Monday, January 16, 2012

Productivity is not the only way to generate more profits

Recently one of the ministers said that the only way to prevent a zero-sum game (more profits) is to upgrade productivity. I disagree the word only. It is not the only way though.

Productivity is not the only way to generate more profits. Innovative products have always been the key point in generating profits. Look at Apple. The iPod, iPod Touch, iPhone, iPad. All these products made them, at one time, the biggest company in the world. Can productivity give you this level of profits? Not by itself.

Therefore, if we're stuck at thinking productivity equals to more profits, we'll be forever stuck at the vicious cycle of cutting costs to create the same product or service. Who knows. We may end up like the MRT breakdown. Too much productivity? Innovative cable ties perhaps?

2 comments:

market2garden said...

When the business entity is in the stage of innovative product still not ready to commercialise, the only way to generate profit is through productivity. Once the innovative product commercialised, the business entity is able to generate profit through vigorous promotional efforts.
The key questions: Good leader of the business entity / country must have good sense of "when". ~"Productivity is not the only way to generate more profits"~ indirectly admit that the organization / country lacking in innovative products / value creation.

chantc said...

In the stage of producing innovative products, marketing would be more important that increasing productivity on the product. No matter how good your product is, it is of no use if no one knows about it. Efficient marketing would be better.

I'm not saying that productivity is not good. Just that its not the only way to generate more profits. In fact, increasing productivity also does not produce the most profits.

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