The Productivity Paradox

Think about all of the amazing technology innovation that has impacted businesses over the last three years.  Since 2011, we have seen an explosion in cloud computing, in mobile, in technology-enabled business services and in globalization.  All of us feel more productive as professionals and our businesses feel more productive instutionally.  As a nation, the US must be cranking in productivity.  Killing it — particularly after rebounding from a recession, right?

Now look at the latest US productivity statistics (Q1 was just released last week):

  • Q1 2013:  0.5% (annualized)
  • 2012:  0.7%
  • 2011:  0.6%

In other words, despite three years of amazing innovation and growth, we don't seem to be gaining in productivity.  What's going on?  

In 1986, observing a similar phenomenon on the heels of the PC revolution, MIT Economist Robert Solow quipped:  "You can see the computer age everywhere but in the productivity statistics."

Those of us that are immersed in the innovation economy may find this hard to believe, but we are not, as a whole, actually more productive when we are in the midst of an innovation cycle boom.  New technologies take time to absorb, refine and make mainstream.  Computer software can be reprogrammed quickly.  Humans can't.  

Forrester captured this phenomenon nicely in a chart they produced a number of years ago predicting "the next big thing" in computing:

Forrester chart

We can't imagine a world without broadband wireless, iPhone 5s, iPads and the cloud.  But we've got a lot of work to do to absorb these amazing technologies and make us all more productive as a whole.

2 thoughts on “The Productivity Paradox

  1. Great point on the lag between innovation and adoption. It is hard to remember that we’re weird. Most people aren’t watching WWDC and Google I/O and dying to play with every new app—adoption takes time.
    A couple of other points worth noting
    1. The new apps and devices often lead to changes in media and entertainment habits first. The average person doesn’t spend $500 on a new iPad for that killer Keynote app. They may justify their purchase that way, but they’ll probably end up using Keynote or PowerPoint on their PC first… so their productivity habits didn’t change much.
    2. People tend to view adds to their productivity as a chance to work less. I can think of a number of attorneys I know that will look at a technological leap and think to themselves “well I’ll bill an hour for 50 minutes of work.” Efficiency doesn’t necessarily lead to aggregate output increases.

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    • Great points, Chris. I’m not sure people are working less. It’d be interesting to see that data because all my anecdotal evidence suggests we are working more thanks to being “always on”.

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