From May issue NZ Manufacturer

-Ian Walsh, Argon &  Co

It’s great to see the recent upsurge in discussions regarding the need for New Zealand to be more productive. This discussion is long overdue. The problems with New Zealand’s productivity have been masked by employees working harder for longer hours, and a surge in immigration providing excess labour, rather than working smarter.

This has kicked the productivity problem down the road, and masked the reality that almost all other countries in the OECD are more productive per labour hour than we are. It is a shame that we’ve waited until we’ve run out of levers to pull, the platform to burn, and for our economy to be in arguably its worst shape ever for us to confront this brutal reality.

As ever in these situations there are many peddling solutions looking for a problem. They offer silver bullets with IT and digital solutions, which look great in demonstrative environments but often don’t deliver fully when implemented.

With that said, this does identify a further problem – that we are behind in digital adoption, investment in R&D and technology. However, to suggest that by addressing the digital adoption gap we will also address the productivity gap is somewhat erroneous.

Digital solutions aim to automate or improve the efficiency of existing processes and ways of working, and these tools can enhance productivity when successfully implemented with careful planning, training, and change management.

However, to be effective these tools need efficient, consistent physical practices and operational processes to work alongside and model. This is where these solutions aren’t replicating the success of the demo environments they’re sold on – the real operations of our businesses aren’t the tidy and optimally-structured brainchildren of software developers.

They’re chaotic factories, reactive back offices, haphazard warehouses, and on-the-fly solutions of decision makers just looking to get products or services out the door.

Digital solutions are icing, but we don’t have the cake.

For real success we need to have the right macro-economic conditions working in tandem with our business leaders who are willing to adapt to more competitive ways of working and lead change to create the right culture for best practice to become second nature.

This will enable all the benefits of digital technologies to be realised. The culture and technology need to work in unison so the realised productivity benefits are formed on strong foundations not quicksand.

As mentioned before, we need to have the right macro-economic conditions. This involves systemically embedding productivity-based thinking in NZ. We need to get clear alignment with key stakeholders: government, universities, business, banking and our communities.

It’s poignant to note that this is exactly what Japan did post World War 2: they established a specific ministry to drive collaboration amongst these stakeholders. The development of best practices (through Toyota and others) was the primary outcome, and then automation and digitisation.

It is encouraging to see we now have a minister of small business and manufacturing, and an advisory group with business owners and leaders providing input as to business needs.

These are positive steps heading in the right direction. But it’s important not lose sight of the prize in pursuit of quick fixes when a rigorous systemic approach will deliver long term sustainable competitive advantage.

We have a mountain to climb, lets do this together for a better future for NZ.