A Productivity Paradox --DickesonAugust 2003
Can we just call a halt to improvement? Stop generating the over-capacity? No. In an economy where price is competitive we must constantly improve or die. If we don't continuously improve our efficiency, our competitor will, and we'll be lost in the dust.
Those who guess right on the demand for certain products, buy the appropriate equipment and constantly reduce prices win the survival race. At the same time, those winners constantly and carefully trim away at staffing and fight to increase market share. That's the winning path. It takes good information, keen intuition and lots of luck.
Unfortunately we're not all equally gifted, positioned or lucky enough to make it into that winner's circle. All men (and women) are NOT created equal in talent, position or good fortune.
Our choice of information has been deceptive. We know that Budgeted Hourly Rates (BHRs) are false and misleading. Yet everyone in the plant sort of believes in them. "Drink the Kool-Aid," says the preacher, "and we'll meet in Heaven." "Buy the new machine," says the sales rep, "and it'll reduce your costs 40 percent." What the rep didn't say was, "Buy the new machine and you can fire three people," even though that was what he meant. We expect suppliers to deceive us because they use the same words to create a never-never-land that we use to deceive ourselves.
It's not deceit, really; it's telling half the story. We're telling the Abbot of the monastery that if he installs this new press it will cut the per copy cost of books 80 percent. We didn't say that if he installs the new Gutenberg he must fire all of his manuscript illuminati monks.
No Bad News, Please
The management system supplier doesn't tell us that if we install the new server we can discharge all of our data processing staff. No, we only want to hear good news—the good stuff. We hate to let people go and upset families, keep kids from college. We avoid it with every excuse we can think of. We look at falling job costs and say, "WOW!" Now we can cut our prices." That's half the story. The other half is to call in Joe and Sally and say, "Hey, that new gizmo you fought for and worked so hard to get going has made you obsolete. Write when you find jobs."
It even hurts to write this down. We just don't find people saying this kind of thing aloud, do we? But it's true. We know it's true. We just don't want to hear about it. Let's go look at our job costs and BHRs and make like fat, dumb and happy. But just remember: increasing productivity is both a blessing and a curse. It'll sneak up and bite you before you know what happened.
Funny, isn't it, how the whole scene changes when we look at people payments as defining "capacity" rather than machine speeds? That's what we did a few months ago when we found that for the past 10 years the top group of printers actually paid out 10 percent less of their manufactured value-added as people payments.
We have to increase efficiency—productivity—or fail. We must also struggle to lower our prices. If possible, increased marketing efforts and sales will help. Much as it hurts, capacity must be reduced. Every task and person not required for saleable results must be eliminated.
—Roger V. Dickeson
About the Author
Roger Dickeson is a printing productivity consultant based in Tucson, AZ. He can be reached via e-mail: email@example.com.