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America is facing a productivity crisis, and it’s creating a huge drag on our economy. Since 2007, productivity in the U.S. nonfarm business sector has only grown at an annualized rate of 1.2 percent. The last time we saw such anemic productivity growth was back in the 1970s. And it’s getting worse. Last year, productivity only grew by 0.7 percent, and it actually fell by 0.6 percent in Q1 2016.
Experts can’t seem to agree why productivity growth is historically low. Explanations include low demand for products and services, underinvestment in the wake of the Great Recession and a slowing pace of technological innovation. Of these, the technology angle is particularly intriguing — productivity grew strongly between 1990 and 2007, just when technology was exploding in the workplace.
The yawning gap between consumer and enterprise services
Since then, however, technology in the workplace has stagnated. We’re still using yesterday’s tools to get work done. Most work processes aren’t automated — instead, they rely on a flurry of emails to coordinate activities. For example, when my company surveyed 2,400 managers in 2016, only 5 percent used a mobile app to access enterprise services — such as onboarding new employees or opening a purchase order. They were 10 times more likely to use email — and nearly 20 percent used the phone or had face-to-face meetings.
Compare this with consumer services such as Amazon or Uber. When was the last time you emailed Apple or called eBay? Over the last decade, these companies have transformed the consumer experience, making it incredibly easy to find and order goods and services online. We can get what we want, anytime and anywhere. And delivery is fast and predictable — driven by automated fulfillment processes that are efficient, reliable and measurable.
Hundreds of billions wasted every year
The truth is that enterprises are still stuck in the last century — and the productivity drain is immense. An overwhelming seven in 10 managers say they are negatively affected, with manual workplace processes lowering their productivity and leaving them less time for strategic initiatives. In fact, they end up spending 40 percent of their time on mundane administrative work — that’s an astounding two days a week.
How much does this cost the economy? With more than 16 million managers in the U.S. earning nearly $90,000 a year on average, the grand total is almost $600 billion a year — about 3.3 percent of the U.S. GDP. And that’s just the managers — when you consider the entire white-collar workforce, the implications are staggering.
We need to change our mind-set about work
So why haven’t most U.S. businesses embraced consumerization and automation yet? It’s not because we’re waiting for technology — the technology to do this exists today, and it’s already widely used in areas such as IT. And it’s not because of lack of demand — 90 percent of managers say that automating their work processes would make them more efficient. It’s because we’re still stuck in our old way of doing work — we use technology to reinforce existing work practices, rather than redesigning processes to take advantage of technological advances.
Many companies follow a tech refresh every three years, but what about a business process refresh to go along with it? Companies can start injecting productivity by revamping their enterprise processes. Here are three steps to start down that path:
- Analyze the small data. See how processes are working today and identify the bottlenecks. Take employee onboarding, for example. How many email requests does it take the average manager to get a new employee the requisite work space, connectivity, security access, employee credit card, computer needs? How many days does it take to turn around those services? How many new employees have what they need to start working on Day 1?
- Question why. Figure out why a process is currently run the way it is and look for alternatives that can simplify and streamline. Identify the proper approval cycles rather than just the status quo.
- Fix the processes to allow machine logic to do the heavy lifting. Make it easy for managers to approve the next steps and stay abreast of status, similar to the way online consumer sites work by adding automation to bypass email.
Fortunately, things are starting to change. Productivity is an enormous hot-button issue for enterprises, and this is beginning to drive a revolution. Increasingly, organizations are rationalizing and streamlining the delivery of enterprise services. The results are compelling — according to a 2015 Deloitte survey, organizations that do this see an average productivity increase of about 8 percent every year. And according to Deloitte, these organizations place automation at the top of the agenda for their shared service centers.
And that’s good productivity news for a change.
Dave Wright is chief strategy officer at ServiceNow, and serves as the company’s evangelist for how to improve workplace productivity. He enables ServiceNow customers to eliminate their reliance on email, spreadsheets and other manual processes so their employees can work smarter, not harder. Prior to joining ServiceNow in December 2011, Wright spent more than six years with VMware Inc. as vice president of Technical Services for EMEA. From 2003 to 2005, Wright headed up the technical division for Northern and Southern Europe at Mercury Interactive. Reach him @TheWrightView.
This article originally appeared on Recode.net.
