US Productivity Slip, A Threat to Sustainability?

Bob Suh, Chief Technology Strategist at Accenture writing in yesterdays Financial Times hits the panic button on US productivity. Apparently it is starting to slip relative gains in Europe and China. The reason is an under investment in technology. I know what you are thinking, I'd be surprised too if Accenture reached a different conclusion about the need for tech spend. Nevertheless.

What is interesting in terms of sustainability trends are two issues. One is an apparent political fear of technology investment inside the firm amongst CIOs with Accenture reporting only 34% of major IT projects coming in without a hitch. Suh uses the heart surgery analogy:

Taking no action with a 100 per cent chance of gradual death, is more palatable than having a procedure that has a 66 per cent chance of sudden death.

The other issue is a concentration of spending on Sarbanes Oxley compliance and M&A systems integration that might be better spent on overall process efficiency.

The former though based on well grounded fear is a clear example of short term thinking getting in the way of longer term value creation. The latter is an example where legal compliance is traded away against the opportunity for greater resource efficiency.

In reality, to tackle global problems such as climate change and poverty we will need a massive innovation in business process efficiency. For example, writing in the Foreign Affairs journal recently Elizabeth Economy quoted a Chinese official:

To produce goods worth $10,000 we need seven times the resources used by Japan, almost six times the resources used by the U.S. and -- a particular source of embarrassment -- almost three times the resources used by India.

And if we are to see compliance focus come at the cost of productivity we will certainly be slow to make progress. We need to be better able to do both. At the least we will need greater regulatory certainty to spur investment in cleaner technologies but compliance too should be nimble. Multistakeholder, voluntary initiatives such as the Electronic Industry Code of Conduct or the Extractive Industry Transparency Initiative show real promise in this area in helping organisations more flexibly meet the societal demand. The tech industry job one is to shore up CIO confidence in tech investment.