You’d think that the massive growth of the Internet would bring with it a massive growth in productivity. But the opposite is happening.
“A decade-long global decline in productivity growth threatens future competitiveness, profitability, wages, and living standards in both mature and emerging economies,” The Conference Board announced in its 2015 report on global productivity. The report was backed up by analysis from the Wall Street Journal which found productivity in the US had halved between the 1990s and the 2000s.
"A detailed analysis of different metrics since the mid-2000s shows the primary problem with productivity is not inefficient workers," said Bart van Ark, The Conference Board chief economist. "Rather, companies and countries appear increasingly unable to translate investments in technology and innovation into timely gains in output."
“You can see the computer age everywhere except in the productivity statistics,” Nobel laureate Robert Solow said in 1987. (“Productivity isn’t everything, but in the long run it is almost everything,” Paul Krugman, another Nobel laureate said.) Then along came the 1990s and there was a significant productivity uptake. You could hear a great sigh of relief roll across Silicon Valley. But then the 2000s arrived and productivity began to decline again. What was up?
What is up is that consumer productivity has been greatly increased by the Internet, while employee productivity has greatly lagged behind. As Mark Hurd, Oracle CEO stated in 2015, “Consumer IT spend has grown five times in a decade. Companies’ IT spend in that time frame is flat — and 82 percent of their spend is on maintenance; only 18 percent on innovation. Consumers are innovating. Companies are not.”
Consumers have become much better educated, independent-minded and skeptical as a result of the Internet. Consumers have essentially become a new super-powerful organization. The web is their workplace, Facebook is their leisure place. Consumers are much more demanding today. They are less loyal and less trusting, particularly of organizations and brands. They switch brands more frequently.
A 2013 study by Accenture estimated “that the 'Switching Economy' puts up to $5.9 trillion of revenue up for grabs for companies globally.” It is common knowledge that it is five to seven times more expensive to get a new customer than to keep an existing one. Organizations may be producing the product more efficiently, but keeping customers and producing sales is becoming more and more expensive and time-consuming.
What’s more, the enterprise technology that employees have to do their jobs is mostly appalling. I listened to a senior executive from one of the world’s largest consultancies state that for the first time this year he had received a computer from his company that was more powerful than the computer he had at home. Think about that for a moment.
Most intranets are an absolute and utter joke. Enterprise search is pathetic. Why? Because today’s management culture has no interest in making the work lives of —particularly its knowledge workers — easier and more productive. In fact, management practice often heaps more complexity and awful, unusable systems on top of frustrated, overwhelmed employees.
And we wonder why there is a global employee engagement crisis? And we wonder why there is a productivity crisis?