Robert Solow, Nobel laureate in economics, famously quipped in 1987 that “you can see the computer age everywhere but in the productivity statistics.” Other than a brief bump between 1995 and 2000, the growth in productivity in advanced economies has not kept pace with the growth in IT spending.
Technology was supposed to free people for more productive uses of their time. But so far it has not worked out that way. Companies invested heavily in technology but not in true integration. They integrated the tools with one another but not with the way people work. As a result, they often made matters worse. The technology that was meant to liberate employees has insidiously trapped them. It is no wonder that, in 2014 in the US, 51% of employees reported being disengaged, while 18% said they were “actively disengaged,” a recipe for subtle forms of corporate sabotage.
Now we are at the dawn of a new technology age, characterized by the explosive growth of data, connectivity, and processing power. And while history might suggest that today’s digital, cloud, and connected technologies will have little effect on productivity, we believe their benefits could be substantial. Compared with the industrial systems of the past (massive HR, ERP, and CRM databases), today’s technology is more flexible, forgiving, and conducive to collaboration and data analytics. For example, agile software development, which is based on iteration and continual improvement, allows developers to write code that conforms to how people actually do their jobs.
If companies successfully marry these new digital approaches with what we call “smart simplicity,” they can unleash the latent power of their technology and their people. Smart simplicity is built on the premise that companies are most productive when they harness the intelligence of their employees. (See “Smart Rules: Six Ways to Get People to Solve Problems Without You,” BCG article, October 2011.) Many of today’s most successful digital natives, such as Netflix and Spotify, deploy aspects of smart simplicity in order to run agile and productive businesses.