Productivity

Abstract

The concept of productivity needs to be reviewed by arguing that the product-service “product” that current productivity is measured against is no longer the norm; for many economies the industry mix is dominated by “intangible service products” and “tangible manufactured products” that are produced by networks of organizations that are both interorganizational and international in their nature. It has been suggested that governments look to develop a more realistic method for calculating productivity, to identify a methodology reflecting the twenty-first century, rather than the approaches taken since the mid-twentieth century, if not earlier. A Boston Consulting Group (BCG) document Productivity Now offers an interesting approach to calculating the productivity of the organization, but this needs to be taken further to include productivity profiles of networked organizations. One important consideration concerns the treatment of intangible assets, another concerns the international and increasing complexity of manufacturing. The BCG approach uses economic profit generated and calculated using the aggregate EVA (economic value added) contributed by the network component organizations.