For decades, productivity has been the cornerstone of economic thinking. Do more with less. Streamline operations. Eliminate waste. Scale efficiently. It’s a model that has shaped how businesses are built, and how economies are measured.
But in today’s environment, that definition is starting to look outdated because the challenge facing Welsh businesses is no longer just about efficiency. It’s about adaptability.
Across sectors, from manufacturing to professional services, organisations are operating in conditions that are anything but stable. Supply chains shift overnight. Customer expectations evolve rapidly. Technology continues to redefine how value is created. In this context, the ability to respond quickly, to pivot, reallocate resources, and make informed decisions in real time is becoming just as important as, if not more important than, operational efficiency.
And yet, most businesses are still being measured and managed, through a lens that prioritises efficiency above all else. That creates a problem.
Efficiency-driven models are designed for predictability. They reward consistency, cost control, and optimisation. But they also tend to remove slack from the system. Processes become tightly defined. Decision-making becomes centralised. Risk is minimised. On paper, this looks like strong performance.
In practice, it can create fragility.
The Menzies Agile Advantage white paper highlights this tension clearly. As businesses grow and become more structured, the very systems that drive efficiency can begin to slow them down, reducing their ability to respond to change and seize opportunities. What once worked as a strength can become a constraint.
This is where a shift in thinking is needed.
Adaptive productivity is not about abandoning efficiency; it’s about balancing it with responsiveness. It recognises that in a fast-moving environment, value is not just created through doing things well, but through doing the right things at the right time.
That requires different capabilities.
Speed of decision-making becomes critical. Businesses need access to real-time data, not reports that arrive weeks after the fact. Leadership teams need to be aligned and empowered, rather than relying on a single decision-maker at the top. Systems need to support forward-looking insights, forecasting, scenario planning, predictive modelling, rather than simply tracking past performance.
These are not theoretical ideas. They are increasingly practical necessities.
Research referenced in the Menzies report shows that nearly one in five business leaders have missed a major opportunity in the past year due to slow decision-making, while more than a quarter cite leadership misalignment and poor collaboration as barriers to agility. These are not marginal issues; they go to the heart of how businesses operate.
For Welsh SMEs, the implications are particularly significant. On one hand, many smaller and mid-sized businesses have the potential to be more agile than their larger counterparts. They are closer to their customers, less encumbered by bureaucracy, and often more willing to act. On the other hand, they can also be more exposed to volatility, with fewer resources to absorb shocks.
In this context, adaptability becomes a competitive advantage. Businesses that can respond quickly to changing conditions are better positioned to capture new opportunities, whether that’s entering a new market, adopting new technology, or adjusting to regulatory change. Those that cannot risk being left behind, not because they are inefficient, but because they are too slow.
This also has broader implications for how we think about economic performance in Wales.
If productivity continues to be measured purely through traditional metrics, output per hour, cost efficiency, scale, we risk missing a critical part of the picture. A business that is highly efficient but slow to adapt may look strong on paper, but struggle in practice. Conversely, a business that is constantly evolving and responding may appear less “efficient” in the short term, but deliver stronger long-term growth.
In other words, we may be measuring the wrong things.
For policymakers, this raises important questions. How do we support businesses not just to become more efficient, but more adaptable? How do funding, regulation, and business support programmes reflect the realities of a fast-changing economy? And how do we encourage investment in the systems, skills, and leadership capabilities that underpin agility?
For business leaders, the challenge is more immediate.
It requires a shift in mindset, from optimisation to responsiveness. From control to empowerment. From backwards-looking reporting to forward-looking insight. It means asking not just “how do we improve efficiency?”, but “how quickly can we respond when conditions change?”
This is not about abandoning discipline. Efficiency still matters. But on its own, it is no longer enough.
The businesses that will succeed in Wales over the coming years will be those that can combine operational strength with the ability to adapt. Those who can make decisions faster, act with confidence, and adjust course when needed.
In a world defined by change, productivity is no longer just about how efficiently you operate. It’s about how quickly you can respond when it matters most.
