As the latest figures show, labour productivity in UK manufacturing fell by 0.9% during the first quarter of 2019 and we continue to see weak performance in the UK economy. Thus, there is a business imperative and a huge opportunity to harness digital innovation to boost productivity. This article clearly explains the value of investing in affordable and simple digital tools, like app technology, to improve productivity in manufacturing.
Article originally published in June 2018.
Throughout his period as Chancellor, Philip Hammond has repeatedly emphasised the UK’s “productivity puzzle”. It’s a catchy name for the UK’s stagnant productivity growth since the ‘08 financial crisis.
The UK’s productivity growth has plateaued at 2%. It’s not a decline, sure. But the stalling of productivity growth is probably the UK’s most serious current economic problem. In terms of output per hour, the last five years’ productivity performance has been by far the worst period in the last 45 years.
For engineering firms and any business involved in product design, productivity is a particularly existential challenge. Delivering a higher level of output for each hour worked can be the divide between success and failure in a highly competitive, international market.
The answer to the puzzle is innovation. According to studies by the OECD and Nesta, innovation accounts for 25 to 50% of labour productivity growth. This conundrum has increasingly meant businesses looking to technology for answers, with digital transformation a hot topic and key push across all sectors. At the centre of this drive for digital improvement is app tech. And while technology can be a tool for change, it can also shift a business’ culture to one with innovation woven into its DNA.
Apps are a tool, productivity the strategy
An app isn’t the answer to innovation in and of itself. It’s a tool, created for a purpose. Focusing on tech without understanding the problem or thinking about the end user can damage the productivity the apps were meant to improve. In enterprises the situation is particularly chronic: According to a global survey of 2,000 knowledge workers, 69% of workers waste up to an hour of productivity each day (or 32 days per year) navigating their workplace apps. And 68% claim to toggle between 10 different apps every hour.
The situation proves two things: businesses are investing in apps to improve productivity, but unfortunately, their approach to investing in tech is often flawed. Perhaps more concerning: it’s a sign that most enterprise apps aren’t all that great.
Apps help productivity when they’re strategically developed and tactically deployed.
Many enterprises labour under archaic and out of date systems, and the cost of wholesale change can be intimidating. Plus, as Dharmesh Mistry, the former head of technology at NatWest and TSB, points out, the money for upgrades is often difficult to obtain because budgets are divided between maintenance and providing new functionality.
So while some businesses are certainly investing, 61% of British manufacturers indicated a reluctance to spend money on productivity investments. What that survey doesn’t show is why. But we would hazard a guess it’s one of three things. 1) A fear of change 2) The businesses have been stung by ineffectual ‘solutions’ before 3) The initial outlay is seen to be too vast.
The focus on cost of innovation is misguided for a couple of reasons. First, 81% of CIOs believe legacy systems are having a negative impact on their businesses. And secondly, investment in infrastructure isn’t necessarily a huge expense.
The role of apps
The thoughtful use of app technology can, and has, improved productivity in businesses. In fact, enterprises already use apps to great effect. Apps like Expensify have radically simplified the creation of expense reports, a traditionally painful productivity killer at enterprise level.
But app technology means more than just smartphone widgets, it provides the infrastructure of the industrial internet of things (IIoT), the various sets of hardware pieces that work together through internet connectivity to make manufacturing and engineering more productive.
enModus, for example, is a ‘smart buildings technology’ company that enables the monitoring, control and internet connectivity of any device that is mains powered.
It’s pioneering work, but its installation engineers faced a pernicious problem: Once smart lighting fixtures were installed, it was difficult to know which light on the ceiling mapped to which item on the computer screen. This process is known as ‘commissioning’, and it was slow and laborious, especially as it involved large factories.
So enModus commissioned Calvium to develop an app to ease the process for their installation engineers. The app makes the mapping and tagging of smart lighting fixtures to digital IDs fast, easy and reliable. The design incorporated a series of different methods, allowing the user to select the appropriate tool at the appropriate time.
enModus and Expensify are just two illustrations of how apps and app tech offer incisive focus on particular business challenges and processes. From supply chain management to communication and design, the technology offers productivity improvements across the entire enterprise.
But apps also offer another benefit. While businesses often use apps to improve one area of their process, apps often act as a catalyst for innovative and transformative thinking business-wide.
A culture of innovation
Affordable labour has been an important, albeit temporary, fix for the UK’s productivity puzzle. But productivity, at least in its modern sense, is defined by its capital-intensive nature. Technology is an investment in the staff you have presently, maximising their potential.
Apps can negate the need for a complete system overhaul, using the technology and processes that already exist within a business, solving legacy issues quickly and at a fraction of the cost. But great app development can spark innovative ways of thinking too.
As we’ve written before, the mindset of technological and transformational change is as important as the technology itself. Innovation creates, as Google’s innovation chief Frederik Pferdt put it, “an environment where people can share ideas which might not be finished, might not be perfect, but are attempts to start disrupting things, to start a discussion of things that may be impossible at the moment.”
Some industries are embracing change more readily than others. The signs in the engineering sector, in particular, are positive: A PwC report found engineering and construction companies plan to invest 5% of annual revenue into improving their digital operations over the next five years.
A culture of innovation is taking hold, and technology is the tip of the spear. Enterprises, manufacturers and engineering firms – like Rolls-Royce – want to introduce agility into their operations.
The answer to the UK’s productivity slowdown, we know, is innovation. As the OECD explained, the productivity slump isn’t a slowing of innovation, but the slow adoption of innovation. ‘Innovation’ doesn’t mean distant or expensive technology. Tools like app technology are affordable, simple ways to address familiar pain points.