Swings + Roundabouts Spring 2021

Some of you might already know that I do a bit of consulting work for The Icehouse, New Zealand’s premier business growth, development, and coaching firm. The Icehouse was born some twenty years ago, out of a funding alliance between the University of Auckland and the Government’s business incubator programme. In the early years, it helped early-stage firms, with high- growth potential, to get established and to access quality advice. Since then, The Icehouse has moved towards assisting companies with an established track-record, who have the desire to grow significantly. To date, it has helped more than 5,000 businesses to increase their average revenue growth by 12% annually, at a rate 2.5 times faster than comparable New Zealand businesses, while generating more than $325m in combined revenue. At the time of writing, The Icehouse has just completed a nationwide roadshow, visiting 15 major provincial centres, as part of its twenty-year celebrations. I attended the Wellington event in early July, where we heard from Icehouse CEO Gavin Lennox and other speakers. Somewhat inevitably, the conversation turned towards such topics as productivity, innovation, effectiveness, value-production, and business sustainability. Productivity is a deceptively complex subject, closely related to the three Es (efficiency, effectiveness, and economy). However, in its most basic form, productivity is simply the ratio of outputs to inputs. If we want to improve the productivity ratio in our favour, then we can do one of two things: We can either increase our outputs (which broadly equates to greater efficiency and more effective use of resources), or we can decrease our inputs (which relates to greater economy). Alternatively, we can both increase outputs and decrease inputs, at the same time. As the value of our outputs increases in relation to the cost of inputs, then some very interesting things start to happen. The first thing is that we generate more wealth, through the transformation of raw materials into higher-value products. The second thing is that more production makes these higher-value goods available to more people, thereby democratising the results of the production process. Interestingly, we can measure productivity ratios in many different ways, including dollars, hours, units produced, quality, or other relevant measures. So, with this in mind, I thought that I would share with you three cautionary tales about productivity. Three cautionary tales about productivity By Phil Sales September 2021 { 34 }