History Changing Productivity

If I could magically bestow a core value upon business owners and workers, it would be an understanding and prioritizing of productivity.  For many businesses and workers at those businesses, improving productivity is the most significant way they can improve their income and their lives.

This is a long post, but I hope it gives you some serious food for thought.

Hard work is important.  But smart work is more important.  This means exactly what it says.  Hard work IS important.  But the biggest secret to improving all of our success is smarter work.  What does that mean?  It means working in ways that increase output with the same human effort.  In the field of economics, this is called increased Productivity.

What is Productivity? It is simply defined as output-per-hour, output-per-day, or whatever unit of time that makes the most sense .  The more productive we are, the more we eventually make. The pie grows bigger.  It benefits us individually and also benefits others. The overall concept is simple.  Putting the idea into action can be harder, but the concept is simple.

I am going to illustrate this by highlighting the most dramatic example of productivity improvement in world history, and how this productivity improvement has literally saved millions, perhaps billions, of lives and made us all better off. 

Politicians like to talk about helping people or groups do better, but compared to productivity, political contributions have paled in comparison.  Most people don’t fully grasp the link between productivity, prosperity, and our improved human condition.

The example I'm highlighting is farming.  Pay close attention to these numbers.  If you really think about them, it is stunning.

In 1900, America’s workforce numbered 28 million. Of these, 11 million workers, 40% of the total, worked in farming. The leading crop then, as now, was corn. About 90 million acres of land were devoted to corn production and the yield was 30 bushels of corn per acre, for a total output of 2.7 billion bushels annually. That’s 245 bushels per farm worker per year.

Then came the tractors, combines, and one innovation after another that revolutionized farm productivity. The improvement wasn't just equipment.  Planting, harvesting, irrigation, fertilization, and seed quality all improved.

Fast forward to today. Today, we devote 85 million acres to corn production, 5 million acres less than in 1900.  Productivity, however, has improved yields to more than 150 bushels per acre, for an annual output of 13-14 billion bushels. That is an output of 5 times more than in 1900, using slightly less land.  Farmers have made similar gains with other products.

But wait.  That’s not even half the story: The huge increases in food output have been accompanied by a dramatic reduction in the number of farm workers.  The human effort is dramatically lower.  Today about three million people work on farms. That’s less than 1/5 of the number that worked in 1900, in spite of the national population being a lot larger. 

Today’s output per farm worker?  4667 bushels of corn per farm worker per year, as opposed to 245 in 1900.

Bottom line:  Much more food with much less labor.  The productivity increase has been stunning. 

I want you to really think about this.  Have any of you ever really gone hungry?  Oh, sure, I’ve been hungry for a few hours at a time.  Maybe I’ve missed a few meals. (not many by the looks of how my clothes fit!)  But I’d bet that none of us have ever really gone hungry for any length of time.  All over the world, famine is becoming a thing of the past.  How dramatic is this improvement?  The World Peace Foundation reported that from the 1870s to the 1970s, great famines killed an average of 928,000 people a year. Since 1980, annual deaths have dropped to an average of 75,000.  Yes, wars and natural disasters do cause some famine, but that’s different from famine caused by the simple inability of humans to produce enough food.

But wait. There is even more. The benefits don’t stop with food production and eliminating starvation. The productivity benefits have allowed hundreds of millions of present-day workers to utilize their talents for other work. This reallocation of human labor enables all of us to enjoy huge quantities of non-farm goods and services we would otherwise lack. Plus, most of these jobs are higher-paying than farm worker jobs.  We have more food security, more products to keep us comfortable, and higher paying jobs, all because of improved productivity in farming.  Farming productivity has improved the quality of life for nearly every person on earth. 

One more thing to think about:  During this time of farming improvement, was everyone happy?  No, they weren’t.  There were literally millions of farm workers who were afraid.  Farm work was the only life they knew, and they feared losing their jobs.  The disruption of farm work was scary, and some people resisted it.

Looking back, is there any question at all that this productivity improvement made life better for humankind?  The lesson for each of us is that change may be uncomfortable, but if it is change that improves the big picture, it will improve our individual lives too.  We can’t fear it.  We have to embrace it.   

What does all this have to do with you and your business?  I hope it makes you realize the importance of productivity.  Improved equipment, improved technology, and more experienced people all improve a company's productivity.  Everyone gains from it. 

When I first started my business, I couldn’t pay myself for 2 years, and our pay rate for the few people we hired was very low.  What changed?  We steadily became more productive in every area of the company.  It enabled us to improve our pay and benefits for everyone. 

Working smarter helps everyone.  That is why I am obsessed with productivity improvements, and why it should be a core value for every company.  We should never take our eye off the productivity ball.

One final thought:  If a young person says to me “I want to do something that makes a difference in the world.”  I tell them this:  “Get a job and do it better and smarter than it has been done in the past.  If you do that, you are improving productivity, which has done more to improve the security and well-being for humankind than anything in our history.  If you do this, you can have pride that you are making a difference in our world.”  Yes, I know this sounds a little corny and over-the-top, but it is as real as the letters on this page.