Why focusing on productivity is critical for your business right now

Why focusing on productivity is critical for your business right now

MikkoLaaksonenHistorically, we’ve seen many companies struggle with transforming their business. As paradigms shift and market requirements change drastically, many companies have been left choking on the dust of their competitors.

Many times the situation can be simplified by arguing that established companies are so busy optimizing their current core business, that they do not focus enough on new ways of doing that business to meet the future requirements of their customers. Innovator’s Dilemma (Clayton Christensen, 1997) analyses these reasons pretty well.

Now we’re seeing a multitude of management tools to tackle this problem. We have internal startups, intrapreneurship, spinoffs, tiger teams, task forces, innovation hubs, thinking outside the box, in the box and getting bigger boxes… Companies are even hiring external consultant companies (which funnily enough are often advertising companies gone digital innovation) to facilitate innovation.

It would be interesting to know exactly how often these activities tackle the real problem of why established companies struggle renewing themselves: Lack of long term development resources and true top management focus on creating new business.

I am not saying the above mentioned innovation activities are wrong. I am just saying that when not acted upon firmly, their greatest achievement is just the tick in the box in a manager’s task list.

What could be the solution then?

Personally I think the coming exponential increase in productivity due to robotics and automation is fascinating. Not because of how the automation is done technically, but what it will cause and facilitate in businesses and society. It is definitely not going to be limited to just higher profitability of companies, lower priced goods and the need to re-think income distribution.

Robotics will facilitate the big shift of manufacturing companies to service companies on a huge scale. Whole industries will change from manufacturing to providing new kinds of value to their customers. The focus will shift from manufacturing products to serving the customers – with the physical product being just one small building block in the service chain.

Just like Uber has changed the logic of the taxi industry towards mobility as a service, a refrigerator company can start thinking of nutrition as a service. The fridge could adjust food orders to the owner’s schedule, activity levels or the coming dinner party in the calendar. The fridge could order champagne automatically when the owner couple’s anniversary is close.

For this, the fridge company doesn’t necessarily need fridge assembly people, but coders and technology partners which many fridge companies might not focus on (yet).

Why is robotics the critical link here? Once companies can automate work, the human employees can focus on more creative tasks in serving the end customer. In other words, machines and software will create the current value of the business and human employees will start using their creativity to create the new value business.

For example this warehousing company that started using robots (with 800% productivity gain by the way) is now focusing on the market need of making online purchase packages seem more personalized. If their employees are focusing on improving the personalization of the parcels, the competitor with employees still focusing on running around the warehouse will become less competitive and hence less relevant in the market.

To an extent, automation and robotics will solve the innovator’s dilemma: Suddenly companies will have a lot more resources for experimentation and developing new business models (like services). The companies with the best strategic technology partners that understand the company’s business and can help the company utilize automation technology will win.

If you’re running a business, be sure to take automation and robotics seriously. Both on physical and software level. Because automating your current business is required for your company to remain relevant in the next 5 to 10 years.