Thought Leadership Articles

    The Stagnating Productivity Challenge: A Case for Change Management

    Aug 21, 2017 | Posted by Michael Campbell

    In spite of groundbreaking breakthroughs and startling growth in technological progress, capital invested into innovation projects have mostly failed to translate to higher levels of productivity. In fact, this rendition of the productivity paradox is one of the biggest economic problems in which its complexity surpasses even that of the Great Recession. By scrutinising the latest economic data collected by the Conference Board, we can better visualise how global productivity growth (considering both total factor productivity and labour productivity) has changed historically. Comparing between the two periods before the 2007-2008 financial crisis, we can see that the global productivity growth has been on the decline, albeit with some anticipated upside, in 2017.

    Growth of Labour Productivity and Total Factor Productivity.png 

     Figure 1: Estimates of Global Productivity Growth - per year, average %, 1999-2016 

    Significant lower levels of Total Factor Productivity (TFP) is worrying because it is one of the most commonly-used measure associated with the contribution to efficiency deriving from technology and innovation. Moreover, productivity is the number one factor that explains the variance leading to long-term growth and improved societal well-being (also known as rising living standards). Consequently, if this trend persists, everyone will be less well-off. The picture that the data is painting seems to be in absolute contrast to the expectations of higher productivity predominantly associated with technological and innovative breakthroughs. What exactly is happening here?

    One plausible explanation is that the world has yet to fully appreciate and experience the big bang of productivity that is going to be generated by the collision of new technologies and innovation. We can make observations that exemplifies this phenomenon across the globe. For instance, the current state of our technologies (i.e. cheaper and improved sensors, connectivity, and data-enhanced products) has enabled companies and governments to serve markets previously unreachable (e.g. third world and developing regions) and gradually resolve complex global problems previously thought unsolvable (e.g. reducing carbon emissions). Yet, according to Klaus Schwab - Founder and Executive Chairman of the World Economic Forum, the biggest hurdle that businesses, governments and civil society leaders face is "to transform their organisations to realise fully the efficiencies that digital capabilities deliver".1 

    Transformation CES.png

    Figure 2: Change-Enabling System - Transformation      

    Transforming organisations are intricately complex and require multiple pillars of capabilities to deliver them. Establishing a Change-Enabling system (e.g. in Figure 2) is a comprehensive way to improve the likelihood of a successful transformation. The deminishing growth of TFP indirectly suggests that labour productivity growth is attained through increased usage of machinery by workers. In other words, how much an average worker can produce depends mainly on how much the company invests in the machines they work with. While this may be reflective of technological investment,  unless there are existing infrastructure to help every worker accept, embrace, learn and use the technology, the productivity goals, as measured in TFP, are not achieved. This calls for better organisational management systems that focus on training and engaging human capital to facilitate ultimate utilisation, accelerate speed of adoption and optimise proficiency - Prosci® Three factors of Change which define the Return of Investment (ROI) of a project. 


    Clearly, reaping the productive benefits of innovation and technology in the long term is a complex challenge that companies and governments all want to address. Labour/Skill shortages as well as wage cost pressures are already pressing on the bottom lines of many businesses. With declining productivity compounding the problem of generating profits, companies, particularly those in mature economies, are feeling the heat and struggling to sustain growth. For longer and sustainable productivity, there are increasing recognition amongst business and government leaders to invest in intangible assets, especially on human capital. Since productivity depends on people changing their old ways of working to embracing new technology and adopting new ways of working, this is why  there is such a strong case for Change Management  and why it is so central to every transformation.

    Prosci's individual model of Change - ADKAR model allows change leaders to leverage a structured approach and methodology to facilitate individual change and measure change outcomes, as well as create a common language of change within the organisation. The Prosci's Change Management metholodology is practised by 80% of Fortune 100 companies and is based on extensive research spanning two decades and insights from over 4500 participants from 56 countries. 

     Prosci Change Management Effectiveness.png

    Figure 3: Prosci® Data chart on Change Management Effectiveness and Achieved Outcomes

    The data chart is clear - better Change Management equates better likelihood of delivering project outcomes. According to this chart, you can potentially improve your chances of delivering your desired project results by a staggering 6 times if your organisation applies excellent change management practices. In fact, this data trend of delivering significantly better project results from excellent change management as opposed to poor change management practices has been consistently replicated by other consultancy firms such as McKinsey and Boston Consulting Group.

    Embed Change Management in your organisation today and release the productivity potential of your technological capabilities.  A great way to start this journey is to understand an approach and process to the creation of a strategic and intentional plan for Enterprise Change Management (ECM), the internalisation of a structured approach to change as a business as usual (BAU) process in all of your employees, line managers and leaders. In our upcoming 1-day Prosci ECM bootcamp we outline the structure and contents of such a strategic plan and provide you with an approach, tools and guidance on how to begin completing this for your organisation. Why not join us?

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    Prosci Enterprise Change Management (ECM) Bootcamp

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    Register for the Prosci Enterprise Change Management Bootcamp


    1 Quoted from Klaus Schwab (2016) The Fourth Industrial Revolution, Impact - Economy - Productivity, pp 34. 

    Topics: Prosci training, change management