tools of measurement
Are the measurements we use to establish productivity out of date?

For years economists and business people alike have debated the "productivity paradox" — asking how the same technology that connects people and information seamlessly can also slow down our workplace productivity. 

I have a theory: they're asking the wrong questions.

Correcting How We Define Success

Maybe it’s because I was born the same year Tim Berners-Lee invented the World Wide Web, but the idea that technology has done nothing to revolutionize the method and speed with which we work is to me, entirely illogical. And yet, the Bureau of Economic Analysis in 1991 judged technology’s impact on productivity — measured through GDP growth — to be negligible.

Much like the BEA study, current evidence for the productivity paradox are somewhat dated. From a subjective standpoint, the evidence is all around us: from email and VoIP to document collaboration and data analytics. But the objective ‘evidence’ suggests that IT is in fact slowing down our working output.

So where does the truth lie?

Paradoxical Reasoning

MIT professor Erik Brynjolfsson offered four plausible causes for the productivity paradox:

  • Mismeasurement: the gains are real, but the current measure of productivity is inaccurate
  • Redistribution: private gains come at the expense of other firms and individuals, leaving negligible net gains
  • Time lags: again, real gains, but they take a long time to surface
  • Mismanagement: there are no gains because of the unusual difficulties found in managing IT or information itself

Mismeasurement offers a potential window into why no improvement has been seen: if no accurate method for measuring outcomes exists, then what signs of success could be found? 

The benefits attributed to IT — increased quality, customer service, speed and responsiveness — are the very aspects of output measurement that are so poorly accounted for in productivity statistics. Referencing the 1991 BEA study, economist E. F. Denison noted the unreliability of both productivity and computer output statistics, which would lead to similarly unreliable predictions in productivity. 

Brynjolfsson explains this phenomenon with the following analogy:

"Because you and I stopped buying CDs, the music industry has shrunk, according to revenues and GDP. But we’re not listening to less music. There’s more music consumed than ever before. On paper, the way GDP is calculated, the music industry is disappearing, but in reality, it’s not disappearing.”

To put the analogy in perspective: 2016 has been the worst year in recent history for sales of recorded music, yet listeners streamed almost 209 billion songs in the first half of the year alone. Clearly, selective numbers alone do not tell the whole story. 

From my perspective, IT and the internet are the two most integral instruments to how we operate in the enterprise. Maybe it’s time we consider changing our methods of measuring productivity before determining it has decreased.

Put the Productivity Paradox to Rest

So can we solve the productivity paradox? 

In short … no. Paradoxes, by their nature, are not meant to be solved. 

In today’s enterprise, we are so accustomed to using facts and figures to back up statements that at times it can feel like a requirement. But perhaps it is of more or equal use to determine the accuracy of such statements before reaching a conclusion. Because without internet technology, well, you probably wouldn’t be reading this, would you?