Let’s rethink how to measure productivity

OK, so while doing some light research around "productivity," I came across this article from Reuters, with the headline: "U.S. productivity posts biggest decline since 1947 in first quarter." 

Wait — what? 

If we can compare statistics going back 75 years, then that means we're still using exactly the same measures of what productivity is the whole time. Really?

I guess there are some types of labor that haven't changed, but with the increase in knowledge work and services, I'm wondering how comparisons of productivity back then can be relevant to productivity today. I mean, at least, it needs to be reimagined, doesn't it?

How do we measure productivity?

To review, the basic calculation of productivity is:

• Productivity = outputs / inputs

In terms of national productivity, as calculated by the US Bureau of Labor Statistics, the measurement calculates the amount of goods and services produced divided by the hours of labor it took to produce them. 

We can also use the basic productivity equation to measure things like sales growth. This rate breaks down to: Sales Growth Rate = (Current Period Sales – Prior Period Sales) / (Prior Period Sales * 100). Or in software development, it’s possible to calculate a “defect escape ration” for measuring bug resolution: Defect Escape Ratio = (Bugs Found in Production / Total Number of Bugs) * 100.

The question is, how does that work in a service economy dominated by knowledge work? If the inputs to work are increasingly things like imagination and creativity and the outputs are customer experiences, how can we continue to measure in this way? 

We’d end with something like this: Productivity = customer experiences (outputs) / imagination capacity (inputs). This is basically infinity divided by infinity. 

Does this reflect productivity at all? 

We’re not alone in our thinking: Others have raised similar questions over the past decade or so. Roger Martin, for one, Professor of Business at Rotman School of Business (and author of multiple books), points to the difficulty of measuring “decision making,” a key activity in knowledge work. He asks: “What do knowledge workers actually do? Clearly they don’t manufacture products or perform basic services. But they do produce something, and it is perfectly reasonable to characterize their work as the production of decisions.”

Managing and tracking decisions as units of work, however, is different from calculating productivity in manufacturing, for instance. 

Yet, even Martin's metaphor of a "factory" suggests the wrong perspective. The issue isn't just with the way we measure "productivity," it's with the mental model of it. We need a completely new perspective.

At this point, we don't need new ways to measure productivity, nor do we even need a new definition of productivity — we need to reevaluate the motivations for measuring or defining it in the first place. 

I believe the motivation to measure productivity is a symptom of the analytical, machine metaphor-ridden end of the human knowledge spectrum, where we've overindexed these last few centuries (thanks Fred Taylor 🤣), and the response is for us to remember the counterpart to analytical thinking is systems thinking. 

Buzzwords aside, understanding the goals, behavior, and performance of holistic systems can tell us things that existing measurements of individual or group productivity can't.

What would it mean to replace our current mental models of productivity with something more similar to how we assess system adaptation?

OKRs: The new productivity measurement?

The measurement should live within the operating framework of the company's choosing. OKRs — objectives and key results — are one of the leading ways to reflect progress these days. Many companies have adopted this framework, and for good reason.

If done correctly, OKRs bring out the aspirational nature of your workforce. The “O” (objective) is best when it’s aspirational, perhaps even a stretch goal. Shoot for the stars and land on the moon. The “KR” (key results) gives you data to measure your progress along the way. 

Related: OKRs vs. KPIs: What’s the difference?

This also shines a light on the idea of how my work is contributing to the P&L and overall north star of the business. It's not a way to micro-manage people, but rather encourage them to do their best work without feeling the burden of someone checking your stats on a daily basis. Contextualized check-ins on a consistent basis to talk through strategy and progression. 

What I've not seen, however, is anything to really replace old measures of productivity. Yet, I still hear things like: "Execs are concerned about productivity in the hybrid workplace." (You can Google that, too). What does that mean to them exactly and how do they know they should be worried? Maybe we need to look elsewhere?

Beyond measuring productivity — measuring happiness

Can we move beyond measuring achievement, and aspire to measure things like happiness? Nick Marks thinks so. The British statistician shows in his 2010 TED talk how creating a happiness index for the world isn't only necessary, but wholly possible. 

It starts with questioning the basic measurement of “progress,” in the broadest sense of the term. Right now, we tend to understand it purely in terms of financial progress or business progress. The assumption in commercial contexts is that “somehow, if we get the right numbers to go up, we’re going to be better off,” as Marks puts it. But that’s not always the case.

Productivity is part of the calculus in traditional definitions of financially-driven versions of progress. Producing stuff is the basic driver in this way of thinking, Marks claims. And so, productivity becomes the backbone we rely on. 

‘Happy Planet Index’ seeks to measure happiness. Marks claims that the main goal of every nation on the planet should be to make its citizens happier. 

What can we learn from this as we approach our work? If we extrapolate that to more commercial, business contexts, we could break it down into two happiness components: 

• How do we make our employees happier?
• How do we make our customers happier? 

We are in the golden age of innovation when it comes to the workplace. This doesn’t just apply to teams struggling to make sense of hybrid work schedule and keep their projects on track. It also applies to management and leadership, and even to what the basic notion of an organization is. 

We don’t just have to reimagine the surface-level operations of the daily workplace, but also the management systems and leadership expectations such as traditional notions of productivity. 

How to increase team productivity

One of the keys to unlocking productivity at scale is to focus on individual productivity. We’ve all had those days when we’ve said, “I wasn’t very productivity today,” or, “today was really productive!” And there are many recommendations for being more productive at work, including such things as: 

• Manage your time better by prioritizing tasks on urgency and importance
• Break down larger goals into smaller objectives and tasks to track progress
• Minimize distractions in your work environment and block off time for deep work
• Manage energy by taking regular breaks or using techniques like the “Pomodoro Technique” (25 minutes of solid work followed by 5-minute breaks)
• Optimize tools and settings to be more efficient. 

These are all fine and good. In fact, we’ve promoted visual techniques for daily work prioritization. See for example this template in Mural.

But individual productivity is only part of the problem. You also have to think about team productivity. 

During the COVID-19 pandemic, we noticed something surprising: Individual productivity actually went up, according to many studies. However, when it came to strategizing and solving complex problems as a team, it was clear that something was missing. Team productivity had gone down. 

In a post-pandemic hybrid world, teams are finding it difficult to come together for complex

problem-solving. A general lack of alignment caused re-work, and delayed schedules, among other things, set teams back. Teams also struggled to build consensus and confidence.

Knowledge workers spend a lot of time collaborating — anywhere from 25% to up to 80% in some cases. It’s therefore imperative to also consider team productivity, along with the effects that team collaboration has on individual productivity. 

For greater productivity across an organization, we recommend streamlining team productivity in several ways: 

• Adoption more async habits and behaviors across the team. Reduce real-time team meetings with asynchronous collaboration. This doesn’t necessarily reduce the overall workload an individual has, but it gives them much more control over time management. They can work at their own pace in a much more controlled and predictable way. For that reason, we’ve developed an async meeting calculator, built to help you determine which meetings should stay on the calendar, and which can move to async collaboration. 
• Create a team charter or team agreement. The healthiest, most effective teams we’ve observed make how they intend to work together explicit. Team charters or social agreements document how a team intends to interact. A team charter is an agreement about how your particular group of teammates will best work together. These documents outline the essential elements of your team’s communication and define a set of concepts and skills that'll focus and guide you.
• Get aligned with visual methods and techniques. Written communication is, of course, important for documenting decisions and capturing content. But to get aligned and foster a deeper understanding of common ground across team members, working visually does a better job.  The human brain processes visual information differently than text. We’re able to see patterns and relationships in a unique way when we solve problems when we see concepts visualized. When everyone in a group visualizes their thoughts with maps and diagrams and shapes, they can better make sense of the challenge at hand. A picture is worth a thousand words, as they say, and visualization goes far toward building alignment across team members. Perspectives are aligned, and reality can be negotiated when imagination is expressed visually.  For instance, using the “What’s On Your Radar” method for a team stand-up not only saves multiple factors of time; it also helps everyone get aligned. 

Teams can achieve more, faster when the all-too-common pitfalls of collaboration are minimized. It’s not enough to just get individuals more productive; the productivity of the team is more critical in delivering results that matter.

Get in touch with our Professional Services team to learn more about how Mural can help your team increase productivity, while reducing the noise, notifications, and busywork that increasingly clutter the digital workspace.