
Productivity Is Soaring at Top Firms and Sluggish Everywhere Else - luu
https://hbr.org/2015/08/productivity-is-soaring-at-top-firms-and-sluggish-everywhere-else
======
golemotron
The author implies that the gap is due to lack of diffusion and that this is a
problem that should be addressed and corrected. I think that the real issue is
much simpler:

Technology has made manufacturing, services, mass communication, and markets
much more efficient. When they are efficient, competition creates fewer
winners and the winners win big.

If you want to understand inequality understand that. This is fundamental
economics. We can dream of a world where there are 1500 different brands of
phone each having close to equal market share but when one gains advantage,
the advantages multiply and you end up with one or two major phone
manufacturers. Propping up the other ones is nice, and may do some local good,
but it's Sisyphean - it won't change the dynamics.

~~~
noir_lord
The end goal of capitalism is one corporation selling you air.

I'm pro-capitalist (not least because it works) but also pro-market
regulation, capitalism should be harnessed for the good of everyone not just a
few.

~~~
toomuchtodo
I think you might be interested in this article on the end of capitalism:
[http://www.theguardian.com/books/2015/jul/17/postcapitalism-...](http://www.theguardian.com/books/2015/jul/17/postcapitalism-
end-of-capitalism-begun)

"Postcapitalism is possible because of three major changes information
technology has brought about in the past 25 years. First, it has reduced the
need for work, blurred the edges between work and free time and loosened the
relationship between work and wages. The coming wave of automation, currently
stalled because our social infrastructure cannot bear the consequences, will
hugely diminish the amount of work needed – not just to subsist but to provide
a decent life for all.

Second, information is corroding the market’s ability to form prices
correctly. That is because markets are based on scarcity while information is
abundant. The system’s defence mechanism is to form monopolies – the giant
tech companies – on a scale not seen in the past 200 years, yet they cannot
last. By building business models and share valuations based on the capture
and privatisation of all socially produced information, such firms are
constructing a fragile corporate edifice at odds with the most basic need of
humanity, which is to use ideas freely.

Third, we’re seeing the spontaneous rise of collaborative production: goods,
services and organisations are appearing that no longer respond to the
dictates of the market and the managerial hierarchy. The biggest information
product in the world – Wikipedia – is made by volunteers for free, abolishing
the encyclopedia business and depriving the advertising industry of an
estimated $3bn a year in revenue."

~~~
hellameta
I'm not sure whether I agree or not but thank you for sharing that article.
Very interesting.

~~~
toomuchtodo
I appreciate your polite reply.

------
SixSigma
Can many people really say that IT is being used effectively in most
organisations ?

Almost every one I have worked in use haphazard methods, unnecessary manual
input and duplication of input, outdated forecasting, bad choice of software
tools (e.g. spreadsheet heavy) ... the list goes on of small day to day things
that add up.

There was a recent story about 90% of people not even knowing about Ctrl-F to
search documents.

Think about all the times you've had images sent in Word documents or crappy
artwork you've had to re-create by hand because the only copy of the logo was
a 400px jpg.

Multiply the time wasted on those things by a few hundred million.

Now tell me there's no productivity to find, and we haven't even got on to
your actual business processes.

------
tankenmate
How much of this is productivity and how much is merely increased revenue? If
you assume that costs are not linear with large economies of scale (which is
not such a wild assumption), then some of this "productivity" increase can be
attributed to rent taking; especially so when taking into account the power
law distribution at the thick end of markets and reduction of competitiveness
at the big end.

~~~
stevetrewick
They use a measure called Multifactor Productivity. From the linked report :

 _Multi-factor productivity (MFP) growth measures the growth of GDP over the
combined contributions of total hours, workforce skills, machinery and
structures and ICT capital._

From wikipedia [0] :

 _Multifactor productivity measures reflect output per unit of some combined
set of inputs. A change in multifactor productivity reflects the change in
output that cannot be accounted for by the change in combined inputs. As a
result, multifactor productivity measures reflect the joint effects of many
factors including new technologies, economies of scale, managerial skill, and
changes in the organization of production._

[0]
[https://en.wikipedia.org/wiki/Multifactor_productivity](https://en.wikipedia.org/wiki/Multifactor_productivity)

------
Yaa101
The most productive teams were mostly bought and consolidated by rich firms,
that is until a new generation of disruptive small startups that take the
chance of not wanting to be bought out by the big firms, will take things to a
different level again. This pattern has always been there and always will be,
business as usual.

------
imh
It's strange to read this story immediately after this other one
[https://news.ycombinator.com/item?id=10367253](https://news.ycombinator.com/item?id=10367253)

I'd be afraid to see the correlation between who uses those kinds of methods
and who is at the frontier of productivity. I hope that other article isn't
the future :(

------
eitally
There's something of a snowball effect here, especially in the manufacturing
sector (and coincidentally, the most productive mfg companies have been
diversifying into services (logistics, warranty mgmt, co-engineering, etc)
because it's so much more profitable -- often in the 15-20% gross margin
rather than 4-6%), but additionally, just having the working capital and
financial leverage that large corporations have helps ensure their continued
growth and success. The big have gotten so big that even the small guys
wouldn't succeed without somehow also giving money to the big guys. For
example, if I'm in Shenzhen and I start a widget factory, it would be hard for
me to avoid the influence of Foxconn, for better or for worse. ... Just like
further up the food chain, Apple's iPod/iPhone/iPad successes padded the
coffers of Foxconn, Jabil, Samsung, TSMC, and others. The "no one was ever
fired for choosing IBM" maxim holds true manufacturing, too. :-/

------
gaius
Article doesn't mention _what_ firms tho'.

~~~
rrmm
It also doesn't appear that the firms are constant year over year. It just
takes the top 5% and labels those the frontier firms.

So with just the info in the article i don't think it supports any particular
conclusion without more information.

