The Productivity Imperative and Strategy & Operations Consulting

The U.S. Bureau of Labor Statistics released its revised nonfarm business sector labor productivity results last week. The quarterly figure, although revised up, was still only up 0.7 percent versus the same quarter last year.

The trend of U.S. labor productivity during the post-Second World War period evidences alternating eras. During the two decades immediately following the war, annualized productivity growth exceeded 3%. Growth fell to 1.5% during the 1970s and 1980s, but jumped to 2.5% between 1990 and the onset of the global financial crisis in 2007. Since then, growth averaged only 1.3 percent.

What set apart the high growth eras was a confluence of improvements that combined in virtuous cycles. The immediate post-war era aligned with the broad adoption of transfer line manufacturing and statistical process control that together enabled improvement of an integrated production process.  The start of the second boom era, one that S&O consultants played a key role in fomenting, coincided with the publication of "The Machine that Changed the World" that helped popularize lean and included the dissemination of computer aided design and manufacturing technologies that together adapted an integrated production process to yield greater product variety.