look back on 2020.

Something more to look forward to in 2021

Ed Conway, economics editor of Sky News, recently wrote a positive article in The Times – in essence, his views were:

  • For decades, developed world economies have lacked ‘oomph’
  • Productivity is the ‘silver bullet’ viz:
    • The more we earn for each hour worked (an old school view) the more is spent on every other bit of the economy, the more governments receive in taxes
    • Hence, there’s more to spend on public services or redistribute to those who need it
  • Productivity growth would make most people better off – and it would help us repay pandemic debts incurred
  • But, in recent years, productivity growth has been ‘disappointingly weak’ (according to ONS statistics)
  • And proposed solutions such as improving infrastructue, boosting education and supporting entrepreneurs have not emerged with much success
  • Some experts even think we’ve become trapped in a ‘great stagnation’
  • We’ve plucked the low-hanging fruit and the great life-changing innovations of the industrial era are all behind us
  • “But what of fruit already on the ground, aka waste – and high-hanging fruit we’ve yet to pick to any great extent?”
  • Then, reading on, he agrees with the potential of my ‘high-hangers’
  • Vaccines are promising a return to something like normality – more likely a supercharged normality as a wall of savings made by many locked-down families is unleashed – indeed, a retail boom is in the offing for many who can manage to survive the next few months
  • And a host of innovations have appeared during this pandemic which have the potential to create not just a few new products but whole new sectors which could launch thousands of new products and even more thousands of new jobs viz:
    • The first mRNA vaccines have opened up the possibility to treat other diseases, including cancer
    • Deepmind has used AI (Artificial Intelligence) to predict the structure of proteins
    • Quantum computing, the next frontier in technology, came a step closer to reality – and from China
    • Nuclear fusion is said to be ‘close at hand’ according to MIT
    • GPT-3, an AI algorithm, can now write poetry or prose and sound uncannily human (i.e. pass the Turing test)
    • Apple have unveiled computer chips which are leagues faster and more efficient than their equivalents from Intel
    • Waymo has rolled out self-friving cars to consumers in Arizona
    • Singapore has approved the sale of ‘chicken bites’ grown in the lab without the death of a single hen

 

Add to the above the fact that businesses have been forced to become leaner, and so less wasteful, during the pandemic, and there is much hope

Conway, being an economist, then has to balance this optimism with a cautionary note (after President Truman’s quote: “Find me an economist with just one hand!”)

He finishes by saying it’s early days for much of the above – interest rates will not stay so low for ever, and for businesses and governments that have borrowed big, they will be hit hard when they do rise – and a bounce next year will not fully heal the scars suffered by  millions who have lost their jobs

Add in Brexit uncertainty (even if a deal is reached) and the fact that the UK market is focused on the kinds of business that have been hit hardest – banks, oil, Rolls-Royce and airlines for example – and one might worry that the world is on the brink of a productivity leap, but the UK could be left behind

Four-day week could boost jobs in Spain

Adam McCulloch reports in ‘Personnel Today’ on a proposed initiative being considered in Spain – to reduce their working week in order to boost employment, health and productivity – in our view, a 4 day working week is inevitable, and soon, just as a 7 day week became 6, and then pressure grew for 5 – the pandemic has dramatically accelerated this need, with widespread WFH showing that, for most, 5 days a week in the office is unnecessary.
One cautionary note, however – more and more employees are rightly being judged on their results, not their ‘presenteeism’ record –  that means they cannot simply ‘knock off’ when the clock chimes 5pm – their brains continue ticking 24/ 7 as they kick around problems chasing solutions – they’re paid a specific total per week, regardless of the official hours input expected – it’s their ability to ‘switch off’ and give their weary grey cells time to recover that is likely to become of serious concern – the current rise in mental health problems at work suggests this has started already

 

Spain’s parliament building in Madrid

 

Spain’s deputy prime minister Pablo Iglesias Turrión said a cut in working hours, without loss of pay would “undoubtedly” lead to the expansion of employment opportunities.

Spain has a complex multi-party political system based around coalitions so often leaders of smaller parties – many of which are chiefly regional – can have significant influence over policy outcomes. Among those smaller parties is Más País (More Country) whose leader, Íñigo Errejón, has also voiced support for a shorter working week.

He said: “Now that we have to rebuild our economy, Spain has the perfect opportunity to go for the four-day or 32-hour week.”

“It is a policy for the future that allows for an increase in the productivity of workers, improvements to physical and mental health.”

He added that a four-day working week could contribute to less pollution and a reduction of energy consumption with less commuting and a reduced need to light, heat and cool office buildings.

The move is being considered by the Spanish Treasury as part of negotiations ahead of budget talks. It is thought that any roll out would be limited to a small number of companies initially. Indeed, a small number of companies have already independently adopted a four-day working week, reportedly leading to an increase in productivity.

This is all in the global context that Unilever has begun trialling a four-day week in New Zealand, with employees allowed to select which four days they would prefer to work.

And a four day week was also trialled by Microsoft last year in Japan – the company found it led to more efficient meetings, happier workers and, it claimed, a 40% productivity boost.

France planned to reverse globalisation but is still bleeding jobs

Today, a smattering of schadenfreude is permitted to lighten the mood of all our British readers, especially after the last, rather heavy, post on the future economic needs of developed nations – the following extracts are from an article by writing in the New York Times about our old enemy France, soon to be the butt of contempt for all other EU nations due to their negotiating tactics over Brexit

“It’s a catastrophe,” said Mr. Chabance, who is worried the layoffs will fuel a broader economic malaise in the area. “The government is calling for a renewal of ‘Made in France.’ But in reality, we are going to be grappling with a stricken industrial region.”

When the coronavirus began sweeping through China and then Europe, disrupting global supply networks, Mr. Macron declared that the pandemic could be “a game changer for globalisation.” He said he wanted to create opportunities to secure supply chains and reverse a decades-long trend of companies sending production to low-cost countries. But the jobs are continuing to leave, as multinational firms relocate production from France to countries with cheaper labour and higher productivity.

At a Bridgestone factory in northern France, over 860 jobs will be cut as the Japanese tire maker moves production to Eastern Europe. Nokia, the Finnish telecommunications company, will relocate some research and development activity from hubs outside Paris and in western France to India and Poland, threatening around 1,000 positions.

In southern France, Zodiac, a maker of inflatable boats, plans to move some production to Tunisia, citing the need to save money after bringing jobs back from a plant in China just two years ago. Other companies are mulling similar moves to rein in costs.

“The Covid crisis has brutally highlighted our vulnerabilities and reinforces the urgency to succeed in a policy of industrial reconquest,” Agnès Pannier-Runacher, the Secretary of State for Economy and Finance, said. “France must once again become a great productive nation. Whether the government can succeed in restoring even a fraction of production lost from France over decades is far from clear.”

“In the context of the coronavirus, the government has talked about providing aid to bring production back to France, so people think that jobs will be returning,” said El Mouhoub Mouhoud, vice president of the University of Paris-Dauphine and a specialist on globalisation. “If anything, companies are continuing to offshore production.”

Despite political pressure, multinational firms that have closed European factories in favour of areas with cheaper labor costs appear hesitant to reverse these moves. A recent survey by the consulting company Ernst & Young found that 37% of business leaders were considering bringing manufacturing services back to Europe, down from 83% in May. As Asia recovers from the pandemic, businesses have decided “not to cause further disruptions to their supply chain,” Ernst & Young said.

Manufacturing has shrunk to 10% of the French economy from over a quarter in the 1960s. From steel mills to auto factories, the loss of hundreds of thousands of jobs to globalisation has created social distress — and proposals by a succession of politicians to fix it.

Mr. Macron wooed voters during the 2017 presidential campaign by arguing that globalisation could be a “great opportunity” if managed correctly. He promoted business-friendly policies as a way to shield France from globalisation’s threat. And there were signs that some of his policies had begun to pay off before the pandemic, especially a landmark overhaul of France’s strict labour code to create more flexibility for companies to hire and fire. Such measures helped draw pledges for billions of euros in foreign investment from companies including Coca-Cola and the drug maker AstraZeneca.

But executives say the changes didn’t address one of France’s lingering competitive drawbacks — labour costs that are higher than in other countries, thanks to steep payroll taxes levied to fund the generous social safety net.

At Europhane, a maker of industrial lighting in northern France, the parent company in Austria recently relocated production of a type of light bulb requiring significant labor to Britain, where labour costs were 25% cheaper. The bulb, used in streetlamps, represented 20% of the value of production at the French site. “The paradox in France is that we have a fantastic social security system, but it comes at a cost,” said Mr. Papoular, Europhane’s president. “The charges imposed on companies are so high that labour costs lead to uncompetitiveness.”

“Covid has led to a deterioration in the financial situation of companies,” said Patrick Artus, chief economist of the Paris-based Natixis bank. “They will try to improve their profitability and their financial situation, which will lead them to move production to the most attractive countries in terms of labor costs, taxes, regulations and skills.”

France regularly appears at the top of labour productivity comparisons with other European economies. Yet companies with far-flung operations say output can lag behind lower-cost, more productive manufacturing sites, creating another incentive to shift production.

For Mr. Chabance, managing the fallout seems a herculean task.

“The domino effect will be huge,” he said. “We’re not just talking about  layoffs at specific companies, but the job cuts that will come at small firms that supply those companies,” he said. “Two jobs here, three more there — little by little it all adds up.”

As more jobs go, he fears that skilled workers may leave the area in search of more stable employment, placing further stress on the region.

“What is happening here is diametrically opposed to the government’s promises,” Mr. Chabance said.

“We’re going to find ourselves in an industrial wasteland,” he said.

Liz Alderman is the Paris-based chief European business correspondent, covering economic and inequality challenges around Europe. 

 

The post-pandemic brave new world

The following views from Martin Sandbu, the Financial Times’ European economics commentator, are well worth reading – in my case, at least twice to get the broad span of them on board – there is no doubt that CV-19 has created a major watershed for businesses worldwide and it now needs leaders to grasp the opportunities presented, for the benefit of all

The pandemic struck a global economy that already was profoundly unsustainable—socially, environmentally, even intellectually.

Over the past four decades almost all advanced economies have become more polarised, with increasingly unequal income distributions. Developing economies lifted billions of people out of poverty, but in the process they, too, created their own rising inequalities and social tensions.

The global economy’s lopsided growth has brought us to the edge of catastrophic climate change – and  political upheavals in one country after another meant the world could not expect to go on as before.

This pressure for change was reflected in economic policy thinking that was rapidly challenging old orthodoxies about public spending, central banking, and government intervention in the economy.

Then the coronavirus brought the most dramatic societal disruption and economic collapse in peacetime memory. Greater policy shifts took place in days or weeks than the most ambitious politicians could have dreamed of achieving in a lifetime. The enormity of the crisis made unintended radicals out of many political leaders as they intervened drastically in economic activity and took the risks of both workers and businesses onto the state’s shoulders on a massive scale.

We are now far enough past the initial onslaught to lift our gaze to the future, even if the pandemic’s course remains uncertain. It is time to consider how current policy choices will—and how they should—shape the long-term path for the world’s economies. This year’s transformation of both the economic and political landscapes—what economic risks and rewards we can realistically foresee and what is newly considered politically possible—means that things will never be the same. But how they will change is wide open, and policy choices made over the next few years will make a big difference to whether the post-COVID world favours broadly shared prosperity more than the status quo ante.

Sharpened societal contradictions

The fundamental economic fact about the pandemic is that it intensified existing societal fault lines. The preexisting policy debates about them have intensified too.

Concerns about rising inequality have been given new fuel because lockdowns entailed much greater hardship for people in jobs that could not be done from home. White-collar jobs, especially knowledge-intensive ones, already were increasingly well rewarded relative to manual jobs—in terms of pay, but also job security and predictability. Workers in most manual service jobs—hospitality and tourism, delivery, retail, and basic care—had long been getting a rougher deal, which worsened in the pandemic. Because they require physical proximity, these are the jobs most exposed to either lockdowns (when judged non-essential) or contagion (when essential). Women and the young are hit particularly hard because they are over-represented in many of these sectors.

A second, related economic impact of the pandemic is an accentuation of the policy challenge from gig work and other irregular labour. It was already clear that in rich countries, non-conventional forms of employment and contracting were fitting ever less well with established welfare states. Informality continues to be an obstacle to developing safety nets in poorer countries. The lockdowns demonstrated the shortcomings of even well-developed state bureaucracies in reaching workers outside regular jobs. Politics and legislation often progressed at lightning speed to establish income-support programmes, but the support sometimes failed to reach its target because governments could not identify the workers most in need.

Large, informal labour markets have long been a feature of poor economies. But the growth of a “precariat” of service workers—those with insecure employment and income and ill served by public services — is a principal reason why shockingly many people in the world’s richest countries have exceedingly thin financial buffers. Workers in sectors relying on low-paid and precarious work, hit disproportionately hard by the pandemic, were also less equipped to absorb such a shock to begin with.

Moreover, even unprecedented government steps to protect incomes have generally been insufficient to offset the disproportionate damage to those already worse off. As a result, the pandemic is likely not only to have reinforced chronic economic polarisation, but to have intensified public awareness of it as a problem.

The economic fallout from the pandemic interacts with the underlying pressures of inequality in a third, less obvious, way. The sudden shift to remote working amounts to a steep change in business use of digital technology that is bound to affect production patterns and the distribution of economic surplus. While these effects may be hard to foresee, it is plausible that they could increase the productivity of those who already have the most “modern” jobs, intensive in cognitive skills and suitable for remote working. That could exacerbate the bifurcation of good and bad jobs.

The pandemic also played into political rifts over economic geography. Most obviously, it raised new questions over globalisation—how interconnected countries can cope with contagion that spreads with travellers; with production disruptions from lockdowns in a global supply-chain manufacturing hub, as in Wuhan in January 2020; and with a sudden scramble for imported medical equipment.

Less obvious are the pandemic’s geographic effects within countries. Regional inequality has been one of the most toxic forms of economic polarisation: starting about 1980, the post–World War II process of regional catch-up stagnated or even reversed as industrial jobs across national territories gave way to a concentration of knowledge services in their biggest cities. Now, while COVID-19 has spread in leading and declining cities alike, the economic disruption has temporarily changed how and where white-collar work is carried out—and could potentially be used by policymakers to alter permanently the geographic distribution of prosperity.

What is to be done?

For all these reasons, the pandemic is forcing policymakers to confront problems neglected for too long. But if things cannot go on as they were, the question remains – ‘what policies should be implemented to change them and with what goals in mind?’

This is no easy question but two things seem clear. The first is that the nature and quality of work are central, and any reform programme must focus on creating higher-quality jobs for more people in more places. The second is that it must be big in scope and scale—something with ambition and motivational power comparable to the New Deal or the Marshall Plan.

Work must be central because it is where many of the chronic and pandemic-related economic challenges intersect: inequality, precarity, and the new informality; geographic disparity; and technological change. A much greater availability of high-quality jobs is also the main common yardstick to measure the success or otherwise of a comprehensive range of policies.

What these policies should be is, of course, the big question, and one that ought to be democratically anchored.

A programme is needed that embraces the following:

  1. Productivity growth and the technological upgrade of jobs by demanding more from employers . It is when unproductive jobs give way to more productive ones that work becomes safer, more pleasant, and better paid. In the European Nordic economies, wage egalitarianism has spurred productivity growth by making low-productivity labour uneconomical and incentivising investment in productivity-enhancing capital. This approach can be adopted elsewhere to combat chronic low-paid, low-productivity work in lightly and rigidly regulated labour markets alike (both the United Kingdom and France have their precariats, for example) and to direct the reallocation about to take place as COVID-19 makes some activities unviable. Concretely, this means ambitious minimum wage increases and strong and strictly enforced workplace standards.

2. Produces a high-pressure economy with strong demand growth to give productive firms reason to expand and ensure new jobs appear as bad jobs disappear. High demand pressure is necessary to benefit those on the margins of the labour market—the young, ill-educated, and minorities—who tend to be fired first in a recession and hired last in an upturn. Concretely, this means running macroeconomic policy “hot,” calibrating monetary and fiscal policies to keep demand always slightly ahead of the economy’s capacity, to encourage companies to pull more people into the labour force and seek productivity-enhancing improvements. This is admittedly more easily done in large, rich economies, especially reserve currency issuers—which also puts the onus on their policymakers to lead global demand growth.

3. Lowers the cost of leaving a bad job and finding a better one . This requires a panoply of policies, including greater spending on skills, well-resourced active labour market policies, and social security reform to untie benefits from jobs. Changing jobs and upgrading skills are costly for workers, and are not undertaken if people have low buffers to live on between jobs. Direct and unconditional payments, including a basic income or negative income tax to avoid low-income traps in the benefit system, are ultimately the only way to overcome these obstacles. They are also the most effective and quickest way to improve living conditions for the worst off, especially when more targeted approaches are unable in practice to reach those most in need.

4. Reforms tax systems to encourage high-quality work. This means shifting taxes away from labour to encourage job-switching and hiring. The tax revenue loss must be made up elsewhere. This requires that a greater tax burden fall on capital, ideally through a net wealth tax, which is more productivity-friendly than other capital taxes. In addition, carbon taxes should be significantly increased to reallocate labour and capital in a green direction. The proceeds should be redistributed as a “carbon fee and dividend” or “carbon checks.” Finally, international corporate taxation must be fixed to level the competitive playing field between multinational and locally employing firms, and to allow governments more room for manoeuvre in taxing capital.

5. Reforms financial systems and tax rules to be less favourable to debt and more favourable to equity-type funding, which is both more conducive to productivity growth and restores an appropriate balance of risk between workers and investors. Governments should convert COVID-related rescue loans to companies that struggle to repay into tradable equity stakes.

6. Incentivises a broader geographic spread of the highest-value-added jobs . The goal of policy should be to make more places host a critical mass of high-paying jobs. This is easier said than done, but at a minimum requires greater investment in transport and IT connectivity, local infrastructure, and amenities to make places attractive to live in, and policies to make financing available for new ventures in declining areas. The change to remote working provides a promising opportunity to use tax or regulatory incentives to shift good jobs from large central cities to more remote locations.

Reinterpreting the world

All of this may seem a tall order. The devil will be in the details – implementing large-scale reforms depends on solving myriad trade-offs and logistical difficulties at the micro level. But the challenge our economies face is so big that incremental policies are unlikely to achieve much—and are easy for vested interests to defeat. So any programme with a hope of success must be of great scale and broad scope. Given that enormous policy changes have already happened, that no longer seems unrealistic.

The old macroeconomic rules have been thrown out. Politicians who not long ago intoned about fiscal responsibility preside over record-breaking deficits, actively choosing to open the budgetary floodgates to sustain people’s incomes and companies’ liquidity.

The structure of public spending has also undergone a big shift, especially in countries with Spartan welfare states to begin with. The United Kingdom, in a matter of months, designed a European-style wage subsidy from scratch. The United States allowed people to lose their jobs, but sharply boosted unemployment benefits. And every advanced economy has put in place extraordinarily generous loan programmes for businesses, in some cases taking all credit risk off banks’ hands. In many countries, the state is back in a big way, and this shift is qualitative as well as quantitative: governments are taking on risks previously borne by the private sector.

Some of these policy shifts are unprecedented. Others are an acceleration of pre-existing trends. A reset of several fundamental premises for central bank policymaking had already emerged from the sluggish recovery after the global financial crisis. Central banks largely, if grudgingly, accepted mounting evidence that low interest rates are here to stay. The Federal Reserve, in particular, has embraced a greater tolerance for “running the economy hot,” no longer worrying that inflation might threaten as soon as unemployment comes down. Both shifts in thinking have helped central banks act early and comprehensively to sustain demand, cheap funding, and financial market functioning in the pandemic—a dovish shift in central bank thinking that is likely to continue.

Then there is the significant change in technology used by companies, which suggests that new remote work practices are here to stay. Surveys suggest that many companies plan to retain at least some work-from-home practices even after the pandemic. In any case, the technological and organisational know-how employers have had no choice but to accumulate at breakneck speed this year cannot be unlearned. It almost certainly will create permanent change in how people work.

And this holds not just for employers, but for consumption patterns. The pickup in online retail and substitution of online connectivity for physical travel are unlikely ever to be fully reversed, even if a vaccine eliminates the virus. A dramatic restructuring of the economy is underway.

These changes are easier to respond to in richer than in poorer economies. But there are opportunities even for lower-income economies. If nothing else, policy revolutions in rich countries will be a learning experience for the world and ought to affect the policy conditions attached to financial aid and debt relief for the poorest economies. And some developments provide direct opportunities for emerging economies: the embrace of remote working improves the prospect of attracting outsourced high-value-added service jobs.

Revolutionary questions

Ordinarily, policymakers can at most hope to tweak their governing systems. Mostly their job is to keep things running. At rare moments, however, leaders’ decisions help reset the course of their societies for a long time. This is such a moment.

Leaders now face three big questions about how they envisage their countries’ economic future.

  1. The first is: reallocation or restoration? National economies have been knocked out of joint, leaving companies and workers uncertain about the future—whether a job viable before the pandemic will be again, whether a line of business is worth investing in or should be wound down. The nudge—or not—of policy can make a big difference to whether capital and labour shift into new activities or the allocation of economies’ resources retains its pre-crisis pattern. Even if COVID-19 makes some activities permanently less profitable, reallocation may not happen—or not to the necessary extent—without policies to promote it, because of the risk and uncertainty involved. Even if the existing economic model is broken, a new one will not build itself.

 

2. The second, more stirring, question is, “building back better or back to business?” There is a big difference between using the disruption to build something different and wishing to get things back on track as fast as possible. These two orientations lead to different policy considerations—roughly, whether to keep resource reallocation to the minimum necessitated by the pandemic or use the disruption to re-engineer the economy more fundamentally. Building back better will demand more of businesses and people—for example, by doubling down on climate change goals or raising pay and work standards, using the dislocation to move to a different path. The alternative “back to business” approach will aim to make as minimal, quick, and painless as possible any adjustment economic agents have to undertake.

3. The final question is whether states are ready to once again embrace planning—using intervention to consciously shape the economy over time. Having a policy goal of sectoral reallocation, or regional convergence, or “building back better” presupposes some confidence in the ability of the state to coordinate and steer private sector behaviour and a willingness to establish a desired destination. The loss of both confidence and will caused planning to fall out of fashion in the 1980s. As a result most governments today are neither used to strategic planning nor all that good at it.

Yet there are signs that planning is back. Climate change, geopolitical upheavals, rapid technological transformations, and now the pandemic have increased pressure on politicians to lead their economies to a better place, rather than simply freeing the animal spirits of the private sector. Even before COVID-19, economics and economic policy advice were becoming increasingly sympathetic to more active intervention to make economies work better.

Most leaders vow to “build back better” and to oversee a reallocation of resources to more COVID-safe, greener, and more productive activities. At least implicitly this entails a commitment to a more active and strategic state role in the economy than most have engaged in recently. Whether many states have the capability, or their leaders the temperament, to govern the economy more actively and more strategically than before, we are about to find out.

Microsoft software criticised as workplace surveillance

Alex Hern, writing in the Guardian, raises serious concerns about Microsoft software and a ‘Big Brother’ return to office work, especially when time inputs are, at long last, being recognised as far less important to efficiency and effectiveness success than results output

Microsoft has been criticised for enabling “workplace surveillance” after privacy campaigners warned that the company’s “productivity score” feature allows managers to use Microsoft 365 to track their employees’ activity at an individual level.

The tools, first released in 2019, are designed to “provide you visibility into how your organisation works”, according to a Microsoft blogpost, and aggregate information about everything from email use to network connectivity into a headline percentage for office productivity.

But by default, reports also let managers drill down into data on individual employees, to find those who participate less in group chat conversations, send fewer emails, or fail to collaborate in shared documents.

“This is so problematic at many levels,” tweeted the Austrian researcher Wolfie Christl, who raised alarm about the feature.

In a statement, a Microsoft spokesperson said: “Productivity score is an opt-in experience that gives IT administrators insights about technology and infrastructure usage. Insights are intended to help organisations make the most of their technology investments by addressing common pain points like long boot times, inefficient document collaboration, or poor network connectivity. Insights are shown in aggregate over a 28-day period and are provided at the user level so that an IT admin can provide technical support and guidance.”

“We are committed to privacy as a fundamental element of productivity score,” wrote Jared Spataro, the corporate vice-president for Microsoft 365, in online documentation. “Let me be clear: productivity score is not a work monitoring tool. Productivity score is about discovering new ways of working, providing your people with great collaboration and technology experiences … For example, to help maintain privacy and trust, the user data provided in productivity score is aggregated over a 28-day period.”

But the response has not reassured all critics. “The word dystopian is not nearly strong enough to describe the fresh hellhole Microsoft just opened up,” tweeted David Heinemeier Hansson, co-founder of the office productivity suite Basecamp. “Just as the reputation of a new and better company was being built, they detonate it with the most invasive workplace surveillance scheme yet to hit mainstream.

“Being under constant surveillance in the workplace is psychological abuse,” Heinemeier Hansson added. “Having to worry about looking busy for the stats is the last thing we need to inflict on anyone right now.”

Employee surveillance “has really ramped up” alongside remote working during the coronavirus pandemic, as companies seek more oversight of workers away from the office, Dr Claudia Pagliari, a researcher into digital health and society at the University of Edinburgh, told the Guardian in September.

The future of work?

Citrix is an American software company helping organisations to simplify cloud transformation and speed adoption of digital workspaces and virtual desktops to enable greater agility, productivity, and security – Darren Fields, their Vice President UK & Ireland, contributed the following article, published in the HR Director magazine

What does the future of work hold?

In a world where it’s impossible to predict what will happen tomorrow, it’s a tough question to answer. But businesses that hope to emerge from the global pandemic in a stronger, better position need to be thinking about – and planning for future models – today.

What will the workforce, work models and the work environment look like in 2035? And how will technology shape them?

To find out, Citrix teamed up with futurist consultancy Oxford Analytica and business research specialist Coleman Parkes to survey over 1,000 employees within large corporations and mid-market businesses across the United Kingdom, United States, Germany, France and the Netherlands on current and future workforce strategies and work models. And here’s what was learned:

Robots will not replace humans
But they will make us smarter and more efficient. Three-quarters (74%) of UK respondents believe that in fifteen years, artificial intelligence (AI) will significantly speed up the decision-making process and make workers more productive.

New jobs will be created
New roles will emerge to support a technology-driven workplace and the changing relationship between humans and machines. Here are the positions UK respondents believe will be created:

  • Robot / AI trainer (78% of leaders/42% of employees)
  • Virtual reality manager (85% of leaders/34% of employees)
  • Advanced data scientist (76% of leaders/28% of employees)
  • Privacy and trust manager (74% of leaders/24% of employees)
  • Design thinker (49% of leaders/20% of employees)

 

Work will be more flexible
Technology that allows for seamless access to the tools and information people need to collaborate and get work done wherever they happen to be will fuel flexible models that the future of work will demand.

  • 59% of UK professionals (business leaders and workers combined) believe that a “platform” model – which creates value by facilitating exchanges between groups or individuals using digital technology – will dominate work in the future.
  • 56% of UK workers believe permanent employees will become rare by 2035.
  • 75% of UK leaders believe that technology platforms will provide instant access to the highly specialised, on-demand talent required to power future organisations and accommodate rapid changes in business and customer needs.
  • 54% of UK leaders believe that in 2035, the majority of high-value specialist workers will work as on-demand and freelance contractors.

 

Leadership will have a new look
More than half of UK respondents (57%) believe AI has the potential to make the majority of business decisions by 2035 and potentially eliminate the need for traditional senior management teams.

  • 69% of UK professionals think most organisations will have a central AI department overseeing all areas of the business.
  • 63% of UK respondents believe that the CEO will work in a human-machine partnership with a Chief of Artificial Intelligence (CAI).

 

Productivity will get a major boost
Technology, closely integrated with humans, will drive step changes in productivity as workers are supported by solutions that enable them to perform at their best. “AI-ngels” – digital assistants driven by AI – will draw on personal and workplace data to help employees prioritise their tasks and time and ensure mental and physical wellness. These worker augmented assistants will, for example, schedule meetings to take place at the most effective time based on factors ranging from the blood sugar levels of participants to their sentiments at different times of day. And while the meetings are taking place, they will monitor concentration levels and attitudes and adjust as necessary to drive optimal outcomes.

Professionals in the UK are the most sceptical of technology’s potential to make workers more productive. Yet, on average, they still believe that technology will increase productivity by 87% by 2035, as opposed to a global average of 102%. Among the solutions they believe will be commonplace:

  • AI that anticipates and performs tasks based on habits and preferences
  • AI nudges
  • AI personal assistants
  • AI-guided digital wellness to ensure employees’ mental and physical wellbeing
  • Wearable technology to interact with systems
  • Augmented reality glasses
  • Neuro-linked technology for controlling devices
  • Exoskeletons to enhance performance-related tasks

 

Employee engagement will improve

As technology and AI takes over time-consuming, mundane tasks, work will become more strategic and employees more engaged.

  • 82% of UK professionals believe that by 2035, technology will automate low-value tasks, freeing workers to focus on the meaningful work they want and are paid to do.
  • 72% of UK professionals say it will be a significant factor in upskilling human workers, creating new opportunities for personal development and career growth.

 

Innovation and growth will soar
Organisations will invest more in technology and AI than human capital. This will open the door to unprecedented levels of innovation and new revenue streams and fuel sustainable growth – particularly among small businesses.

  • 93% of UK business leaders believe that in 2035, AI technology investment will be the biggest driver of growth for their organisation.
  • 58% of UK leaders believe that by 2030, AI will generate more revenue for their organisation than human workers.
  • 59% of UK professionals believe that technology will level the playing field and convey advantage to small companies.

 

Businesses that embrace technology’s potential to boost productivity, improve employee engagement and drive innovation today can get a head-start on creating the more intelligent workplace of the future.”

“By adopting more flexible work models and using technology to better support workers, organisations can not only empower staff to work more productively in the way that suits them but also free employees up to focus on more meaningful and rewarding work.”

WFH results = Productivity Up, Innovation Down

      • Interesting findings about WFH (alone) follow from Wharton’s Management Professor Michael Parkes, reported in the Wharton Business Daily, and Mark Golan, a top Google executive – despite their lack of clarity on precise measures used, their good news  is (labour) productivity has not stalled due to CV19, counterbalanced by the bad news that innovation has suffered and, for this to recover, a partial return of employees to offices is vital to restore essential collaboration

 

A new study finds that productivity has remained stable or even increased for many companies that shifted to remote work during the coronavirus pandemic. However, innovation has taken a hit as both leaders and employees feel more distant from each other.

Businesses tend to spend less money and take less risks during uncertain times, but researchers also attribute the current innovation deficit to the difficulty with collaboration that often comes with working from home. Videoconferencing and instant messaging apps can’t perfectly replicate the dynamics of being together in the same room, hashing out ideas and feeding off the energy of co-workers.

“It’s a challenge to feel connected, confident and communicate effectively with the team, and we know from a lot of research that creativity and innovation largely happen through collaboration,”

“Given that context, we tried to see what were some of the benefits and what were some of the challenges, and how workers adjusted to those challenges,” Parke said.

Productivity impact?

Significantly, the study shows that fears about lost productivity during the pandemic are largely unfounded.

Employees haven’t slackened off just because they are at home. In fact, some home comforts are helping many employees stay at the same level of productivity or reach even higher. They enjoy dressing down, having their pet nearby and personalising a workspace they don’t have to share with nosy neighbours peeking over the cubicle.

“Employees can really focus; they can be comfortable in their own setting,” Parke said. “They’re gaining things like less commute time, not having to get ready or dressed up for work. A lot of those factors, just the comfort and casualness of working from home, came through [in the survey].”

Another positive in the productivity column — at least for those without young children to care for — is less disruption while working. “Think about all the meetings, all the times you’re interrupted, which we know historically has been a major source of people’s lack of productivity,” Parke said. “You can structure your work a little bit more effectively when it’s just you in the office.”

Innovation impact?

The dip in innovation is the biggest downside to remote working, according to the survey.

But Parke said there are three simple steps that managers can take to overcome this hurdle:

  1. The first is to make sure that employees have access to a wide range of collaborative tools. Don’t limit them to Zoom or email, but onboard a number of different platforms so that each employee can find what suits them. “The reasoning here is that when people have the flexibility and variety, they can pick tools that work better for them and their own personality and communication style,” Parke said.
  2. Second, train employees on how to work remotely. It’s not an inherent skill, so a little guidance can go a long way. Training was “another major factor that contributed to employees’ collaboration effectiveness, their empowerment and their ability to share information across their team.”
  3. Finally, establish a routine way of connecting with your team, and stick to it. Workplaces where managers had regular meeting routines — town halls, one-on-one reviews, brainstorming sessions, etc. — were better at transitioning to remote work because they maintained those routines.

 

Researchers fully expected to find a drop in productivity. Instead, they found a surprisingly different problem with keeping innovation high.

“The pandemic is showing that employees are able to be productive, and there are some things they really enjoy about that autonomy, so that trust is something organisations should really increase,”

“At the same time, organisations should be developing ways to maintain good collaboration in this remote working environment, because  we know from a lot of research that innovation and creativity often happen through collaboration.”

Ingrid Fuary-Wagner, a reporter for the Australian Financial Review, also wrote under the following heading:

“Collaboration works better in the office” – says Google chief

Google may be at the forefront of enabling people to work from home effectively, but the technology company warns remote working in the long term will be detrimental to the productivity and culture of businesses.
While the COVID-19 pandemic had shown just how efficient employees could be working from home, there were long-term negative effects, said Mark Golan, Google’s chief operation officer of real estate investments and development.

People are very efficient doing their work at home in their home office, once they know what they are doing. The problem is when you have to decide what to do next.”

“The act of creating a new product, or programme … where the ‘figuring out’ part is very messy and requires input from a lot of different people from a lot of different backgrounds generally through very ad hoc interactions, that’s where, if you don’t have physical co-location, I think we are all going to struggle. You run the risk of being very efficient at doing the wrong work, and I think over time that’s the risk that we run.”

Golan acknowledged the irony of the tech giant, which builds and sells cloud computing and software products that allow people to work and collaborate online, fundamentally believing in the importance of physical offices.

“Physical co-location still allows people to collaborate better and, I think, relate better,” he said.

“Traditionally, relationships are formed in person. They are formed when you are in the office together, when you’re leaning over a shoulder talking to [someone], when you go to lunch with them.

“So when you go into this kind of environment like we’ve seen with COVID, you can then lean on these relationships. But if you’ve never had a chance to form them, there is nothing to lean on.”

Balancing teams and individuals

Golan said over time there would be a deterioration in relationships and company culture if people, especially younger employees, weren’t physically brought together.

“Companies are going to have to find a way to rekindle that feeling of culture and teams that comes from the formation of personal relationships.”

He said the challenge for Google in the future was working out how to strike the balance between the needs of the team and the wishes of the individual.

“Individuals have lots of different reasons for why they want to work remotely or from home, and often times those reasons don’t necessarily enhance the team.”

“For Google as a company, there has always been this interesting dichotomy because at one level we’ve probably been one of the foremost companies that produces technology that allows people to be efficient from wherever they are, and yet we still fundamentally believe in the concept of physical co-location as the driver of productivity and culture.”

“How do you innovate when you’re sitting by yourself and you’re not able to leverage off the people around you?”

 

 

Knowledge workers are more productive from home

An interesting study has come up with the above headline finding – it was published in the Harvard Business Review and conducted by Professor Julian Birkinshaw  and Pawel Stach of London Business School, and Jordan Cohen of Lifelabs Learning – extracts follow

For many years, we have sought to understand and measure the productivity of knowledge workers, whose inputs and outputs can’t be tracked in the same way as a builder, shelf-stacker, or call centre worker.
Knowledge workers apply subjective judgment to tasks, they decide what to do when, and they can withhold effort (by not fully engaging their brain) often without anyone noticing. This make attempts to improve their productivity very difficult.
In 2013, we presented research showing that knowledge workers spent two-thirds of their time in meetings or doing desk-based work, even though they found these activities mostly tiresome. We proposed some steps people could take to shift time to more worthwhile activities, such as talking to customers or coaching subordinates. Of course, we all get stuck in patterns of activity reinforced by the routines of office life.
But, then, in March 2020, the pandemic struck. Suddenly, many of us were sent home and forced to develop new ways of working. After several months, we now have a good sense of how our own day-to-day schedules have changed.  But we don’t know how generalisable our experiences are. So we decided to replicate the 2013 study, using the same questions as before and interviewing respondents with similar profiles.

About the Research

The individuals were selected randomly, subject to a few specific criteria: They had to have at least a bachelor’s degree, five years of full-time work experience, and a job in which effectiveness is determined by the use of brainpower and their capacity to make sound judgments. The age, sector, and experience of the respondents varied.
We broke down activities done into six categories:
  1. Desk-based work – alone
  2. Externally facing work – interacting with anyone outside the company, talking to customers
  3. Managing down – interacting with subordinates, coaching and supporting them
  4. Managing across – interacting with peers and colleagues, in meetings, often with many colleagues
  5. Managing up – interacting with the boss or other senior people
  6. Training and development

A. How Do Knowledge Workers Now Spend Their Time?

There have been two significant shifts:
  • 12% less time managing across through meetings
  • 9% more time doing externally focused work.
  • Desk-based work continues to take a third of our time.
  • Other changes — a little less time managing up and a little more time on training and development — were not statistically significant.

 

Conclusion:

The evidence suggests lockdown has helped us more effectively prioritise our work. We still need to get through our emails and report-writing, but we are significantly less likely to get drawn into large meetings, and this leaves us more time for client or customer work and for training and development, which most people would argue is a good thing.

However, lockdown doesn’t seem to have helped with hierarchy-spanning activities (managing up and down), presumably because it’s impossible to have the short, spontaneous meetings that used to be possible.

B. How Do Knowledge Workers Decide What to Do?

While most knowledge workers have a written job description somewhere, it is well understood that they take responsibility for choosing what to do and when to do it based on a variety of factors, including tasks outside of their formal role when it appears sensible to do so.
To get a sense for how these decisions are made, we asked study subjects to choose among four options for every activity:
  1. It’s a standard part of my job
  2. My boss asked
  3. A peer or colleagues asked me
  4. I did it spontaneously, or it was important and I found time

In 2013, respondents said 52% of their activities were standard, 18% requested by a peer , 24% independent but important, and 3% independent and spontaneous.

In 2020, we are still spending half our time on standard activities, but we are doing only 8% because a colleague asked, and a full 35% because we thought the activity was critical.  Spontaneity rose to 6% but this difference was not statistically significant.

Conclusion:

It seems we have been taking more direct charge of our time during lockdown.  Working from home gives us a bit of breathing space: We don’t have colleagues or bosses badgering us, and we don’t get drawn into meetings by force of habit, just because we happen to be around.  The result is a reassuring increase in us making time for work that matters most to us.

C. How Effective and Valuable Were These Activities?

Finally, we asked respondents about how important and energising they found each activity. The differences are striking.
In 2020, respondents say their work is more important, less tiresome, less easily offloaded and contributes to the company’s objectives.  Not only is their work important, they feel important as well!
Of course, there is some self-justification going on here: When we think our work is important, we are more likely to gain personal utility from it and less prone to delegate it. But it seems there is also some reprioritisation occurring, with people stopping some of the less-important activities they used to do and focusing their energy in a more effective way.

Conclusion:

The findings here are consistent with the notion that knowledge workers are more intrinsically motivated — and taking more personal ownership — during lockdown, in large part because of the increased degrees of freedom they are getting.

Overall – Concerns and Challenges:

Working in lockdown has helped us to focus and to take responsibility – but that’s not the whole story.
Follow-up interviews revealed some of the areas of concern that we as individuals — and as leaders of others — need to understand:
  • Some respondents cited the potential for shirking: “I am worried there is some slackening of effort. People are starting to get a bit too comfortable working from home,” said one. In our view, this is not a huge problem: There are many ways of informally monitoring how much time your colleagues are putting in via Outlook, Slack and other tools, and we should really be evaluating knowledge workers on their outputs not their inputs anyway.
  • The bigger areas of concern were around the things people couldn’t do well in a virtual environment:
    1. Take managing across first: It’s not so hard for an existing working group to stay on course when working remotely, but the challenges of getting started on something new (the forming/storming stages of team development) or resolving internal conflicts are enormous. Of course, these activities can be done over Zoom – just not as well. Few people are energised by informal online get-togethers. As one person said, “We are slowly losing the social glue that holds us together.”
    2. Managing up and down are no less tricky under lockdown. Most respondents had instituted regular one-on-one catch-ups with their teams and bosses, but they usually focused on immediate task and personal well-being issues, rather than longer-term development. They missed the opportunity to bottom out difficult issues: “You cannot challenge a person quite so well over Zoom. You tend to hold back,” said one. They also lamented the loss of growth opportunities for their teams: “I used to throw people into new assignments, where they learned on the job, watching and learning from experienced colleagues. That’s almost impossible to do in a virtual setting.
  • Finally, some people worried about their own training and development. While time spent on self-education went up during lockdown, this was mostly due to online webinar and course attendance — which helps build knowledge but doesn’t encourage the active experimentation and personal reflection that help us really grow.
For many of us, the new socially distanced mode of working may continue for some time.  The good news for knowledge workers from the first phase of this experiment is that lockdown has helped us better manage and prioritise our schedules to favour the most value-added work. The challenge — as we move into the next phase where some face-to-face meetings are allowed — will be to bring back the informal and social elements of office life that are so vital to organisational and individual success.

Is the pandemic making us more productive?

A big-picture, easy-to-read article just in from the antipodes, published in the Australian ‘Financial Review’ and written by Nathan Sheets, chief economist and head of global macroeconomic research at PGIM Fixed Income – essentially, he agrees with our view that the pandemic, when eventually over, will be seen to have ushered in a sea-change in the way working lives are structured and digital tools used

 

To reap the full benefits of newly-found virtual tools, it’s vital to find ways to establish boundaries between work and other parts of our lives. Consider the factors in play

First is the ongoing pandemic – with case counts spiking in many parts of the world, the grim realities of the virus and the steps required to fight it continue to create challenges and shape our lives.

It has changed the way we work, socialise, educate our children, and do business. We have converted in-person events into virtual events, face-to-face meetings into video calls and crowded lecture halls into virtual classrooms.

In the process, we have learned that our virtual tools are surprisingly powerful. We have been able to complete our tasks while sparing the time, stress and expense of commuting. We have avoided the wear and tear of business travel and the sometimes interminable jet lag that came with it. In parallel, employers have beefed up their connectivity and virtual communication platforms.

The reality is that through the pandemic, workers around the world have put in the time and effort to learn new virtual tools. We have found ways to do business differently and, in some cases, even better than before.

In a recent survey of 1,200 chief information officers by Enterprise Technology, nearly half judged that productivity has improved since workers went home, with less than 30 % reporting a decline.

Of course, as the virus recedes, we are likely to return to the office and get back on airplanes, trains and subways. The virtual world will not fully supplant the physical. This episode has underscored that face-to-face contact is both a critical human need and necessary for some industries and occupations.

But a portion of these adjustments are likely to be permanent. Some business trips or meetings will be converted into virtual events, and some conferences will be done online.

Similarly, many workers will have split schedules – spending several days a week in the office but also working part of the week at home. The same survey of chief information officers found that remote work is likely to be twice as frequent as it was before the pandemic.

Perhaps in anticipation, workers have sharply increased their outlays on home improvement projects.

The economic implications are significant. These virtual technologies have the capacity to drive lasting “process innovation” and higher levels of productivity.

For example, if they enable us to convert just two hours a week from lost commuting or other transportation time into productive work time (which may be an underestimate for some), this would translate into a hefty 5 % productivity gain on a 40-hour work week.

These efficiency gains could also have effects on our lives more broadly. They may allow us to spend more time with family, relaxing, exercising or even sleeping – with benefits for our physical and mental health and overall happiness. A reduction in travel could bring benefits for the environment as well.

We see higher productivity as a potential legacy of the pandemic. This higher productivity, in turn, would expand the size of the overall economic pie – raising wages, profits and global GDP. Indeed, for economists, stronger productivity is as close as it gets to a free lunch.

But this admittedly optimistic assessment should be tempered by several offsetting concerns.

The first is the consequences for employment.

It’s not clear whether the winning sectors will be able to absorb the workers shed by the losing sectors, which include travel and transportation, hotels and bricks-and-mortar retailers.

The losing sectors tend to be labour-intensive, and the skills of these workers may not be a good fit for other parts of the economy. The upshot could be a slower-than-expected return to full employment.

Second, to the extent that these tools benefit higher-paid workers more than lower-paid workers, they may widen inequalities in income and wealth.

Sophisticated professional services, which involve the exchange of ideas, are likely to translate more naturally into the virtual world than lower-paid jobs in food preparation and personal services. There is no virtual application that allows food to be cooked or that provides daily care to the elderly and infirm.

Third, these technologies have the capacity to make us more efficient – but there is a potential downside for our personal lives. This risk is best captured by the quip: “Are we working from home or living at work?”

If left unfettered, these virtual tools could make work omnipresent and inescapable. To reap the full benefits of these tools, we must find ways to establish boundaries between work and other parts of our lives.

In summary, one surprising side effect of the pandemic has been the coordinated adoption and diffusion of powerful technologies.

These technologies hold the promise of higher levels of productivity and more balanced lifestyles. For this to happen, however, we must remain firmly in control of these technologies – and not allow them to control us.

Potential £145bn productivity boost for UK economy

 

New research published by Sage plc and Capital Economics has found that unlocking SME digital investment will be critical in helping small and medium size businesses remain resilient as a wave of local lockdowns trigger ongoing uncertainty – it could also deliver major benefits to the UK economy.

According to the research, Covid-19 has had a transformational effect on attitudes to technology among UK SMEs – 73% of them have turned to technology during the pandemic to keep their business functioning –  only 17% were planning such investment before the crisis.

  • 43% say the pandemic has made technology investment more urgent in order to remain competitive and boost productivity
  • 72% believe further investment into key areas of technology would deliver performance improvements and support recovery

This increased appetite presents an opportunity to underpin fundamental long-term productivity improvements among UK businesses.

However, Covid-19 has dramatically reduced their capacity to invest – over three-quarters say financial constraints are preventing the necessary investment in technology.

If these barriers can be overcome, and this untapped appetite for investment unlocked in fullUK SMEs could deliver major benefits to the economy, including:

  • £145 billion in annual economic output as a result of improved productivity, equivalent to:
      • 140 million working weeks per year – or 8 working weeks per employee per year
      • More than double the total estimated cost of the Job Retention Scheme
  • £325 billion additional annual revenue
  • Supporting, creating and protecting 2.7 million jobs across the UK private sector

 

There is widespread support among businesses for Government-backed financial incentives to accelerate technology investment, including digital vouchers, digital adoption grants and tax benefits.

Steve Hare, Sage CEO said, “As businesses across the country face the threat of tighter lockdowns, the need is to place firms on a more sustainable footing by giving them confidence and support to invest – the only certainty for SMEs right now is uncertainty – we must do everything we can to ensure firms can stand effectively on their own two feet through a challenging period.

“We are on the brink of a once-in-a-generation digital revolution among SMEs – one that will power job creation and growth at a time when it’s most needed, as well as helping to crack the UK’s long-standing productivity puzzle. But the UK stands to lose out on these massive gains if we do not encourage this investment now. Currently, businesses do not believe they can deliver even half of the technology investment they need in order to position themselves for recovery and growth.

“So, in addition to targeted and local support, SMEs in all sectors across the UK need a strong message from Government that they can invest in technology with confidence. Our research shows that policy incentives like vouchers and tax breaks would pay for themselves within a year, driving a tech-led recovery that will underpin greater resilience, productivity, and job creation for decades to come.”

Felicity Burch, CBI Director of Innovation and Digital said: “Against the Covid pandemic, UK business has demonstrated extraordinary levels of adaptability by forging new working methods and routes to market. Much of this innovation has been underpinned by an accelerated move towards new technology.

“But cash is now tight, and this will hold firms back as they seek solutions to help them grow out of the current crisis, and on to a successful future beyond Covid.

“It is clear the Government needs to step up the support available for innovation adoption. This will be vital to ensure the UK builds back better, with a more productive, sustainable and green economy in all parts of the country.”

The Key to solving the Productivity Puzzle

A very interesting approach has just been published in project-syndicate.org for solving the ‘Productivity Puzzle’ – it was written by Professor Diane Coyle, University of Cambridge who is also a member of the newly formed UK Productivity Institute

Although the factors contributing to stagnant productivity are well known, economists and policymakers have so far paid little attention to figuring out how to address these problems in a coordinated way. But the need to deliver broad-based prosperity is more pressing than ever, and this shortcoming must be rectified without delay.

In a 1996 lecture entitled “Big Bills Left on the Sidewalk,” the late American economist, Professor Mancur Olson, made a powerful observation: an individual from a poor country – say, Haiti – who migrates to a richer country like the United States immediately becomes vastly more productive and earns a far higher wage than before. The individual has not changed overnight, so their skills or cultural attitudes cannot explain their improved situation. The answer must instead lie in their new country’s environment

Olson therefore concluded that many (or most) economies are not socially efficient. A better institutional and social context, and higher stocks of assets from past investments, can make an enormous difference to individuals’ productivity, and hence to their living standards.

The challenge, as Olson pointed out, is that individuals cannot change the overall context in which they live and work, except by moving elsewhere. The improvements needed to raise an entire economy’s productivity require coordinated, collective action. Olson’s own well-known research on the logic of collective action explored why this is so difficult to achieve.

Unfortunately, Olson’s “big bills” insight about the need for coordination rarely features in the current productivity debate. Instead, the discussion – why output per worker hour has been virtually flatlining in many OECD countries since the mid-2000s, or which targeted policies might help to revitalise left-behind towns or regions – has focused on numerous potential contributory factors, rather than the need for coordinated action.

For example, policymakers typically undertake cost-benefit appraisals of potential infrastructure investments on a project-by-project basis. But the returns to any project will be affected by other decisions, both private and public. If a new railway line opens, will local bus timetables change to coordinate people’s journeys? Will developers build houses nearby, and will other government agencies open schools in the area? Without coordinated decision-making, investing in new projects where more of the other pieces are already in place will generally look like the better value-for-money option. Unfortunately, government agencies appraising projects are rarely tasked with conducting a holistic survey of the policy landscape.

Regional or local low-skills traps present a similar problem. If there are no high-paying jobs in a particular area, then individuals have no incentive to invest in their own education. And if the local pool of available skilled labour is small, employers have no incentive to open offices or factories there. The only option for people who want to move up is to move out.

Bundle2020_webSuch examples have now attained almost motherhood-and-apple-pie status among economic researchers, given the widespread acceptance that “institutions” are important for growth and development. But economists need to connect their analysis with an understanding of the political potential for change, the sociology of organisations, and the psychology of decision-making. Simply urging regions to “be more like Silicon Valley” is useless. The challenge for researchers and policymakers is to understand – in each specific context – exactly what coordination is needed to increase productivity, and what actions (and by whom) can achieve this.
Vast inequalities between places, and therefore in people’s life chances, are a critical political issue almost everywhere, as election upsets and increasing polarisation in recent years clearly indicate. Moreover, the COVID-19 pandemic, the likelihood of economic turmoil owing to extreme weather or civil conflict, the existential requirement of shifting to a zero-carbon economy, and widespread digital disruption will make delivering broad-based prosperity an even more pressing imperative.

Although the obstacles to increased productivity are nearly universal, the solutions will be specific to each place and reflect its asset legacy, industrial history, location, and local politics. There is no science – yet – regarding what kinds of decisions need to be taken at different levels of government, or how to coordinate choices across departmental silos and budgets. (That is why these issues are central to the agenda of the United Kingdom’s recently established Productivity Institute.)

Nobody would be surprised that the factors contributing to low or stagnant productivity include lack of investment in physical and intangible assets, skills shortages, inadequate infrastructure, poor management, and a weak macroeconomic environment. More surprising is the lack of attention paid so far to finding a recipe that addresses these problems in tandem. Economists and policymakers must begin to rectify this without delay.

Debt may be cheap, but the UK’s poor productivity will cost us dear

Margaret Thatcher outside 10 Downing Street

The strangely easy agreement between economists of right and left that the chancellor should set aside concerns about Britain’s rising debt levels still holds seven months after the first Covid-19 lockdown was imposed.

Thatcherite free-market thinktanks sing the same carefree song as Keynesian academics when debate turns to the size of this year’s public spending deficit. There are differences in tone and it goes without saying that all would want money spent wisely, but their efforts focus on competing proposals for growth.

If only that were true inside the Tory party, be that members or backbenchers. Listen to what they say about the economy, and it is like the 2008 financial crash never happened. Public sector spending is still being likened to a household’s finances, where the aim must be a balanced budget.

 

On its own, though, it is not enough. There remains the gloomy assessment of Britain’s productive capacity. Leftist economists will point to the period of expansion after the last world war and argue that it justifies renewed high levels of public spending, nationalisation and state-backed industrialisation, though the 2020 version would be a climate-friendly initiative.

 

A second wave of growth took hold from the 1980s to the early noughties. While there is much to say about this period – from Thatcher’s fire sale of assets to the consumer borrowing binge in the early part of this century that artificially boosted growth – the main point today is that many of the industries that drove this growth are now dying or in retreat. From the oil and gas sector to the carmakers and previously stellar finance industry, the UK relies on wealth generators that have either a limited future or none at all.

From the Treasury’s perspective, the launchpad for recovery is in a terrible state – worse than most ministers, and many thinktanks, realise. Whether it is finding new industries to supersede the old, rescuing those affected by Covid or supporting firms through a tough Brexit transition, the cost of aiming billions of pounds at a particular target and missing will be too high.

The Institute of Economic Affairs has urged the chancellor to use business tax cuts to rekindle the entrepreneurialism of the Thatcher decade, arguing that that would generate enough growth to bring down the deficit, and pay for extra welfare, investment in the regions and all the other things on MPs’ wish list.

According to the left, the same trick can be pulled off by lashings of government investment. Yet when so much growth has been generated by foreign managements and foreign investment, the Treasury view is that spending must be careful. As such, it is almost inevitable that recovery will take a decade or longer.

So while the price of debt is important, glib and uninformed exhortations for tax cuts or extra spending won’t reassure the Treasury unless deep-seated weaknesses in the UK’s engine of private sector growth are tackled too.

AI will unlock USD 15.7 trillion in global productivity by 2030

India is taking the potential for AI – Artificial Intelligence – to improve productivity very seriously indeed – their government is pushing hard to build on its existing IT strengths and become a world leader in AI – this will give a massive boost to its economy and standard of living whilst helping to solve many international as well as national problems – there is no doubt that AI has already become a major driver of productivity improvement in many sectors globally, and these are only ‘early days’ 

 

Speaking at the inauguration of RAISE 2020 – ‘Responsible AI for Social Empowerment 2020’ – and a summit meeting of hundreds of his nation’s finest brains and businessmen, Indian Prime Minister Shri Narendra Modi said:

  • “At every step of history, India has led the world in knowledge and learning
  • India has proved to be the powerhouse of the global IT services industry – we will continue to digitally excel and delight the world
  • We want India to become a global hub for AI
  • Many Indians are already working in this area – I hope many more do so in the times to come
  • India’s national programme on AI will be dedicated towards the rightful use of AI in solving societal problems
  • We must ensure that human intellect should always be a few steps ahead of AI
  • Let us have no doubts that human creativity and human emotions continue to be our greatest strength – they are our unique advantage over machines – even the smartest of AI cannot solve mankind’s problems without blending with our intellect.”

 

Shri Ravi Shankar Prasad,  Minister for Electronics & IT, Communications & Law & Justice, elaborated on  developing AI capabilities in the country:

  • “The government has set up AI centers of excellence and more such centers will be set up to train the youth
  • Technology at times overwhelms us, but we welcome AI to generate development and promote equity
  • India’s demographic dividend will play a key role in promoting pools of skilled professionals to take the country’s AI ecosystem forward
  • India’s application of AI will become a beacon for the world.”

 

In his address, Mr. Mukesh Ambani,  Chairman, Reliance Industries Ltd, said:

  • “India has the power of data generated by over a billion Indians that would catapult it to becoming a leading global AI player
  • When 1.3 billion Indians are digitally empowered, they will unleash proliferation of digital enterprises that will create faster growth, better standards of living and superior opportunities across society.”

 

Dr Arvind Krishna,  CEO, IBM India, said:

  • “According to independent studies, AI has the potential to raise India’s annual growth rate by 1.3% and add USD 957 billion (i.e. around 1,000 billion) to the country’s economy by 2035
  • At a global level, AI will unlock USD 15.7 trillion in productivity by 2030 and it has the potential to not only boost economic growth but improve the livelihoods of millions around the world.”

 

Professor Raj Reddy, Turing Awardee, emphasised the benefits of AI in bridging language barriers and for managing pandemic situations:

  • “Today, we can do things which were impossible to do 50 years ago
  • Using AI, anyone can translate from any language to any language, ride in a self-driving car and play chess at grandmaster level
  • Looking forward, we can expect AI to help eliminate lockdowns, replace one-size-fits-all education by personalising education based on individual student capabilities and interests, watch any movie and talk to anyone in any language and empower the people at the bottom of the pyramid.”

 

From agriculture to fin-tech, from healthcare to infrastructure, India is witnessing rapid development in the integration of artificial intelligence. On the back of its technological prowess and the richness of its data, India believes it can become the AI laboratory of the world and achieve its vision for social transformation, inclusion and empowerment through responsible AI.

Website: http://raise2020.indiaai.gov.in/

 

£300 million to boost UK manufacturing productivity by 30%

Businesses with creative ideas to boost the UK’s manufacturing capacities are set to receive £300 million of joint government and industry funding according to the

 

Businesses with creative ideas to boost the UK’s manufacturing capabilities, including using robotics, AI and augmented reality, are set to receive £300m of joint government and industry funding

Through the Manufacturing Made Smarter Challenge, the government will invest £147 million – backed by further funding from industry – to support businesses implement new tech to boost their manufacturing productivity, helping them reach new customers, create thousands of new highly skilled jobs, slash carbon emissions and reduce prices for consumers.

The first £50 million of the funding is being allocated to 14 cutting-edge manufacturing projects involving around 30 small or medium businesses, 29 larger enterprises and nine universities, with the rest of the funds due over the next 5 years.

A company behind one winning project – the Digital Designer Robot – aims to offer machine-to-person ‘digital assistance.’ When a business needs a bespoke product, it will be able to use a digital robot to help design it and upload the design quickly onto a supplier’s website – so the product can then be sampled, prototyped and manufactured by the supplier.

The virtual assistant would also offer expert advice and guidance, by ‘conversing’ with businesses to ask questions, listen to feedback, and provide suggestions. This could reduce the time it takes to manufacture products, as well as cut costs and waste thanks to a more precise design process.

Another is developing super lightweight, aluminium bikes for children using robots, whilst another is pioneering the use of AI to help businesses design new products.

Business Secretary Alok Sharma said:

Increasing productivity is vital for any business, and having the right new technologies in place can help manufacturers make better products to compete and thrive.By helping manufacturers to reduce costs, cut waste, and slash the time it takes to develop their products, this multi-million pound uplift will help fire up the cylinders of productivity as we build back better from the pandemic.

Other winning projects include:

  • WeldZero – This project will explore the use of robots, sensors and automation to improve accuracy when welding metal parts on a production line. The machines will also collect and feedback valuable data to help improve the manufacturing process, leading to stronger and higher-quality parts, as well as quicker production, in industries including automotive and construction.
  • Smart Connected Shop Floor – Real-time data integration with multi-sector applicability – GKN Aerospace is leading a cross-sector team trialling digital technologies, including augmented reality headsets for engineers, so manufacturing businesses can guide them through repairs – the project will also use ‘smart’ devices to exchange information between old and modern computer systems.
  • The Digital SandwichRaynor Foods Ltd, a leading UK sandwich supplier who helped supply the NHS during the coronavirus pandemic, is creating a major piece of software where food and drinks businesses can connect online to share valuable data – this information exchange will increase productivity, improve cashflow, help boost food quality and reduce waste within the supply chain – the platform includes small and medium sized enterprises (SMEs), who don’t usually have access to this kind of technology and will benefit sectors including pharmaceutical, aerospace and automotive.
  • Dialog – this project, led by Atlas Copco IAS UK Limited, brings together affordable, automatic and human-interacting robots to help machines make quicker and better decisions, making production more efficient.

The Manufacturing Made Smarter programme will also support technology SMEs through growth accelerators – partnerships between the government and the private sector where experts will work with businesses to identify barriers to growth and ways to overcome them – it will also create a national network of innovation ‘hubs’ where businesses can partner or share advice, to help spur growth and creative ideas.

The government has committed to raising productivity and earning power in the UK by spending 2.4% of GDP on R&D across the UK economy by 2027.

Rich Ingram, Director of funding recipient Account Management Online Ltd, said:

Moving beyond ready-made products available from online stores, AMO’s Digital Designer Robot provides the opportunity to define made-to-order products and get a price in real time including bought in tooling, sub-assemblies and parts. We are excited how this capability delivers benefits in many industries where design requirements are unique, bringing faster, more available and resilient sales resource to customers to help them buy. Automation cutting costs and creating competitive advantage by immediate service response. Discontinuous innovation generates high rewards for taking high risks – we are proud to be working in partnership with Government helping us manage risks and supporting our R&D in this ground-breaking area to help us turn our ambitious ideas into real world solutions for selling to the benefit of UK PLC.

 

Hamid Mughal, MMS Industrial Advisory Group chair said:We have tremendous manufacturing capability in the UK and recent events have reinforced the importance of strengthening this sector for national resilience and economic growth. Rapid advances in Digital and disruptive Manufacturing technologies provide us with the perfect opportunity to shape this outcome. By harnessing the potential of this technology, we will be able to make a transformational improvement in productivity, sustainability and global competitiveness and create new products and services that forge modern digital enterprises. 

Why Software Won’t Eat The World

An interesting article from Greg Satell offered by Medium.com which supports the argument that technology, artificial intelligence and computers in general are NOT poised to take over our lives and run the world

In 2011, technology pioneer Marc Andreessen declared that software is eating the world. “With lower start-up costs and a vastly expanded market for online services,” he wrote, “the result is a global economy that for the first time will be fully digitally wired — the dream of every cyber-visionary of the early 1990s, finally delivered, a full generation later.

Yet as Derek Thompson recently pointed out in The Atlantic, the euphoria of Andreessen and his Silicon Valley brethren seems to have been misplaced. Former unicorns like Uber, Lyft, and Peloton have seen their value crash, while WeWork saw its IPO self-destruct. Hardly “the dream of every cyber-visionary.”

The truth is that we still live in a world of atoms, not bits and most of the value is created by making things we live in, wear, eat and ride in. For all of the tech world’s astounding success, it still makes up only a small fraction of the overall economy. So taking a software centric view, while it has served Silicon Valley well in the past, may be its Achilles heel in the future.

The Silicon Valley Myth

The Silicon Valley way of doing business got its start in 1968, when an investor named Arthur Rock backed executives from Fairchild Semiconductor to start a new company, which would become known as Intel. Unlike back east, where businesses depended on stodgy banks for finance, on the west coast venture capitalists, many of whom were former engineers themselves, would decide which technology companies got funded.

Over the years, a virtuous cycle ensued. Successful tech companies created fabulously wealthy entrepreneurs and executives, who would in turn invest in new ventures. Things shifted into hyperdrive when the company Andreessen founded, Netscape, quadrupled its value on its first day of trading, kicking off the dotcom boom.

While the dotcom bubble would crash in 2000, it wasn’t all based on pixie dust. As the economist W. Brian Arthur explained in the Harvard Business Review, while traditional industrial companies were subject to diminishing returns, software companies with negligible marginal costs could achieve increasing returns powered by network effects.

Yet even as real value was being created and fabulous new technology businesses prospered, an underlying myth began to take hold. Rather than treating software business as a special case, many came to believe that the Silicon Valley model could be applied to any business. In other words, that software would eat the world.

The Productivity Paradox (Redux)

One reason that so many outside of Silicon Valley were skeptical of the technology boom for a long time was a longstanding productivity paradox. Although throughout the 1970s and 80s, business investment in computer technology was increasing by more than 20% per year, productivity growth had diminished during the same period.

In the late 90s, however, this trend reversed itself and productivity began to soar. It seemed that Andreessen and his fellow “cyber-visionaries were redeemed. No longer considered outcasts, they became the darlings of corporate America. It appeared that a new day was dawning and the Silicon Valley ethos took hold.

While the dotcom crash deflated the bubble in 2000, the Silicon Valley machine was soon rolling again. Web 2.0 unleashed the social web, smartphones initiated the mobile era and then IBM’s Watson’s defeat of human champions on the game show Jeopardy! heralded a new age of artificial intelligence.

Yet still, we find ourselves in a new productivity paradox. By 2005, productivity growth had disappeared once again and has remained diminished ever since.

The Platform Fallacy

Today, pundits are touting a new rosy scenario. They point out that Uber, the world’s largest taxi company, owns no vehicles. Airbnb, the largest accommodation provider, owns no real estate. Facebook, the most popular media owner, creates no content and so on. The implicit assumption is that it is better to build software that makes matches than to invest in assets.

Yet platform based businesses have three inherent weaknesses that aren’t always immediately obvious. First, they lack barriers to entry, which makes it difficult to create a sustainable competitive advantage. Second, they tend to create “winner-take-all” markets so for every fabulous success like Facebook, you can have thousands of failures. Finally, rabid competition leads to high costs.

The most important thing to understand about platforms is that they give us access to ecosystems of talent, technology and information and it is in those ecosystems where the greatest potential for value creation lies. That’s why, to become profitable, platform businesses eventually need to invest in real assets.

Consider Amazon: Almost two thirds of Amazon’s profits come from its cloud computing unit, AWS, which provides computing infrastructure for other organisations. More recently, it bought Whole Foods and opened its first Amazon Go retail store. The more that you look, Amazon looks less like a platform and more like a traditional “pipeline” business.

Reimagining Innovation For A World Of Atoms

The truth is that the digital revolution, for all of the excitement and nifty gadgets it has produced, has been somewhat of a disappointment.

Since personal computers first became available in the 1970s we’ve had less than ten years of elevated productivity growth. Compare that to the 50-year boom in productivity created in the wake of electricity and internal combustion and it’s clear that digital technology falls short.

In a sense though, the lack of impact shouldn’t be that surprising. Even at this late stage, information and communication technologies only make up for about 6% of GDP in advanced economies. Clearly, that’s not enough to swallow the world. As we have seen, it’s barely enough to make a dent.

Yet still, there is great potential in the other 94% of the economy and there may be brighter days ahead in using computing technology to drive advancement in the physical world. Exciting new fields, such as synthetic biology and materials science may very well revolutionise industries like manufacturing, healthcare, energy and agriculture.

So we are now likely embarking on a new era of innovation that will be very different than the digital age. Rather than focused on one technology, concentrated in one geographical area and dominated by a handful of industry giants, it will be widely dispersed and made up of a diverse group of interlocking ecosystems of talent, technology and information.

Make no mistake. The future will not be digital.

Instead, we will need to learn how to integrate a diverse set of technologies to reimagine atoms in the physical world.

Greg Satell is bestselling author of Cascades: How to Create a Movement that Drives Transformational Change. His previous effort, Mapping Innovation, was selected as one of the best business books of 2017.

CV-19 provides a giant leap for creative destruction

As the world focuses on ‘track and testing’ whilst medics internationally race to prove their CV-19 vaccine/ treatment stops people dying or suffering badly, there are many positives emerging from this damned pandemic – especially given it probably won’t be the last one, and some in the future may even be man-made

Creative destruction of our ‘old norm’ way of living, both socially and at work, has gained massive impetus in just about all quarters of our lives – Schumpeter discontinuities abound – the status quo is being challenged – ‘custom and practice’ has been forcefully questioned – work processes have widely and successfully adopted new technologies in a matter of months, not years as expected

We undoubtedly needed a massive shock to our system – the one we’d all got used to and followed – the one where most people lived the same way, worked the same way, produced the same way and served the same way – we’d become averse to radical change, to any rocking of our comfortable boat

Hence, up until now, the full benefits of identifying and removing obvious waste from our systems was largely ignored

The same could also be said about the benefits on offer from making much better use of  existing resources – resources we’d already paid for – and when a few tried to ‘do something’ in response to competitive threats, say, some of them would call in outside experts, only to be peddled latest, leading-edge and expensive ‘management fads’, not the business common-sense they needed

Consider where we are now today:

  • The fact is most developed economies have (rightly) run up devastating debt to counter the pandemic, the effects of which will last for decades, not a year or so – and sclerotic productivity growth rates before it struck have inevitably worsened since, not improved
  • But where’s the long term economic plans which all can find inspiring, exciting even – what might the population be enthusiastic to put our shoulders behind? – where’s the light at the end of the tunnel?
  • In particular, where’s the panacea for those sectors and regions which have been particularly scarred by the pandemic?
  • Overall, where’s the ‘big ideas’ to get national productivity growth back on the upward slopes again – and not just to ‘level up’ everyone, which hardly inspires the vanguardians we all rely on, but to benefit all, unequally included?
  • All we ever hear about are latest numbers on Covid, latest firefighting rules and latest failures to stall it

 

So what next?

  • A fundamental societal change is under way – ‘old norms’ of working are no longer ‘acceptable norms’
  • Workers will be judged mostly on ‘results output’, not ‘hours input’ i.e. effectiveness, not presenteeism
  • The previous wish for a better social/ work balance will become widely implemented, at least for most office workers viz:
    • 2 to 3 days working alone from home (or a boat or beach?)
    • 3 to 2 days working in an office, with others – for casual meetings and conversations, developing relationships, assessing others,  socialising and gossiping, sparking new ideas etc.
    • Keynes’s forecast, that we would be working a ‘3 day, 15 hour working week’ by now, will become a reality for many, recognising knowledge workers are effectively ‘switched on’ 24/ 7, not for the hours they’re paid for
  • Hours wasted commuting, on business air travel, or in pointless meetings, will be decimated:
    • Less road capacities and developments will be needed – rush hour volumes will be less, rush-hour periods will be widened – rail travel will be greatly reduced, the need for HS2 must be  revisited
    • Business air travel to ‘press flesh’ and sign deals will be unnecessary – Heathrow’s third runway may be redundant
    • And the lockdown has clearly demonstrated that most meetings at work achieved little or nothing, so most will be cancelled in future
  • In addition, inefficient or non-use of costly resources will, at long last, become a major concern i.e. resources already paid for but often left idle e.g. skyscraper offices, hospital operating theatres or school classrooms and sports facilities for most of the 24 hour day
  • There will be a growing exodus of ‘townies’ who will grasp the opportunity to live where they want to, not near their work – many Londoners will cash in on their ‘grossly inflated’ house valuations and move out
  • Demand for city and town-centre offices will thus plummet – likewise, thousands of small businesses, which rely on serving those office workers, will fail – but much of the surplus office space will be converted to meet housing shortages, and new demand for pied-de-terres, so a whole new set of small businesses will be needed to support them

 

And that’s just a sample for starters!

Indeed, one might say CV-19 has become a massive ally of productivity improvement – so long as none in your family catch it

Long-term planning for remote work

      • Extracts about WFH follow from an article in the HBR (Harvard Business Review) by Mark Johnson and Josh Suskewicz

Mark Zuckerberg recently shared his plans for the future of remote work at Facebook. By 2030, he promised, at least half of Facebook’s 50,000 employees would be working from home. “We are going to be the most forward-leaning company on remote work at our scale,” he declared in a follow-up interview.

A few days before, Jack Dorsey had announced that Twitter and Square’s employees would be allowed to work “where[ever] they feel most creative and productive…even once offices begin to reopen.”

After spending the last two decades building amenity-filled campuses that maximise the ”collisionability” of talent and ideas while enticing their workers to stay in the office for as much time as they can, Covid-19 has shown these leading-edge technology companies that their workers can be just as productive — or in some cases, even more so — when they stay at home.

And it’s not just tech. Executives in traditional industries who spent days and weeks on the road are discovering that a well-managed Zoom meeting can be as effective as a face-to-face — and a lot easier (and less expensive) to organise.

Will Apple’s new $5 billion HQ – aka The Spaceship – turn out to be a white elephant? Will Google abandon its Googleplex? Will corporations empty out their office buildings everywhere and shrink their physical footprints? Are we on the brink of a new paradigm for work?

Microsoft’s Satya Nadella isn’t so sure. Switching from all offices to all remote is “replacing one dogma with another,” he said in a conversation with The New York Times. “One of the things I feel is, hey, maybe we are burning some of the social capital we built up in this phase where we are all working remote. What’s the measure for that?”

We suspect that the workforces of Twitter and Facebook will be less remote in 10 years than their leaders are predicting today, but much more remote than they could have imagined six months ago.

The real issue, however, is not whose predictions turn out to be right or wrong (no one has a crystal ball), but whether those leaders are thinking deeply enough about what they want their new work paradigm to achieve — and whether they can architect and construct systems that will allow them to meet their objectives.

WFH is helping them muddle through the immediate crisis, but what do they want from it in the long run? Higher productivity? Savings on office space, travel, and cost-of-living adjusted salaries for workers in cheaper locations? Better morale and higher retention rates?

To know what’s “best” for your organisation’s future when it comes to remote work, you have to put it in the context of all the things that you are looking achieve. In other words, you have to have a conscious aspiration. Then you need to envision the “workforce system” that will make those things possible.

Having more or less remote work is not a “point change” in an otherwise stable system — work from home is a system in and of itself, with many interfaces and interdependencies, both human and technological. These include:

  • The technologies (existing and yet to be created) that you will need to make your system workable, including collaboration, creativity, and productivity tools.
  • The resources (your physical footprint, people, and the technology interfaces you use to organise them) and the policies, practices, and processes your system needs to function. These include HR considerations like travel, talent development, and compensation; operational issues like office design and logistical challenges like “hoteling”— making temporary desks available to remote workers when they need to work on site.
  • The rules, norms, and key metrics you will need to prescribe to preserve and enhance your culture and values.

 

While you can model such a system up to a point, its design specs will inevitably need to be revised as they come into contact with reality; as such, experimentation and learning will be key — you cannot expect to have a one-time rollout.

Ridding ourselves of the productivity fetish will help us combat climate change

Simon is an ecological economist, trying to understand the current economy in order to build a better one. He is also a co-investigator on the ESRC funded ‘Powering Productivity‘ project, exploring links between energy, wellbeing and the UK’s productivity puzzle and a Research Fellow with the Centre for the Understanding of Sustainable Prosperity. 

 

Climate action is often about sacrifice: eat less meatdon’t fly, and buy less stuff. These things are essential. But climate action can also be about gain. Many causes of climate change make our lives worse. So transforming our societies to stop climate change offers us the chance to make our lives better.

Take work, for example.

Work can be “shit” or it can be good. Sociologists and psychologists have developed various frameworks to explain what makes a job good or bad. And we’ve identified a few common factors. A good job is socially useful, it provides material security, it is varied and creative, and it offers us a degree of autonomy. A shit job does nothing for society, fails to help us meet our material needs, is repetitive, and offers little autonomy.

The characteristics of shit jobs often come from chasing productivity growth. Productivity is a term economists use, which refers to the amount of output you get from a set of inputs. Usually the output is measured in terms of money. Your boss cares how much profit they make from your work. The government cares how much money you generate for “the economy”. Productivity growth is the process of squeezing the inputs to get more outputs. Squeezing you to get more profit for the same salary.

An age-old problem

Since Adam Smith in the 18th century, economists have known that productivity growth is improved by making jobs more specialised. This might make us more productive, but it often also makes work shit. Specialisation means spending as much time as possible doing the same thing in the same way. Specialisation is death to autonomy and creativity.

Specialisation is also death to social purpose and leads to alienation from our work – something Karl Marx warned of in his critique of capitalism. Most of us are now so specialised that we don’t get to see the end product of our work. We probably don’t even know how the thing we make or service we provide ends up being used.Economists have also known this since Smith. Smith himself wrote that specialisation would make us more productive but also more stupid.

In the modern economy, the production of even the simplest product has many steps, spread across many countries. Production of a t-shirt involves growing, cutting, dyeing and sewing cotton. But it also involves the production of fertiliser to grow the cotton, the mining of metals to build machinery to process the cotton, the extraction of oil to power the ships that transport the cotton around the world, and many more such steps. The whole system is unfathomably complex. So your work could be socially useful, but how on Earth would you know if you don’t see the end product?

So why chase productivity? One reason is money. Productivity growth measures monetary value. This means that making money is the priority.

Productivity growth keeps us chasing the production of stuff we don’t need. Profit goes up when more stuff is sold. As William Morris, the famous designer and activist, put it, profits are maintained by the production of a “mountain of rubbish … things which everybody knows are of no use”.

Chasing productivity growth sends us down the alley of working to produce the things people can be convinced to buy, rather than the things we actually need. Why do you think we have a teaching crisis, and a care crisis, but not a marketing crisis, or a plastic flower crisis?

An endless treadmill

What’s more we’re caught in what the ecological economists Tim Jackson and Peter Victor call a “productivity trap”. If the economy becomes more productive, that means fewer people are needed to produce the same amount of stuff. Which is great, unless you’re one of the people who’s no longer needed.

For most people, as long as productivity growth happens, the only way they keep their jobs is if more stuff is produced. This is another way productivity growth creates a treadmill of production and consumption: keep buying the stuff you don’t need otherwise you’ll lose your job.

The endless treadmill of production and consumption is how the pursuit of productivity growth drives climate change. Chasing productivity growth means chasing continual expansion of production. All production requires energy. So chasing endless productivity growth means endless energy use.
This makes it very hard to decarbonise the economy.

Fossil fuels are very high quality sources of energy. There is reason to believe that it will be impossible to produce the amount of stuff we have right now, using only renewable energy. Even if it is possible, if we keep chasing productivity growth producing what we produce today won’t be enough. In the productivity trap, we don’t just need to produce the same, we have to produce more.

But suppose we stopped chasing productivity growth. What might happen?
It would make it easier to decarbonise. We’d no longer be stuck on the production-consumption treadmill. It would mean less stuff too. But do we need all the crap we have?

And although less productivity might mean less stuff overall, it could mean more of the really useful stuff. More nurses, more teachers, more care workers. If we stop chasing productivity, we’re freed up to chase the things that really matter, rather than the things that make money.

This would be the first step in moving from shit jobs to good jobs. Roll back specialisation. Free us to be creative and autonomous at work. Let’s work on problems we think are important, that contribute to our communities rather than generating sales. Let’s work in different areas doing different things.

Yes, we’ll be less efficient. But we’ll be happier, more useful and better able to tackle climate change.