The Productivity Conundrum: Why is Productivity Declining?

Productivity declined 0.5% in the last 5 years globally till 2017 end, whereas it gained 2.5% in some previous decades. Puzzling:

McKinsey[1] states three factors include waning productivity growth rates in the last 15 years, the global slowdown due to the financial crisis on 2008, and that digitisation has not caught on.

Job growth has happened in the last few years, but not with productivity gains.

While productivity declined 1% in the 1990s growth due to computers and digitisation was ending in 2005.

Mckinsey feels that digitisation and computerization has led to cannibalisation and reduction in footfalls (up to 10% in retail). Transition barriers and lag effects are culprits. Operating and business models are changing and transforming bringing in a lag.

There is a feeling that productivity growth will be about 2% per year in the coming decade, 60% coming from digitisation gains.

I would imagine that low growth in the economy, low investments and changing workloads are reducing the effectiveness of people. This is combined with user unfriendly systems.

Let me give you an example:

I am asked to do more and more on then net like paying bills and e-transactions. But when something goes wrong I cannot access the provider and get answers easily. That reduces my productivity as I have to spend unnecessary time. Companies need to rethink this and think about the customer and the convenience of the customer.

LinkedIn, Amazon, SBI, HDFC, Uber are all guilty of this.

We cannot have a lopsided productivity view: the convenience of the company at the expense of the convenience of the customer. Let me give an example: If on Uber your location is not precise due to their location system, then there is a productivity loss for them and for me. Their map showed the cab was 4 minutes away and the driver thought he had arrived.

In SBI e-statements full details of payments and receipts are not given and it is not possible to get this easily from the net or by a personal visit.

I can go on and on. Productivity gains must take into account the customer also, not just the company for it to be pervasive. If you decide not to create value, you will get nowhere. Except to use robots for productivity gains without corresponding gains for the customer, and consequently for you.



Gautam Mahajan

President, Customer Value Foundation and Inter-Link India

Founding Editor of Journal of Creating Value

New Delhi 110065 +91 9810060368  

Twitter @ValueCreationJ  Blogs:

Author of Value CreationTotal Customer Value ManagementCustomer Value Investment

Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transforms the entire company to focus on Creating Value for the Customer by aligning each person’s role in Creating Customer Value and getting shareholder wealth and Value.


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