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Tuesday, May 26, 2009

The Truth About Productivity

According to research published in Forbes Magazine:

"The real key to productivity--and thus performance--is not maximizing it at all costs. It is maintaining a level of consistency."

Haig Nalbantian, labor economist at Mercer HR Consulting found:

"It wasn't the companies with the highest productivity that were most profitable. It was those companies that consistently maintained their productivity that built the most value."

In other words, "great businesses can't crank through a job at record pace this month only to fall down on the next. Options traders may love volatility, but customers, vendors and shareholders decidedly do not."

Volatility is an indication of ability to manage (or mismanage). It is another way to view risk.

Higher productivity essentially acts like an intangible asset that carries significant market value.

Put another way, companies that maintain a decent level of productivity are rewarded more than those that hit higher highs but can't sustain them.

Says Nalbantian: "Companies get obsessed on reaching a level of productivity, when they should really be focusing on how they're going to sustain that level."

BOTTOMLINE: Consistency, predictability, a strong balance of strong strategy and strong execution - these are what produces the firms with the most value.

For more examples of how to increase value, read Chapter 11: Making Solving All Other Problems Easier" - from Six Disciplines Execution Revolution, by best-selling author and strategy execution expert, Gary Harpst.

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