Redefining Productivity As Global Borders Tighten

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What is productivity really? In the current geopolitical landscape, the way we measure and place value on productivity is set to change.

Will this present a challenge or an opportunity for businesses? What role will technology play? And does people’s trust in the digital realm provide a glimmer of hope?

If we look at the last two decades of innovation in the US, it’s been driven by talent from all corners of the globe. The best creative and technical minds have been welcomed in to help push forward all sorts of amazing developments. Which has been the backbone of the nation’s productivity.

It’s no surprise then that leading tech companies are filing lawsuits against travel restrictions into the US. Such a policy will surely lessen the availability of creative talent to those companies – which in turn will impact their competitiveness and drive down their productivity.

The current political shift is to view productivity through the traditional lens of ‘output per worker’ (e.g. GDP per hour) – where jobs-at-home and employment targets are the focus.

This is quite at odds with the open, global approach many companies have adopted, including high-profile success stories like Apple, Google and Facebook, who have famously created large-scale campuses across the world to tap into talent and drive revenues from abroad.

If governments take an isolationist, inward mindset, it will surely open the door for ambitious global players, like the Chinese giant Alibaba, to capture market share and take business away from their own companies – having the inverse effect of the policy intention.

Historically, of course, politics and economics often move full circle like this. As George Friedman eloquently lays out in his book Flashpoints, having moved from being individual sovereign nations to an interconnected economy, Europe is on the cusp of fragmenting again. The refugee crisis and debates around the EU project as a whole are putting physical borders back on the political agenda.

Yet the fourth industrial revolution, driven by digital technology, has never recognised such borders. The virtual world makes it possible for consumers in New Zealand to purchase goods and services from New Hampshire, and for businesses to base themselves in whichever talent hotspot they need, regardless of which geographic market they are targeting.

So as the virtual world remains borderless while the physical world moves to fortify its borders, what does that mean for productivity? Will companies and countries find it a challenge to drive up productivity in a less global economy, or will more opportunities emerge through the digital economy? Perhaps the answer lies in the notion of trust.

In the virtual world, we are more inclined to have trust in what we do. Whether it’s the information we choose to consume from our news feeds and social media connections, or the services we use such as our preferred digital banking and online shops, we are comfortable operating in this digital space – we trust those sources.

Whereas in the physical world, there’s been a huge trend towards distrust. Towards politicians, towards big business, towards the impact of globalisation. Which has left people feeling more cautious and protectionist in nature – resulting in Brexit, anti-establishment voting and fears over market liberalisation.

But in my view, the great progress made in the virtual world surely can’t be undone by this physical distrust, or the policy decisions that are falling out of it.

The borderless collaboration and innovation of the last few decades, driven by technology, will continue – and continue to thrive. Especially as we see further developments in automation, the evolution of cloud technology, new applications for IoT and the growing volumes of data that we move around our networks.

I suspect many of the concerns around the competitiveness of individual countries will be alleviated as innovators continue to innovate, creating new markets and new revenue streams not factored in to current policy-making or jobs plans. It may just mean we need to redefine productivity in recognition that it means different things to politicians and businesses.

I will continue to explore some of the innovative new uses of technology that are driving the global digital economy here. In the meantime, if you have any stories or examples you’d like to share, please leave a comment below.

David Blackwood

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