Published on the 12/04/2016 | Written by Donovan Jackson
New Zealand’s productivity is low and not improving, but ‘new technology’ can change that…
That’s according to NZTech chief executive Graeme Muller, who in a statement pointed out that productivity is a measure of being able to produce more with less effort or resources.
In the statement, the organisation noted that ‘services make up 70 percent of GDP and it is here where New Zealand is least productive’. That’s particularly pronounced in government services, which account for half of all services, Muller said.
“The government understands these services need to be transformed in order to improve productivity and they appreciate technology is the way to solve the problem. But, according to Deputy Prime Minister Bill English, the transformation is not happening fast enough. This is due to government employees’ fear of failure, resistance to collaboration and capability gaps,” he said.
Asked by iStart what ‘technology’ specifically should be used to improve productivity, Muller gave a non-committal answer, which can be summed up as ‘ICT generally’ (given the breadth and depth of the industry, the question is admittedly a difficult one to answer). However, the organisation’s statement noted that, ‘since 2012, better use of technology has delivered a 16 percent reduction in the reported effort in dealing with government departments’.
Muller’s statement was promoting NZTech’s background briefing paper ‘Transforming Government Technology’, in which the industry association is pushing for greater innovation through an improved partnership between the Government and the ICT industry.
At the recent NZTech Government Technology Summit, where English spoke, Muller said a clear theme emerged that ‘transforming government services will lead to better outcomes for all New Zealanders, especially those in most need’.
“So the Deputy PM is planning to put further fiscal pressure on agencies to try to force them to innovate. The tech sector is concerned that without cultural change, fiscal pressure runs the risk of driving a ‘cost reduction’ mentality in agencies, resulting in decreasing service rather than transformation.”
When iStart pointed out that governments are notoriously bad at innovating (and further imagines that ‘forced innovation’ is, like so many government initiatives, likely to produce unintended results), Muller agreed but said the intentions are good.
He added that the bureaucratic components tend to be well addressed, ‘with great strategies and guidelines in place and partnership frameworks’. Where it all falls apart is the implementation. “It’s the nuts and bolts. Government workers are designed to be risk averse, so it is hard to innovate in that place, so we see innovative thoughts at the strategic level, but anything deemed risky is avoided which means innovation tends to be squeezed out in the implementation.”
That said, Muller said there are ‘pockets of innovation’ in government, found where the incentives are right and chief executives have a high understanding of technology and what it can offer. The situation is also better, he added, “when working closely with the industry; innovation doesn’t necessarily come from a government agency and that’s not what they are there for”.
The summit recommended that further investment be made in alignment with the government ICT strategy – building better tech capability across government, continuing to drive better use of data, working on innovations with the tech sector and agencies sharing examples of successful innovations with each other.
iStart notes that these are somewhat nebulous targets which are difficult to measure.
“The Government is the tech sector’s largest client. Engaging proactively together will not just improve the country’s productivity it will also further stimulate the country’s fastest growing export sector. With up to 40 percent of all money spent on ICT in New Zealand spent by the public sector, enabling agencies to share innovative ways of using technology can drive better public services,” Muller said.
He added that New Zealand’s tech sector presents ‘the most obvious opportunity to expand the diversity of New Zealand’s exports’ and ‘ongoing investment in the New Zealand tech industry can help achieve these aspirations, while helping to drive better public services’.
NZTech’s briefing paper on Transforming Government Technology is available here.
Hi there John
Thanks for the great comment. Suffice to say, we’re a bit Adam Smith in this office and believe the best thing government and bureaucrats can do to accelerate business performance, is to get well out of the way. Of course, that’s also the last thing that governments and bureaucrats are likely to do, because they overwhelmingly believe (and are enabled by an electorate with similar views) that being seen to do something is of pivotal importance. Brings back recollections of Frederic Bastiat’s Parable of the Broken Window, or ‘That which is seen, and that which is unseen’.
There has always been a deep mistrust of ‘business’ and ‘capitalism’ in the minds of most, notwithstanding the amazing things both give us automatically. Further, I do believe there is a further mistrust of allowing ‘the market’ to proceed independent of the molestations of government ‘managers’ who presume to know better than the infinitely complex and automatic market is capable of achieving well away from their interference.
Best wishes.
D
Hi Donovan,
You can tell I feel strongly about this subject… when I originally typed this into your comments field and pushed the post button, I was told I’d timed out. I lost the lot. But on this subject my memory is strong.
Would that there were more articles like this …and that they appeared on the front page of the Herald.
It’s good to have a bureaucrat formally recognizing the link between productivity and technology but it is appalling that the head of NZ Tech doesn’t know how IT can actually be deployed to achieve it. Has he not heard of Uber Technologies Inc?
Politicians, economists and their ilk do not understand the role that IT could play. They make the subject of productivity complex and intellectual – capital, labour, blah, blah, blah. It is actually simple, but if they don’t understand and thereby shape NZ’s economic infrastructure accordingly our economy will decline.
In an article describing 1 million US bank workers being put out of work in the next few years, Business Insider described the situation as the banks’ ‘Uber moment’ – the point at which a business model is completely transformed by automating it. The pieces are in place to apply the same treatment to most businesses. It’s all about linking consumer and supplier using IT automation.
The lever, the wheel and most of all, fire, transformed mankind’s productivity and enabled the birth of civilizations. Fire took us out of the trees by transforming our digestive capabilities and giving us time that we could invest in developing a society.
And time is still the biggest issue with productivity. While Amazon and FedEx measure the time it takes to do things in minutes and hours, most business measure it in days and weeks. For processes that are not highly repetitive the average time taken by each step in the process is a week.
Automation can eliminate this ‘dead air’ in a process. The technology has been around for 20 years. In 2003 Benchmark Capital’s Bill Gurley said that BPMS would do for the rest of industry what JIT did for automotive manufacture. But it never happened …for a couple of reasons.
Unlimited in 2008 reported that a clothing manufacturer had increased productivity 10-fold, 1000%, by automating his business using our software. He told us exactly how his company operated. 80% of the time he was correct. For the other 20% the staff had to change. We have yet to meet another CEO who would take the same approach. We did have one who told us that the 20% was the software’s problem.
Not being able to define what happens in a business is part of the reason that BPMS systems failed, but the main reason is that they don’t cater for exceptions. BPM vendors tell you that 80% is good enough, or that you only need to map out the happy path – the way things go on a good day. They don’t cater for exceptions. Things go wrong, so you need makes changes – to normalize or eliminate exceptions – but BPM software is particularly bad at handling change.
When something happens with which a worker is unfamiliar, they have 3 options: ignore the issue, make something up, or take the easiest way out. IT systems are black and white, they don’t handle ‘um er’, so when systems do not cater for exceptions they make life difficult for workers, who eventually go back to their old way of doing things. Six years ago a study into BPMS systems showed that the average life of an automated system was just 8 months.
I could go on… but please, please push this issue whenever you can. Imagine if we could increase NZ’s productivity by 1000%, wages would double, social problems would evaporate, South Auckland would be a great place to live.