Why important for organisations

Private sector manufacturing and logistics, in particular, has had spectacular success in reducing unit costs and so unit prices of most household items whilst, at the same time, greatly improving the variety, quality and service levels offered:

• • Compare cars, white goods, air travel, foreign holidays, staple food or table wine versus 50 years ago – once, they were luxuries for the few – now, they’re affordable by the many
  • Watch container ships at any port, each one carrying over 15,000 containers, equivalent to over 1,000 small freighters in the olden days
  • Marvel at how personal computers and mobile phones have vastly more power than the huge air-conditioned mainframes of the 60s, and at a fraction of the cost – in 1980 a gigabyte of hard disk space cost the equivalent of £120,000 in today’s money yet it now costs around 5 pence

Private sector services have enjoyed similar successes – for example:

• The media, where the number, reception and quality of TV and radio programmes and video recordings have improved by quantum leaps in the last 50 years
• The telecommunications sector, where people’s access to information, music and each other has been transformed in only the last 20 years
• The newspaper sector where expensive time-consuming typesetting at printers has been replaced by computer technology in the last 30 years
• The retail sector, where supermarkets now offer far more at better prices, quality and convenience than their ‘high street’ competitors ever did and many of their customers can now order goods from home and even have them delivered next day 

In the public sector, major successes in improving lives also abound

• For example, the UK’s National Health Service has had huge success with sourcing better medicines and offering better facilities and use of technology – as a result, it has greatly improved the average length and quality of lives of the UK population
• However, the same does not appear to be happening in other public sectors, not least because they lack any significant competitive pressure to increase their productivity and get their unit costs down
• For example, in the UK alone, the general view is that:
• • The police are considered to be “poor at dealing with crime”
  • Local governments “vary widely in their performance levels” – many are thus not serving their local public well
  • Passports from the Home Office can take far too long to renew
  • Taxation errors by HMRC are said to ‘run into millions’

Productivity improvement has thus transformed the standard of living and quality of lives of most people living in the developed nations and, overall,  around a third of the world’s population

That means there’s still a long way to go