Stagnating productivity and the need for business process reinvention

The reflection starts from a datum, which emerged from the last CNEL (National Council for Economy and Labour) report on productivity: in the last 30 years, productivity growth in Italy has been weaker than in the main European states, with an average annual increase of around 0.2 per cent compared to the average 1.2 per cent recorded in the EU-27 (Germany travels at a rate of 1.0 per cent, France at 0.8 per cent and Spain at 0.6 per cent). Our country has thus shown difficulties in keeping up with the pace of innovation, and this is also weighed down by a structural lag in digital skills. And in a world where artificial intelligence and automation are advancing at a dizzying pace, it becomes necessary to understand why the operational processes of Italian companies are not keeping pace with those of other nations.

The study "The Roadmap for End-to-End Reinvention" by BCG tries to draw a guide to rethinking the entire value creation flow. The American consultancy's analysis first focuses on an objective and incontrovertible aspect: despite successive technological revolutions - first the Internet, then the cloud and today generative AI - productivity growth on a global scale is disappointing. Narrowing the field to Europe, GDP per hour worked has increased by an average of only 0.6 per cent per year over the past decades. The paradox is obvious: despite having new and powerful tools at our disposal, little has changed in terms of real efficiency and technology (this is the assumption) has not generated productivity gains as incisive as one might have thought. There are two main reasons for this (unforeseen) slowdown: the first sees companies applying new technologies in obsolete workflows, without radically rethinking business processes that are rarely updated; the second is linked to the presence of organisational silos and fragmented governance that reduce impact with respect to objectives that remain sectoral.

It is not a technology problem, say the experts, because this component is widely available: but if the value created is essentially at a standstill, this is a sign that true integration between technology and processes is missing and that it is the way of working that needs to be redesigned. The key, according to BCG, is an end-to-end approach (the 'End-to-End Reinvention' mentioned in the study) that leads to rethinking the entire sequence of activities and not optimising piece by piece. The ultimate goal to be achieved, in other words, is no longer just incremental optimisation, but an integral reinvention of business processes and individual operations that encompasses the entire value stream from front-office to back-office, breaking down the boundaries between functions, realigning organisational objectives across the board, eliminating legacy activities and redefining the way of working with new technologies. The effects of this 'reinvention'? According to analysts, this type of transformation can bring productivity gains three to four times greater than traditional continuous improvement interventions.

For managers - and the invitation applies especially to Italian managers working in medium-sized to large companies - the implications are clear: it is not enough to introduce new technologies and digital tools, the operating model must be redefined, collaboration between functions must be fostered, and the benefits of transformation must be brought to the ground through vision and strong governance. Only in this way can productivity finally take off, instead of remaining pinned to very modest growth rates.

Salvatore Calì, Partner and Associate Director of BCG, explained why this systemic and integrated rethinking of processes has become indispensable in order to move from potential value to real performance and, nonetheless, to transform innovation into a true driver of productivity. "Today," explains the manager, "companies are faced with complex challenges, unpredictable geopolitical scenarios, hyper-competitive competition, and changing customer needs. The continuous improvement that functioned as a model of excellence for decades is no longer enough: what is needed is a continuous reinvention capable of exploiting technology to rethink the very way of doing business'.