P.I.N. – a new productivity broadside?

I thought the launch of the PIN (Productivity Insights Network) last Tuesday evening in London went well – sadly, I had to leave after the main speakers but felt optimistic about your planned initiatives

I was also glad, albeit a tad surprised, that you picked me out to have our little chat beforehand given I recognised nobody there except fellow Mancunian Jim O’Neill and knew only one name on the Attendee list, Mia Andersson of the CBI, who earlier this year sent me an email ‘enjoying a readthrough (of your book) right now’

As I told you, I have been banging the productivity improvement drum for many years – hence, although now happily retired and content simply to run a website and write posts on it, I was at the launch because of wondering whether something powerful (at last) for national productivity improvement might be in the offing

So, given our chat, I thought you might like some top-of-head reflections on the show and handouts:

• Lord Jim:
  • PIN has done well recruiting such a high profile and well respected person to chair the advisory board
  • I liked his point that 16 of the world’s top universities are UK based yet we only clock 3% of global GDP, especially as I believe the world is at a watershed, moving from wealth being measured by the value of goods and services produced (materialism?) to one which places much greater value on knowledge and happiness (mentalism?)
  • However, I was surprised his well-delivered talk on current UK productivity issues (low level, poor growth, persistent gaps, inexplicable puzzles) was based, without caveats, on the seriously flawed national statistics for GDP and productivity – both are well known for being littered with errors, dubious assumptions and so sizeable error margins – admittedly Carney, Hammond et alia on the SS UK’s bridge do the same, not least because ‘it’s the best data available’ – sometimes it can be better to not bother measuring what you ‘think you can’ until something acceptably accurate and useful is found – imagine if the widely accepted ‘doom and gloom’ analyses of UK productivity were seriously misleading

• Key Result Areas (KRAs) needing to be addressed:
  • There’s a set of KRAs impacting productivity at all levels, and their precise causes and effects, and interactions, are not fully understood
  • Lack of good performance measures of them means most managers are ‘flying blind’:
    • Finances are usually measured well, perhaps too well, but steering any part of an organisation or nation by watching your wake is asking for trouble
    • Measurement of all other key areas – customer satisfaction, productivity and waste, employee motivation and corporate knowledge – are sadly lacking at all levels
  • Most managers, and ministers, thus have to rely on their team’s common-sense and experience to decide where best to act, how and when
  • Hence, there’s enormous scope for productivity improvement at all levels, much of it ‘staring all in the face’
  • There are just three steps to follow:
    • First, understand, quantify, then cut waste at task and process levels – often 50% or more of costly input resources are lost this way
    • Then optimise use of existing resources, with better management the principal driver here – sadly, most business schools don’t even offer any courses on productivity improvement
    • Finally, and only then, consider the cost and benefit options for investing in latest IT technology and/ or management fads such as Lean (which is not a panacea for all)
  • However, the first two steps don’t float the boats of most academics or consultancies

• The proposed PIN research areas:
  • Knowledge, innovation and technology – The key here is surely to establish the availability, utilisation and effectiveness of the corporate knowledge within and without any organisation – and so know where and how to plug gaps
  • FDI, markets and investment – Cities are inevitably better than surrounding regions at productivity since it’s quicker and easier to exchange goods and services with those close by – but clusters of same sector firms are better still e.g. the Toulouse cluster for engineering, or the Boston cluster for life-sciences
  • Work and the workplace:
    • Employee motivation undoubtedly has a significant impact on productivity levels – and job quality is indeed a key factor, but so are many others – however, quantifying the individual impact of each one on overall motivation levels may be found nigh impossible
    • I’m weary of reading about the so-called research conducted by the University of Warwick which concluded that happiness (brought about by a small sample of people being offered chocolate!) improved productivity (defined by speed of number crunching!) by 12% – and look forward to any useful numbers here
    • I sense a negative attitude towards the gig-economy which certainly is no answer for people who want full-time jobs – for balance, however, it’s not only good for many organisations and their productivity by enabling them to better match labour supply to fluctuating demand, but also for many people who prefer shorter working weeks and a better work/ life ratio
  • Skills, Education and Labour Markets – Industry are forever talking about the lack of the right technical/ STEM skills (not O and A levels) available to them in the UK – occasionally HMG tries to nudge youngsters towards closing these skills gaps with grants and apprenticeship schemes – however, complaints continue so something bigger and better is needed
  • Well-being and inclusive growth – Employee motivation issues again
  • Scale-up challenges of SMEs – It will be interesting to see if anything beyond the obvious is found here for deciding what to offer whom, when, where and how – given some firms have far fewer barriers to scaling up than others e.g. some need little capital and few staff
  • Transport and infrastructure – The penalty costs to industry of poor infrastructure – for example, delays causing extra delivery costs and poor service times which reduce demand – can be very significant but establishing marginal costs and benefits for an extra road or pinch-point removal may prove a step too far
  • Ageing and demographic trends:
    • If all work was brawnwork, then the older the workforce the less productive an organisation would likely become – but, for developed nations at least, most work is now more brainwork than brawnwork – and oldies beat youngies on many brainwork fronts (I’m biassed of course)
    • Re the oldies, you might ask why we encourage successful managers to retire to their gardens or golf courses when aged 60 or 65 – a Silver Army of such managers is readily available to advise their successors and avoid repeating costly mistakes – a national powerhouse one might say – and many are itching to ‘put something back’, if only on a part-time basis
  • Regional and city productivity debates – PIN claim there is a prosperity gap between the North and South, implying the North is worse off than the South – au contraire – as a northerner living in the south, it is clear that, with house prices a fraction of those in the south yet average pay per job about equal, most northerners have significantly greater disposable income – and compare travelling along the south coast, where industry can be reduced to B roads to get to Dover and the Chunnel, with the numerous motorways South Lancashire has enjoyed for decades
  • Governance, institutions and organisations – Any research here first needs to understand the causes of the ‘productivity puzzle’ before addressing what HMG and others might do about them – and, if they do, hopefully they’ll let us all know what they are
  • Entrepreneurship, small firm business growth and productivity – SMEs are the strength and future of any economy yet practical help for them to improve productivity is sparse – most need hard-nosed performance measures and ‘action that works’ which doesn’t cost them ‘an arm and a leg’ and produces big benefits quickly – what most if not all don’t want is reams of consultant-speak, buzzwords or TLAs like TFP, MFP, BPR or TQM which few, if any, understand
  • Overall – With ESRC backing, there’s clearly a ‘social sciences’ flavour to most of the initial research areas chosen – however, there are many other areas which also play a role in determining current productivity levels, and some may be even more important

• Initial concerns:
  • There’s no mention of the need for a set of credible performance measures, both at organisation and national level, to establish current productivity positions, trends and gaps – a link with Professor Bean and his study into productivity measurement might be found useful – ditto a link with the recent Indigo prize winners who suggested better ways to measure national GDP/ wealth/ prosperity (although their solutions were beyond me!)
  • None of the above list of research areas is likely to produce quick results, so I feel the PIN team might have ‘bitten off more than it can chew’ if they expect to complete in under three years – to have any chance, they will need to define deliverables and accept that ‘good enough’ may be just that rather than endlessly seek ‘perfection’
  • Of the 75 who attended the launch, by my reckoning, some 70% were academics/ economists (i.e. never held responsible for productivity results) and 15% were representatives of business groups and trade bodies (e.g. CBI, PLG, TUC, EEF, FSB) – so, if the PIN wants to be taken seriously by private and public sector managers, employees and their trade unions, or productivity consultants, all of whom are on the front-line in making changes happen, they should seek to greatly extend their network and involve well-known representatives of those latter groups
  • The PIN goal of providing ‘thought leadership’ in productivity improvement will have to compete with hundreds of consultancy organisations, big and small, each offering their leading-edge advice and thinking on one or more component parts of the overall productivity picture – and most will be unwilling to share their valuable secrets

First recommendations:

1. Test whether a link with the APQC – American Productivity and Quality Center, Houston – might be mutually beneficial:

• I visited them many years ago, intending to re-establish the UKPC (UK Productivity Centre) and found them most helpful
• Take a look at their website – www.apqc.org – and you will see their main offerings include:
  • Explore Best Practice content – access the world’s largest data-base of benchmarks and best practices
  • Measure your performance – using robust online tools
  • Network with your peers – collaborate with leading organisations
  • Read regular reports on important topics concerning productivity and quality improvement
• The APQC is led by the charming Dr Carla O’Dell who has been kind enough, on reading my book Productivity Knowhow, to wish me well in spreading the productivity message – their board of directors also comprise a team of industry and academic leaders, not academics alone

2. Consider forming a new UKPC – UK Productivity Centre:

• All other developed nations have a PC – why not the UK?
• This might be possible by merging PIN with HMG’s £13m sponsored PLG (Productivity Leadership Group) and the new HMG £20m sponsored ‘MakeSmarter’ initiative to boost the Northern Powerhouse (one wonders who is deciding to set up these initiatives and sponsor them with such amounts?)
• The PLG already comprises several industry leaders – it seeks to spread best practices to the ‘long tail’ of UK firms and improve productivity measurement at organisational level – i.e. it covers the first two arms of the above APQC offerings
• The PIN seems to be equivalent to the APQC’s second two arms for networking and reporting on various issues
• N.B. Such a merger may put some noses out of joint – but effective productivity improvement is far too important an issue for the nation to be hobbled by such niceties

Last of all, sorry for going on a bit but maybe that reflects my optimism for what you plan to do

I wish you every quantifiable success

RCS