Do more people make the boat go faster?
I am a fan of rowing. I remember watching the British Men’s four of Steve Redgrave, Matthew Pinsent, James Cracknell and Tim Foster in the run up to the 2000 Sydney Olympics and taking victory over the Australian boat to win gold. Four great athletes, but key to their success was a man not in the boat, their coach Jurgen Grobler.
Grobler’s job was to get the best out of the talent at his disposal, to innovate, to utilise everything available to him to make the rowers better at their function and make the boat go faster. It didn’t go faster because they threw more numbers at it - they innovated, worked smarter and increased their outputs with the same physical inputs.
What relevance has this to UK Manufacturing?
Since 2008, growth in UK manufacturing has fallen from 3-4% in the preceding years to around 1% annually, and it is widely considered that this growth has not been generated through innovation, but by using more labour to increase the top line. In other words, we have thrown more people at the issue. The boat has gone faster, but only marginally, and not in the longer term.
If we measure labour productivity as being the value of outputs against labour inputs, then real growth can only be achieved by increasing outputs, reducing labour costs, or both. Grobler kept his labour costs the same but created an environment where they could achieve more.
In 2015 labour costs in the UK economy accounted for 66% of total productivity, which is significantly higher than in the US where the equivalent figure is around 47%. The indication is that in the UK, rather than investing in new technologies or innovation, we have used more labour to maintain results, which in turn has an impact on long term growth. Unemployment is low, but the reduction in this has mainly come from lower wage jobs and this short-term gain will have a detrimental effect on the medium to long term.
Without the investment in higher level skills and processes it is harder to achieve real growth and the pace at which industry is changing will place more focus on this – we may be getting faster, but our competitors are moving ahead.
Investment in technology and innovation results in using reduced labour to achieve greater results and this can be measured by looking at the labour content of our productivity which is why it is an important measure for economic growth – in order to grow business, leaders will need to think differently and invest in skills and technology. This also leads to a sustainable, long term growth.
Grobler’s effect on British Rowing was long term. 18 years later his legacy is evident with the men’s four winning gold at every Olympic Games since 2000 and the medal count in other boat classes consistently high. The facilities are much improved, technology too and this enables the athletes to train smarter.
There are the same number of men in the boat. Does it go faster? Of course it does.