You only need to look at the news these days to see that low growth and waning company performance is an increasingly urgent problem. Just last Friday, a report from the UK’s Office for National Statistics released shows that labour productivity (output measured by the hour) in Q1 2019 has actually decreased by 0.2% compared with Q1 2018.
Overall, productivity growth has slowed to just 2% over the last ten years in the UK. (For reference, we used to grow that much in a single year about a decade ago.) Reasons why and potential solutions are the sources of much debate but, at Quorso, it’s our job to help customers increase productivity, and we spend a significant amount of time solving this particular issue. It boils down to variability.
How variability impacts productivity
That different people do things differently is not exactly news. We’ve all met waiters or shop staff who go the extra mile to sell more or deliver better service than the norm.
This range of skill applies across everything that humans do in organisations, so as a result, companies experience variability across every revenue or cost item. It can be significant: When we configured a pub client in Quorso, we discovered that one of their locations were discounting and comping 19X more than their peers. Imagine making 19 dinners for yourself and only eating one. For businesses, this is waste at scale.
The opportunity we have
In Quorso’s data, we’ve seen that any companies’ highest performers – the top 25% – are 2X productive as the bottom 25%. Twice as productive, twice as efficient, twice as good. Meaning that if each line item of a business (sales of handbags, for instance) could just increase productivity to the average for that business, industry profits would more than double.
The even better news is that everyone is good at something, and people who are bad at certain things can improve. Which all means that increasing productivity is about getting good ideas out of the heads of high performers, codifying it as best practice and getting this information to the lower-performers.
If the solution is to get really good at sharing information, that sounds relatively simple, right? Not so much. There are huge, institutional, massive, hard-to-change barriers. However, if you can do something about them, create something that helps people crawl under, or over, or around, or break through them all together, productivity has the potential to skyrocket.
How companies are increasing productivity
After Quorso suggested to a manager that he could sell more cocktails on certain days of the week, he created a game called Cocktail Bingo. If servers sold one of each cocktail from a specialised menu during their shift, they would win a prize. He targeted a few hundred pounds in improvement but ended up smashing that goal because the team loved it. Moreover, it became an excellent way for the whole chain to increase sales of cocktails.
When you add up thousands of stories just like that, it can be transformative for a company – and not only from a financial perspective either (though we’re pretty happy that we can help add millions of pounds or dollars back into a company’s bottom line).
We see many plans like Cocktail Bingo that unleash the power of employees or coach them to be better.
Transformation without disruption
Making companies more productive doesn’t mean a radical new approach or a giant initiative involving an HR campaign and t-shirts. It doesn’t mean trying to do a 180°. It can mean millimetre shifts. A little action here, and another one there. And so on. It’s about continuous improvement: solutions driven by the people who are closest to the problem.
There are, admittedly, many pieces to the productivity puzzle. However, we’ve proven with data that distributing insights and decision-making abilities across an organisation is an incredibly effective way to improve productivity and profitability.