Business across the UK facing increased costs combined with a range of external economic headwinds, which are affecting margins for many. These issues can often be exacerbated for scaleups, which by their nature are looking to expand and maintain consistent growth.
Improving productivity can be one way of mitigating the current issues, allowing businesses to produce more without increasing their costs. Stephen Gregson is a strategic adviser and Non-Executive Director to businesses across Lancashire. He assesses productivity and gives advice to scaleups on how they might start to improve it.
The productivity problem
I think every problem in our lives, business or personal, can be visualised as a Venn diagram. The economy is a great example, all the big issues such as GDP growth, inequality, pollution, resource depletion and employment overlap and where they do, the issue of productivity is often found.
The big problem with productivity is it is hard to define, measure and improve.
What is productivity?
Essentially, productivity means achieving greater outputs for the same inputs or, even better, fewer inputs.
Generally, when we talk about reducing inputs we are thinking of automation, robotisation and the potential for Artificial Intelligence (AI) technologies to reduce the quantity of labour input required.
An elephant in the room when it comes to productivity improvements is that we often think about marginal improvement to existing processes – but sometimes those entire processes are themselves no longer fit for purpose and need completely re-structuring.
Starting small
If you don’t know where to start when thinking about how to improve your productivity, then starting small is often best. Focusing primarily on labour inputs to improve productivity can be a good starting point, particularly if you are either a service sector business or a manufacturer with a very manual production process.
You could carry out efficiency/waste workshops, which are designed to focus on minimising waste in processes, improving productivity and reducing cost. In my experience, these are exceptionally good at highlighting the things that are done which don’t need to be, without singling out specific roles or staff members which are less productive. They tend to result in jettisoning processes which are unnecessary rather than people or roles.
Tip: It’s crucial that people involved with these processes get involved in the workshops – and that they are listened to.
Five key areas
After identifying processes which are least productive, there are a number of ways that businesses can invest in improving productivity:
- Digital technology and automation: AI, robotics and cloud platforms can streamline operations, reduce costs and improve resilience. There are a range of local and national growth programmes which offer funding and support for digital adoption.
- Workforce skills and talent development: Training in digital skills, leadership, and lean operations ensure teams can leverage new tools effectively. Upskilling enhances retention, engagement, and succession planning, while reducing recruitment costs. Lancashire institutions like Lancaster University and UCLan provide tailored development programmes.
- Process improvement and lean management Adopting lean practices such as just-in-time production and continuous improvement helps reduce waste, speed up workflows, and increase competitiveness.
- Supply chain strengthening and localisation: By sourcing locally and using supply chain technologies, businesses can lower risks, cut costs, and reduce environmental impact, while boosting regional partnerships and agility.
- Sustainability and energy efficiency: Investing in energy-saving equipment, carbon reduction strategies, and circular practices can lower costs and improve brand reputation. These practices also help future-proof businesses against regulatory and environmental changes.
The AI puzzle
We are at the early stages of AI development and deployment so, unless you are a very early adopter, it may still feel alien and clunky. However, we must remember that AI right now is likely the worst it will ever be because it is improving so rapidly.
AI is a ‘General Purpose Technology’ (ie the GPT in ‘ChatGPT’), like electricity and steam power when they were introduced. That means its impacts are anticipated to be felt far, wide and deep.
In terms of its impact on labour, when GPT change occurs, it is much, much easier to see which human tasks will be lost than it is to see which new ones will be created. This can be daunting for business leaders, but it is important that they do not fall victim to fearing that the sky is falling in and so risk falling behind competitors by being resistant to changes happening throughout the economy.
Inspiration and help
We are really fortunate in our part of the world in having great external sources of help and insight which might be useful, including Lancashire’s three universities, regional growth and innovation programmes such as Made Smarter and funding providers such as Lancashire County Council’s Rosebud Finance.
Boost; Lancashire’s Business Growth Hub can help you if you are not sure where to start. You can contact the Business Support Helpdesk team here.
