Germany needs higher wages?

"For about 10 years now wage increases in Germany have not kept up with the development of productivity, by a long stretch" said European Employment Commissioner Laszlo Andor in an interview with German newspaper Welt am Sonntag recently.

This, of course, makes Germany highly competitive compared to other European states.

Is this a problem?

Is this unfair?

If you are German, it might not seem like a problem (unless you think that those who have helped create the improved productivity should share in the benefits it brings). 

If you are a European, perhaps it matters more fundamentally - a trading imbalance (and a competitive advantage for one state over others) harms the European economy.

Presumably it is difficult to 'blame' Germany for its good performance and its 'prudence'.  We might urge them to take off the brakes and spend a little more .... but, much more importantly, we have to urge other European states to address their own productivity - and 'fight back'. 

Recognising the Counterfactual

When we make changes to (try to) improve productivity, we subsequently measure results and assess impact.  (Or we should if we want to evaluate our own performance and impact.)

However, in many complex situations, we cannot be clear that what we have done has resulted in the changes we observe.  What would have happened if we had not intervened?  This is the 'counterfactual'.  How do we measure it - so we know the true impact of our changes?  Well, often, of course, we can't.  But sometimes we can extrapolate from observations we made earlier - and make an informed (and hopefully intelligent) 'guess' at what might have happened.

Sometimes, we might have a 'parallel' situation elsewhere we can continue to observe (rather like a 'control group').

The important point is to realise that in complex situations,we have to be careful about assuming (or claiming) that all change has resulted from our actions. Otherwise we can over- or under-estimate the impact we have ... and subsequent decisions might be based on this imperfect - and incorrect - knowledge.

Controlling Interest

In my recent discussions with PAPA (the Pan African Productivity Association), the topic of the Ebola virus came up.  Just as Africa seems to have recovered from the great HIV/Aids crisis (having largely got the 'epidemic' under control), the continent is hit by another great health problem - likely to have severe implications for those economies where the virus is rampant.

The developed world is only just starting to see this as a global concern rather than as a 'local' African problem - and we might now start to see real resources going into research into both containment and cure.

Situations where we lack control are real drains on productivity.  We have to do what we can to help Africa take control of this situation or the whole continent - and then the rest of us - will suffer.

Balanced Reporting

Well, I’m here in Mauritius and I’ve been having an interesting time.

I spent a few days with the Board of PAPA (the Pan African Productivity Association) discussing the productivity status and opportunities in Africa.  Many of the productivity centres and champions are working under a range of funding, cultural and political constraints but there was consensus about some of the big challenges and around some of the necessary infrastructure elements that need to be put in place to underpin productivity development.  

This is something we should all watch with interest  - Africa’s productivity is important to us all in terms of helping the world solve the 3 great problems of food security, energy availability and universal access to fresh, clean water.

I was then fortunate enough to attend a session led by the great Robert Kaplan, one of the creators of the Balanced Scorecard concept and model.  Amongst other things, it was interesting to see the development of the model from measurement scorecard to strategic planning catalyst. Robert gave several examples of companies that have deployed Balanced Scorecard and used it to transform their understanding of the business and shape its future.  Importantly he cited the use of the Scorecard to support strategy execution and evaluation as key to longer-term success.  My biggest, single ‘takeaway’ message was that ”Strategy is important, but execution is what delivers.”

Tomorrow, I am flying home - to more mundane (but no less important) issues, concerns, projects and activities.

Something in the air

The 'something in the air' i refer to in the blog title is ... ME.  As you are reading this, I should be in the air (if I'm not waiting at an airport terminal) en route to Mauritius.

Those of you who follow this blog know that I make this trip regularly - I have been advising Mauritius on its national productivity strategy, working with the lovely people at the National Productivity & Competitiveness Council (NPCC).

This one is a 'special' visit for two reasons.

First, I shall be giving a keynote presentation to a meeting of the Pan African Productivity Association and I am keen to hear their views on Africa's productivity future - and see how well they chime with my own.

Secondly, while I am there, NPCC have invited the great Robert Kaplan (of Balanced Scorecard fame) to give one of their occasional productivity days with a world-class 'guru'.  I shall get to listen to Robert - and meet him subsequently.

Its not often you get a chance to meet one of your 'heroes'  - so this is quite exciting for me.

And, of course, to do all of this in Mauritius makes it all even more special.  Sometimes you just have to say, "Lucky Me!".

If I wake up from this dream, I'll give you a report next week.