miércoles, 7 de octubre de 2015

Is technology the only way to improve productivity?

We are living interesting times, at least in Mexico, these days. There is a discussion about the minimal wage and of course how much should this wage be. The goverment decided to fix the minimal wage through out the country. 70.10 pesos was the amount fixed (about 4 Usd per day), that will be used across the whole country. For those who don`t live in Mexico, should know that in the past, there were two economic zones with different minimal wages: zone A and B. Being A the zone where more economic activities are held and therefore the minimal wage was higher. México is one of the countries with the lowest wages in Latinamerica. Haiti, Guatemala, El Salvador, Honduras, Chile, and Argentina have a higher minimal wage. 
Mexico´s productivity compared to other developed
countries from 1991 - 2009Based on data from OCDE.
One of the key components, according to experts, to be able to increase the minimal wage is productivity. It is believed that the more productive the country, more wealth for the citizens. If you are interested about minimal wage this interesting paper from the OIT goes deeper on this topic. Going back to the productivity, the complain from the private sector was that increasing the minimal wage will go against the competitiveness. Some industrial sectors argue that an increase on this subject will hit the cost structures and will make the prices of goods and services go up. In the following analysis  done by CIDAC (Investigation Center for development) is clear that México is last when compared to countries such as South Korea, Ireland and Japan. The productivity of course is measured as production of goods (mainly) between resources used to produce those goods. The following article from CNN explains that in México, for example, an average worker, works 2237 hours a year, compared to a worker in Chile that only works 2015 hours a year.  So, we get the picture, we, mexicans aren't efficient, nor productive. So, how can we increase the minimal wage if we are not productive? Also in this article from CNN, there is a statement that I heard in the radio that almost made crush my car in the highway. An expert on productivity and economic development was saying that: 

We need Technology in order to be more productive, and for that, we need to invest more to be really competitive. 

In the article from CNN I found a similar statement that said:

When the company automates processes, is more likely to become more productive. how you do this? Through practical measures, such as helping the employee to understand what`s expected from them and training to be able to perform over and over again.

Ok, lets analyse both statements. The first one makes me angry. Technology isn't the only way to become more productive. I believe that technology works when actually solves a problem for you. Think about Taichi Ohno back in his days at Toyota factories. He didn´t have a cell phone, an app, or a computer. Yet he managed to create a great system to be more productive, respectful, and safe, A system that now, everybody talks about. Did he invest huge quantities of money to get the latest technology in order to be productive? No! as the Toyota Way states, Toyota only uses tested and reliable technology. And I should add, that actually solves a problem for them. 
Toyota is going back to Kaizen, for that they are trusting in people instead 
The following article talks about how Toyota is replacing robots with... Yes! you guessed. Humans! This obviously defies the statement that in order to be productive and efficient, you need the latest technology. As my manager used to say, back in my days at Ford. All automakers use the same robot´s brand, the same suppliers, similar tools, the design of cars is pretty much alike, and yet Toyota is the most profitable of all. This is because they know that the difference isn´t in the tool, but in the thinking and management behind the decision of acquire or reject that tool.
The second statement, well I partially agree. But I would say it differently. I think when you improve the processes to be more effective, safer and simpler, the company is more likely to be more productive, more competitive. Of course, engaging employees and explain them what´s expected from their job, explaining why is the job important is esencial to build ownership. Also training is required for the worker to perform in a stable standard way. But the key thing that will lead to innovation and a jump in the competitiveness of the company is the worker´s brain applied to continuously improve the methods, the processes, the way we work everyday. This is a lean basic. And that´s why lean has tremendous possibilities, specially in countries like México. Where changes are needed and Lean can be applied to the industry in a wide variety of ways. Unfortunately most of the leaders, "experts" and TV/Radio hosts believe, that the only way is Technology in the form of robots, software, programs, without considering if it´s really solving a problem. 
Also for the industrial sectors that state that increasing the minimal wage will make them less competitive, think twice. Think about products and companies that are highly profitable. Their products aren´t cheap at all, yet everybody wants an iPhone 6s, or a cup of coffee at Starbucks. Eventhough doing coffee in your house is far cheap. This shows that taking care of your employees isn`t against profitability. If the company takes care of its employees, pays them well, allow them to grow, the company will grow even more as the employees will remember and notice when they are being treated with respect and kindness.

Please share your thoughts on this topic! Thanks for reading.

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