Why new technology alone won’t fix your productivity problem
Every few years a new technology promises to transform how organisations work. Today it’s AI. Before that it was cloud, digital transformation and automation. Many leaders I speak with have invested heavily and are quietly disappointed. The systems work, but productivity hasn’t moved.
There’s a good reason for that, and it isn’t the technology.
The productivity J-curve
Erik Brynjolfsson, Daniel Rock and Chad Syverson studied why major technologies take so long to show up in productivity figures. Their answer is the productivity J-curve. To get value from a general-purpose technology, organisations must also invest in what they call intangible complements: new processes, new skills, new ways of organising work and new business models. Those investments take time and effort, so productivity often dips before it rises.
Organisations that buy the technology without redesigning the work around it get stuck at the bottom of the curve. They have the cost of the new system and the inefficiency of the old way of working.
Capability, not just tools
David Teece, Gary Pisano and Amy Shuen argued that lasting advantage comes from dynamic capabilities: an organisation’s ability to sense change, seize opportunities and reconfigure itself in response. Technology can strengthen each of these, but only people can do them. A tool can show you a pattern in your data. It takes people to understand what it means, decide what to do and change how the work is done.
What people-led, technology-enabled means in practice
In my work, people and culture sit at the heart of every innovation. Technology is a powerful enabler, but it comes second. In practice that means:
- Start with the problem, not the tool. Work with frontline staff and customers to understand what’s really getting in the way.
- Redesign the work. Change processes, roles and decisions alongside the technology, not after it.
- Build capability as you go. Help people learn to use new tools to solve their own problems.
- Expect the dip and plan for it. Leaders who understand the J-curve hold their nerve and keep investing in the complements.
The point
Technology multiplies what an organisation is already able to do. If the culture, capability and ways of working aren’t ready, it multiplies the problems too. Lead with people, use every available technology to amplify them, and the gains become sustainable.
Investing in AI or digital change and not seeing the results? Let’s talk about what’s missing.
References: Brynjolfsson, E., Rock, D. & Syverson, C. (2021) The productivity J-curve: how intangibles complement general purpose technologies, American Economic Journal: Macroeconomics 13(1). Teece, D.J., Pisano, G. & Shuen, A. (1997) Dynamic capabilities and strategic management, Strategic Management Journal 18(7).