Earlier this weekPricewaterhouseCoopers released their Productivity Scorecard, which showed Australia’s business efficiency isn’t improving as fast at it once was and the country’s relative performance is steadily slipping down international tables.
One of the notable things in the PwC report is the massive growth of productivity in the 1990s, a point emphasised by the accompanying paper on business productivity in a presentation by economist Saul Eslake last month to the Reserve Bank of Australia.
Economists attribute most of this late 20th Century growth to deregulation and privatisation by governments in the 1980s and 90s but the driving force was really computerisation that allowed most businesses to do much more with less.
Immediately noticeable for an Australian walking into a British, European or Japanese office during the early 1990s was the lack of desktop computers.
Australian businesses adopted technology a lot quicker than their counterparts outside of North America and this alone was probably responsible for the country’s relatively good productivity growth in that decade.
The arrival of computers – followed by desktop printers and Internet access – suddenly gave small businesses access the means to do jobs that even the biggest corporations had struggled to do previously and drove a rapid reorganisation of most offices.
Everybody from secretaries to architects and graphic designers to lawyers – even economists – suddenly found they had the tools at their fingertips to do work they could have only dreamed of prior to 1990. This drove massive productivity gains in businesses of all sizes.
From 2000 onwards, things became tougher as the easy gains had been made and the incremental improvements in technology, such as smartphones, cloud computing and web publishing didn’t have the same substantive effect the early PCs delivered with spreadsheets, word processing and desktop publishing.
The real challenge we now face in business – and government – is to start harnessing cloud computing driven online services that promise to deliver similar productivity gains to what we saw twenty years ago.
We have the tools; online office apps, Customer Relation Management services (CRM) and sharing platforms all deliver major improvements in the way we work within our businesses and with external partners like contractors, suppliers and event clients.
One of the most powerful aspects of cloud computing services is reduced capital cost meaning reduced barriers to entry into markets we previously may have thought were safe.
This easy access into established sectors is one of reasons the retail industry’s giants are now struggling as online competitors can setup cheaply and quickly while offering better prices and service.
Retail is only one of the more obvious sectors being changed by these technologies and as the decade continues we’re going to close to every industry be radically changed by low cost computers accessing the Internet.
As business owners and managers we need to look at our own processes and systems with an eye on how we can improve workflows and customer service within our organisations.
Those of us who manage to get these new technologies are going to reap the benefit of the next productivity wave, those who don’t are going to go the way that many uncompetitive and slow to respond industries did in the 1980s.