The Productivity Paradox

The media is alive this morning regarding the long standing issues we have on productivity. Emphasis is on how lack of productivity is restricting income growth which is restricting the economy. First port of call is whose fault it is, and the default route that it’s all about low cost labour.

Probably, all of these things have a degree of truth to them, but in the scheme of things are secondary.

Productivity is low because we are still trying to improve the things we have been doing or making, rather than doing or creating new things.

at GrowHouse, we understand the power- and the limitations – of improvement better than most. We keep our process excellence ninjas keen and hungry, but in the end, improvement is an exercise in diminishing marginal returns. Get even close to six sigma measures, and getting incremental improvement on 97%+ levels of efficiency is an exercise in rock breaking.

Innovation on the other hand creates a class of activity that resets the game. Not only do we start with new services and products, but we have a whole new field on which to let loose the ninjas.

But innovation – and it’s big ugly sibling invention – require different skills, mindsets, and leadership. they have higher levels of risk, and require purpose and passion.

We have a paradox – most of the measures we take to motivate improvement kill the creativity on which innovation thrives:

  • Have people work for an expected reward.
  • Focus people on the expectation of being evaluated.
  • Deploy lots of checking and surveillance.
  • Make them follow a limited range of processes
  • And make it a competitive exercise.

(a major nod to Margaret Heffernan – “A bigger prize”)

If we really want to improve productivity, we need to innovate at every level. To explore possibility, and let people’s imagination loose.

Most of our structures, management processes and leadership practice pay lip service to this, and fall back on an evaluation mindset. It is the same principle that applies to the way we are educating tomorrows staff – and it’s substantially flawed and counterproductive.

The fast growing economies have cottoned on to this – China, Korea, and the like. they are changing the way they collaborate, create and lead. We need to do the same. Doing more of what we’re doing won’t solve it.

We’re running a series of exploratory conversations with people to explore possibility. The first is in Derby on 28th May, and we’ll be running the next in London. If you want to explore that space where knowledge ends, and possibility begins, we’d love you to join us.

Not Knowing – a critical business skill

There’s an interesting, and I think important theme emerging. As we tiptoe out of the caution of the last seven years, and entertain the idea of ambitious business growth, rather than survival and incremental growth, the rules have changed.

We are discovering the limitations of expertise.

Expertise and knowledge are great in relatively static conditions, and we come to rely on the “schemata” – ways of thinking, built on experience, that govern what we take notice of. Expertise gets us promoted, makes our businesses work and allows us to train people to do things. And that is now a problem.

Almost all of the clients I work with are trying to deal with a paradox. How do they make the most of today, knowing that it is becoming obsolescent – but not knowing with any precision what is coming next.

We like certainty (uncertainty, unless it’s nature is properly understood, generated the same reactions as fear), but in order to thrive tomorrow we need to develop confidence in “Not Knowing”. (If you want more, Google “Flawed but Willing” by Khurshed Dehnugara, and “Not Knowing” by D’Souza)

When we can lean into not knowing, we can lose the fear of being wrong, and fully engage the real capabilities we need going forward – imagination, creativity and collaboration. We can find allies in adjacent areas. We can reimagine.

“Experts” are useful for what you do today, but a liability if they are relied on to guide you into tomorrow. they don’t know either. Your best guide to tomorrow is you.

We are in the middle of massive change that will see that majority of routine accounting, legal, insurance and medical skills replaced by technology. Accountants, Lawyers and the rest will not disappear – we’ll just need fewer of them, with deeper understanding of and imagination regarding the field.

Success tomorrow will be driven by real purpose, joy in what we do, creativity, and the ability to imagine and explore with the confidence of a four year old.

At GrowHouse, we are working with clients on how to explore and profitably occupy this emerging territory. If you’d like information mail me richard.merrick@growhouseinitiative.uk  and we can talk more.

Potbound.

It’s Spring. On the one hand I love it – the end of winter, renewal, growth everywhere. On the other hand, it can overwhelm me. Everything grows at once, and there is that sudden rush as we seek to bring our gardens under control. Despite the regularity of Spring, it still takes me by surprise. I had become used to Winter.

It strikes me that in reality, businesses are much the same – and that we can learn a lot from Gardeners.

Businesses have seasons. They sprout from an idea, grow, thrive and then wither.

Gardeners in tune with nature benefit. They do not try to ignore the seasons, they work with them. They variously take cuttings, grow seedlings, graft plants onto new rootstock. Create hybrids.

They fell, prune, and transplant.

They know how to look after the soil.

They know when to harvest, and when to plant.

So why is it in business, we don’t do the same? We often expect our idea to thrive as though it’s always Spring. We let the business grow, but in effect keep it in the same pot – a mixture of products, markets and locations, amplified by processes, protocols and the fertiliser of efficiency. – and the danger is, it becomes potbound.

As the business grows, so do the people in it – ideas, ambitions, confidence, networks. This growth needs room.

But far too many of us have let  let our businesses become potbound. People and ideas find nowhere to grow, so they wither whilst the main plant absorbs all the nourishment, until, inevitably, Autumn arrives.

I’ve often wondered why we are so resistant to letting businesses die back.

I guess there are lots of structural reasons – prime amongst which are that investors and bankers don’t like the idea of a pause in growth, even though that is necessary to gather the resources for the next stage of growth. As owners and employees we become dependent on the produce. We got used to perpetual credit and have become very poor at harvesting and storing so we can overwinter. We fell out of the idea of rhythms and cycles. Which is a mistake.

Generally speaking, we’re nowhere near as good at managing business cycles as gardeners are at managing the seasons.

In the industrial era, the main nutrients for our business was capital and fixed assets – machines and offices.They were easy to measure, difficult to move and could be kept in the asset register.They could be hothoused. They were difficult to transplant successfully – it was an expensive and risky process.

In the connection economy, the main nutrients for our businesses is talent – and that’s as mobile as dandelion seeds. It will take root anywhere conditions permit. It’s difficult to measure, and cannot be owned.

Traditional businesses are struggling in the connection economy. Everything they do is replicable. They are unwieldy, and have to resort to forcing growth through extracting every ounce of cash, even though the peak of their cycle has passed. They become hostages to the expectation of continual Spring.

Connection economy businesses on the other hand are flexible, and can find the space to grow because they are mobile. They experiment, hybridise and adapt. They can follow the seasons. There are lots of places in them for talent to grow, and talent has a choice.

After seven years of economic winter, Spring has arrived.

Time to cultivate your business.

If you want to know more about helping businesses thrive throughout the seasons, talk to us at the GrowHouse.