Slash and Burn: Productivity and Enterprise 2.0

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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Desktop computers
Desktop computers

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.

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The timing of your case-study initiative is excellent! It’s a good time for the E2.0 community to take stock of the progress made so far, and to discover which of our claims hold up under scrutiny.

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Enterprise 2.0 describes the introduction and implementation of Web 2.0 technologies within the enterprise, including rich Internet applications, providing software as a service, and using the web as a general platform

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Mark
Mark

"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."Honestly, I don't know how anyone can make the "increased productivity allows us to work less" argument with a straight face anymore. The only people I know who a) have a job and b) work only 40 hours a week are temporary hires who are bound by the terms of their contract not to work overtime.

emanuelequintarelli
emanuelequintarelli

Sameer,while in the chart Italy seems to be in a slightly different position than other EU countries, I'm not completely sure that 'doing more with less' is a less relevant goal here.On the contrary, I believe the reasons for Europe to lagging behind are a bit more articulated and less rational:- the entire enterprise 2.0 concept and many enterprise 2.0 platforms have been invented in and for an american centric culture. As suggested by the latest privacy related study from the 2.0 Adoption Council, this reality adds significant hurdles to market adoption and many european managers are simply not yet exposed to the enterprise 2.0 discussion (language and missing international scope being some of the most relevant points here)- the mainstream organizational culture in most large european companies is not really aligned with bottom-up, people centred, horizontal, participative approaches. While this is surely true also in US, from my own experience in different european countries here the way power is handled and distributed deeply differs from US (lack of meritocracy as a main point)- european case studies are just starting to emerge now, while US can share hundreds of story already- I believe lack of accountability and transparency could be two other reasons (deeper but maybe connected to sheer people capacity) for which many companies are not yet looking at Enterprise 2.0. When you don't know who is doing what and how (and this state of things is strongly welcomed to many in the organization), it's really tough to scientifically improve the situationThat said, I absolutely agree both with you and Dennis Howlett that selling Enterprise 2.0 on productivity is not the best, most effective, lasting way to go and that we, as consultants, have a major responsibility to clearly move from soft benefits to the acceleration of business performance.

Ellen Feaheny
Ellen Feaheny

I would like to visit the microcosm surrounding Northwestern University - interesting case study I guess, at least, since not reality with what is going on in American corporations from what I have seen in the field over the last year+ working with or discussing these themes with > 30+ small and large corps. Intrigue, interest, desire, and understanding that IT and orgs needs to evolve their approaches and skills to stay competitive, evolve their workforce, and yeah - productivity would be nice too (but more innovation, honest and open knowledge share, and integrations for reduced system redundancy) - these are themes that I saw... Yet of course the impact of their implementations will play out for months and months - really years. So how could the trees possibly be picked - here or in the "emerging economies"? Baffling comment. But that's the good news too!

Megan Murray
Megan Murray

Wow indeed. That low hanging fruit idea seems a bit myopic to me. From the perspective of someone on the ground who is constantly introducing people to technology that most us take for granted, there's still a great deal of low hanging fruit to be had. Pretty surprised to see that. Very eager to hear the EU comments.

Ed Nadrotowicz
Ed Nadrotowicz

Please, we're not even close on exhausting IT generated productivity. We have tools that we come no where near to fully exploiting. People, being human, cannot adopt new ways of working as quickly as IT can deploy the latest version of enterprise software that has more productivity enhancing features for them to not use. Maybe the easiest to grasp benefits have been reached but so much more awaits. And that's just in the things we know about today. The mobile space hold much promise in the way of providing more people data in a context that makes it useful than ever could be done before. Augmented reality applications are just beginning to take shape. There's much more to come from IT in terms of productivity.

Mark Fidelman
Mark Fidelman

RE: Exhausted benefits of IT in the USAI'm not sure Academia is the right place to go for these answers. Gordon is on the sidelines watching while IT is figuring out these issues in real time. The economist makes the classic mistake of asking the scholars (who are still living in the World is Flat model) instead of the navigators (those that understand the power of collaborative networks, crowd sourcing and innovation management - the World is Round and Connected). If the Economist were better informed, they would be asking the Adoption 2.0 council or Sameer Patel for your input on the subject. Then a more rounded view of the issue would emerge. The fact is, we are now entering a new Enterprise model. One where productivity will increase many fold as a result of companies' leveraging the new knowledge, collaboration and innovation tools. I believe we call that Enterprise 2.0

Ana Silva
Ana Silva

Great comment! Being an European myself I can relate to the reasons highlighted here.

Sameer
Sameer

Very insightful stuff, Emanuele. Cultures are different for sure. though, and not to sound like a macro economist, I do believe that the global market opportunities for large companies, regardless of where they are will start to create an equilibrium on the back office side. Italian, French, Indian or American companies will be competing for the same pie of business more and more and that my ultimately lead to more openness on how to re-tool for global competition. Ultimately I still feel strongly about productivity as a degree of achievement as opposed to # of hours - thats the more current and useful definition.Lets see how it shakes out.

Sameer
Sameer

Valuable themes and I hope you're right about large scale attitude change. Until then, lets draw a direct line between investment and acceleration of known performance goals as the catalyst to embracing these newer forms of work.Thanks for the comment!

Sameer
Sameer

Yeah I cringed when I read that low hanging fruit comment as well. Ironically what they call "low hanging fruit" was ridiculously expensive, rigid, proprietary and complex deployments of technology used to solve all kinds of problems. Nothing low handing about it. In fact, were finally entering the era of low hanging if you ask me.

Sameer
Sameer

Absolutely.I think if were going to talk about productivity at all, the discussion needs to be in the context of how much more an individual (and ultimately the business) can achieve from these new advancements - not how many hours they put in. Frankly, the latter borders on insulting and doesn't really get anyone anywhere. If you can prove the value in terms of achievement - thats rewarding.

Sameer
Sameer

Hey Mark,Brilliant points (and thanks for the nod: ). Yeah - to say that the benefits of productivity in the U.S are exhausted is really a myopic view. Though I still feel that to some degree the jokes on us for not having been the obvious answer after 4 odd years of beating the E20 drum. In this age of social media you hardly need to a well publicized rag to be the Ssole marketing channel.We are entering a new enterprise model and ultimately a new economic model once there is scale. And the Economist, given its name, can be at the fore front of talking solutions to help business leaders get out of the mess. I absolutely love the publication and I hope they are the ones to take the leap.

Emanuele
Emanuele

Sameer, of course you are right but even working with the EMEA side of huge corporation I often feel the right culture is not yet there with the european part quite completely disconnected from the american part.That will change and we are everyday more competing for the same resources and deals but it will still take time.Our goal of course is to shake all this out and reducing this time to the minimum :)

Mark Fidelman
Mark Fidelman

To class up the publication, I am submitting your name as a expert source :-)

Sameer
Sameer

Heh. I worry its all downhill from here if i get labelled an expert :)

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