“Focus on being productive instead of busy.” Tim Ferriss, American podcaster, author, and entrepreneur once advised.

You’ve probably heard employers or managers make statements like, “this program will increase our productivity if we adopt it", “we should raise our productivity by at least 20% next year", “over the past half-decade, our production has remained below average."

All that these statements are referring to is "business productivity". But what exactly is it? Before we look at the definition of business productivity, what is productivity in its real sense?

Productivity SA, a South African firm that aims to improve productivity and competitiveness among South Africans, defines the word productivity as more than just the measure of how effectively resources are used to produce outputs. It is all about using less to create more – to work smarter, not harder.  

In short, it is a mindset that continuously aspires to better ways of accomplishing tasks and conducting businesses. Then, if productivity is concerned with using less to create more, what then is business productivity? Why is productivity important to startups? How can a startup become more productive? These and more are the things you're going to learn by the time you finish reading.

What is business productivity?

When you hear of business productivity, it refers to how well business organizations convert input to output. The inputs in question are resources such as labor, capital, materials, and technology. The outputs are the goods and services produced by the company for capital.

Though we call it "business productivity" the employees are often at the center of it. Only by constant improvement of systems, knowledge, skills, discipline, effort, and teamwork can a business attain productivity.

So companies now use business productivity to measure how good their efforts have been over time and how much they have grown, but also to identify areas for improvement. 

Why is productivity important for your startup?

Here are 10 ways you can achieve so much for your startup by prioritizing productivity:

Increased profitability

By improving productivity, your startup can produce more goods or services with the same amount of resources, which can result in higher profits.  For example, if your startup deals with bottled water and can produce the same quantity in 2-3 hours instead of the usual 5 hours with fewer resources, it can reduce its cost and increase its profit margins.

Competitive advantage

You have an advantage doing anything faster, more effectively, or better than your competitors. 

Productivity is important to your startup because if your startup is more productive than its competitors it can meet the demands of customers faster and may be able to offer products or services at a lower cost. This can help your startup attract and retain customers, leading to sustainable growth over time.

Attracting investment

It is impossible to discuss how important productivity can be to your startup without mentioning that it helps attract investors. If your startup can demonstrate strong productivity in goods, services, employees, etc, it will more likely attract investors, as they are likely to generate higher returns on investment and this can help the startup secure the funding it needs to grow and succeed.

Improved work experience for employees

Startups that prioritize productivity can foster a positive work experience that encourages innovation and continuous improvement. When you encourage your employees to be efficient and effective in their work, your startup can create a working experience that supports its goals and growth.

Better use of resources

Productivity-focused startups are better able to use their resources efficiently, which can help them maximize their impact and achieve their goals with limited resources. For instance, if your startup prioritizes productivity, it may be able to reduce waste, streamline processes, and optimize its use of technology, which can help it make the most of its resources and achieve its goals. 

Scalability

Scalability is a basic indicator that your business is growing and one way you can achieve scalability for your startup is when you prioritize productivity. If your employees are better equipped to increase growth, they can increase their output while keeping costs under control. When this is done, it helps the startup scale its operations effectively and achieves its goals faster.

Improved customer satisfaction

Customer satisfaction is the external factor that defines the level of your company's productivity. Of course, you know that without the customers, there would be no need for your product or services. So when your startup values productivity, it is more likely to deliver products or services to customers in a timely and efficient manner. By doing this you improve customer satisfaction, repeat business transactions with them, and also have sustainable relationships. 

Better decision making

Tracking and analyzing productivity metrics helps your startups make more informed decisions about its operations and allocate resources more effectively.  Analyzing your business productivity data goes a long way in identifying areas for improvement, such as inefficient processes. 

Enhanced innovation

Experimenting with new ideas and tools is another way productivity can help your startup. Doing this would keep you looking for ways to improve the processes and results of your company. This will also help your startup stay ahead of competitors. 

Employee engagement

Startups that prioritize productivity can create a healthy work environment that engages and motivates employees. By focusing on productivity, the startup can encourage its employees to be productive, innovative, and invested in the company's success. In turn, the company will become more profitable and capable of paying higher salaries to its employees. This would bring employee satisfaction, reduced turnover, and a stronger workforce for the startup.

Read Also: Achieving product market fit in your business

What are the 4 types of productivity measured in business?

Now, you are probably asking yourself "how do I know if my startup is productive?".  Well, you're not wrong to ask yourself that question. That only shows how zealous you are about achieving productivity for your company.

According to John E. Jones:

"What gets measured gets done, what gets measured and fed back gets done well, what gets rewarded gets repeated."

However before you achieve productivity for your business, you have to first understand how to measure productivity. Here is another article that explains how to measure your company’s productivity. In this section, I want to focus on the different types of productivity that is often measured in a company. These are:

1. Capital productivity

How well your employees and team use physical capital to produce products or services is measured by capital productivity. The term "physical capital" refers to things produced by humans, such as tools, equipment for warehouses, computers, cars et cetera. Basically, physical capital is everything material that you employ to create your goods.

You deduct expenses from your physical capital to determine capital productivity. After that, divide your sales by that figure. Your capital productivity is the result. The larger the quantity, the better, as it indicates that your tools are enabling you to sell sufficiently to succeed. You can improve your physical capital (or acquire more of it) or reduce your expenses to raise this amount.

2. Material productivity

Material productivity should be your go-to productivity analysis tool if your company offers services rather than goods. Similar to capital productivity, but focusing on raw materials rather than physical capital.

You may also come across items referred to as "raw material" or "natural resources" (which in this context does not refer to water and land). Use the capital productivity method to calculate your team's material productivity, but substitute natural resources for physical capital.

3. Labor productivity

You can use labor productivity to determine whether each member of your team is productive enough. Labor productivity measures the output produced by a worker, a team of workers, or a company in a given time relative to the amount of labor inputs (hours worked, number of employees). 

It is calculated by dividing the total output by the number of workers or the total number of hours worked. For example, if a company produces 100 units of output and has 10 workers who each work 8 hours, the labor productivity would be 100/80 = 1.25 units per hour of work.

Companies that want to increase labor productivity can do so by investing in physical capital, developing human capital that is the employees, and innovating how things are done. When a business assesses its labor productivity, it also seeks to determine the efficacy of the three metrics it has put in place.

4. Total Factor productivity

Experts like to refer to this type of productivity measure as "multifactor" productivity. Here, the term "factors'' other things outside the typical workplace nets, such as capital, resources, labor productivity, etc. They also consist of the leadership style, expertise, and organizational structures of your business as well as how each of these things affects your company's production.

Before you realize the total productivity of your business, divide the entire value of all your goods by the weighted-average value of all the factors. 

The importance of each unit in your company must be determined to be able to calculate total factor productivity. Workflows, knowledge, and almost anything else are all-important at this level.

There are a few straightforward formulas that make calculating your overall factor productivity simple. One of them is the Cobb-Douglas function. 

Read also: How to create a successful MVP–A step-by-step guide for startups

How can a startup become more productive?

Your startup can be more productive in the following 5 ways:

1. Define what productivity means for your startup

Defining what productivity means for your startup will help it become more productive because it will provide clear goals and expectations for the team to work toward achieving. It will also serve as a benchmark for measuring progress and making data-driven decisions. 

By having a shared understanding of what productivity means in your company, everyone can work together towards a common goal and prioritize their efforts in a way that aligns with the company's overall objectives. This can ultimately lead to increased efficiency, better utilization of resources, and more positive results for the startup and the end product will be maximum productive.

2. Look at the existing structure and identify the bottleneck

When you are able to scrutinize the existing business structure of your company, you'll be able to identify areas of inefficiency. From here you will be able to:

Streamline processes

By identifying bottlenecks and redundancies in the current structure of your company, you can comfortably streamline operations and increase efficiency.

Allocate resources effectively

Identifying areas where resources are being misused or underutilized will help your startup make better decisions on how to allocate those resources to drive maximum productivity.

Improve communication

Being able to realize the problems in communication channels and addressing them can lead to better collaboration, a clearer understanding of responsibilities, and more efficient decision-making in a company.

Reduce waste 

Knowing areas where resources are being wasted, can help a company eliminate these inefficiencies and reduce waste, leading to improved productivity and profitability.

3. Use technology to improve your operation  

Using technology can improve your startup by 200% yearly if properly utilized. Technology can automate repetitive tasks, streamline processes, improve communication and collaboration, provide access to real-time data and analytics, and enhance customer experience among other benefits. By leveraging technology, startups can optimize their operations, increase efficiency, reduce the risk of errors and delays, and then achieve improved productivity.

Also Read: Read 20+ productivity tools every startup founder should be using in 2023

4. Build a team and delegate some task

Hellen Keller once said:

“Alone, we can do so little; together, we can do so much.”

This is why finding a co-founder is a unique advantage to startup founders because dividing tasks and responsibilities among team members with different skill sets and expertise, helps you and your business ensure that each task is completed effectively and efficiently. 

Delegation also allows the founder or CEO to focus on high-level tasks and decision-making, rather than getting bogged down in the details of daily operations. 

Additionally, having a team in place allows for the sharing of ideas and workload, which has the potential of increasing your creativity and motivating you to do more. However, the delegation process needs to be properly managed, with clear expectations and communication, to ensure that your team can work effectively together towards the common goals of the startup.

5. Set clear goals and establish your priorities

Lawrence J. Peter helped us understand the value of setting goals when he said:

"If you don't know where you are going, you will probably end up somewhere else." 

This is to say having a well-defined direction and objectives allows your startup to allocate resources effectively, prioritize tasks, and measure progress. Furthermore, it helps focus the team's efforts and energy toward achieving the company's mission, leading to better results and increased productivity.

Wrapping things up

Business productivity should be every company's goal as it can help the startup achieve, remain competitive, and attract investment. For a startup to become productive, it must; define what productivity means to it, identify bottlenecks, make team building a priority, implement the latest technology and set clear goals. With these, a startup can become more profitable, more innovative, and make better use of its resources which will eventually help it scale easily. These are just a few of what is achievable with business productivity.