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Will technology help or hinder productivity?

Will technology help or hinder productivity?

As technology increases, productivity decreases

The global market for App and productivity software was estimated to be worth just shy of $60 Billion in 2016. So clearly, we have neither a shortage of people feeling they need tools to help them be more productive or suppliers willing to keep developing and providing those tools.

It is especially curious then that, the more technologically advanced our businesses (and our smartphones) become, the less productive we seem to be. In fact, it is widely reported that the rate of productivity growth (a measure of output per worker) in America is at its lowest point in 40 years.

However, this decline in productivity in the face of the most rapid diffusion of technology across networks is not unique to the United States, having shown similar trends in most of the developed world.

The productivity paradox

This apparent contradiction, known as the 'productivity paradox', does however need some context.

Firstly, while we easily speak about new technologies as being "disruptive" this is mostly only considered in relation to an industry. The 'disruption' caused internally, with staff, by new software or even hardware, necessitates that everyone learns new skills, incorporate new systems and change behaviour. This takes time, and in a world where technology is moving at a blistering pace, employees may well be stragglers in the race. Not having enough time to really understand and learn new technologies and, by implication, being less productive than in in the past.

A further influence of technology on our lives is the implication of being connected at all times. In theory, we should be more productive since we have all the work tools we need, available on our computers and our smartphones, but the impact of personal emails, videos, social media and video gaming all conspire to distract employees and offset some of the potentially productivity-enhancing potential of being connected 24/7.

It's not a sprint, it's a marathon

Another view is that the sluggish growth in productivity is more fiction than fact. Perhaps, it is argued, the measures used to determine productivity levels are out-dated, compared to the technologies being incorporated. Or, maybe it is natural that there is a lag before productivity is raised by a new technology. After all, to some degree at least we are entering unchartered territory as we boldly move into the fourth industrial revolution. Maybe we just don't know yet?

There is one view however, put forward by Lord Adair Turner in his presentation "Capitalism in the age of robots: work, robots and wealth in the 21st Century" that is both stunningly simple and compelling.

What paradox?

In Lord Turner's view there really is no productivity paradox. Simply put, the impact of new technology on a growth in productivity will depend largely on who benefits most from these new innovations and then how they choose to enjoy those gains, directing productivity accordingly.

So, if those earning most revenue choose to spend it on services that are hard to automate (i.e. artisanal or artistic), the net result would translate as a coexistence of rapid technological development progressing side-by-side with slow or no productivity growth.

Essentially, this view holds that technological advance does not need to always result in increased productivity.

They can, and do, happen independently of each other.

While this view may explain the past and make a prediction about the future, at an organisational ERP level, the role of technologies such as Artificial intelligence and Machine Learning, already in-service at especially manufacturing enterprises, are demonstrating how technology working side-by-side with employees is not only improving productivity but also reframing the nature of business.

Here are three ways that AI can improve organisational performance:

1. Productivity Improvements

Companies exist to show a shareholder return and to maximise profits. One of the ways in which this can be done is through increased productivity. This in itself is however not a competitive advantage anymore, since the methods for optimising workforce performance are well understood and can easily be replicated. Automating mundane tasks through artificial intelligence however creates an opportunity for competitive advantage. Not only will data be entered more rapidly by AI, it can also interpret this data much more efficiently thereby making it more meaningful and user-friendly towards meeting business ends through improved productivity.

2. Enhanced decision-making

As businesses continue to generate mountains of big data, it is AI that can be trained to harness this resource to achieve business benefits. Analytical scrutiny can reveal data patterns both relating to business operations and employee data, resulting in faster and more informed decision-making and ultimately strategic advantage.

3. More efficient work-flow

An enterprise resource planning system typically has many moving parts and numerous processes executing simultaneously. By allowing AI to manage the workflow it is not only simplified but also optimised as the artificial intelligence synchronises and arranges processes for optimal outcomes.

This increased application of technology, especially in the form of Artificial Intelligence is fast emerging as a factor of production that is changing how work is done, projected to increase labour productivity by up to 40% over the next two decades.

In order to achieve this, not only will the relationship between technology and productivity be redefined, at a more fundamental level, it will also redefine the connection between man and machine -which may well turn out to be a new cost of production.

By Craig Johnston of Seidor Bluekey.

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