Do Governments Innovate?

Most people - including me - would answer immediately - and say ‘No’.

However, things are not so simple.

Think of recent large-scale innovation changes.

Nuclear power for example.  Or space exploration.  Such massive innovations could not have happened without large-scale investment (and planning and coordination) from governments.

Other innovations cannot be fully diffused into markets without support from government t and government t agencies.  The rollout of electric vehicles cannot work without a sound national strategy for there provision of charging stations.

Spo, sometimes innovation needs a helping hand from government. This can be upfront in supporting massive technological change or post-event in supporting the diffusion snd uptake of new technologies.

Thus, new technology may take some time to show up in productivity figures.

This is, of course, exacerbated by the need in innovating firms to train the workforce in the use of new technology or systems - and promote the innovation to potential customers.

Government education and training policy also has to adapt and reflect technological change.

So change includes the major change (introducing a new technology, for example) and the few or many intangibles which must be changed to exploit the technology.

Governments clearly have a role to play here.

Governments perhaps do not directly innovate … but the support they provide can make the difference to the success is a new innovation in improving national productivity.

Trust is Key

Bad title.  There is no one key to productivity. Yet, research shows a strong correlation between mutual trust and performance in organisations.

Mutual trust means that:

• Senior leaders trust employees
• Managers trust their team members
• Managers are trusted by their direct reports
• Employees trust their fellow team members
• The senior leadership team is trusted by employees

If you can generate and then maintain such trust, you move forward.

Establishing and Improving such trust involves the training of employees and especially managers/leaders - on effective business communication and on how and why trust bonds are formed, and how they are broken. An innate sense of empathy in senior leaders is also very helpful.

So, ‘all’ you have to do (as ever) is to hire the right people for supervisory/managerial/leadership roles, and give them appropriate training and development opportunities.   Mentoring by an.established peer with the right qualities is also helpful.

The Sound of Silence

Many people like to listen to music while they work on their computer or carry out other individual tasks.  Music can drown out the sounds of the task itself or the sounds of colleagues - especially when working in an open plan office.

Others think music is a distracting  influence and prefer to work in silence.

A ‘listening’ brain is continually processing sensory input (including multiple changes in rhythm, tone and volume) even when a person is not consciously paying attention. This constant input can put a considerable cognitive load on the brain, potentially leading to mental fatigue and reduced productivity - the brain is working at something other than the work task in hand.

In contrast to the potential mental overload caused by noise, silence can have a soothing effect on the brain. Moments of silence can help lower blood pressure and heart rate, reducing the levels of stress hormones 

The calming effect of silence can contribute to improved concentration, better decision-making, and an overall sense of well-being.

Furthermore, a study published in the journal "Heart" showed that just two minutes of silence can be more relaxing than listening to "relaxing" music, 

Silence has also been recognised as a catalyst for creativity and productivity. By reducing auditory distractions, silence can help people focus, make connections between ideas, and solve problems more effectively.

So encourage staff to throw away (or lay aside) their headphones, turn off the radio and listen to … silence.  They will feel better and be more productive.

Failure can lead to Success

Most business people are aware that failure can be a useful learning process - allowing those who are part of the failure to learn lessons about what went wrong and/or where they could have improved their performance … and especially where they lack specific skills  and experience.

Now this ‘principle’ is being taken further by setting up ‘productive failure’ - giving individuals or groups tasks which include s strong chance of complete or partial failure.

One way of doing this is to give the individual or group a task which requires skills or experience they don’t have - for example by asking a group to design a new AI-related service when their normal field of experience is, say, hardware engineering or accountancy.

The team should not know the nature of the ‘experiment’ - they should feel the exercise is a positive one - for them and for the company.  Thus, it must relate to the company’s portfolio of products or services - and the current company content.

Of course the team must be given the chance to debrief their experience and identify where their skills/experience were lacking or how they could havre tackled the task differently.  

It may be that the group includes highly creative people who come up with genuinely useful ideas.   So much the better, of course,  Whether the group comes up with useful ideas, or is unable to so so, the company wins. 

Can the UK Fix its Health Service?

 The NHS (National Health Service) in the UK is regarded by many British people as ‘he jewel in the crown’ - by far the most important public service.  Over the last decade, though, there has been increasing disappointment with the state of the service - with the COVID pandemic putting a large nail in the coffin.  Though people still value the NHS for its convenience and its ‘free of charge at the point of use’ status, it is generally reported as, and regarded as, ‘broken’. Demand for its services is rising with an increased demand (and lengthening waiting lists) for, in particular, mental health related services.

So what can be done to fix the NHS .  ‘Throwing more money at it’ is the usual political solution - but a solution that never works … and almost certainly could never work.

Increasing, and improving the use of technology is one partial solution - and AI certainly seems to offer some potential to help. (The NHS uses and produces vast quantities of data and carries out a large amount of data analysis.)

Certainly it seems to an outsider that  the NHS has to change the way it does things, rather than simply attempting to do more stuff…. but the NHS should be looking for specific, focused technologies rather than trying to squeeze and mould existing or mainstream technologies to fit its own environment.

The NHS should be, and is, looking at developments elsewhere in both public and private health arenas - and in different contexts.

For example, many developing nations have been unable to copy western, high functioning, high infrastructure health services due to the very high set-up costs.  Yet they often construct services which meet many of their needs at far lower costs - often by using staff with shorter, cheaper qualifications.  (Despite recent trends in the use of ‘paramedic’ staff, the NHS still uses expensive, well-qualified doctors to diagnose and treat low level ailments.)

So, the NHS can be wholly or partially fixed but it may need to be  further (intentionally) broken to end up with a streamlined structure, a wider range of staffing levels and skills, more appropriate use of specialised technologies - and this will take  a massive political will to ‘attack’ the beloved NHS before rebuilding it.

The size of the NHS complicates the situation but such ‘turnarounds’ have been undertaken by failing, commercial organisations to show  that this is a difficult, though by no means impossible, mission.

What is the Point?

Reading documents and even blog posts about productivity would lead one to believe that the only purpose of improving productivity is to raise profits.

That is true at the level of the firm … but sometimes we need to take a wider view.

At the national level, raising economic performance  by improving national productivity is clearly important  but only, fundamentally, because its allows a government to improve the social well -being and quality of life of its citizens. 

The productivity improvements should also be in sustainable directions so that those changes in well-being and quality of life move only in one direction - upwards.

So let’s place less emphasis on profitability, on GDP, and start to work out a well-being index that more clearly reflects our longer-term aspirations and societal goals.  Then we can know if we are being successful.

Such an index has even discussed in the past but further work is necessary on an international basis to try to reach a consensus that allows international comparison and benchmarking.

America Leads

Even though productivity has been rising slowly in the last few years, America still tops the international league table for productivity.  Why is this?

Well, possibly the most significant reasons are:

Firstly, America is a high-tech country.  It leads the way in software development , and probably still in hardware design.  America therefore implements new technologies as an early adopter and other countries have to play catch-up.  This early lead means that America gets the real first-mover advantage for most significant technologies (though countries like South Korea are fast catching up.)

Secondly, America has high quality universities which provide an effective pipeline of new talent.

Thirdly, though linked to the technological advantage, is America’s commitment to capital investment, both physical (infrastructure, equipment) and intangible (software, patents). 

This  sets it apart from, and above,  many other economies. Non-residential investment has run at about 17 percent of GDP in America since the mid-1990s, consistently higher than the share in large European economies, according to John Fernald of INSEAD, the leading French  business school.

What’s more, public and private R&D spending of 3.5 percent of GDP is surpassed only by Israel and South Korea.

Fourthly, America has a high turnover or churn rate  rate for companies, with nearly a fifth of companies being created or dissolved annually. Thus fosters innovative firms can rapidly emerge and obsolete ones can gracefully exit.   Start-ups find financing easier than do their counterparts elsewhere.

None of this is rocket science.  (Actually, some of it is ... see reason one above).  Other countries can learn the lessons but would have to invest over a number of year to reach the same point - and this would, in many countries, be mitigated by a reluctance to take risks.