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The Productivity Paradox

Technology doesn't make us work smarter, argues Jeff Bussbang.
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Think about all of the amazing technology innovation that has impacted businesses over the last three years. Since 2011, we have seen an explosion in cloud computing, in mobile, in technology-enabled business services and in globalization. All of us feel more productive as professionals and our businesses feel more productive instutionally. As a nation, the US must be cranking in productivity.  Killing it -- particularly after rebounding from a recession, right?

Now look at the latest US productivity statistics (Q1 was just released last week):

  • Q1 2013: 0.5% (annualized)
  • 2012: 0.7%
  • 2011: 0.6%

In other words, despite three years of amazing innovation and growth, we don't seem to be gaining in productivity. What's going on?  

In 1986, observing a similar phenomenon on the heels of the PC revolution, MIT Economist Robert Solow quipped: "You can see the computer age everywhere but in the productivity statistics."

Those of us that are immersed in the innovation economy may find this hard to believe, but we are not, as a whole, actually more productive when we are in the midst of an innovation cycle boom. New technologies take time to absorb, refine and make mainstream. Computer software can be reprogrammed quickly. Humans can't.  

Forrester captured this phenomenon nicely in a chart they produced a number of years ago predicting "the next big thing" in computing:

Forrester chart

We can't imagine a world without broadband wireless, iPhone 5s, iPads and the cloud. But we've got a lot of work to do to absorb these amazing technologies and make us all more productive as a whole.

This post originally appeared on the blog Seeing Both Sides

IMAGE: Flickr/zandwacht
Last updated: Jun 11, 2013

JEFF BUSSGANG | Columnist | General Partner, Flybridge Capital Partners

Jeff is a general partner at Flybridge Capital Partners, which focuses on consumer, Internet commerce, marketing services, software, and mobile start-ups. He's the author of Mastering the VC Game, and the blog Seeing Both Sides.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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