Paul Krugman, the Nobel Prize [winner] in economics, once wrote: "Productivity is not everything, but in the long run, it is almost everything."
So this is serious. You know, there are not that many things on earth that are "almost everything." Productivity is the principal driver of the prosperity of a society. So we have a problem. In the largest European economies, productivity used to grow five percent per annum in the '50s, '60s, early '70s. From '73 to '83: three percent per annum. From '83 to '95: two percent per annum. Since 1995: less than one percent per annum. The same profile in Japan. The same profile in the US, despite a momentary rebound 15 years ago, and despite all the technological innovations around us: the Internet, the information, the new information and communication technologies.
When productivity grows three percent per annum, you double the standard of living every generation. Every generation is twice as well-off as its parents'. When it grows one percent per annum, it takes three generations to double the standard of living. And in this process, many people will be less well-off than their parents. They will have less of everything: smaller roofs, or perhaps no roof at all, less access to education, to vitamins, to antibiotics, to vaccination－to everything. Think of all the problems that we're facing at the moment. All. Chances are that they are rooted in the productivity crisis.
Why this crisis? Because the basic tenets about efficiency－effectiveness in organizations, in management－have become counterproductive for human efforts. Everywhere in public services－in companies, in the way we work, the way we innovate, invest－try to learn to work better. Take the holy trinity of efficiency: clarity, measurement, accountability. They make human efforts derail.
There are two ways to look at it, to prove it. One, the one I prefer, is rigorous, elegant, nice－math. But the full math version takes a little while, so there is another one. It is to look at a relay race. This is what we will do today. It's a bit more animated, more visual and also faster－it's a race. Hopefully, it's faster.
World championship final－women. Eight teams in the final. The fastest team is the US team. They have the fastest women on earth. They are the favorite team to win. Notably, if you compare them to an average team, say, the French team,
based on their best performances in the 100-meter race, if you add the individual times of the US runners, they arrive at the finish line 3.2 meters ahead of the French team. And this year, the US team is in great shape. Based on their best performance this year, they arrive 6.4 meters ahead of the French team, based on the data. We are going to look at the race. At some point you will see, towards the end that Torri Edwards, the fourth US runner, is ahead. Not surprising—this year she got the gold medal in the 100-meter race. And by the way, Chryste Gaines, the second runner in the US team, is the fastest woman on earth. So, there are 3.5 billion women on earth. Where are the two fastest? On the US team. And the two other runners on the US team are not bad, either.
So clearly, the US team has won the war for talent. But behind, the average team is trying to catch up. Let's watch the race.
So what happened? The fastest team did not win; the slower one did. By the way, I hope you appreciate the deep historical research I did to make the French look good.
But let's not exaggerate—it's not archeology, either.
But why? Because of cooperation. When you hear this sentence: "Thanks to cooperation, the whole is worth more than the sum of the parts." This is not poetry; this is not philosophy. This is math. Those who carry the baton are slower, but their baton is faster. Miracle of cooperation: it multiplies energy, intelligence in human efforts. It is the essence of human efforts: how we work together, how each effort contributes to the efforts of others. With cooperation, we can do more with less.
Now, what happens to cooperation when the holy grail－the holy trinity, even－of clarity, measurement, accountability－appears?
Clarity. Management reports are full of complaints about the lack of clarity. Compliance audits, consultants' diagnostics. We need more clarity, we need to clarify the roles, the processes. It is as though the runners on the team were saying, "Let's be clear－where does my role really start and end? Am I supposed to run for 95 meters, 96, 97...?" It's important, let's be clear. If you say 97, after 97 meters, people will drop the baton, whether there is someone to take it or not.
Accountability. We are constantly trying to put accountability in someone's hands. Who is accountable for this process? We need somebody accountable for this process. So in the relay race, since passing the baton is so important, then we need somebody clearly accountable for passing the baton. So between each runner, now we will have a new dedicated athlete, clearly dedicated to taking the baton from one runner, and passing it to the next runner. And we will have at least two like that. Well, will we, in that case, win the race? That I don't know, but for sure, we would have a clear interface, a clear line of accountability. We will know who to blame. But we'll never win the race. If you think about it, we pay more attention to knowing who to blame in case we fail, than to creating the conditions to succeed. All the human intelligence put in organization design－urban structures, processing systems－what is the real goal? To have somebody guilty in case they fail. We are creating organizations able to fail, but in a compliant way, with somebody clearly accountable when we fail. And we are quite effective at that－failing.
Measurement. What gets measured gets done. Look, to pass the baton, you have to do it at the right time, in the right hand, at the right speed. But to do that, you have to put energy in your arm. This energy that is in your arm will not be in your legs. It will come at the expense of your measurable speed. You have to shout early enough to the next runner when you will pass the baton, to signal that you are arriving, so that the next runner can prepare, can anticipate. And you have to shout loud. But the blood, the energy that will be in your throat will not be in your legs. Because you know, there are eight people shouting at the same time. So you have to recognize the voice of your colleague. You cannot say, "Is it you?" Too late!
Now, let's look at the race in slow motion, and concentrate on the third runner. Look at where she allocates her efforts, her energy, her attention. Not all in her legs—that would be great for her own speed—but in also in her throat, arm, eye, brain. That makes a difference in whose legs? In the legs of the next runner. But when the next runner runs super-fast, is it because she made a super effort, or because of the way the third runner passed the baton? There is no metric on earth that will give us the answer. And if we reward people on the basis of their measurable performance, they will put their energy, their attention, their blood in what can get measured—in their legs. And the baton will fall and slow down.
To cooperate is not a super effort, it is how you allocate your effort. It is to take a risk, because you sacrifice the ultimate protection granted by objectively measurable individual performance. It is to make a super difference in the performance of others, with whom we are compared. It takes being stupid to cooperate, then. And people are not stupid; they don't cooperate.
You know, clarity, accountability, measurement were OK when the world was simpler. But business has become much more complex. With my teams, we have measured the evolution of complexity in business. It is much more demanding today to attract and retain customers, to build advantage on a global scale, to create value. And the more business gets complex, the more, in the name of clarity, accountability, measurement we multiply structures, processes, systems.
You know, this drive for clarity and accountability triggers a counterproductive multiplication of interfaces, middle offices, coordinators that do not only mobilize people and resources, but that also add obstacles. And the more complicated the organization, the more difficult it is to understand what is really happening. So we need summaries, proxies, reports, key performance indicators, metrics. So people put their energy in what can get measured, at the expense of cooperation. And as performance deteriorates ,we add even more structure, process, systems. People spend their time in meetings, writing reports they have to do, undo and redo. Based on our analysis, teams in these organizations spend between 40 and 80 percent of their time wasting their time, but working harder and harder, longer and longer, on less and less value-adding activities. This is what is killing productivity, what makes people suffer at work.
Our organizations are wasting human intelligence. They have turned against human efforts. When people don't cooperate, don't blame their mindsets, their mentalities, their personality—look at the work situations. Is it really in their personal interest to cooperate or not, if, when they cooperate, they are individually worse off? Why would they cooperate? When we blame personalities instead of the clarity, the accountability, the measurement, we add injustice to ineffectiveness.
We need to create organizations in which it becomes individually useful for people to cooperate. Remove the interfaces, the middle offices—all these complicated coordination structures. Don't look for clarity; go for fuzziness. Fuzziness overlaps. Remove most of the quantitative metrics to assess performance. Speed the "what." Look at cooperation, the "how." How did you pass the baton? Did you throw it, or did you pass it effectively? Am I putting my energy in what can get measured－my legs, my speed－or in passing the baton?
You, as leaders, as managers, are you making it individually useful for people to cooperate? The future of our organizations, our companies, our societies hinges on your answer to these questions.
Thank you.
