India’s difficult task

India is often cited as the next major economic powerhouse – perhaps even overtaking China.  This is based on India’s recent record in moving up the international GDP league.

However, look just below the surface and you will see that this impressive growth has largely been fuelled by widening employment participation.  India has been very good at creating jobs.  It has been significantly less successful in creating productivity.  India’s GDP per worker is very low. This is OK for growth in certain sectors but limits India’s ability to compete in some sectors – and in overall terms.

India knows it has to improve and increase skills – and is trying to find ways of doing just that.  But this is much trickier than simply employing more workers.  It is, however, essential to securing and sustaining long-term growth in productivity.

Coaching or consultancy

Coaching has become ‘fashionable – the number of business coaches has multiplied dramatically over the last 10 years.

However many of thee coaches are ‘consultants’ under a different name.

What is the difference?

Well, a consultant attempts to improve your business.

A coach, on the other hand, is trying to improve you – so  that you can improve, and continue to improve, your business. The focus, the approach is quite different – as are the skills required.

So, if you need coaching, make sure you employ a coach with the right (personal ) skills and the right focus.

Don’t waste time with new staff

Careers have been changing for some time. More and more people have portfolio careers, switching industries, roles and employers frequently to fit in with a more flexible lifestyle and give a better work-life balance.

This means most firms have higher labour turnover and greater recruitment costs.

It also means it becomes necessary to improve the effectiveness and efficiency of recruitment and induction processes – what is often called ‘onboarding’ these days – - so that shorter tenure employees get up to speed quickly.  

It can take months to get an employee fully up to speed in a skilled job – every week saved is worth money.

Not tariff-ic!

The US is imposing tariffs on a number of imports – notably steel and aluminium.  The aim is to protect US manufacturing by making foreign goods more expensive – thus making domestic products more competitive.  Now I haven’t seen the details of the tariffs – but I do know that this is an area in which there are often unintended consequences – and my experience also tells me that the ‘pain’ from unintended consequences often outweighs the ‘pleasure’ from the intended consequences.

I hope President Trump’s advisors have remembered that US auto manufacturers import steel and aluminium parts from around the world.

There is evidence that – mot surprisingly – countries like China will respond in kind, imposing tariffs on goods most likely to come form the US.

There is other evidence that Modi, in India, is also looking towards forms of protectionism – it seems to becoming into fashion as politicians become more populist – looking for short-term vote grabbers rather than long-term economic success.

The rest of the world needs to avoid getting sucked in – no long-term good will come of it.

Provide a stimulus

Sometimes, well-performing organisations move into ‘coasting’ mode – they know they are good, so they keep doing what they are doing, perhaps taking advantages of new technologies or ‘obvious’ improvements when they come along, but not actively striving for change and improvement.

in such cases, the leaders of the organisation have to find some way of providing a stimulus – forcing them to think more deeply about improvement opportunities.

One such stimulus can come from zero-based budgeting where the organisation makes departments bid for all the funds they need rather than taking last year’s budget and adjusting it to reflect changes.

If the leadership at the same time suggests that the total budget allocation will be no more than, say, last year minus 5%, then departmental managers have to think more deeply about how they can run their departments and achieve agreed outcomes.  Those departmental managers  might think such an approach is ‘unfair’ – but if it unleashes creativity and higher productivity, perhaps a bit of unfairness is what is needed.

Should you control the process – or the costs?

Business people who come from the product, manufacturing or engineering disciplines have a natural instinct to try to exercise process control to improve efficiency and profits.

Those without such a background often aim at controlling costs.

Some take one or other of these approaches to extremes. (Think Six Sigma.)

The great advantage of the former (exercising process control) is that it involves the establishment of useful metrics and experimentation to see what makes those metrics move in the right direction.

The problem with he latter approach (exercising financial control) is that this measurement/experimentation process becomes much more difficult as the linkages between actions and financial consequences are often either too indirect or occur over too long a time. By the time the results are in, it is too late to change the parameters that have resulted in poor results.

So though financial control might be the ultimate aim, something more direct is needed to give you useful levers to pull (or push).  You need some intermediate, relatively direct measures that will tell you promptly what is happening when you make changes.

Control the process properly – and the finances will take caee of themselves.

Be creative …. and productive

There is some debate about whether a concentration on productivity is bad for creativity.  However this is a fallacy. Over-concentration on quality – and especially compliance – can be bad for productivity, but productivity and creativity are natural bedfellows.

So it depends on how broadly or narrowly you interpret productivity.  Rigid compliance to standard operating procedures (SOPs) in the name of productivity might stifle productivity unless you give your employees another avenue where they can exercise invention and innovation.

My old friend, Tor Dahl, always used to say that a natural approach to improving productivity is to:

(a) unfreeze the organisation – allow staff the time and opportunity to contribute ideas as to how what they do might be improved

(b) experiment with those ideas to arrive at new ways of working

(c) re-freeze the organisation by creating new SOPs to reflect the new ways of working and lock in the productivity gains.

Some time later, repeat the cycle.

Then we ensure that creativity is encouraged and that it underpins higher productivity.

Multitasking doesn’t work

Being able to do two things at once might seem like the epitome of efficiency – why waste time doing just one task when you can complete two simultaneously?

However, famously there is a belief (myth?) that women can mulitask but men cannot – hampered by having a ‘one track mind’.

In the real world, rather than the world of gender politics, multitasking seems to be unfruitful, since in practice the work style is not multitasking but micro-sequencing of two parallel tasks.  The problem is that the brain switches so often between the two tasks and focus is lost on each switch and there is a delay each time the switch occurs.

So, stick to one task, focus and concentrate, complete it – and then move on to the next task. You will be more productive.

Don’t worry about completion – look for achievement

We give ourselves a metaphorical ‘pat on the back’ when we complete another item on our ‘to do’ list … and we do the same with our employees. We congratulate them for completing a task or project.

What we should congratulate them for is their achievement – or the impact they have made.

A teacher, for example, who complete a professional development course, has only achieved something if the course results in impact on the learning of students.

The problem is that in recent years we have become more and more compliance oriented – and we have come to delight in tick boxes and ‘sign offs’.

Its time to shift the focus – to achievement and impact.  Much harder – but it is what matters!

Crest of a wave?

McKinsey is suggesting that the recent sluggish productivity performance in the developed world might be coming to an end.  We might soon see productivity rises like we did before the economic downturn – of the order of 2% per year.

Are they right?

Only time will tell.  The time is right – but are the conditions right?  Has all that quantitative easing improved the productivity infrastructure and prepared businesses for an upturn?  Have we been developing skills? Are there technological breakthroughs in the pipeline?

(The answers are maybe, maybe and maybe – but, as we know from history, cycles occur for no good reason – ups and downs …. so perhaps the time is right and enough has been done to ride a wave.  So much of economics is down to confidence anyway that if McKinsey can convince enough people they are right, it will probably become a self-fulfilling prophecy. )

So good for McKinsey.  I’m with them.  Let’s all talk higher productivity – and then deliver what measures we can in our own sphere to make it happen.

See you in the boom times.