Political parties’ productivity plans

Productivity is the biggest peacetime issue facing all UK political parties

Annual improvements are vital if living standards and average earnings are to be raised – so what did their recent manifestos say about it?

Conservative party manifesto – essentially ‘to grow the national wealth pie’:

  • Introduce a National Productivity Investment Fund – spend £23 bn by the end of the next parliament on housing, research and development, infrastructure and skills
  • In particular, by the end of 2020, invest:
    • £740m on things like broadband
    • £1.1 bn on local transport
    • More on railways
    • £250 m on training
  • But detail is lacking
  • And there’s no mention of any sector or national targets for closing apparent productivity gaps, nor any government accountability for making such things happen
  • Nor any specific support enabling private and public sector organisations to improve given they determine some 80% of total UK productivity – for example:
    • Re-establishing a UK Productivity Centre of Excellence
    • Setting up a National Best Practices database
    • Introducing good productivity and waste measures at all levels in all organisations so they at least know where they are now 

 

Labour party manifesto – essentially ‘to slice the national wealth pie differently’:

  • By 2030, i.e. well beyond when the present leadership have retired:
    • Generate 60% of energy from zero carbon or renewable sources
    • Develop the highest proportion of high-skilled jobs among OECD countries – promote skills through a National Education Service
    • Spend 3% of GDP on R&D
    • Invest £250 bn on infrastructure
  • But, again, detail is lacking
  • And, on top of this, they say many more police, firemen, nurses and doctors are to be recruited and existing public sector workers given significant pay rises to compensate for those they have been denied during the austerity years
  • Labour assume that simply pouring more resources and cash into struggling public services will solve their current problems when there’s huge waste in most of them – and often it’s method changes, not input volume increases, that’s needed
  • And there’s no mention of specific support/ incentives for private sector organisations and entrepreneurs to create the wealth to pay for all the above – they seem to think taxing ‘fat cats’ more heavily will produce the funds needed

 

Liberal Democratic party manifesto:

  • They make no specific mention of productivity
  • However, they do promise to invest in the above areas viz:
    • Build 300,000 homes a year by 2022
    • Put £5bn into a new British Housing and Infrastructure Development Bank
    • Set up a major capital investment programme across all UK
    • Invest in road and rail infrastructure
    • Bring more private investment into renewable energy

 

Green party manifesto:

  • Again, no mention of productivity
  • Introduce a four-day working week up to a maximum of 35 hours – they’ve spotted that ‘when people are exhausted, their productivity goes down’
  • Ensure a living wage for all
  • Introduction of a universal basic income

 

Meanwhile, many months ago, the Tory Government set up special inquiries into ‘better ways of measuring productivity’ and a PLG (Productivity Leadership Group) but we have yet to learn what difference such initiatives have made to improving the nation’s productivity

Conclusion:

Overall, one gets the impression that words about productivity issued by all UK political parties flow easily and superficially but serious practical action is lacking – the same as at board level in most organisations

 

National productivity positions built on sand

I read an article about Chinese productivity posted by Bloomberg journalist Michael Schuman and sent him the following email:

Michael,

I read your article about Chinese productivity with great interest

The first step in any major productivity improvement drive is indeed to establish the current position – where are you now?

Most ‘expert’ commentators try to do this but are forced to use flawed GDP and so flawed national productivity statistics – then they offer a wide variety of broad solutions based on that flawed data which, in their view, will close apparent productivity gaps

Meanwhile, lowly managers on the front-line are left with little practical advice on what they could and should do at their level – yet it’s only at their level where some 80% of any national productivity improvement can be made

Given this ‘productivity support vacuum’ affecting all nations, you and China may be interested in my website – www.productivityknowhow.com – which offers free advice on productivity improvement for all managers at all levels in all sectors, public and private

If I can be of any further help, do please let me know

Cheers

DS

————————————————————————————————

Michael replied the same day, from Peking:

Thanks for reading.

Yes, the data isn’t perfect but at least you can get a sense of trends in productivity – i.e. is it going up or down, or how countries compare.

Best,

Michael

CEOs rate potential of new technology ‘very low’!

A new Gartner survey of 388 CEOs/ senior executives found they rated as “very low” the potential for productivity improvement from new breakthrough technologies such as IoT, AI, blockchain (secure databases) and 3D printing

In particular, when asked for their ‘top enabling technology for improving productivity’:

  • Only 2% chose IoT – and only 1% picked either AI, blockchain or 3D printing
  • Whereas 10% chose ERP, 7% the cloud or data analytics, 4% CRM, and 3% mobiles or marketing tools

 

However, about half expected IoT would have a major impact on business changes to come, a third said the same about AI, and a quarter for blockchain and 3D printing

Gartner thus suggests ‘it may be too early in the game for CEOs to fully appreciate the benefits of these four general purpose technologies (GPTs)” – “CEOs are still largely judging productivity based on management theory from the industrial manufacturing era” – “they need ways to judge the value of such new technologies such as increases in customer approval ratings rather than, or instead of, using just revenue”

At present, according to Jack Gold, an analyst: “Most companies have no idea how to get the most out of all the new technology piling-up, nor how to measure return on its investment and the competitive advantage it might give them” – hence most use “seat of the pants guessing”

New measures and methods for employing these new GPTs are thus needed urgently

 

Vanguard lead way for big improvements

  • Productivity is the most important peacetime issue facing any nation or organisation – therefore, one would expect all governments and major business schools, management organisations and consultancies to focus on it 
  • Not so
  • For example:
    • The UK has no well-known, well-supported productivity ‘centre of excellence’ e.g. a UK Productivity Centre – HMG might occasionally set up study groups to evolve better measures of economic performance or advise on ways to improve national productivity but nothing much ever results
    • Major UK business schools offer no courses on the subject
    • The CBI and IoD offer no useful help or comment about productivity on their websites
    • Major consultancies offer their expensive advice on anything but – the one exception being McKinseys who delve into the subject, albeit only at the macro/ global level 
  • So, for all the huffing and puffing about productivity being ‘almost everything’ and ‘the guts of capitalism’, managers and ministers are left with all sorts of productivity experts forever trotting out their groupthink wisdom about dismal ‘productivity gaps’ followed by widely different theories but little good practical help on how to close them – hence, most productivity gaps persist 
  • However, hope is at hand 
  • One management consultancy has emerged which already has a successful track record in obtaining BIG quantifiable productivity improvements for organisations in both public and private sectors – namely:
    • Vanguard Consulting
    • N.B. I have no connection with them and only a limited understanding of their approaches but I do like what little I know of them 
  • Vanguard, led by John Seddon, has cut through all the highfalutin fads and TLAs on offer to identify HUGE improvement potential available in most organisations, much from cutting waste caused by what they call ‘failure demand’ or which arises within most processes
  • Their approach is based on the thinking of Taiichi Ohno, his revolutionary TPS (Toyota Production System) and his focus on ‘removing the non-value adding wastes that occur in all OCTs (Order Cycle Times)’ 
  •  Overall, “all power to Vanguard” in their efforts to improve the performance of others
  • They seem to offer what most organisations desperately need i.e. practical solutions for big quantifiable productivity improvements and quick paybacks

By George, ‘every company is dying’

According to Sir George Buckley, a top quality UK export from the North of England to the USA and now Chairman of Stanley Black & Decker and Smiths Group,  the ‘basic building blocks are the same in all companies’

George says:

  • ‘At the 30,000ft level, every company needs:
    • A dream
    • To know what it wants to be when it grows up
    • Good people
    • Relentless execution’
  • ‘At the 10,000ft level, senior executives have only five levers to pull:
    • Sales growth
    • Margin expansion
    • Working capital for improvement
    • Tax rate
    • P/E multiple’

That said, he claims many executives ‘do not know’ the above

Indeed, ‘the core of every company in the world is dying because of competitive attacks, the end of life of its products and maybe even cannibalisation of its own products’ – the trick is calculating how fast you are dying and then working out how much more stuff you need to put in at the top to counteract what is leaking out at the bottom’

‘If you only focus on short term results and not on replacing that core or expanding your capabilities, then you die’

He then claims there are only three ways to make new money in the Adam Smith sense of the phrase – via Manufacturing, Minerals and Extraction, and Agriculture – Banking does not make new money, nor Insurance, nor Tourism – they take money – they might expand the UK economy but they do not create new wealth

Reference the UK, his diagnosis of our deficiencies is mainly lack of skills:

  • ‘People should be encouraged to study/ work in STEM subjects – Science, Technology, Engineering & Mathematics
  • And charging people to study them – via student loans – is short-sighted’

Overall, the UK government ‘should foster innovation, support manufacturing and ensure that the education system lubricates the flow of skills that the UK needs’

George, despite having a degree and PhD, claims he gained most of his business knowhow in the ‘School of hard knocks’ where he found out ‘what works’

Most managers, and ministers, would do well to heed what he says