With times still tough, all organisations are attempting to squeeze as much productivity from their resources as possible. A new paper by Deloitte explores how you can increase the productivity in your firm.
The document, which looks specifically at the Canadian market, researched 884 firms across the country, and found that 1 in 3 of them were not being as productive as they could be, with most not even aware that they were failing to invest sufficiently in their business. With the illusory superiority bias in full flow, most believed they were at least on a par with their peers.
The report broke companies down into three types:
- Overconfident companies are those investing below the mean and unaware that they’re doing so
- Static companies are those that still underinvest, but are aware of the situation
- Dynamic companies by contrast invest above the mean, and know they do
As I’m sure you can imagine, the problem rests with the overconfident third, the ones who have the incorrect assumption that they’re investing enough in their own productivity.
So why does the perception gap exist?
Deloitte suggest that the main problem is one of information. The overconfident firms share many characteristics with their dynamic peers, but they have access to poor information on both their current productivity and on the best ways of improving it.
Of course, solving this problem is easier said than done, as the very nature of it tells us that these companies don’t even think they have a problem. The answer lies in having access to better information and benchmarking between firms. Deloitte suggest that as soon as companies have a better idea of where they stand in relation to their peers, they will quickly increase spending accordingly.
“our experience shows that many senior leaders lack that clarity, primarily because companies tend to put too much emphasis on comparing their present selves with their past selves and too often declare victory if they’ve improved. What they forget is that you compete only with your current rivals.”
Whilst many companies are already strong when it comes to collecting data about their past, and indeed their current performance, where they lack is in providing context for this data. It needs to be compared with the competitive environment within which they operate to have any meaning.
How does your own company ensure you are leading the pack? Do you engage in benchmarking with your peers or companies in other sectors?