Focus on Productivity and Innovation to Reduce Economic Anxiety
Solving today’s productivity puzzle is the key to countering the big challenges facing many organizations including an aging workforce, strained government budgets, inequality and threats to the environment. “Productivity is the ultimate engine of growth in the global economy” said Angel Gurria, secretary-general of the Organization for Economic Co-operation and Development (OECD) in his introduction to a major 2015 report on the subject, the future of productivity.
This is a huge change in their thinking. Previously OCED believed that the key to productivity growth was through economic policies including low inflation, modest public debt, competitive tax rates and so on. They now recognize that companies need to increase their productivity including a more efficient deployment of skills, technology and innovation. They added that countries need to help spread innovation to smaller companies.
There is growing anxiety in some quarters that the financial turmoil could undermine the broader US, Canadian and other world economies. It’s becoming apparent that government monetary policy won’t get it out of our slow-growth rut. Some economists and investors fear that a bout of extended instability in financial markets will threaten to weaken global economies. The Globe & Mail concluded, on January 18, 2016 that, “One of the key lessons of the past year is that monetary policy isn’t a cure-all.”
Looking Ahead – The Fourth Industrial Revolution
The theme of the 2016 World Economic Forum meeting in Davos was the Fourth Industrial Revolution. It encompassed the use of robots, driverless cars and the sweeping changes internet technology is bringing to businesses. To manage in this industrial revolution organizations must have the diversity, resilience, positivity and confidence to not just manage these changes but to take advantage of them.
Focus on Productivity and Innovation
The successful adoption of these new technologies could boost global productivity by as much as the personal computer and the Internet did during the late 1990s. To reduce the current economic anxieties and manage through the Fourth Industrial Revolution, companies must focus on productivity and innovation. Although the root causes of the current economics remains a puzzle it’s time to move beyond the blame and excuses and start looking for solutions and opportunities. Everyone has their theories about the driving forces of our current economics, how this situation started and what is necessary to reduce our economic anxiety. But these theories are just theories. What’s more important is what we can do to manage through this period.
Key Areas of Opportunity
- Think about re-branding your efforts
Rather than be known for your resources, your products and your services, think about how you can be known for your resourcefulness. The concept of re-branding is for both for countries and organizations.
- Examine your key business processes
Are your employees producing a lot of value-added or are they adding little value? Does your company understand and invest in the importance of finding new and better ways to create and offer their products and services? Is productivity improvement and innovation considered important but little real investment is made in undertaking these critical initiatives? Statistically, most companies talk a lot about productivity and innovation and spend their investment dollars on “business as usual.”
- Invest in Innovation
During these challenging economics many companies will reach for cost-cutting measures and operational efficiencies. This will bring them short-term gain but in the longer-term will likely lead to obsolescence. Only investing in innovation can ensure longer-term success. The experience by some of our clients is that small investments in innovation led to the realization of millions of dollars in new sales. In one particular case, it ensured the continued survival of an organization that thought they were going to cease to exist.
Many organizations today know that they must become more innovative in order to survive and grow, especially in this Fourth Industrial Revolution. No longer can we look to the past to predict the future. No longer can we expect incremental improvements to products and services to be the innovation we need. We must re-think and re-invent what it is that we are doing and want to do. We need to identify what our products and services will be in order to manage today and in the future. We must increase our levels of productivity to move quickly into this new era.
A Call to Action
Research indicates that although most leaders understand the critical importance of innovation today and their employees want to contribute to their organization’s innovation mandate, most leaders don’t do anything about it. In your organizations:
- Create a vision for innovation
- Develop the strategies for innovation
- Re-shape your culture to be supportive of innovation
- Develop a process that engages employees to help drive innovation
Work on increasing productivity
In addition to innovation, reduce economic anxiety by increasing productivity:
- Update organizational strategies frequently in the face of continually evolving technologies.
- Use business-model innovations to capture the value that entirely new products, services, processes, structures, reporting, and so on will deliver.
- Plan for a range of scenarios and abandon assumptions about where your competition will come and what risks this might present.
- Don’t be afraid to look beyond long-established models. Celebrate past successes but don’t depend upon them for your future.
- Keep their employee’s skills up-to-date and engage them in analyzing every key business process throughout your organization, in all departments and locations in an effort to increase productivity.
The Bottom Line
The bottom line is that innovation is now critical for survival. Those that continue doing what they’ve always done will not survive. The Fourth Industrial Revolution is challenging us to keep up. To do this we must embrace innovation and adopt agile responses to technology and business operations in general; all the while focusing on productivity.