Mind the productivity gap: how to grow your small business

Jon Card

The UK lags behind other G7 nations in productivity and under-investment in digital technology is one of the many reasons why. Yet experts and entrepreneurs both agree that digitisation, combined with good management and greater access to finance, can produce knockout results.

Christine Telyan’s London-based tech company Ueni builds more than 3,000 websites a day. The 60-strong company is now active in seven countries. Automation is at its heart. Customers answer a few questions online and, after roughly five minutes, Ueni has enough information to create a free website. With the help of AI-powered tools, designers and SEO specialists finish the work, often the same day. “A huge amount is done through automation, though every website still gets a human touch,” says Telyan.

Businesses such as Ueni simply couldn’t have existed until recently. Digital tools are making mundane, repetitive tasks a thing of the past, or reducing them to a click of a button. Telyan says her company also speeds up internal processes by using AI-powered platforms. Its accounts team, for instance, uses Xero, a small business platform that uses AI and automation to help businesses better manage their accounts. For example, enabling the company to import bank feeds and match invoices to payments, plus carrying out a whole host of other routine tasks. “If a job is repetitive, it can usually be automated. But you need to have human oversight. Digital tools can supercharge productivity and free up staff to deal with harder problems,” Telyan notes.

In a report from the Work Foundation, called Productivity, Technology and Working Anywhere (pdf), researchers maintain that “faster adoption of industrial digital technologies can drive improved productivity”. However, their report also states that while the UK is a “world leader in digital consumption” the country’s “rates of digitisation within businesses are only around the EU average” and “UK businesses as a whole are not pioneers”.

Businesses that do invest in digital can work in smarter and more flexible ways, the Work Foundation’s research suggests. It points to benefits such as “crowdworking”, where, through the use of cloud-based systems and collaborative tools, a broader and more diverse range of people can work together on projects. It says digital technologies enable the use of talented freelancers from around the world and that these smarter projects “unlock the business value”.

Gary Turner, managing director and co-founder of the online business platform Xero UK, says too many tasks are still being performed by humans when they should be automated. Turner urges business owners to free themselves up from routine and repetitive tasks where they can. “Britain’s workforce can be freed from time-consuming or systematic, low-value tasks such as data entry or processing, enabling them to instead focus on more valuable areas of the business such as customer service,” he says.

Turner adds that the UK is a mix of highly productive and very unproductive businesses, and that often the key difference is a lack of investment in digital technology. “The gap between the UK’s most productive and least productive businesses is 80% greater than the European average,” he says.

Investment in digital technology is surely needed, but experts argue that tech alone will not solve our productivity problems. Employees also need to feel empowered. Photograph: Hero Images/Getty Images

In order to boost their output, many businesses and managers push for employees to work longer hours, not always for extra pay. But Steve McCabe, senior fellow at Birmingham City University and a specialist in automation, says working longer hours is not the solution to our productivity woes and, in fact, could be doing more harm than good. “The majority of nations outranking Britain have significantly shorter working weeks than our average, including France, the Netherlands, and Germany – which has the shortest week at a mere 26 hours. This pattern adds fuel to the fire of countless studies that condemn long hours for health reasons,” he says. According to research, full-time employees in the UK work an average of 42.5 hours a week.

McCabe also points to the fact that ultra-fast full-fibre broadband has only been rolled out to about 6% of the UK, far behind many other developed nations. He says this means many people and businesses in the UK are missing opportunities and underperforming.

Related: Filling jobs that don’t yet exist: how to future-proof your small business

“Increasing the availability of a full-fibre digital network in this country means offering all citizens, regardless of location, the ability to access opportunities that might not otherwise be possible,” says McCabe. “There is also a clear view among industrialists and academics that paucity of investment in digitisation is holding back the UK’s economic development,” he adds.

Investment in digital tech and wider infrastructure is surely needed. However, workplace psychologist Ian MacRae argues that technology alone will not solve our problems. He says productivity is falling, even though more of us are using apps and software designed to make us more efficient. He says staff need to feel empowered and happy in the workplace in order to be productive. “Psychologists tell us that people who have more autonomy and independence in their work perform much better than those in rigid and restrictive work environments. Productivity tools are only useful when people want to be more productive.”

Turner echoes MacRae’s point and says the human element is vital. “We will continue to embed AI within our platform but it’s our people and partners who drive innovation and collaboration. With every new technological advancement, the human element is what matters most.”

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