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Improved Productivity

Improved Productivity

Nikkei Asia reported that Bangladesh’s output per citizen is now equal to the output per citizen in neighboring India. In other words there is an improved productivity. For a long time, few thought Bangladesh would develop anything close to a macroeconomic policy that would lift the population out of poverty. It’s a significant achievement—not just for Bangladesh but for other countries that are trying to follow that same path. What makes Bangladesh unusual is that a large part of their strategy was bringing women into the workforce and building infrastructure and policies to support a burgeoning textile industry.

But why does this matter?

Imagine there is a family from China who has just arrived in New York. Neither of the parents have university degrees. They both work at a restaurant, and they have four kids to raise. The parents pay their bills, but they only spend money on things that will increase their ability to make money in the future. So, they’re not taking any trips to Disneyland. Instead, they’re investing money in things like education, tutoring, books and library visits.

If you continue to invest disposable income in things that increase your standard of living, you will notice improved productivity—the amount of output you produce in terms of dollar value will be more than the input to produce that output. A question we ask clients in our one-on-one coaching programs is: Are you more productive?

People usually say, “Yeah, I completed more tasks today.” But improved productivity is whether you are creating more value for the time you work. A better question I ask clients is: Improved productivity is whether you are creating more value for the time you work. A good question to ask is, how will you deploy your disposable income to increase your returns while adjusting for the input cost? Click To Tweet

How will you spend your money to create more money? That’s what you have to think about.

When I was a partner, I did a lot of work with state-owned companies. I traveled to parts of the world that had recently become democracies. Sometimes those democracies inherit strong state institutions run by the military. Usually, these countries mismanage those assets. Instead of increasing productivity, they decrease it.

Our new book Mavis is about productivity strategy. Most people think improved productivity is all about better operations, which is all about time and speed. But improved productivity is about output value, divided by input costs. FIRMSconsulting Insiders who also arranged for access (add on) to our Advanced Knowledge Management System will be able to see slides that show how a typical company would run an operation strategy and implementation program to achieved improved productivity.

This is an excerpt from Monday Morning 8 a.m. newsletter, issue #4.

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