Technology and the Paradox of Productivity© – Georgios Ardavanis Ph.D. 

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Consider all of the incredible technological advancements that have influenced companies in the past three years. Cloud computing, mobile, technology-enabled business services, and globalization have all experienced tremendous growth since 2011. Professionally, we all feel more productive, and institutionally, our firms feel more productive. The United States has to be producing a lot more as a country. Killing it, especially after the recession has passed, isn’t that right? Now, take a look at the most recent US productivity data (Q1 was only recently released):  

·       Q1 2013:  0.5% (annualized)

·       2012:  0.7%

·       2011:  0.6%

Put another way, our productivity doesn’t seem to be increasing after three years of incredible innovation and development. What is happening? Following the PC revolution, MIT economist Robert Solow noticed a similar pattern in 1986 and joked, “You can see the computer age everywhere but in the productivity statistics.”

It may be difficult for those of us in the innovation economy to accept, but generally speaking, productivity does not increase during an innovation cycle boom. It takes time for new technology to become widely used, refined, and accepted. Reprogramming computer software is a quick process. Not in human form. The chart above created by Forrester a few years ago that predicted “the next big thing” in computing effectively depicted this phenomenon: In a world without iPads, iPhone 5s, cloud computing, and wireless broadband is unimaginable. But to fully utilize these incredible tools and increase our collective productivity, we still have a lot of work ahead of us.


Thus, is productivity increased by using computers, or do they take up needless time, effort, and knowledge?

The argument that originally surfaced a few decades ago is still being debated, and there is no agreement on the solution.   

When computers were originally invented, they were meant to completely change the way we lived by enabling us to work more quickly and effectively. Employers were meant to extract greater productivity out of their workers in the same period, but has that happened? Productivity can be described as obtaining more output from a certain input by generating more in a given amount of time or material (e.g., 10 items in an hour as opposed to 8).  

Nine out of ten responders to a brief, informal study I conducted agreed that the computer has increased productivity. This, along with the fact that there were roughly 403.1 million computers worldwide in 2023, gives rise to the theory that, at least in part, humans are content with computers.
Technology experts, however, are the first to point out that there are a variety of reasons why people use computers, and it ultimately depends on the user whether or not these high-end devices increase productivity.  

A managing director of a private communications company provides an example of how computers and the Internet can reduce productivity: your employees are wasting company time on Facebook, Instagram, Myspace, and other sites. Some businesses find that blocking these websites works, but they still play the games that are included in the program.

In my experience as a consultant, incompetent computer specialists have often been hired to mechanize broken systems. Before implementing technology, business process re-engineering requires that the computer process itself be in line with the existing work environment. I believe that companies should be technology-enabled rather than technology-driven. Others concur, stating that they frequently witness companies entering developing nations, setting up shop, bringing in computers, installing unfamiliar systems, neglecting to train staff, and then complaining that they aren’t getting value for their money or that their investment in technology hasn’t increased productivity.

But instead of introducing programs that will help their employees in particular fields, they hire technology experts who give them bulk software prescriptions which at the end of the day may benefit one out of ten processes and two out of ten employees. Employers (particularly in countries where productivity levels and general work ethics still need improving) want a quick fix to slow turnover and see advanced technology as a cure-all when it is only one part of the productivity equation. Technology is just one part of the system. The other components must be present for the whole system to increase its productivity, like leadership, management, competent workers, incentives, information to perform tasks, resources, facilities, and teamwork. If all of these are not optimized and synergized there will be no significant increase in productivity or quality (despite computers). Even while computers are faster and more precise than humans at many basic activities, including computations, this is of little use if the results are left on someone else’s desk for a few weeks. People’s associations between computer-related productivity gaps and malfunctioning processes in humans may be more accurate. There are many cases where the use of computer systems and technology enhances productivity significantly: “Businessmen are not stupid, they would not continue to pour a lot of money into something that is not working.”

One great illustration of how computer technologies can improve efficiency is the Automated Banking Machine (ABM). ABMs run without the need for human interaction, except for refilling and maintenance. This certainly reduces the difficulty and time required for bank employees and customers to deposit and withdraw money. According to a banking insider, ABM systems handle more money transfers in a few hours than a bank’s opening hours can typically handle in a full day.

“It takes away the hassle of time constraints, labor shortages, and interpersonal disagreements between staff and customers, which is always good,” according to him. “The ABM system, internet banking, and tele-banking have brought a new level of convenience to the modern banking world.” The amount of labor required to run modern businesses has decreased significantly because of computers, as demonstrated by the user-friendly ABM and automated phone systems. Computer-based solutions have simplified daily life management through email, teleconferencing, voice mail, instant messaging, and caller ID. Computer systems also form the foundation of entire enterprises, such as online shipping networks and wireless international money transfer companies.      

However, the use of computers has made identity theft and other similar technology-related problems more common. These problems have an indirect impact on people’s productivity, both within and outside of the office. Everyone agrees that the computer and its accompanying technologies have changed our lives, despite the arguments for and against computer use and whether or not it increases productivity. 

Therefore, how you use and comprehend computers will determine whether they become a financial burden or a productivity booster. One size and type does not fit all needs, just like it does with apparel, food, and automobiles. To get the most use and fit out of your information technology solutions, it is up to you and your business to customize them to your unique demands and the needs of your staff.


Georgios Ardavanis -12/05/2024

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