Productivity in a Connected World
Report from the WCPS Think Tank
As part of their planning and preparation for the next world Productivity congress (Hong Kong/China, November 2001) the World Confederation of Productivity Science recently held a 'think tank' session in Boston, USA.
Participants were senior members of the WCPS and a group representing the Hong Kong/China hosts of the Congress. However, importantly there was a small number of 'external' facilitators/catalysts, there to make sure that, in drawing up the draft programme, we addressed current productivity issues, and issues of interest and concern to potential delegates.
The meeting was held in the Ernst & Young Center for Business Innovation, which provides 'think tank' facilities for the consultancy. One of the facilitators was Chris Meyer, the Director of the Center and the co-author of the recent book 'Blur' and the just-about-to-be-published 'Future Wealth'. He was joined by Alan Grant, of a Boston consultancy Exchange Partners and also by John Jordan, another member of the Center for Business Innovation. Rather than discuss the (less interesting) planning arrangements for the Congress, this article concentrates on the views that emerged from the session on the changing world in which we live and its impact on current and emerging productivity trends. The result is my synthesis of the various views put forward and includes thoughts, material and issues raised by both the facilitators and the rest of the members of the meeting. I have not tried to construct a balanced article, merely to reflect the spread of the discussion - this itself shows the changing nature of the environment, and signals the kinds of issues we, as a profession, must address. Each point is made briefly - it is up to you to give it some more thought and develop policy/action around it!
The Information Age
Chris Meyer started by describing a discontinuity in economic development - the shift from the industrial age to the information age. He did this by drawing the life cycle of each of these ages (see Fig 1) and using this to suggest that we are currently at a point where the industrial age is reaching its plateau of maturity, but that the information age is at a period of maximum growth and development.
This leads to emerging new forms of business and business organisation. These new forms can lead to a significant change in performance but require new performance measures. As yet we do not have appropriate yardsticks for these new forms. For example, Chris suggested that a measure of innovation might be the percentage of company revenue that arises from products less than one year old - but is this an adequate measure?
The changing nature of products, and the increasing sophistication of customers, means that concepts of value are changing. The value of a product now often lies in less tangible attributes. For example, a buyer of a new car may particularly value the keyless entry, the traction control, the in-car navigation system, etc. The value of these intangibles is subjective but can be very high - in terms of shaping the 'buy decision'.
An alternative (though not new) view of value suggested was based on scarcity and availability. When what was once scarce becomes plentiful (e.g. network bandwidth) or what was once plentiful becomes scarce (skilled labour), organisations are slow to respond. For far too long, they act as if the former situation still applies, then they are often forced to over-compensate and over-react because of the delay in adapting.
Talent is now scarce and therefore expensive. Law firms in the USA are paying recent graduates salaries that are higher than those earned by state attorneys-general.
New forms of business
An example of a new (though actually very old) form of business is barter. If Yahoo and The Economist do a deal on providing content from The Economist on the Yahoo portal website, no money may change hands - Yahoo gains content (and readers more likely to stay with the website and read the associated advertising): The Economist gains exposure and (hopefully) more subscribers.
Such transactions would not figure in current productivity models - yet obviously consume inputs in the creation of value. Such transactions also may not enter the taxation system - this may be very attractive for the parties involved in the transaction, but of considerable concern to governments.
The dotcom (.com) phenomenon created some discussion. These startups have to prove their longevity by evolving into real dotcompanies. Similarly, established organisations have to embrace the technology, and the culture, of the internet and move their established companies to being dotcompanies. The two must learn from each other and form true, new (or at least effective hybrid) organisations.
Developing and rewarding talent
Over the last few decades the issue of job satisfaction has been raised several times - though many organisations have paid lip-service to enhancing it. Yet in a time of increasing competition for skilled labour and real talent, keeping employees satisfied, and developing, becomes very important. Also, perhaps luckily, in an economy that is getting richer and increasingly sophisticated, more people end up doing jobs they like (most of the really dangerous and unpleasant jobs have gone - or have been 'exported' to other parts of the world) and are working harder and over longer hours.
Organisations have to create value both with, and for, their employees. In a fast-changing world, long-range plans become out-of-date all too quickly. An individual assigned to a project has to have the flexibility, and the autonomy, to adjust activity as the environment changes. Thus, it is much more important to recognise, nurture and value talent, than to back plans.
Outputs and Outcomes
The difference between outputs and outcomes was raised - this is particularly important for senior policy-makers, especially those in the public sector and in government. For example the outputs of a health service process might be measured in terms of illness addressed. However, the really important strategic decisions taken with reference to health have 'wellness' as an outcome - not an output.
We are living in an increasingly connected world. Connectedness is something different than connectivity (which is generally seen to refer to the 'wiring'). Scott Sink, the President of WCPS, pointed out that in the terms in which we often really mean it, the world used to be highly 'connected'. He cited the example of his father who in the 1950s was a florist with a small shop. He knew all his regular customers and would treat them, respond to them accordingly. As organisations grew, this close contact (connectedness) was lost. Only now is technology providing the means to re-connect.
Connections now are more complex - a web (paralleling the technical, wired web) is a useful concept.
In a webbed world, the productivity of specific, individual organisations may be less important than the overall productivity of a complete web. Thus, we now see the world's 3 largest car manufacturers co-operating on a web portal that gives them all access to their major suppliers - this web offers value to all. We have moved from supply chain to supply web.
Learning and adapting systems
We are even now moving beyond 'new' forms of working such as 'mass customisation' to exploit 'learning systems'. For example very soon car manufacturers will have the capability to download software into cars which will learn the driving habits of the driver and upload this information (via satellite) to a central computer. This computer will aggregate and analyse data from many cars/drivers and adjust the software which will be re-downloaded. The system has learnt and been adapted.
Concepts of efficiency also change over time with different circumstances. The established input/output model does not hold, for example, in data networking where redundancy and over capacity (in the form of very high bandwidth) makes for efficient networking.
Recently, organisational efficiency (productivity) has concentrated on business processes - BPR being the prime example. Yet, in this new, wired world our processes interact with those of our suppliers and customers - interfaces become important.
Network connectivity creates new markets - an interesting phrase used was that "every market is a network, every network is a potential market". Networks drive efficient markets - though not necessarily controlled ones.
'Old' forms of productivity assume a high degree of control: 'new' productivity has to accept changes in the environment and make provision for 'externalities': it must recognise that sometimes we cannot control, merely influence. Further, we must decouple elements of former systems to allow more 'openness' and flexibility.
To summarise, businesses must :
Poductivity professionals must :
A question put to us - but not answered - was ...
How would we measure the productivity of YAHOO?
If any reader of this website would like to make suggestions, I'd be happy to publish them.
John Heap May 2000
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