Productivity: 5 Ways Businesses Can Work Smarter Not Harder
Australia is facing a productivity crisis. But experts say there are short-term fixes and long-range innovations that will help us become more competitive.
Whether you’re a country or a company, finding ways to boost productivity is a never-ending priority. It’s an essential ingredient for prosperity and right now it’s a national challenge. “Australia’s productivity growth is in the doldrums,” says economist Danielle Wood, chair of the Productivity Commission. “In the years sandwiched between the global financial crisis and the COVID pandemic we saw the slowest productivity growth in 60 years.”
The Productivity Commission recently kicked off its first-ever crowd-sourcing project. Australia’s Productivity Pitch attracted 453 policy ideas from the public. “We knew the Productivity Pitch was a bit out there but you have to take risks and innovate to find new ways to approach old problems,” says Wood. Responses were assessed by the commission’s team to compile a shortlist calling for more detailed submissions and final reports to the government by the end of the year.
“We tried to make it as approachable as possible because we wanted to get the broadest range of people participating. I was delighted by the diversity of ideas people had, seeing things from their real-world experience, the frustrations they have dealing with particular systems or quirky ideas they think could transform things.”
Surprisingly, Wood says technology hasn’t been the rocket-booster most of us assume it to be. “The reduced contribution from technology may seem strange when technological change is all around us but at least for the past decade, it hasn’t generated the same contribution to productivity growth as previous waves of technology.”
She adds that business investment has been stagnant, including while central banks were dropping interest rates. “When you don’t have businesses taking risks and bringing on new capital and technology you just don’t get the same productivity gains.”
Leaders can take lessons from those trends. “The long-term driver for productivity growth at an organisational level is adopting new technologies and innovative ways of working,” says Wood. “Australia is lagging on the uptake of data analytics and AI. To turn that around, leaders themselves need to understand the new technologies.” She says that Australian managers “report less confidence in identifying technology solutions for their business and in their ability to implement those changes”.
As well as elevating leadership skills in the digital space, Wood says Australian companies looking for productivity improvements should assess their workforce training programs. “Over time, we’ve seen less investment in on-the-job training, which will become more important as jobs evolve and we need people to do fewer routine tasks and more non-routine tasks. Leaders have to think about how they skill up their workforce to thrive in that new world.”
To accelerate AI adoption, executives should “think systematically about the full suite of tasks across an organisation and the role AI can play”, she says. “Cultural change is needed as well as the technology – you’ve got to bring the workforce along, including upskilling in some places. AI is general purpose and can touch so many sectors of the economy, such as in the services sector where technology hasn’t been a feature of change over past decades. If you can shift productivity in the services sector, that’s going to shift the dial on our national figures.”
For leaders looking for ways to energise their own productivity agendas, five experts share their ideas.
Figure out where to deploy AI agents
“The term ‘jagged frontier’ was coined when talking about the capabilities of AI agents and large language models [LLMs],” says Dr Michael Kollo, CEO and founder of Evolved.AI, which works with companies to implement generative AI solutions. A 2023 Harvard Business School paper summed up the snakes and ladders of this landscape: “Professionals who skillfully navigate this frontier gain large productivity benefits when working with the AI, while AI can actually decrease performance when used for work outside the frontier.”
We’re approaching artificial general intelligence (AGI) “where the AI is able to do one thing after another”, says Kollo. “For productivity, this means that for specialist fields and difficult problems you have a tool that can help you think through that problem.”
We know AI makes mistakes – sometimes real howlers. Paying careful attention to the specific risks relevant to your industry is essential and complex tasks will still require human intelligence to make the final decisions. “But it’s absolutely true today that you can have a conversation about your work with an AI agent, in any number of languages, and in some cases, the agent can go a very long way to doing your job, such as programming.”
In January, it was predicted that Meta’s AI systems will soon be writing code at the standard of a mid-level software engineer and, in time, AI engineers will dominate that workforce. “This is not a future prediction – this is in 2025,” says Kollo.
“An individual programmer who understands how code comes together suddenly has the equivalent of five junior programmers working for them through AI – as long as he or she knows how to direct them. There is enormous capability and now the challenge is to turn that into actual workflows.”
Stretch inclusivity to decision-making
“A figure McKinsey quotes often is that diverse leadership teams are 87 per cent more likely to make better decisions,” says Div Pillay, CEO of diversity, equity and inclusion (DEI) strategy firm MindTribes, which she co-founded in 2012. It’s no surprise, when research shows that companies in which the workforce is comprised of people from varied cultural and ethnic backgrounds, genders, abilities and neurological traits perform better. But Pillay warns that it takes more than diversity alone. “You also need the right culture and for the diverse people in your team to be at the right decision-making level for it to yield positive results.”
She says that organisations will come to MindTribes saying that despite changing the make-up of their board or executive team to be more diverse, they’re not seeing better outcomes. “When we go and audit the culture of those teams we find that decision-making is still with the same people who were driving it before – they are not including different thinking.”
The disconnect is clear when Pillay’s team examines a year or two of board papers or executive team minutes. “We can see how many ideas or risk flags were raised by the new people who’ve joined the team and how many times they were discounted or ignored. If you’re not listening to these different voices, you have a blind spot – you’re making decisions just as you did five or 10 years ago.”
Boards and teams that continue to fall in line with “the most powerful voice in the room” miss out on valuable insights – diverse team members are likely to be closer to the customers or the community your company is serving. “If you don’t include their different views and ideas in your decision-making you can have diversity ‘represented’ but you won’t have the productivity gains.”
Increase your thinking time, not your hours
“When the challenges of the job intensify for senior leaders, the reflex for many is to knuckle down and prepare for longer hours but this is often the lazy choice,” says Michelle Rushton, co-founder and director of consultancy People of Influence, which has been advising on the development of executive leadership since 2014.
Instead of “reflexive hard work”, productivity gains are unearthed through “hard thinking, making hard decisions and having hard conversations to communicate those decisions”, says Rushton. “The mindset of ‘the more hours the better’ is short-sighted and terrible for productivity because it doesn’t support mental sharpness or strategic decision-making.” She coaches leaders to extract themselves from the operational maelstrom. “Schedule regular thinking time – one or two hours, a few times a week – and build out from that. If you’re a CEO you’ll need that reflection time to be truly considered and strategic.”
Rushton is ruthless when she evaluates executives’ calendars. “Saying that a meeting is ‘valuable’ is too low a bar – a good senior executive could easily fill their calendar three times a week with ‘valuable’ meetings. You can still stay involved – dip in and out, go to the meeting to keep across a particular project or read the minutes. You need to prioritise the deep work because it’s critical to having a real impact.”
Ditch busy work and storyboard your change-management program
Nous Group deputy CEO Greg Joffe jokes that it’s not “new or sexy” but a straight path to improving productivity is to focus on essential work. Australian-born consultancy Nous works with large public- and private-sector organisations on refining strategy. Joffe says productivity improvement usually begins with “looking at the work that needs to be done to achieve objectives and comparing that to the work that’s actually being done”.
“We almost always find there’s work being done that’s less valuable – it’s stuff that’s accumulated over time,” says Joffe, who’s also an adjunct professor at AGSM at the UNSW Sydney Business School, where he teaches operationalising strategy. “Every three to five years it’s healthy to go through and measure what absolutely needs to be done versus what’s actually being done. Then take out the work that’s in the gap between the two.”
Joffe says another common error is a lack of clarity around how success is measured, which can range from a vague word cloud to a spreadsheet with thousands of things that have to change. “Productivity improvement programs need to be super-clear about what measures you’re going to track and when you expect them to change so that people can focus on those numbers in a well-structured way.”
Simple dashboards and logic trees are excellent tools to illustrate the journey, he says. “If you’re saying, ‘These are the changes we want’ in a large organisation, people need to be able to see how all the pieces fit together. When it’s presented in a one-page dashboard or logic tree, they’ll understand what’s changing. If it’s listed in a spreadsheet, people won’t be sure where they fit.”
Think outside the box for recruitment
Majority First Nations-owned firm IPS Management Consultants does mostly mainstream work with state and federal governments and corporations but it’s also done projects that offer a solution for the tight labour market.
“We’ve run several large-scale employment programs to get disengaged people into jobs on large infrastructure projects,” says co-founder and co-CEO Katina Law, a Worrorra Walmajarri woman. “We target people who are unemployed or not engaged at all in the economy, including youth, women, ex-offenders and Indigenous people, and we’ve had a 75 per cent success rate of people gaining employment and staying in employment.”
The Yaka Dandjoo (Working Together) Sustainable Employment Program is an award-winning example of this approach. IPS recruited workers for Western Australia’s Bunbury Outer Ring Road (BORR). “We developed these programs by deploying different ways of thinking to solve the problem that there are people who’ve perhaps never had a job at the same time as there’s a shortage of labour,” says Law.
“We start with a training program that looks at all aspects of people’s lives. We’ve had people go from being homeless to being employed on that project for a number of years, with mentoring along the way. We placed people with different contractors all through the BORR project and we worked with those companies to make sure that the environment they were going to was supportive so both the employer and the employee could be successful.”
The result of the BORR project alone is that 191 previously long-term unemployed people were trained to become part of the civil construction industry, creating not only an ongoing labour resource but also positive generational change for many of the trainees themselves. “These people become productive members of society and the majority will remain so for the rest of their working lives,” says Law.
“We start with a training program that looks at all aspects of people’s lives. We’ve had people go from being homeless to being employed on that project for a number of years.”
