How can we increase U.S. productivity so we'll continue to be competitive in the world economy? This question has everybody worried. In the days when productivity was measured in terms of manufacturing and agricultural output, the U.S. was supreme. Even now, our productivity in these sectors continues to grow. The trouble is, so few workers are engaged in manufacturing or agriculture that gains in these areas are insignificant in terms of overall productivity. The big question is whether we will be able to compete in the knowledge and service sectors that are coming to dominate the economies of the developed world.
According to Peter Drucker, we're not the only ones who should be worried. In "The New Productivity Challenge" (Harvard Business Review, November-December 1991), Drucker says that countries like Germany and Japan are in no better shape than we are when it comes to the output of their knowledge and service workers.
A few years ago, everybody thought that new technology would lead to enormous increases in productivity in these areas. Computerizing offices, for example, was supposed to mean that fewer people would be able to accomplish far more. This has not happened; staffing levels have continued to rise much faster than productivity. The first country to figure out how to reverse this trend, Drucker says, "will dominate the twenty-first century economically."
Making this breakthrough -- or failing to -- will also have important social consequences. Many people have already noted that the overall standard ofliving in the U.S. is falling, but Drucker thinks this is a problem for all industrialized countries. He sees it in terms of a growing gap in income between well-educated and well- paid knowledge workers -- scientists, computer specialists, consultants of various kinds -- and relatively unskilled service workers. Both kinds of workers need to increase their productivity, but unless service workers, in particular, make great strides, their standard of living will continue to fall relative to that of knowledge workers. The result: The entire developed world will be facing a period of "increasing social tensions, increasing polarization, increasing radicalization, possibly even class war."
What's the answer? Drucker looks back to an earlier revolution in productivity and to the principles of Frederick Taylor, the father of the production line. But instead of asking, as Taylor did, how is a particular task, like shoveling sand, performed, Drucker asks, "What is the task?" In other words, what's the aim in doing a particular job? And, equally important, what don't we need to do in order to accomplish the aim?
This sounds easy. In fact, looking at a task with fresh eyes and stripping away the inessentials is extremely difficult. Most people who want to improve something elaborate it. They add two or three or four pieces to the process -- and some extra employees to take care of the additions. In some cases, the process becomes an end in itself -- as teachers who have to submit detailed lesson plans to principals who are far too busy to read them know from experience.
Drucker' s example of successfully rethinking a task is a Sears, Roebuck innovation in processing mail orders instituted early in this century when most people still paid with coins. Instead of opening each envelope and counting and recording the money, clerks were instructed to weigh the envelopes. If the weight tallied, within specified limits, with the total cost of the order, the envelope was passed on to be scheduled for shipping. This was a daring idea because we are accustomed to dealing with money by counting it. But as result of this and a related innovation, Sears' mail order department enjoyed a remarkable ten-fold increase in productivity within two years.
Or what about the hospitals that have dramatically reduced the time and labor involved in processing admissions? Instead of requiring a long and detailed form for every patient being admitted, these hospitals started asking only for the information they got about emergency patients: name, sex, age, address and how to bill. Why? Because when they really looked at the task, they decided that was all the information they needed.
Figuring out how to make changes like these takes ingenuity and the ability to step back and look at a job as though you've never seen it before. Also, Drucker acknowledges, it's much more difficult with some jobs than others. Most people would agree about the task involved in processing death claims for an insurance company: Pay them as quickly and cheaply as possible -- quantity is the main issue there. But what about jobs where productivity can't be assessed so simply? Maybe both quantity and quality are involved -- Drucker gives the architectural draftswoman as an example. Or maybe quality is the primary consideration.
As Peter Drucker points out, rethinking the way we work so that workers in knowledge and service jobs can attain the productivity of people in manufacturing or agriculture will not be a short-term or an easy job. But in some areas -- education for example - people have already started rethinking their jobs and working to change them. When they succeed, it will be a big step toward achieving the productivity Drucker is talking about.