Stoking Valuation With Increased Productivity
Copyright Jack Mixner. 714 449 1040. www.mixnerstrategy.com
Let's assume that American businesses have some time to go before productivity gains have run their course and things start to stagnate again.
What changes would we make, right now, to increase productivity - and valuation as a result?
Normally, productivity gains have been tied to "workers' skills, information technology investment, or even the quality of availability capital (Hubbard, page 2.)"
Called "fixed effects" since the 60's (Hubbard, page 2), additional productivity gains beyond the list above are attributable to "changes in management and the attendant additional personnel, time, attention, and other resources." When you make changes, you expect a pay-off in cost reduction via efficiency of plant and equipment and increasingly skilled workers who improve processes, use goal setting, evaluate performance, and utilized over-all human resource to increase management skills.
These management skills increases pay off in increased productivity - and increase valuation.
Increased productivity. Increased management skills. Increased valuation. They all go together.
Strategic Implications
Which management skills to focus on?
Start with planning and goal-setting. Set quantitative goals and objectives. Measure results repeatedly against goals. Make corrections frequently.
Recent evidence says that repeatedly returning to your strategic plan over the year will significantly increase results, as well (Hymowitz, page B1).
References
Hubbard, Glenn. The Productivity Riddle. strategy+business. Winter 2006. http://www.strategy-business.com/press/article/06402?gko=e1377-1876-20605692
Hymowitz, Carol. In the Lead: Two More CEO Ousters Underscore the Need For Better Strategizing. Wall Street Journal. 11 September 2006. Page B1.