Blog: Here we go again – searching for sustainable prosperity

We found a way to create widespread prosperity a hundred years ago, now we are looking for a new way

A hundred years ago we saw the introduction of a new process for organizing and performing work (now we're looking for another one). That process employed the most powerful technology of that time - industrial technology - to deliver a significant increase in productivity that made possible the rise of the middle class in what we now call the developed world. That new way of working was called the assembly line. Manufacturing companies in the United States (led by Henry Ford) pioneered the introduction of the assembly line in their factories. Soon companies everywhere were using that new workflow process.

Once that new way of working was implemented it still took some years of negotiation and confrontation (labor, management and money guys all wrestling with each other) to agree on how to share the benefits of that increased productivity. Ironically it was in the Great Depression, when the greatest number of people where hurting, that we worked out most of the basic arrangements for sharing those benefits. Those arrangements served us pretty well for the 50 years or so that followed. Now we’re hurting once more. Maybe this is what it takes.

So a hundred years later here we go again. Assembly lines and manufacturing no longer sustain a middle class standard of living in the developed nations because other countries can do those things just as well at much lower costs. We need to find a new way of organizing and performing work that employs the most powerful technology of this time – information technology – to create new value and deliver new productivity.

In this search here’s a key point to keep in mind: The assembly line was to the last century as the agile and responsive enterprise will be to this century. An agile enterprise evolves continuously as its customers and markets continuously evolve. Unlike the industrial enterprise, its operating procedures are fluid and flexible, not rigid and linear (like an assembly line). It is powered by technology but not controlled or dominated by technology. It uses flexible combinations of technology to automate routine activities and trains and motivates its people to do the rest. Agility comes from a specific set of practices that guide how a company is organized, how information technology is used and how its people are motivated. (There is a formula to measure business agility.)

Agility takes practice (it means new ways of working and new ways of using technology); but it consistently produces slightly higher profits than the old industrial model (as in two to four percent and sometimes more). And that extra two to four percent over time delivers the same wealth creation effect as the miracle of compound interest. Agility is the best way to respond to the demanding realities of a relentlessly competitive global economy.

I wonder what company or industry will pioneer the use of agility and responsiveness to create the value and productivity needed to sustain our middle class standard of living in this century. I wonder what it will take for us to work out the arrangements for sharing the profits created from that new way of working.

FOOTNOTE: My newest book is Business Agility: Sustainable Prosperity in a Relentlessly Competitive World. It talks about all of this; reviewers say it's a good read with a timely message. You can preview it on Google Books. If you like what you see, you can get it on Amazon.