America’s Productivity Boom: What CEOs Must Do Now

It’s pretty easy to be pessimistic these days. The long run of Black Swan events, the fierce political divides, the fearmongering and apocalyptic thinking in so many quarters of society—if you’re not feeling pumped about the direction of the country, you’re hardly alone.??

But falling into that thinking right now is a huge mistake for executives—and it could cost you dearly. So says Phil Powell, an Indiana University economist and executive director of the Indiana Business Research Center,?who is working with Chief Executive on a series of masterclasses for free (once again) to the CEO community thanks to the generous support of the Indiana Economic Development Corporation (thanks, Indy!).?

His big message was simple: Get ready to rock and roll. Powell’s read on economic data, especially in the manufacturing sector, has him convinced that we’re in the early innings of a prosperity supercycle driven by the largest surge in corporate productivity since the 1990s. He thinks this is the hidden force that’s driving numbers like the eye-popping 10.1 percent Q1 growth in corporate profits, even as the Fed raised interest rates.“If your mindset is not in a prosperity mindset,” he told attendees, “if you're not planning for two, three, four years of a nice growth like we had between 2016 and 2020, like we had between 2003 and 2007, then you're really doing a disservice to your stockholders. That's your biggest risk.”?

To take advantage of the soon-cresting wave, he advises you get yourself and your team as focused on growing productivity as they normally are about profits or expenses. Not through cost cutting—that’s not what he’s talking about. He’s talking about taking a more wholistic approach with four areas of focus, attacked across all aspects of your business:?

• Better tech. Have you invested in state-of-the-art equipment and automated the most trivial worker tasks?
• Better management. Have you made your shop the most exciting and fulfilling place to work in your industry?
• Better infrastructure. Have you negotiated the best public support and arrangements with utilities and local government?
• Better talent. Have you built talent pipelines and instilled a culture of continuous training and learning??

And he offered these six key right-away to-dos for CEOs and management teams to thrive:??

• Stop thinking myopically. The Covid crisis is over. Prepare for a multiple-year boom where new technologies and production methods merge.
• Invest in technology, automation and artificial intelligence until a point that makes you financially and managerially uncomfortable.
• Build a robust apprenticeship system that employs 16-year-olds and form deep relationships with local educational and training institutions.
• Modernize “old school” approaches to managing workers. You can accommodate a younger generation and still hold them accountable.
• Shift energy that used to be focused internationally to creative engagement with local government and community nonprofits.
• Obsess about productivity instead of sales or expenses.?

I asked him how best to get started in reshaping the team’s—and our own—mindset to the idea of a coming prosperity, instead of the grating, lasting fear that seems to be hanging out there despite the economic data. I loved his response: “At the end of the day, the decisions you make as a CEO are emotional,” he said. “We're human. That's how we've evolved. That's how God made us. And so you have to watch what you feed your emotions.??

“A lot of CEOs educate themselves in the economy using popular media channels—wherever on the political spectrum. But we have to remember that social media, media itself, they want you to be addicted to their information,” he continued. “That's how they make money. They have no incentive to give you a long-term perspective. Make sure to have the discipline on your executive team that you're being fed good data—and you're looking at the right sources.” Good advice anytime. Particularly good right now.

— Dan Bigman, editor, Chief Executive. [email protected]?

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