The technology productivity paradox: October 29, 2001 issue of New Thinking

October 29, 2001 New Thinking:
The technology productivity paradox

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October 29, 2001

The technology productivity paradox

By Gerry McGovern

The basic promise of technology is more efficiency and thus greater productivity. However, the links between more technology and more productivity have historically been weak. As the Nineties progressed, we were told that that had all changed. Technology has reached critical mass within organizations, the reasoning went, and now we were finally seeing a surge in technology-fueled productivity. A recent McKinsey report begs to differ with this logic.

The report entitled, U.S. Productivity Growth 1995-2000, states that, “Contrary to popular belief, our research shows that IT was only one of many factors causing the post-1995 productivity growth jump.” According to Bill Lewis, director of the McKinsey Global Institute, “There was a big jump in capital spending on IT and a big jump in productivity in the [American] economy as a whole at the end of the ‘90s. But the actual correlation between the two is very weak.”

The question thus must be: if technology is not driving productivity, then what good is it? For a long time we have been sold a technology-driven world of efficiency and leisure. Back in the Fifties, we were promised a 3-day week. But the facts show that we are working longer hours than ever. We were promised the ‘paperless office.’ But we have never produced more paper and it’s rising every year.

Thomas Landauer, in his 1995 book ‘The trouble with computers,’ pointed out that computers had not contributed nearly as much to labor productivity as had been hoped, and that the efficiency of computer applications had been poor.

During the period 1973 and 1993, American productivity growth was half that of the period 1950 to 1973. While the oil crisis of the Seventies seriously impacted on productivity, the period 1973-93 saw a huge investment in technology. Morgan Stanley’s Stephen Roach wrote a paper in 1997 entitled ‘The boom for whom: revisiting America’s technology paradox.’ Roach pointed out that between 1990 and 1996 alone, $1.1 trillion was invested in IT hardware.

However, he noted that much spending was in fact a process of running to stand still. “Sixty percent of annual corporate IT budgets,” he wrote, “go toward replacement of outdated equipment and increasingly frequent product replacement.”

I think the essence of the problem can be found in a basic flaw that lies deep in the heart of the technology industry. The dream of many a technologist is to automate and replace people, rather than help people to become more efficient. We see this sort of thinking all the time in the content management industry, for example.

It astounds me the view that many technologists have of content. It’s all about a quick fix, it’s all about automation, it’s all about shoveling content around the place. Much of the Web illustrates what happens when technology is let loose on a problem - it makes the problem far, far worse. Technology has allowed us all to become publishers. It has facilitated the creation of 550 billion documents on the Web.

But quality publishing has never, ever been about quantity. And the key ingredient in a successful publication has never, ever been its technology. The New York Times depends first and foremost on its writers and editors, not on its printing machines and black ink. As long as technology puts automation before people we will continue to sink money down a black hole of poor productivity.

Gerry McGovern

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As long as technology puts automation before people we will continue to sink money down a black hole of poor productivity.

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