Game Changing Innovation Strategy

“The most important, and indeed the truly unique, contribution of management in the 20th century was the 50-fold increase in the productivity of the manual worker in manufacturing.”

— Peter Drucker, Management Challenges for the 21st Century

The most respected management thinker in history isn’t just talking about fiftyfold productivity for the smartest people. He’s talking about fiftyfold productivity on average for 100 million-plus people.

To put this in context, imagine if you could get an entire weeks’ work done in less than an hour? Or if you could work a full work week, but got 50x the results of everyone else?

But, oddly, after this huge societal boost in productivity, something very strange happened.

At the exact point where you’d think there would be another boost in productivity due to the introduction of the internet, there was stagnation. The evolution of the web should have led to dramatic improvements in productivity, yet they are invisible in the data. This is known as the productivity paradox.

This paradox led Drucker to issue a challenge for our generation:

“The most important contribution management needs to make in the 21st century is similarly to increase the productivity of knowledge workers.”

Over the last 9 years in my rapidly growing recruiting software company, I’ve taken on Drucker’s Challenge and succeeded. We’ve gone from zero to tens of millions of dollars in revenue with 4,300+ customers. More so, we’ve achieved this through a very methodical process.

What I learned boils down to two sentences: At first, gaining a 50x productivity boost sounds impossible. But, if you have the right process and use the 50X playbook, it’s realistic for almost any knowledge worker.

In this article, I will share two things with you:

  • The step-by-step workflow I used to get a 50x productivity boost in the recruiting industry.
  • The little-known process that originally gave the 50x boost in the industrial revolution, but was then forgotten. 

By the end of the article, you’ll have what you need to take the 50x Challenge yourself.

From First-Time Entrepreneur To Tens of Millions In Revenue: How I Got A 50x Boost In The Recruiting Industry

In 2010, I was a 29-year-old vice president of operations at a high-growth SaaS software company. It was high time to found my own startup. The core theme that consumed my thoughts was that artificial intelligence (AI) would revolutionize every industry in the decades to come.  The notion that you could develop software that would learn on its own and improve performance for the people who relied on that software to perform their job inspired me.  That was the future.  I wanted to go create it.

For 24 months leading up to launching my company, I spent two hours per day after work and on weekends minimum:

  • Reading. Sharpening the saw.
  • Exploring 50-plus markets to identify patterns and opportunities.
  • Studying business models.
  • Breaking down the workflow process each industry used to deliver its product or service.
  • Testing potential concepts.

In other words, rather than winging it, I spent the equivalent of nearly a year of full-time work turning over every pebble (not stone) in order to find and validate the business idea that I could go all-in on.  I was looking for a huge market opportunity that would combine artificial intelligence and software and had the potential to change the world in some small way.

After this long discovery process, I finally settled on the recruiting industry for two reasons:

  1. Massive Impact And Market Size. Besides your health and family, your career is the next most important thing. It impacts every human and determines so much. It determines who you become, your income, your impact, your lifestyle, your network, your development, and ultimately how you spend one-third of your waking hours. In other words, your career determines you and your family’s destiny, and I saw that if I could make the recruiting industry function a little bit better, the trickle-down effect would be enormous.
  2. Opportunity To Transform An Entire Industry. There was a massive gap between what I knew was possible and how recruiters managed their day-to-day workflows.   For example, when I looked at their processes, I learned that executive recruitment firms spent a whopping 80 hours performing manual steps just to get one candidate on the phone for an interview. Another epiphany was that recruiters spent the majority of their time jumping inefficiently between disconnected general-purpose tools (i.e., Gmail, MS Word, MS Excel, LinkedIn) rather than an integrated recruiting tool. Dozens and dozens of recruiters I spoke to were even using alphabetized index cards or huge, printed-out stacks of resumes. 

Now that I had the vision and business model, I spent the next 18 months methodically integrating Stanford Professor Steve Blank’s lean startup methodology and launchpad. A key part of this process involved meeting with and learning from hundreds of recruiters. Simultaneously, I actually started recruiting on my own. This allowed me to intimately understand how things worked from a first-principles perspective.

In 2013, after more than 18 months in the discovery phase, I brought together the initial team and we finally began building the first prototype of a software that reinvented the entire recruiting workflow rather than simply improving the existing one. I called the software Loxo

Since then, I’ve conducted 5,200+ discovery sales conversations with recruiting organizations of all types and sizes. Our Loxo software has continually improved to the point where market demand is pulling us faster than we can keep up.  We will exceed 150 employees in the next year, have 4,300+ clients across the globe, and recently expanded into Europe with our first international office.

More importantly, the result has been a fiftyfold boost in productivity for the average recruiter using our software.

Now that you understand my general process, it’s important to understand the historical precedent that caused the 50x productivity boost. By understanding my approach and the historical approach, hopefully, you’ll see an underlying process you can use in your own business.

 

High performance

Revisionist History: What Really Caused The 50x Productivity Boost In The Industrial Revolution

What we’ve been taught about productivity is wrong. Technology is NOT the fundamental cause of productivity. Mastering the latest and greatest tools will not take you to the promised land of productivity.

What I learned and what history shows us is that what really matters is workflow optimization. In other words, it’s about perfecting the step-by-step workflow first, then harnessing technology to turbocharge.

Technology with a bad process is similar to pushing a boulder up a hill. Technology with a great process can result in a 50x productivity boost.

This brings me to Frederick Winslow Taylor, one of the world’s first management consultants and author of Principles Of Scientific Management.

The core thesis of the book boils down to one sentence:

Replace work by the rule of thumb, habit, and common sense with the scientific method in order to boost productivity.

Later in the book, Taylor explains why this is important…

  1. As a field evolves, it develops best practices. Best practices are passed down from generation to generation.
  2. These best practices go unexamined. “Practically in no instances have they been codified or systematically analyzed or described,” explains Taylor.
  3. There is a lot of diversity among practices. Taylor adds, “Instead of having only one way which is generally accepted as a standard, there are in daily use, say, fifty or a hundred different ways of doing each element of the work.”

This diverse body of practice based on the “rule of thumb” is far from optimal. You might think that if a profession has been around for decades and even centuries that it would discover the optimal processes and pass those down. However, Taylor’s work showed that this doesn’t happen.

Taylor describes what it means to apply the scientific method to work with these three steps: 

  1. Develop a science for each element of each person’s work to replace the old rule-of-thumb method.
  2. Use machines where possible to increase efficiency.
  3. Scientifically select and then train, teach, and develop each employee rather than each employee developing their own system.

Using this system, Taylor achieved astounding results for tasks you would think are impossible to improve. Let’s take something as simple as shoveling as an example.

First, Taylor questioned basic assumptions: 

For a first-class shoveler, there is a given shovel load at which he will do his biggest day’s work. What is this shovel load? Will a first-class man do more work per day with a shovel load of 5 pounds, 10 pounds, 15 pounds, 20, 25, 30, or 40 pounds? 

Sandhurst

Next, Taylor answers these questions via experimentation. He varies the shovel load and has managers trained in the scientific method document the results. After several weeks of experimentation, he found the optimal shovel load was 21 pounds.

The example above is not just hypothetical. Taylor helped create a science of shoveling at Bethlehem Steel Company for its 600 shovelers. That science included thousands of stop-watch observations and experiments on: 

  • Different kinds of shovels (they settled on 8-10)
  • Shoveling techniques (testing various distances, weights, heights, and minerals)
  • Management system (new system of educating employees on what works, tracking methods, reporting results, and providing bonuses to individuals rather than having a common group wage)

What was the end result of these shoveling experiments? 

Within three years, the output per man doubled. As a result, employees earned 35% more on average while the company paid significantly less. 

All of this from turning the simple act of shoveling into a science. 

Taylor gives other fascinating case studies in the book. One amazing example is bricklaying. This trade has literally existed for 10,000 years. There had been almost little for hundreds of years. Yet, one company was able to improve efficiency by 3x. Using the principles of scientific management, they…

  1. Reduced the number of motions from 18 to 5. 
  2. Created a simple apparatus that held the bricks at the same height as the wall so they didn’t have to constantly bend down to pick them. 
  3. Taught people to use their hands simultaneously rather than in sequence.

Taylor was not alone in using scientific management principles. Henry Ford used the same principles to invent the assembly line realizing that much of a worker’s time was wasted simply walking between materials and tools.

The following quote from Ford captures the implication, “He gets small pay because pedestrianism is not a highly paid line.”

So, Ford, had the work come to workers rather than them walking to the work. This innovation was called an assembly line. Second, Ford noticed that a lot of time was spent stooping over to pick up materials from the ground and putting them on the assembly line, so he made multiple assembly line heights based on worker height. 

In the industrial production workshop, the robot arm of the automobile production line is working car production line stock pictures, royalty-free photos & images

The most fascinating part of Ford and Taylor’s insights is that easy-to-understand, simple-to-implement changes in the process could have dramatic improvements, yet went undiscovered by others. It conjures up the surprising detail that a suitcase with wheels wasn’t invented until the 1980s.

The need for scientific management rings true just as much as 100 years later.

One hundred years later, most knowledge work is still done via the rule of thumb, habit, and common sense. Most of a knowledge worker’s time is spent doing things other than those activities that yield the highest business impact.

Today, knowledge workers spend an average of 41% of their time on unimportant discretionary tasks and 55% of their time on managing across, up, or down within the organization.

 

Happy business woman with multitasking skills sitting at his laptop with office icons on a background. Freelance worker. Multitasking, time management and productivity concept. Vector illustration. business efficiency stock illustrations

In my story, in Taylor’s work, and with Ford’s insights, we see the same lessons again and again: 

  1. Break down your work processes into their fundamental components
  2. Use the scientific method and first principles to find the optimal process for each step
  3. Reinvent, don’t just improve
  4. Use modern tools to gain leverage
  5. Integrate all of the steps and tools so that all efficiencies build on each other and everything works together seamlessly (rather than it just being stitched together)

 

Now that you see that there is a proven and doable process to get a 50x productivity boost for you specifically and your company more broadly, it’s time to ask yourself a fundamental question…

Will you take the 50x Playbook Challenge?

Imagine the business impact and competitive advantage if knowledge workers were given a software platform integrated with a playbook designed for that specific industry. The end goal should always be to have workers spend the majority of their time on the highest value tasks.

When you use this logic, align incentives, and then add in artificial intelligence, a 50x productivity boost no longer seems crazy. In fact, it feels the opposite. It feels inevitable.

Celebrating Team Success

The original article was first published on Forbes.com available to view here.

Special thanks to Michael Simmons for his collaboration in co-developing the ideas in this article. If you want to go deeper into how Michael developed his own article from our collaborations, then read this article In 1911, a genius revealed a forgotten science how to be 50x more productive without working more hours.

CEO at Loxo, the #1 Talent Intelligence Platform and global leader in recruiting software. Loxo is a horizontally integrated suite of data-driven and AI-powered products designed to manage the full recruitment life cycle through a single system-of-record software platform. The platform includes a talent graph of over 1.2 billion people, with contact information including verified mobile phone, personal and work emails. The instant AI sourcing, ranking and matching, and multi-channel outbound recruiting solution makes identifying, engaging and hiring the very best possible talent easier than ever before. More than 4,200 Executive Search, RPO, professional recruitment and talent acquisition teams across the globe are using Loxo to become hiring machines. Learn more at https://loxo.co/