In the UK alone, at least 80% of all organisations could improve their productivity by at least 20%, many by 50% or more
A conservative 20% productivity improvement across all sectors would translate into an annual saving of at least £300 billion for the UK alone – realised by a combination of:
- Cutting waste, and/ or
- Optimising use of existing resources, and/ or
- Investing in new technology
So how does such a huge potential saving go unrealised, year after year?
First, one can ignore all macro chit-chat focussed on national pictures – government ministers, economists, business lobby and research groups et alia all base their conclusions on the only statistics available viz:
- GDP = National output – a flawed statistic
- GDP/ (Labour numbers) = National productivity, which ignores labour quality and capital/ IT/ AI inputs
Such data is of no use to managers on the front-line – there’s no read-across for them, even if it were accurate – much of any economy goes uncounted anyway – some economists have recognised this and concocted an alternative all-inclusive national productivity formula – Total Factor Productivity (TFP) – described even by the Bank of England as ‘magic fairy dust’
The problem is such limited data is all that is counted, so all that counts at national, and regional, levels – yet, at best, they’re aggregates of aggregates of aggregates, so hide anything useful, good and bad
Using such data, what impact have major national groups had that push for productivity improvement?
Apparently negative according to a ‘bethebusiness’ report just out, headlining ‘A Deep Dive’ in most areas they consider drive productivity – the business mouth-piece CBI recently imploded (unnecessarily in my view) and currently is no longer listened to by HMG – and the TPI (The Productivity Institute) offers research into national productivity issues, not practical advice at organisation level where help is most needed
Overall, therefore, outside support for government ministers (productivity amateurs at best) and business managers is minimal
So what’s happening at organisation level, where the actual GDP results are produced?
First, most managers’ hold mistaken views on productivity viz:
- It’s too difficult to measure productivity in most areas and sectors
- It’s seldom the main determinant of financial success
- It depends on many sectors, so cannot be summarised in a few measures
- It’s just a plant efficiency, shop floor, blue collar measure
- It’s not relevant to service sectors or support functions – what are their outputs after all?
Hence, one finds CEOs/ Boards rarely have productivity on their agendas – and there’s never a director of productivity because all say they’re responsible for productivity, so nobody is
In addition, business schools ignore the subject of productivity – and major business consultancies specialise in everything-but so, again, outside support is minimal
The upshot is economists and the media forever talk of a ‘productivity puzzle’ because their data curves, as counted, have flattened out – but none of these cohorts of clever, well-educated people do much about it
Fortunately, down on the coal face in both private and public sector organisations, managers still have to meet their stakeholders’ needs, especially their customers’, and it’s pressure from them, not support from the likes of the above (other than HMG investment in research, education and infrastructure) that keeps the nation moving forward on both standard of living and quality of life fronts