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Technology And Productivity: Are You Making The Best Use Of Your Investments?

By Daniel

Technology across the board, be it the wheel or the light bulb, has had one universal benefit to business: the increase of productivity. This is why economists track Total Factor Productivity (abbreviated TFP is the portion of output not explained by the amount of inputs used in production. As such, its level is determined by how efficiently and intensely the inputs are utilized in production) to get a better understanding of what technology enables. We do, however, often make the mistake of fixating on a specific technology itself rather than what it enables us to do. A simple example: Google is a search engine that has made it easier for us to find information; it has improved productivity beyond what is obvious – it’s easier to find a research paper, a directory listing, or a book review. Gone are the yellow pages of yore; one can now find that data on her finger tips. We are now free to use the time we would have used looking for the book/restaurant on more productive ventures such as reading the book/eating the food. This is what technology does; it frees us up to be able to better pursue our passions.

I’ll expound on the previous paragraph by giving a few real world use cases.

Let’s take the example of a restaurant, which is in the business of serving food. Depending on what the owner wants to achieve, technology may or may not add value to the operations of the restaurant. Let’s imagine that the restaurant is a lifestyle business, whose owner’s objective is to not only offer good food but also to converse with the clients and to offer them a way to pass time. Such a business has it’s niche in the fact that it doesn’t heavily adopt technology but rather that it is relationship based and hangs on to the traditional ways of interacting with people, provides a unique ambiance with no wifi, etc. The owner gets real feedback from regular clients during their visits. Custom meals for diners are possible as there’s no fixed menu per se. “Adopting” artificial intelligence (AI) offers them no value. This is very different from a restaurant that aims to be a global food chain; for them, usage patterns allow them to use tools such as AI to better model stock control (what’s the order quantity of milk that allows it to be fresh but at the same time ensuring that there is little waste), model customer satisfaction, model the impact of menu changes, etc. In the latter restaurant’s case, technology is key to the survival of the business. Technology is not a “one-size-fits-all.” This is what technologists should always keep in mind – the utility of the technology is more important than the quality of the technology.

Technology, ultimately, should help businesses rethink their workflows and operating models, allowing them to generate more revenue or save on cost. It should act as one of the oldest pieces of technology continues to -the lever – which provides a way to get more work done with less effort. A professional services firm can re-think its communication setup; if phone extensions can be virtual and workspaces can be virtual, why have fixed desks for the users? Why have fixed working locations? We only get the benefiits of the technology not when we adopt it but when we use it to re-think your business processes.

In the early 1900s, when electricity became pervasive many companies realized that there was an immediate competitive advantage in replacing their dirty coal-fired steam engines with the cleaner electric motors. However, it took them a much longer time, about twenty years or so, to figure out that this also allowed them to have more machines per square foot and that the generated light could lead to longer working hours.

The same phenomenon is playing out today: services that could be automated are not yet being automated. Call center staff, for instance, are still forced to have long commutes to sweatshop-like operations yet we have digital phone systems. While a company may have incurred the cost of new phone technologies, it still may have virtually none of its true benefits, much like the earlier mentioned factories from the 1900s with electricity. In this current instance, digital phone systems are used exactly as we did old copper lines; there’s absolutely no benefit derived from the phones other than a reduction in the use of copper. However, digital phone systems allow us to re-think our operations entirely. Many call center workers today can work from home with a smartphone and a computer, and with very flexible hours getting rid of, for example, the dreaded lack of a social life that’s currently caused by long commutes to the call center facility (while a number of companies have already adopted this, adoption is not as high as it ought to be).

Another example is the credit rating systems used by banks in Kenya. They are outmoded. Banks use credit scoring technology to assess high interest loans issued via mobile phones, but the same technology isn’t applied to personal loans not requested via mobile, or corporate loans. The same technology can be used to figure out limits and rates for credit card, mortgages, and corporate loans, etc.; this doesn’t mean that the relationship manager should be supplanted but rather that they should be used for exceptional circumstances not yet catered for by the technology, and to build relationships. This would allow banks to both cut costs, improve revenue, and improve customer satisfaction. The lack of loan scoring in certain categories also explains the increase in non-performing loans issued to struggling but larger companies; the relationship managers don’t using scoring technology that may be able to detect changing fortunes in the operations of a company but rather they depend on traditional, less reliable means of lending. This is a huge gap that needs to be addressed and that would lead to better allocation of debt in the market.

There are so many cases like this, across the board, where technology is adopted and not put to its best use. This disconnect has been instructive to us at Node Africa; we realized we will never make a difference if we simply peddle our technology; our focus should not and can never be the technology itself. We have had to change focus and learn to figure out how to ensure that the technology works for your business, be it in terms of customer satisfaction, revenue growth, or cost savings. This alignment with our customers’ requirements ensures that we always add value to the organizations we work with. We recognize that technology isn’t an end in itself if it doesn’t lead to that magical word: productivity. We don’t use our technology as a catchall cure for all tech-disease, but we try to see how best we can help businesses be more competitive in this rapidly changing era.

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