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Understanding the “P” Word

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Buzzwords are aplenty in this tech-savvy, jargon-riddled business world. One of these, which both residents of nations and corporations mouth often, is “productivity.” The dictionary defines “productivity” as a noun meaning “yielding favorable or useful results.” In economics, the word refers to what is “of” or involved in, the creation of goods and services to largely misunderstood, if not untried, although most entrepreneurs and managers know what that world-class competitiveness can only happen within a productive workplace.

Effectiveness x Efficiency = Productivity

Where Effectiveness means “doing the right thing” and Efficiency is “doing it the right way, “ according to management guru Peter Drucker. As a logical consequence, therefore, “quality is free” if one has done the right thing by doing it the right way.

Product design, engineering solution and process choice will allow further improvements, after one has implemented what one knows at the present moment. This is described by the Japanese as the Kaizen process, while Henry Ford further expounded on it by stating that “Standardization… is the best of what you know today, but which is to be improved tomorrow—(so that) you get somewhere.”

Indeed, it is a truism that if something can be improved then a measure must exist by which improvement can be quantified.

Quality & Productivity Differentiated

To be meaningful, quality can only be created from the onset of the product-and-process definition. In fact, it costs a lot of money the later in the process you pay attention to quality.

The no-cost by-product of productivity is quality, but this relationship is not reciprocal. Often the reality of productivity and quality capabilities is misalign or very different.

Thus, quality through productivity is the only way to achieve world-class practices. Management and productivity expert Hans (J.J.) Baumhardt’s Law of Productivity in fact says that:

Productivity is the product of effectiveness and efficiency.

  • Effectiveness is doing the right things.
  • Efficiency is doing them the right way.

Quality is the no-cost by product of productivity: If you do the right things the right way, world-class quality is the automatic result.

Baumhardt’s conclusion therefore is that Productivity = Quality, depends more than 80% on methods and less than 20% on people, but requires proper management of both. Comes now the ever-problematic Filipino enterprise, best by: the headaches of global competition, market forces forces beyod his control to be weathered, government policy and implementation (often at cross-purposes depending on which agency one is talking with), Philippine labor (in perpetual activist mode) and technology advancements (too fast to grasp or too expensive to acquire), financial means a pressure-packed lifeline to hold onto.

Understanding and doing both productivity and quality is therefore of vital—and urgent—imperative for Filipino industries and enterprises seeking to survive in tough global economy. I maintain thus:

Productivity = Quality = Profitability = Sustainability = Success in the Global Market

And it need not remain the Filipino entrepreneur’s dream.

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