My musings on different political topics relevant to America today.

Tuesday, August 20, 2013

We all Need Some Fat, Including Business

I was reading the Economist (As my avid fans would recall I mentioned them in my last article) and this one article intrigued me.  It was called "In Praise of Laziness."  The main point of it was that many businesspeople are overworked, stifling creativity.  According to the article, "Teresa Amabile of Harvard Business School, who has been conducting a huge study of work and creativity, reports that workers are generally more creative on low-pressure days than on high-pressure days when they are confronted with a flurry of unpredictable demands."  This is funny, because the behavior of corporate America would make you think the opposite is true.  The goal seems to be to fill everyone's plate to the brim, and then some more until it overflows.  

Maximizing productivity while minimizing labor costs may squeeze some extra productivity out of your workforce, but ultimately in the long run this will cost in innovation.  It has been highly reported that American companies are leaner and meaner than ever before.  This is true but soon there won't be any fat left to cut off.  They have stripped down to the muscle, and if they cut anymore it will be self-destructive.  In addition to continue with this human anatomy analogy, while excessive fat (spare time), is bad for the body, some fat is necessary for its proper functioning.  In this case, companies need to remember that creating an innovative corporate environment will require allowing a little fat (spare time) for its workforce, to best allow unique ideas to develop.

The gains in productivity by corporations over the last 6 years were in my opinion an illusion.  An illusion created by the massive layoffs across corporate America during the recession.  The layoffs left behind only the most productive workers, plus those left were forced to work more if they wished to keep their jobs.  This is a one off gain.  It better be recognized as such.  Ultimately innovation drives growth, not busyness.  

In case anyone is skeptical of my claim that innovation drives growth, I will give 2 examples.  I will compare Dell with Apple.  While Dell did well for a long time, and was selling more computers than Apple, it lacked one thing, innovation.  It beat Apple a million times over when it came to cost and pricing, however Apple slowly generated innovative products that changed the fundamentals of the tech market, giving Apple the edge.  While Dell probably still sells more computers than Apple, I doubt anyone would argue Dell is the better run company.  

Therefore since innovation is the catalyst of growth (fyi I am ripping off the economist Schumpeter with the innovation centered growth model, check out his stuff if you would like to learn more), I think it would make sense if companies started to evaluate more on the basis of innovation and less on the basis of "productivity."  Too often, productivity is measured in how much work you did, whether or not it was done in the most effective way.  Mouse clicks and emails sent ultimately mean nothing.  Its the intangibles behind the numbers that matter.  However its hard to measure intangibles, so too often companies will place too much emphasis on measurable things such as emails and mouse clicks.  I believe that the companies that give their employees ample time and incentive to innovate will do the best.  How companies are to do that is out of the scope of this article.  But I hope you corporate workers or future corporate workers out there will consider this.

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