What is "Productivity" Anyways?

After the latest investor call post earnings, Sundar Pichai clarified to his staff that there needed to be improved focus on productivity, announcing some fluffy “Simplicity Sprint” bullshit to spur their 174,000 strong workforce to think about how to improve “productivity”.

Sounds great, but what does it really mean?

To get at that, one must really understand what “productivity” means to corporate leaders. To you and I, when we hear productivity, we think hours behind the keyboard, building backlogs - justifications - monitoring financial performance - analyzing markets (me in product) or writing code - testing - deploying or whatever “delivery” means in your specific context (engineering).

This is concrete, relatable, and quantifiable.

But to the CEO and the board? All that is too difficult to measure in a meaningful way. Particularly for knowledge work, getting a reliable metric for productivity is slippery.

Thus, when you hear a CEO pontificate about how economic concerns are leading to falling or disappointing “productivity” it means one thing.

Productivity = (Total Revenue generated) / (total number of direct headcount)

Seriously, that is it. It isn’t even algebra. You don’t need an MBA or an Economics degree to understand it.

The Engineering reaction

Where I got the idea for this post came from a tech site that I have frequented since the late 1990’s, Slashdot, where the story was posted, and led to a huge number of comments from techie engineering sorts.

All the usual “… end the work from home…” “fire the marketing and sales people, and unleash the engineers…” and “fuck all the meetings and let us WORK” comments were there.

The consistent thread was to remove the distractions (which is good) and to cut the dead wood - usually the sales and marketing dweebs.

The assumption being that as engineers they were indispensable, and should be given more freedom.

100% predictable. But also 100% wrong.

Why Wrong?

Simply put, unless there was malpractice in hiring and staffing, executives are pretty good at balancing the business side, and the engineering side of the organization. Sure, some recession from the mean is there, but by and large, as the business grows and matures, things settle down, hiring and staffing targets become known supportable quantities, and the fiddling around the edges is normal.

But, when recessionary pressures begin to mount, the first indication is a drop in revenue, usually small, but unmistakable, and that prompts the senior leaders to reevaluate their operating model.

The productivity calculation above is the first order assessment of the model. There are precisely 2 variables, staffing levels and dollars coming in, and only one of them has an easy knob to turn.

(you can see where I am going with this, right?)

For the engineers, they naturally think that if we just do “more” (whatever “more” is) productivity will go up, and things will return to fat and happy times. But engineering more. Building more features into your product. Releasing more frequently. Those really don’t have a direct effect on that "revenue” number. Sure, over time there is historical data that can show pull through, but in the here-and-now this quarter and next quarter, that isn’t a needle mover.

So, we get to the one sure fire way to increase productivity. Reducing headcount.

More Engineering Whiffs

Whenever the topic of staff reductions comes up, and it does come up, the techie “engineer” class always points the finger to Sales, Marketing (and even Product) as the first to get the hatchet. And to be certain, there usually is *some* fat in sales and marketing to trim. But not a lot of fat.

Why?

Recall that the one sure fire way to increase productivity is to sell more stuff to more people. How do you do that? You use marketing to identify new segments, to target messaging to those segments, and spend some dollars developing those markets. Additionally, that also requires sales-people to work the leads that your marketing team generate.

You know what I didn’t say there? You don’t engineer your way out of this hole (at least directly - often some product adjustments are required to adequately address the new market segment needs).

So, instead, engineering gets trimmed, and the threads on Slashdot are full of disgruntled techies bitching about how they lost their job, when there were marketing weenies that should have been fired first.

An exception - Unprofitable Startups

The first whiffs of the economic headwinds came from the VC world alerting their portfolio companies (aka pre-IPO mostly pre profitable) to tighten their belts. These are often companies that spend like drunken sailors to build a growth model now, worry about profitability later (if ever). There, they know that they want to keep the core engineering talent focused on the longer-term goal, and the leadership will slash marketing and sales to the bone to hunker down and weather the economic storms (or decide to shutter the business altogether).

But, that is part of the startup worker credo, you take the risks, and more often than not, you walk away with not much to show for it.

Closing Thoughts

If only solving the CEO’s “Productivity” issue was to work more, or goof off less, life would be easier and more predictable. Alas, unless your extra effort directly leads to more dollars coming in the door, it won’t make a difference to the company.

Being in engineering is not layoff kryptonite, as many believe.

When you hear “productivity is slipping” it is a good time to update your resume.

And Working from Home is not killing productivity.