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22 april 2025 · 4 min lästidA lot has happened in sixteen years. Data has moved from local files to the cloud. Many companies have undergone digital transformation more than once. Processes and robots have cleared the most boring tasks from our desks. All of this was meant to make us better, more efficient, and more productive. But things did not exactly go that way.
In Finland, labour productivity has not increased in the last 16 years. During the hundred years before that, labour productivity increased 14-fold, so something odd has happened recently.
“The history of labour productivity is inseparable from humanity's economic and technological development. Today, more value is produced in one working day than in three months in the early 19th century," says Otto Halonen, Nitor’s Senior Enterprise Coach.
Labour productivity simply means how much value is created for each hour of work. Productivity improves when we do more with less. So, work productivity does not increase by doing more work, but by doing it smarter – and by cutting out the wrong or unnecessary things.
In 2008, doctors dictated patient records onto a tape recorder, and secretaries transcribed them. Security guards transported cash from a store to a bank and back. Humans were the ones optimising the transportation routes, not software. We used to spend significantly more time on low-productivity work than we need to today. So, how is it possible that productivity in Finland has not really increased
The productivity of Eino’s lemonade got trapped
Eino has experience with how a promising growth story can stumble into a productivity trap, where clutter takes over and the business's core purpose is lost.
As a young entrepreneur, Eino spends the summer selling homemade lemonade in front of his house. The business is doing well, and the following summer, lemonade made with Eino's recipe will be sold at classmates' kiosks throughout the neighbourhood. Life is simple. Eino's company focuses on what is essential – quenching thirst.
As the business grows, Eino's company soon begins to face various demands. Eino realises he is spending too much time on Excel spreadsheets and web portals. He decides to open a small production facility and hire a few employees.
Eventually, the amount of information in Eino's company grows so large that the spreadsheets have to be replaced with an enterprise resource planning system. Customer relationships, human resources and project management all need their systems, too. Running all of these tools requires more employees.
In a few years, Eino's lemonade will be available in a hundred different locations, and the company is running its machinery at full speed: business unit leaders compete for budget, marketing produces social media campaigns, and IT integrates artificial intelligence. The project management office (PMO) divides five people's time between seventy projects. Everyone suffers from information fatigue and is always in a terrible hurry.
People work in silos. Each unit focused on its own targets while losing sight of the bigger picture. A production line overhaul could bring significant benefits, but the team is too busy refining the ERP system requirements. Developing new sales channels is buried under fine-tuning the project management system’s tender scoring model.
No one stops to think about the purpose of Eino's lemonade. The simple mission of quenching thirst has been drowned in complexity, and productivity has been eaten away by confusion. Sure, the business keeps on running without growth potential – but for how long?
Increased complexity leads to confusion
What exactly happened to Eino's lemonade? A promising business stumbled over its own feet as technological development has made the world more complex in an unprecedented way. Rapid development has led to increasingly complex solutions at work, in everyday life, and across society. When complexity becomes overwhelming, confusion begins.
"Confusion is when time is spent on everything but delivering the mission. A company can survive if its competitors are just as lost, but the potential for productivity and growth is easily left untapped. If a company does not tap into this potential, eventually, someone else will. And they will push the company out of the market," says Halonen.
Over time, even the smallest workshops have ended up with a growing stack of IT solutions. With them come new demands, fragmented data, and a constant need for updates. Therefore, the layer of complexity is greater than before, whether we like it or not.
Complexity itself is not the problem – the real issue is that we are drowning in it.
In the crossfire of seemingly limitless options, tools, and urgency, it becomes hard to see what we should actually be doing – or the right questions to seek answers to. If the management team of a lemonade company is mainly discussing the ERP system renewal project instead of how to make great lemonade, the direction is probably wrong.
“This is a good moment to consider whether the organisational structure of the imaginary Eino’s lemonade is optimised to invent new ways to quench people’s thirst and deliver those solutions efficiently,” he notes.
The million-dollar question is: How do we move forward? Productivity can be improved in two ways: by creating better products, or by developing and producing products more efficiently. The organisation should function like a well-tuned machine, keeping its focus firmly on the shared goal: quenching thirst.
To do less and achieve more, we need collective intelligence – the ability to learn new things and apply them nimbly, solve problems, and act flexibly.
"Productivity does not increase by doing more, adding complexity, or doing fancy tricks. Productivity increases with collective intelligence and by aligning all actions and decision-making to why we exist in the first place," Halonen concludes.
