In the Age of Amazon, Does Productivity Matter?

MCA Think Tank Director Paul Connolly argues that policymakers are far too complacent about the UK’s productivity challenges 

The MCA (Management Consultancies Association) has today launched a new campaign to push for greater action to improve the UK’s record on productivity. The initiative comes as the government grapples with questions of how to raise Britain’s economic performance against that of international competitors, particularly against the backdrop of the challenges of Brexit.

In the first of a series of Productivity Papers (In the Age of Amazon, Does Productivity Matter?) the MCA argues that the current policy debate on productivity is old-fashioned and too narrow. The Association says that this leads to complacency and a debilitating lack of sophistication in policy responses.

The MCA paper suggests two significant areas of weakness in government thinking:

  • current thinking is based on an analysis of manufacturing processes. But the majority of the UK economy is now service-based, which requires a new focus on delivering outcomes rather than just outputs;
  • the government’s emphasis on pushing primarily for productivity improvements by SMEs is misguided and underestimates the challenge for UK corporates, many more of which need to become internationally competitive and world-class.

Paul Connolly, Director of the MCA Think Tank, said:

“Enhancing the rate of value-creation in services is difficult. Too often, productivity is associated simply with cost-cutting and job losses, or the surveillance and control of low-paid staff.

“Linking productivity to outcomes can start to detoxify the term, connecting it with vital positives, such as job satisfaction or career adaptability.”

He added:

“Recent policy announcements suggest that the UK’s long-tail of unproductive, undigitized SMEs are the majority of the problem. This massively underestimate the scale and nature of the challenge we face. Policy-makers need to wake up to the big picture of underperformance.”

The MCA paper reveals results of a recent MCA survey of top business leaders:

  • 100% of business leaders say that productivity is a major issue for their firm
  • They rank improved productivity as a higher priority for their firm than both market share and topline growth
  • 41% of respondents understand that productivity is about improving business outcomes, not just reducing the cost of outputs

To read the full paper, please click this text or the image on the left.