Roger Martin: Increase Product Value To Increase Productivity [VIDEO]
In an interview he gave after his talk, he discussed his idea of how to increase productivity without increasing unemployment. Most workers, he says, fear that increasing productivity means a cut to man-power and, as such, a cut to jobs. "I think what's really key in a modern economy is not so much working on, if you will, the denominator, [or] getting fewer labor hours for the 'thing' in question," he says, "but it's to make that thing more exciting—delightful to users—so that you can charge a higher price for it." Instead of focusing on using less labour hours to make a mediocre product, he says that the best way to increase productivity while securing jobs—and even increasing jobs—is to innovate and make a better product using the same, or even more, labour hours. As an example, Martin explains how a smartphone that takes five hours to make and is worth $500 has a far better productivity margin than a smartphone that is only worth $250 and took the same time to make. By creating innovative new products that users want to buy, and learning to create those products efficiently, your company can be far more productive than if you simply choose to make the same products in less time. When the product is well-received, you will sell more of it, which leads to higher profits for the company and more jobs.
After 14 years at The Rotman School of Management, Martin recently announced his decision to step down in favour of pursuing new ventures. He will now be taking on two new projects at Rotman—the Martin Prosperity Institute and the Institute for Competitiveness. He will also be dedicating more intensive study to the capitalist system and how to work out its flaws, similar to the work he did in his book, Fixing the Game. Martin is one of the most respected business minds in the world, and in his talks he presents fresh, cross-disciplinary approaches to business strategy that are applicable to every industry.