Archive for the ‘Productivity’ Category

When Productivity is Nonsense

In Beating the Odds, Creative Culture, Creativity, Design, Productivity, Strategy, Value on 2010/03/05 at 11:37 am

The concept of “productivity” is a hangover from the industrial economy. Many try to ‘upgrade’ it to apply to the post industrial (knowledge and creative) economy but it is only as successful as putting aerofoil “spoilers” on a front-wheel-drive car — the downforce is on the wrong pair of wheels. Is the suggested obsolescence that bad?

In Singapore, the spotlight has swung on “Productivity” again. It was one of the most campaigned theme at one time (in the 70s) but has apparently lost it’s foothold despite decades of effort. The Economic Strategies Committee’s (ESC) report (see also my blog: “Design in Singapore’s Economic Strategies“) and the ensuing 2010 Budget and Parliament debate have resurrected the age-old issue again. But this is a different day and age.

The easy target of the productivity debate is cheap labour, usually synonymous with foreign workers, though not always. This is when the “less” in the classic productivity definition of “doing more with less” is achieved by lowering the cost of manpower. Never mind the headcount so long as we remain above the “bottom line”. Do or die. Technically, there is nothing wrong about lowering manpower costs, but, not surprisingly, this has social and political repercussions when the consequent of the ratio is foreigners.

But the antecedent of the productivity ratio is the more interesting. How can we increase the “more” in “doing more with less”? To some this simply means not being paid for overtime! To others it means increasing throughput by automation and info-comm; with or without reducing manpower. This, unfortunately, is what many think innovation is all about. Whether you factor in the overtime and the real (total) cost of automation, the balance-book productivity ratio must come up as a big number or you are still in trouble.

In the bigger scheme of things, productivity is a bit of a nonsense. Whilst it is important, and even crucial, to wring out of productivity all that it can yield in every way thinkable, there are aspects of the post-industrial economy that cannot be adequately addressed by the basic productivity equation.

First is the principle of “doing more with more”. The late Ng Teng Fong, a prominent real estate developer in Singapore and Hong Kong, said that he bided high for land because he could get even better returns from them later. Unlike a banker or trader who primarily depends on the market appreciation of value, the developer creates new demand and new value through intentionally good design.

Second is profitability. It is a different metric to productivity because it is no respecter of rules of the game. The competition for better profit margins and ROI goes beyond productivity, and has a life even after productivity levels off (which it always will). Through strategic design and innovation, the “rules of the game” can be changed to effectively eliminate competition. There are of course associated risks, but the potential opportunities of differentiation usually far exceeds the risks in slugging it out in the productivity battle arena.

Third is creative culture. Productivity is a particular nonsense in the heart of creative culture. It is unable to contribute to creative outcomes principally because it is calculative and pre-determined in nature, whereas basic creative culture tends to be speculative and qualitative. Productivity in architects’ and designers’ studios is limited to drawing and project management, and not anywhere near the critical design conceptualisation and design development stage (which wins the work in the first place). There will be an appropriate time for productivity issues to kick in when creative work are eventually executed in the ‘real’ world, but if the creative is not creatively competitive in the first place, productivity is nonsense.