This morning my favorite business journal, the Economist, has a good article on how the recession has had an impact on productivity and the differences in fall out in the United States vs. the European Union.
First an extremely interesting and arguably polarizing difference in how productivity is defined. The economist says:
Producing more by working less is the key to rising living standards, but in the short term there is a tension between efficiency and jobs.
Whether right or wrong, I don’t believe organizations at least in the United States consider this the goal. Here, its generally about get people to cram more work per hour so we can get more out of their eight hour day. Contrast that objective with them being able to go home early and have a life. But I digress.
On to the the central theme of the article:
Analysis by the Conference Board, a research firm, shows just how different the recession was on either side of the Atlantic. America’s economy shrank by around 2.5% last year but hours worked fell at twice that rate, so productivity (GDP per hour) rose by 2.5%. The average drop in GDP in the 15 countries that made up the European Union before its expansion in 2004 was larger, at 4.2%. But hours worked fell less sharply than in America and, as a result, EU productivity fell by 1.1% (see table). Workers that held on to jobs in America and Europe had their hours cut by similar amounts. The reason total hours worked fell by more in America was that there were more job losses there: employment fell by 3.6% last year, compared with a 1.9% fall in the EU.
Productivity has generally been one of the central themes when it comes to showing benefit from social and Enterprise 2.0 concepts. Often adopted from Knowledge Management. If you’ve read this blog since its inception about 15 months ago or you’re one of my clients, you’ll know that I have a fever-invoking aversion to casting productivity as goal of Enterprise 2.0 design (as opposed to an enabler). This, IMO, results in the colossal short sell of the promise of Enterprise 2.0. Its always been about performance acceleration here, where enterprise 2.0 concepts we know of today are enablers toward established performance goals.
Sticking with the productivity benefit argument since it is used a lot in the context of Enterprise 2.0, is it the case that Europe is seeing slower adoption of Enterprise 2.0 concepts because of the sheer people capacity that still exists in organizations? In other words, the need to do more with less is not as strong in Europe as compared to what’s seen in the United States? If people are the ultimate producers and you have an abundance of labor, being productive by finding experts faster, searching for data and content less, reducing time consuming meetings and email, etc etc don’t seem to be strong, budget-shifting value propositions.
What do our European management thinkers and product vendors think about this and what are you seeing on the ground?
Moving on to a stinging conclusion that should be a wake up call for us all in the Enterprise 2.0 space, whether in the United States or Europe, the Economist says:
Much of the expected slowdown reflects changes in technology, says Mr Jorgenson. The burst of strong growth in American productivity after 1995 was spurred by advances in the semiconductor industry, which led to sharp falls in the price of computing power. The technology is still improving but at a slower pace, and productivity trends will soon reflect that. The global outlook is brighter, because the benefits of IT are far from exhausted in big emerging economies, such as China and India. But that is no longer the case in America, says Robert Gordon of Northwestern University. “We’ve already picked the low-hanging fruit,” he says.
Wow. The benefits of IT are exhausted in America? I don’t buy the conclusion that we’ve wrung all the possible value out of productivity angle in the west. But being objective, if this is what the market perceives as the state of affairs with respect to productivity, those that continue to beat the productivity drum as end value better step up their game. Alternatively, lets stop playing defense, go after those fenced in processes policed by rigid ERP systems for decades and focus on how to accelerate performance by reducing cost, driving revenue and mitigating risk.
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