Efficiency x difference
One of the fundamental characteristics of our economy is its excesses: we have an abundance of everything (in the West…). More pointedly, supply far surpasses demand, and in this supply-dominated environment a company needs to be highly efficient in order to compete. It is no strange thing, then, that the concept of productivity has become key.
Productivity is an output produced by an input: the relationship (quotient) between what we produce (output) and the resources we put into that production (input). In a company, it can be measured by turnover per employee or labour productivity. If we include other factors of production in the equation, such as machinery, we are looking at multifactor productivity.
How can we increase productivity? Basically, in two ways: acting either on the numerator or on the denominator of the previous quotient. There are many ways to do this, but one example is by making more with the same (increasing the output with the same input), or making the same with less (reducing the input necessary to generate the same output).
Imagine a factory that produces a product or service. With the resources it has available (people and machinery) it must achieve certain results, and to do this, it basically uses two strategies. The first is with an efficient use of resources, to produce a cheap product and recuperate the investment with a high volume of sales. The second is to have a differential approach to the use of resources, with the aim of producing an item that is highly appealing – more appealing than competitors’ products – and therefore seek a return on the profit margin from sales.
The key question, obviously, is what makes a product appealing, and we use technology to achieve this. There are two principal elements of product appeal: utility and emotion. Utility in terms of personal productivity, and emotion in terms of differentiation, singularity and distinction as part of a special collective. The utility is the substance, and the emotion is the style. As a consequence, we can use technology in two very different ways for the purpose of increasing a proposal’s appeal.
Firstly, we have technologies that merely increase the personal productivity of the user, based on reducing costs and gaining free time, such as mowing the lawn without having to pay somebody else or do it yourself, thanks to a robotic lawnmower. Secondly, we have technology to create a differential experience, which increases perceived value. The Nespresso, for example.
Technology is no longer reduced to efficient machines that aim to increase productivity (of the maker and the user); it can also help to define differential products, which appeal more to the client and generate larger profit margins.
The key is product efficiency by difference, facilitated by technology.
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