Words
It’s something of a recurring bugbear of mine that people liberally use certain words or phrases that they never define, and for which there is no generally agreed understanding of what they actually mean.
What results is something that appears to be a conversation but is, in fact, just the exchange of different opinions without any substantial debate, leading to the illusion of agreement and common understanding where none exists.
The one I am going to be digging into this week is ‘Productivity’, which I have riffed about in this previous missive.
I’m going to start by posing the simple question, “What do we mean when we say productivity?”.
I bet you’re sitting there thinking, “Well, we all know what productivity is, don’t we?”.
We think we have an intuitive understanding of what it means (well, probably more of a socialised understanding). We know when we’re being productive, don’t we? We certainly know when we feel productive, perhaps after sweeping up all the leaves in the garden (as I look out of my window I can see that that’s a job for this weekend!), or when we’ve finished a number of tasks and ticked them off of our ‘To Do’ list.
However, whether we feel productive or not is not very useful (other than for our mental wellbeing) and it’s subjective. We need objectivity.
So, completing tasks, that’s objective, isn’t it? Yes, but that’s measuring activity, not productivity. Productivity is fundamentally about economic output, as we predominantly use the word.
This is the core of the problem. Economics, and it’s bastard cousin Finance, dominate our lives today. Political and social decisions are driven and justified on the basis of the economics and the finances to a much higher degree than we have seen before. Governments are continually saying the country ‘can’t afford’ certain public services, whilst companies cry it’s not ‘financially viable’ to increase wages and benefits for workers. The solution that both put forward is that ‘extra expenditure must be justified through extra productivity’.
But this become more like a riddle than a policy if you can’t actually explain what ‘extra productivity’ is and how you might measure it.
And they can’t because they are using a 125 year-old-term of manual productivity that divides a measure of output (either value or volume) by the number of hours worked. That was useful when we were in factories, but now we are working in a digital-knowledge economy and complex adaptive and non-linear systems. (I’m paraphrasing a point made by Dr. Richard Claydon here).
To put it another way, they are using analogue measures in a digital world. You might as well try to measure relativity with an abacus.
Needles and Pins
The standard way of measuring productivity is simple, understandable, relatable and utterly useless. Like much of the economics and politics it is used to support, it is simplistic, reductionist and detached from reality.
When we talk about productivity, what we are really referring to is value creation. Back in the days of the factory, output was synonymous with value. To take Adam Smith’s example of the pin factory, each pin produced has a value and so the more pins you produce, the more value you produce. So if you measured the output, then you measured the value created.
Smith used this example to argue for specialisation, observing that one worker doing all the operations could only produce 20 pins in a day, so ten workers would produce 200 pins. However, if each worker specialised in a few tasks, Smith asserted they could produce 48,000 pins per day. I think it’s pretty easy to see that would mean a lot more value is created through specialisation. (That raises the question of individual productivity - but we’ll cover that latter.)
The question, then, is what’s today’s equivalent of pin production? Given that even this simplistic definition of productivity is a proxy of what we really want to measure, value creation, it’s rather important that we understand what we need to measure in today’s complex and fluid service-oriented businesses.
If we define the pin wrongly, then we will direct effort into activities that do not lead to value creation. You know, like the number of reports produced, or presentations given, or process steps completed, or any of the many things we can measure today. The sort of stuff you find in most KPIs, in fact.
And that would be disastrous, wouldn’t it? We’d have organisations full of people frantically doing all sorts of things that don’t actually have an impact on the value created at all. We’d have to come up with a word for that sort of mindless, futile, purposeless type of role, like ‘Bullshit Job’.
Oh.
This paragraph’s not been very productive, has it?
The Room Where It Happens
I can tell you when I was most ‘Productive’ in my career, by which I mean when I created the most value.
I was the Marketing Director for a small communications company and one of the sectors we specialised in was Maritime. A colleague, who ran the customer software part of the business, said he wanted to speak to me about an idea he had for a new service as he’d talked to many other people but no-one seemed to get it.
We spent a morning in a small meeting room with a flip-chart and he started off by explaining his idea. After much questioning and back and forth, I drew what I thought he was describing on the flip chart. “Yes, yes! That’s it”, he exclaimed, “That’s what I’m talking about”. In the course of the next hour or so, we fleshed out the outline of a development plan, a product definition and a marketing plan.
What we had come up with was a unique ship-to-shore messaging service, unlike anything else on the market, that solved a couple of key problems for ship agents, owners and captains. We provided end-to-end support, a singe point of contact and a single bill and my colleague had clients that were ready to buy it at a premium price because it would save them time and money.
Off the back of that meeting and those few sheets of flip chart paper, we quickly got approval to proceed and delivered the first trial of the service to a client. It rapidly went into full production and sales were strong straight from launch. In 18 months, it became our most profitable product and soon after became the biggest revenue earner. It went on to keep the company afloat (and people in jobs) as the other legacy revenue streams dried up, until the business was bought by a competitor.
That morning was, without doubt, the most productive and valuable few hours of my career.
However, it would not show on any measure of productivity out there. It was two blokes in a room, talking. All we ‘produced’ was handful of flip chart sheets covered in semi-legible scribble.
Although it wasn’t just that, of course. It was the combination of our years of experience and expertise in our respective fields. It was the close and trusting relationship we had built up previously that enabled us to ask stupid questions and share wild ideas. It was the energy we co-created in the room.
The subsequent realisation of that value was through the work of others: his software team, my marketing team, the sales team, the operations team, the strategic partner who provided the satellite links and many more.
So what, exactly, was the pin here? And who made it?
Close Your Eyes
OK, so maybe productivity can’t really be measured in any meaningful way anymore, at least for a large number of knowledge workers. Why does any of this matter?
It matters because lots of organisations are still pretending that they can measure productivity and are rewarding and promoting people on the basis of these false measures. That, as I referred to earlier, is pushing people to do things that will be seen and evaluated as ‘productive’ but do not create any value or are even value-destroying.
That is bad enough but then these faux evaluations of productivity are being used an excuse for other policy decision that adversely affect people’s lives, such as ‘Return to Office’ policies.
(The misapplication of these flawed methodologies to public services and the perverse and destructive outcomes that they create for both employees and clients is another horror but one that deserves a missive of it’s own.)
In this excellent Business Insider article, Ed Zitron points out that companies that are obsessed with gathering and acting upon data about their clients have almost NO data on their employees (a point I’ve also made before).
The usual justification for insisting employees return to the office is to improve productivity (and also innovation, collaboration and ‘culture’, all terms which are bandied around with the same free-wheeling inexactitude and are about as useful).
Zitron singles out Amazon, a company known for its data obsession. When questioned about their Return To Office mandate, a senior executive said he
‘had "no data either way" on whether mandating in-office work made people more productive but that executives believe Amazon's workers do their best work when they're together.’
They are not alone in their ‘belief in productivity’ or their complete lack of data to support that belief.
The ‘beliefs’ of these senior executives have been bolstered by several articles recently claiming that remote work is less productive. However, they all rely on a handful of studies that have no relevance to the kind of distributed knowledge work that people do today.
Instead, these studies take work scenarios that can be made to fit to the old industrial concept of ‘productivity’, replacing actually output of pins with some type of task completion, such as completed calls by a ‘call centre’ worker or lines of code completed by a coder. Whether the answering of those calls led to better customer outcomes, or those lines of code led to better software, is not addressed.
One of the studies also takes the fact that workers were stretching out their day to complete the same amount of work (or even a bit more) as a measure of REDUCED productivity. That is, they conclude that productivity PER HOUR fell, even if it actually went up PER DAY!
It’s all utter nonsense, isn’t it? Yet it’s being used by execs as a reason to impose policies that actively make the lives of their employees worse.
Which brings us to the productivity of said executives. How is this measured? Well, how DO you measure the productivity of people who are so removed from the actually production of the pin? Who’s work is a complete abstraction from the actual thing that the company does?
Typically, they are evaluated on the performance of the organisation as a whole, on key metrics like revenue and profitability, which they have no direct impact on; and share price, which is determined by a completely separate process they have no control over.
So that’s OK.
Meanwhile, they use the chimera of ‘productivity’ to force people into pointless, expensive commutes into a half-empty office where they do the same thing they do at home only less ‘productively’ and neglect their families and friends in the process. Just like the good old days.
Zitron points out another appeal of this to CEOs
‘The RTO push is eyewash for investors to prove that drops in revenue and profitability aren't a result of poor managerial decisions but the result of lazy workers sitting at home in their pajamas. In some ways, it's a genius move for executives — a way to establish control over workers during an unprecedented societal awareness of labor rights (thanks to the striking workers of the Writers Guild of America, SAG-AFTRA, and the United Auto Workers) while also shifting the blame and consequences of poor stock performance onto those least responsible.’
That’s right, that’s what productivity means for execs. “If we’re missing the targets we set, it’s your fault for being so lazy and ‘unproductive’.”
Great work if you can get it, right?
All By Myself
In this sea of nonsense, we have the fallacy of individual productivity. This is the idea if we measure an individual’s productivity and maximise that, we will maximise the overall productivity of the organisation.
This is a super fallacy because it contains two misconceptions. The first is that we can measure the productivity of the individual in a meaningful way. The second is that the total productivity is the sum of each individual’s productivity.
If you said it out loud to executives, I’m sure they would say “Of course, that’s not how it works.” They’re not stupid. They know about teams and collaboration and the multiplier effect of people working together. “THAT’S WHY WE WANT YOU BACK IN THE OFFICE!”, they would shout.
But it always best to look at behaviour to see what people really believe, not what they say they believe.
So how do they measure productivity? KPIs? i.e. at the individual level.
“Ah yes, but all the KPIs roll up to the KPIs for the team, division, company”
So all the individual bits add up to the big bit?
“Yes”
And how is that different from adding up everyone’s individual productivity metric to get a total of productivity?
“Because, er, culture and something something. Innovation. AI. Burble.”
And so we go on. I don’t have a solution to measuring productivity in this digital, interconnected and complex world - if I did, I would be considerably richer than I am - but you won’t find a solution unless you admit there’s a problem.
I think we can now agree, though, that there’s a problem with how we talk about productivity and how we apply the concept.
And if we’re really going to re-imagine work, we need to stop pretending we don’t and start looking for some answers.
(If you’ve got some, let me know!)
Excellent article! Thanks for publishing this. This notion of 'productivity' needs a lot more input & review. Work varies by organization/job and so productivity needs to be defined & measured differently. Hopefully your article can stimulate lots of input and discussion.