Are You Listening, Government

The Australian Productivity Commission has made some recommendations for a National Disability Insurance Scheme.

The government is (probably) going to partially meet the funding requirements.

This process is fairly typical. A government funded body makes recommendations to government who accept the recommendations in principle but fail to implement or fund them completely.

I understand that governments have many calls on their funds and have to make difficult discussions on priorities … but this does seem at best an imperfect process.

Any suggestions for improvement?

Where are you?

Imagine for a moment that you are in charge of the country.

Your country needs you to increase its competitiveness… you know the best way to do this is to improve its productivity.

Of course, what you might do will depend very much on the country you are in charge of … its current economy, its current industrial strengths, the skill levels of the workforce, the nature of the infrastructure, etc.

So what you do depends on where you are.

The same is obviously true when improving organisational productivity. You need to know where the organisation is in terms of its development, in terms of its aspirations and aims, in terms of its progress towards meeting those aims, etc.

So, whenever you need to move forward, you first need to know where you are.

Less is sometimes more

Sometimes we want output to go down .. sometimes we even want people doing as little work as possible.

Think of maintenance engineers … we want them efficiently and effectively involved in preventative maintenance. We want them sat down the rest of the time (if there is any ‘rest of the time’) .. we don’t want them fixing breakdowns … because we don’t want breakdowns.

Governments too sometimes work too hard. Many of them seem to think their role is to pass legislation … so they are relentless in passing legislation. But we want fewer laws, not more.

So, let’s start a campaign … to identify those jobs and roles where the preferred slogan is “Be more productive – do less work!”.

Italy Flags

Italy’s productivity is on the decline. This is bad news for Italy and for the EU (and especially the Eurozone countries).

Italy seems to have a whole bureaucracy of regulation that keeps Italian companies small ….. making it difficult to secure economies of scale … and stops them doing lots of things that would improve their productivity.

Of course this is unsustainable in the longer-term … but Italy is a conservative country … not really open to change.

I fear things have to get worse before they get better.

More food, please

Food inflation combined with inadequate gains in productivity are clear indicators that our ability to feed a rapidly growing population is at serious risk without swift action.

Example 1
Eggs are one of the most basic, affordable protein sources that people around the world depend upon. But, in recent years, production has been declining by one egg per chicken per year.

Example 2
Global milk production has almost doubled in the past 50 years. Yet, fewer people have access to milk today because populations are growing faster than production gains,

Unintended consequences

Governments (bless them!) often do things with good intentions.. but often fail to think through the unintended consequences of their actions.

Take energy subsidies as an example. Quite a few governments subsidise energy prices … to help businesses be more competitive, perhaps.

However, business will only take a cold, hard look at energy usage when prices are high … so keeping prices artificially low means more energy is used than should be – with consequences for both energy stocks and for the environment.

Good intention. Bad result.

8,000 years

I’ve talked in the past about the need to improve agricultural productivity to keep the world fed.

This was brought home to me this week when I read an astonishing fact.  (Assuming, of course, that this is true  … and I have no reason to doubt it.)

“The world will need as much food in the next 40 years as it has consumed in the past 8,000 years.”

I have nothing to add.

Convergent Thinking

At the recent Rio summit (the less than spectacular one) there was some discussion about whether GDP is the best measure of a nation’s well-being … in an age where we are increasingly looking at the negative impact (on the environment) of increased industrial activity.

The World Confederation of Productivity Science has been looking at the same issues for some time and has proposed the establishment of a SEE (social, environmental and economic) productivity index which tempers GDP with social and environmental factors.

It is good to see the rest of the world catching up with our thinking!

Efficiency, Effectiveness and Productivity

You will recognise the 3 word in the title to this post as being …. well, what, exactly? related terms? or synonyms?

If you do a search for these terms online, you can find lots of definitions and lots of ratios … many go which are just plain wrong!

In descriptive terms, efficiency is doing things right … and effectiveness is doing the right things.

In simple ratios … Efficiency = Actual Output / Standard Output (i.e. it measures how good performance is compared to some measure of what the machine or the person or the team should do … in the case of a machine this might be the manufacturer’s specified optimal performance).

Effectiveness = Standard Output / Resources Required (i.e. it measures how well we turn resources into – quality sets of – our planned output)

Then productivity becomes Efficiency x Effectiveness

= (Actual Output / Standard Output) x (Standard Output / Resources Used)

= Actual Output / Resources Used

Simple, really!

(This has been a public service refresher announcement!)

Sort out the Euro, please

It is almost important to run a high productivity company at the moment. The shadow hanging over Europe from the Euro crisis is sucking all the energy out of the European market … and pulling other markets down with it.

We know that we are already in a long-term difficult period … if ‘they’ cannot sort out the Euro soon, this period will just keep on getting longer.

Current ‘strategies’ seem ostrich-like … trying to mask the symptoms whilst failing to address underlying problems.

What we need is decisive action … soon!