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Igniting Productivity

By: Richard Barkham, Global Chief Economist, Head of Global Research

September 6, 2023 3 Minute Read

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The Power of Creativity to Fuel Growth

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I recently asked myself if Zoom and other virtual technologies have made me more productive. It certainly feels that way. But work has crept into the time that I would have been commuting or travelling, as it has for so many others, and more meetings do not equate to greater productivity. As an economist, I’m inclined to turn to the data when in doubt, so I compared my diary for meetings and travel from 2019 and 2023 to see what the numbers say.

Despite feeling that I do more, my diary, which does not lie, suggests I’m doing less.

Diary Events 2019 vs. 2023

  2019 2023 YTD & Expected
Face-to-face meetings 83 36
Business trips 35 26
Conference calls 25 14
Zoom calls 5 50

In 2019, I had 148 scheduled things. This year, I’m on pace to hit just 126. Perhaps it’s because I’m a better manager than I was in 2019, and I delegate and empower my team to greater effect. Perhaps it’s because the market is quieter. But even more striking in the data is the extent to which face-to-face has been replaced by screen-to-screen—even though I’m in the office five days a week.

The ways I communicate and engage today are the least personal and stimulating—which may be impacting my productivity.

Being with others in person—hearing their insights firsthand and bouncing around ideas—is essential for the research I do and for other areas of business development, too. The serendipity of office life has been discussed before, but I’m shocked to see the lack of it in my own work life.

Things have gotten a bit dull. Is that why I feel slightly less creative than before? Slightly less able to generate fresh ideas? Moreover, is that why I’m feeling somewhat less productive? I think it might be, and I don’t think I’m alone in this.

We could all do with a burst of productivity right now. But that’s not happening.

More output without additional demand for labor is exactly what we need today. As a student and professor of macroeconomics, I tend to think through that lens. We have excess demand for goods and services, and the supply side is maxed out. Labor markets are tight, and because companies don’t have the capacity to increase the supply of goods and services, prices are up.

Recent evidence shows that productivity growth is anchored at 1.4% in the U.S., as it has been since 2007. The 2001-to-2007 average was 2.8%, and the 1990-to-2001 average was 2.1%. Rates of productivity growth are lower than this outside the U.S., but they follow the same pattern. If we had 2.8% productivity growth over the last three years, rather than 1.4%, the economy would be 4% bigger and core inflation would be closer to 2% than 5%.

This doesn’t seem right, does it? We’ve just been through one of the biggest revolutions in how we organize work since people started flocking to factories during the Industrial Revolution—and we’ve done it by deploying the latest technology.

This should be a slam dunk for productivity growth. But it isn’t. Why?

Recent research out of the Stanford Institute for Economic Policy Research suggests that hybrid work is associated with zero change or slightly improved productivity of around 4%, on a self-assessed basis. Fully remote work is associated with between 5% and 20% lower productivity than fully in-person work, due to worse communication, poorer professional development and loss of motivation.

It turns out that the serendipity of office life actually does matter, and it points to the impact of creativity on productivity.

Many people think of creativity as the proverbial ‘bolt of lightning’ that produces a world-changing idea, or even the kind of ‘aha moment’ that results in new ways of getting things done. And they’re partly correct.

Creativity is a process of absorbing new inputs to produce something unique or improved. Spontaneously chatting with others in real life, traveling to meet with clients and colleagues in different locales and having new experiences by chance help us generate fresh ideas.

Organizational models can enable these creative opportunities—or impede them.

I’ll stop short of attempting to formulate a new theory of productivity. But it seems clear to me that working from home full time eliminates opportunities for serendipity in our work lives and denies us essential moments of creativity, big and small. This will ultimately be costly in the national search for productivity growth and corporate profitability.

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