Resource paradoxes of digital transformation (1) – the digital death of productivity


Today’s world is characterised by exuberant diversity – the number of human tasks is growing and the number of solution tools is increasing. A key driver of this is the use of digital technologies. It expands the possible scope of action for everyone and removes obstacles to action. The fact that this sometimes seems quite different to us – for example, because we now have to do a lot of things that are of no use to us but take up a lot of time – does not refute the above observation, but rather demonstrates that it is correct! The productivity explosion and the productivity blockade are two sides of the same coin

It is a banal realisation that amateurishly executed digitalisation can lead to a standstill in productivity. It is also common knowledge that some tasks take longer to complete digitally than non-digitally. This also applies without digitalisation. If you want to get from Zurich station to Bern station faster by car than by train, you will find it difficult. And if you hire a particularly fast car and drive it into a ditch, you may never get there at all. The situation is similar with the wrong or incorrectly used digital tools

Paradox 1: Effective digitalisation can reduce productivity.

Something completely different is interesting: sensible digitalisation that is carried out professionally can also reduce productivity. This is a fundamental resource paradox that has a double effect, factually and psychologically. Factually, it reduces output, but psychologically it blocks further digitalisation because it creates negative digitalisation experiences for everyone involved

  • Example: If a federal administration office significantly increases its efficiency through digitalisation, it can either reduce staff and look for new tasks. In practice, the most common consequence is that it now devotes much more time to tasks that it previously completed very quickly, for example by monitoring the activities of another office (or state secretariat) much more closely than before – for the benefit of society, of course. If these previously neglected tasks also become much easier thanks to digitalisation, then this can lead to a degree of additional social benefit that calls into question the foundations of the system, such as internal consultations.

The fact that digital transformation can even lead to the cessation of any productive activity, precisely because it drastically improves the efficiency, effectiveness and quality of action, is not a contradiction in terms, but the extreme manifestation of the first resource paradox of digital transformation

“Ruin your opponent by showering him with resources” is also a classic intrigue strategy in IT management

In Bulgaria, I heard an illustrative story about this that takes place in the context of digitalisation, but would also make sense in a pre-digital world: The story was told to us overheard in pre-digital tradition right next to a fountain. It goes like this: An advisor to a high-ranking member of the government proposed an innovation project that the administration rejected. It was approved anyway, and when he arrived at the kickoff, he found over a hundred civil servants waiting for him to give them assignments. After the initial shock, he sent them all home and went back to his client to request 4 people of his choice for the project. For he had realised that the only reason he was being given so many resources was to prevent the project from succeeding (and at the same time to keep him quiet with a sense of personal importance)

“Ruin your opponent by showering him with resources” is also a classic intrigue strategy in IT management. Because (almost) everyone has experienced how projects have been slowed down by additional resources. However, the Bulgarian example makes it particularly clear what the cause of this paradoxical phenomenon is. Coordination tasks become unmanageable when too many resources are available. For the digital transformation, this means that the increase in efficiency through digitalisation leads to too many resources being available for the respective tasks and their coordination becomes a problem

The most famous phenomenon, which occurs in several places, is “thrashing”: resource management in a computer system falls into a self-employment trap when overloaded, from which the only way out is to stop activities.

One might argue that this is about psychology, social issues and culture – and that such problems can be overcome through cultural interventions such as mindfulness. But there are also illustrative examples from the field of computer science where there are definitely no psychological or social mechanisms at play. The most famous phenomenon, which occurs in several places, is “thrashing”: resource management in a computer system falls into a self-occupation trap when overloaded, from which the only way out is to stop activities. “Kill or get stuck forever!” is then the motto. The contingency is particularly characteristic: thrashing often cannot be reproduced because its occurrence is random. Typically, there is a critical measure – a kind of “temperature” – and two threshold values. Everything goes well below the lower temperature threshold, nothing happens above the upper temperature threshold, and what happens in between cannot be predicted

In the analogue real world, the situation is not as clear as in computer systems, but there is a kind of “thrashing” here too. Excessive increases in efficiency can lead to control problems in many systems. These are real, but in reality they are exacerbated by psychological and organisational mechanisms. In the example above, it is psychology that prevents offices that are becoming more efficient from reducing staff, and it is organisational logic that prevents the sensible redistribution of staff that become redundant

What we can learn from this is simple: Firstly, I need to develop a model of the system after efficiency management and analyse or simulate the behaviour of this model. Secondly, I need to accompany the digital transformation by regularly measuring efficiency gains. And thirdly, I must promote a sensible adaptation of the system. It is unacceptable for a head of office to lose not only importance but also income in the medium term because she saves two thirds of her employees thanks to his successful digital transformation. Right?

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AUTHOR: Reinhard Riedl

Prof. Dr Reinhard Riedl is a lecturer at the Institute of Digital Technology Management at BFH Wirtschaft. He is involved in many organisations and is, among other things, Vice-President of the Swiss E-Government Symposium and a member of the steering committee of TA-Swiss. He is also a board member of, Praevenire - Verein zur Optimierung der solidarischen Gesundheitsversorgung (Austria) and, among others.

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