GUEST COLUMN:
Jason Murphy
Director
AMRC Cymru, part of the University of Sheffield
When I talk to business leaders about productivity, the reaction is not always positive. Quite often, particularly among SMEs, I hear the same response: “Don’t talk to me about productivity. We talk about turnover and net profit.”
That reaction tells me something important. Productivity is still too often seen as an academic concept, or as something imposed from outside the business, rather than as a practical way of improving performance. Yet the outcomes business leaders care most about – profit, growth and resilience – are shaped directly by productivity, whether they choose to use that word or not.
At AMRC Cymru, we support manufacturers in Wales with technology awareness and technology adoption. Productivity sits at the heart of that work. Manufacturing remains a significant contributor to the Welsh economy, and it is one of the more productive sectors. The challenge, however, is that overall productivity in Wales has lagged behind the UK average for a long time, despite numerous policy interventions. If we want to shift that dial, we have to be honest about what really drives productivity growth.
International evidence is clear. Research by the Organisation for Economic Co-operation and Development (OECD) shows that the firms at the global productivity frontier outperform the rest of their sector by a wide margin, and that the biggest differentiator is technology adoption. These high-performing firms are not concentrated in one place; they are geographically dispersed. The real issue is not their existence, but the slow diffusion of knowledge and technology to the rest of the market.
This is where mindset and leadership come in. Productivity improvements do not happen simply because a new piece of equipment is installed. They happen when senior leaders are clear about what value-added activity looks like, and when that clarity runs through every level of the organisation. Culture matters. Leadership matters. Without that, even the best technology will under-deliver.
In practical terms, much of our work with businesses focuses on data. Before you can improve productivity, you need to understand how your operation actually performs. That means knowing what data to collect, how to interpret it, and how to use it to make better decisions. Wales has strong system integrators who can support automation and robotics, but without good data and a clear sense of purpose, those investments risk becoming expensive experiments rather than drivers of change.
The difficulty is that many SMEs do not frame these conversations in terms of productivity. They frame them in terms of sales, margins and costs. That is why changing the language matters. Productivity needs to be presented not as an abstract metric, but as a way of strengthening the outcomes businesses already care about. If leaders can see how better use of technology, skills and processes links directly to profitability and competitiveness, the conversation changes.
I am encouraged by efforts to provide practical tools that help businesses engage with productivity on their own terms. Resources such as the Wales Productivity Forum’s Toolkit help create a shared starting point, allowing organisations to reflect on where they are, what they measure and where improvement might come from. Used well, these tools can support more informed decisions about investment, technology adoption and capability building.
Leadership development also has a role to play. There are strong programmes available that focus on strategy, culture and innovation, and that encourage senior teams to invest in their own development. Productivity does not improve by accident. It improves when leaders take responsibility for setting direction, building capability and creating the conditions in which innovation can take hold.
One of the most powerful enablers of productivity growth, particularly in Wales, is the strength of our networks. Knowledge and technology diffusion rely on businesses learning from one another. Too often, firms operate in isolation, even when solutions already exist elsewhere in the system. Wales has a collaborative business culture, and that openness creates an opportunity to accelerate learning across sectors.
When businesses share experiences, whether through formal programmes or informal peer networks, ideas travel faster. That diffusion is exactly what global evidence tells us is missing in many economies. Hearing others talk openly about what has worked, what has not, and how they have approached technology and process change can unlock progress that no single organisation could achieve alone.
If we want to see sustained productivity growth, we need to move beyond seeing productivity as a specialist term. It is simply a way of thinking about how effectively resources are turned into value. Changing that mindset among business leaders, aligning technology investment with leadership and culture, and making better use of our networks are not quick fixes. But they are practical steps that can make a real difference to business performance and, collectively, to the Welsh economy.
Find the Wales Productivity Forum’s business toolkit here: https://www.productivity.ac.uk/regions-nations/wales-regional-forum/toolkit/
Jason Murphy talks about this and more in the Unlocking Wales' Productivity Potential podcast episode Unlocking Hidden Business Productivity Potential. Listen to the podcast here.
