Productivity : A Competitive Tool

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Authors: Pradip Sinha, Sadhu Ramakrishna
Associate Consultant, Research Associate
ICMR (IBS Center for Management Research).

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It's important for today's organizations to be productive and further use this productivity as an effective tool to beat competition.

Business is where things change in the blink of an eye. Today's right strategy may not be right tomorrow, i.e., it may become obsolete in a short span of time. So the adage, "old is gold", does not hold true at least in business. But, in this fast moving business environment where nothing is static, one thing that has remained constant is the goal of the organization, i.e., profit-making, irrespective of its nature and size.

The performance of the organization has been traditionally linked to profitability in one way or other. Profitability means gain, advantage, improvement or that output which results from the employment of capital, which is usually expressed or interpreted in financial terms. Jason Jennings (Jason), a California-based management consultant and the author of the best seller, Less is More: How Great Companies use Productivity as a Competitive Tool in Business, defines profitability as the simple act of increasing the output while maintaining or decreasing the input.

Jason further cites an example to explain the meaning of productivity. According to him, if McDonald's can figure out a way to serve an extra 25 customers an hour (output) without having to increase the staff (input), they'll have increased productivity. Now, if the definition is so simple and straight, then why are we making a fuss over productivity? As a matter of fact, productivity is not as simple as it sounds; that's why only a few names feature in the list of productive companies, which have been successful in retaining this magical word with them on a constant basis.

The Competitive Edge

The old days when businesses used to run on mediocricity and laid down sticky traditional rules are gone. Today, it has become vital for an organization's long-term stability, survival and growth to understand the true cost of doing business and the sources of profit. Productivity plays the role of a sheet anchor for today's companies by giving them the much needed edge in the market. Most productive companies, however, take a slightly different path from the usual run-of-the-mill approach, focusing on the overall productivity aspects of their businesses, rather than merely looking at profitability in terms of financial statements. There is an old saying: "Smart people don't do different things, rather they do the same things differently." This is very much applicable in the case of the most productive companies. They take different routes to achieve the same goal, and it is the selection of these different routes/paths by these companies, which brings a lot of difference to the end result.

The first thing which differentiates a productive company from a non-productive one is the company's ability to understand the true meaning of strategy and tactics. According to Jason, it is this realization that enables these companies to stay more focused on their goal.

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