Economic Outlook Interview

Although the Annual Productivity Report issued by the National Productivity Commission was recently released, where Chile reached an increase of 7.4% and 8.7% in total factor productivity in 2021, it is evident that there is a stagnation and there is a large gap to capture value and thus achieve sustained economic growth.

To address where the problems are that prevent the leap in productivity at the company and country level, Francisco Ortúzar Cruz, productivity expert and partner at Orca Business Consulting, spoke with  Nancy Perez  and  Pamela Chavez Crooker  hosts of the DBoxRadio Economic Perspectives program.

On the occasion, the expert stated that "there are spaces for improvement to increase productivity at the country level by 10% in the next 10 years, for which a substantive investment is not required, but rather a cultural change, which starts by reviewing the processes of business in an integral way, collecting and executing the transversal view of the same multidisciplinary human capital of the organizations, and then recently incorporating technology to get the most out of it in the specific areas that require it and only adjusted to the needs, as has been verified the OR-CA methodology in public and private companies in the last decade.

NP: Where are the main problems that are affecting the productivity of companies?

The main problems are the barriers and erroneous beliefs that exist. The first of these is the belief that it is necessary to inject large capital to improve productivity. According to the experience we have accumulated in the public and private world, no intensive investment is required to achieve the first 30 to 50% increase in productivity, just look at the business processes of organizations.

Another mistaken belief that generates reluctance to advance in this line is that more work is required. In reality, when you are productive, you work less and more efficiently, using resources optimally and at the right times.

Along with the above, there is a myth that only the company keeps the productivity gain. In reality, in the most productive organizations wages are increased and workers earn more, with benefits for the organization and for the shareholders.

The fourth myth is that we Chileans are not very productive because we turn around. However, there is low productivity because business processes are not properly looked at.

NP: Do large companies seem to have a hard time looking at business processes? The productive approach prevails too much, since there are technologies that offer various opportunities...

Indeed, there are technologies, but if that technology is not coupled to the company's business processes, more money will be invested and it will cost more to make the leap. Therefore, it is better to review the processes to choose the right technology for each need, getting the most out of it.

PC: Another installed myth is that less labor will be required.

This myth occurs when the growth variable is not taken into account, because if the company and the country open up as they grow, labor will continue to be required. Faced with growth opportunities, you do not need to do without anyone. On the contrary, the focus is on helping people continue to develop further in their professional field. With this emphasis, organizations that are evolving require more workers than they have today and some robotic technology, with which they will produce more, and they will be able to pay their teams better, which will require more training and specific knowledge. That is the mindset that we have to change as a country because we have not been able to eliminate the barriers. Opportunities for growth, greater production, paying workers more, being more productive and having a better return for the country and for companies should be looked at.

NP What are we doing wrong as companies and as a country then?

The fault is that the appropriate technology is not being used. Little importance is being given to the practical knowledge that exists within the organization, to the company's workers. And the great change in mindset that we have seen is that by using the appropriate methodology you incorporate all workers into the solution, from the general manager to the operators, both with a horizontal listening, and giving them space to execute, and thus they are achieved substantive productivity gains.

PC. Is it important to let talents flourish and develop?

Indeed, the companies that apply the OR-CA methodology realize that there is talent that they had not visualized. This is a capital that collaborates looking at the process from the beginning, from how the extraction is done, how it is processed per hour, how it is transported and how it is marketed. When you have transversal teams looking at the complete chain, there are substantial increases in productivity.

For this reason, it is necessary to move from interventionism to coercion and collaboration of the teams, involving them to change the way of operating. In our experience, when companies manage to understand that workers are the source of their profit and knowledge, this practice is installed in the companies.

PC: Does this practice also improve workers' salaries?

It has been proven that by improving productivity, a greater capture of value is produced, which allows the increase in salaries to retain the committed human capital. It even makes it possible to lower the prices of goods and services, and maintain profitability levels so that the appropriate taxes are paid, and thus respond to social demands.

NP: How to use the methodology to change the entire culture of the company, in the different levels?

A great catalyst to change the entire culture is when the workers begin to show the results, that evidence mobilizes, which is transversal to all industries. The north begins to be seen in the capture of value in the third month, when the business process is transformed according to the company's own culture, with the workers themselves.

For all of the above, we must tear down these false beliefs and face the country's challenge, which is to increase productivity by 10% in 10 years. It is a substantive, achievable and realistic goal, which depends on doing the job well. The important thing is that it be carried out in a methodologically legitimate way, worrying about the processes, so that it is sustainable, first promoting cultural change, prioritizing the review of the processes together with all levels in a transversal and multidisciplinary manner, and then adopting the necessary technologies. .

Listen to the conversation of the first block HERE  and from the second block HERE