This short HBR raises an important paradox. It suggests that people have become more productive but companies, not so much.
Whilst I agree with the observation, I feel that the arguments to explain the paradox were too simplistic.
Let me share a few ideas.
Firstly, I feel it essential that a business has an effective strategy. Secondly, the whole business must be effectively engaged in operationalizing that strategy – this is generally not the case, particularly in large businesses.
In my experience, it’s in business processes that the most damage is done, in terms of the productivity leakage and the diluting of strategy. Processes are frequently broken, poorly designed and maintained but most important of all they are not effectively customer focused.
Next I would like to throw in to the mix two archetypes, namely the Sales Director or VP and the Finance Director or CFO.
In my experience the typical sales director is motivated by the top line irrespective of margin, marketing considerations or the business strategy. These old fashioned sales directors are dinosaurs – they are like market pedlars and they destroy effective productivity too.
As for the CFO too many are pompous without any deep understanding of the business, the markets, customers and the strategy. Many are poorly educated, fail to understand the behavioral interactions in business – they frequently struggle because they cannot articulate themselves well. For them, there is a simplistic notion, ‘the numbers never lie’. The CFO want to slash and burn, reducing the headcount and the cost per employee. So the CFO is an effective roadblock to strategy delivery and improving corporate productivity.
I could expand this blog by introducing projects but I hope the reader will indulge me that most large projects fail to achieve their objectives and water down the effectiveness of business strategy. Most important of all is the link between projects and productivity – it’s always there in the justification stage but is very rarely delivered.
So to conclude, corporate productivity is important and I suggest that it should feature in the business strategy. Finally, I would argue that it’s time the corporate dinosaurs were consigned to the golf course.