Smarter not harder: How AI is changing the way we work
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AI is shaking up the way we do business, but is it actually making us more productive? And what does this mean for the future of work?
About the episode
AI is revolutionising the way we work – automating everything from email creation and data analysis, through to medical diagnostics. But does faster really mean better?
As businesses chase efficiency, are we measuring productivity in the right way – or just the easiest way?
The Dean of UNSW’s Business School, Professor Frederik Anseel, says true productivity isn’t about hours worked; it’s about impact. With technology handling more and more of the routine, the real value may lie in creativity, problem-solving, and big ideas.
This episode is hosted by Dr Juliet Bourke.
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Transcript
Dr Juliet Bourke: Artificial intelligence is revolutionising the way we work. From recording and transcribing video meetings to rewriting emails, analysing data, and creating reports.
News Anchor 1: Artificial intelligence is already in the palm of our hands. Now, the revolution is making its way into classrooms, helping teachers with their reports.
Dr Juliet Bourke: Even certain risk management processes can be outsourced to AI.
News Interviewee: AI has been in use in radiology globally for a little while now.
News Anchor 2: As soon as a patient is scanned, AI will be sifting through identifying any abnormalities, and it will be investigated by a radiologist as a priority. Anticipating a 20% productivity boost as a result.
Dr Juliet Bourke: No matter what industry you're in, AI is likely to be at the forefront of productivity conversations within your business. So what does the future of productivity look like, and what do significant advancements in AI really mean for today's workforce?
Professor Frederik Anseel: In a lot of businesses, one great idea can change everything. I don't care then if you had that breakthrough on the beach, in the shower, on a bike, but that idea could compensate for 20 hours, 50 hours, maybe thousands of hours of work, which is so much more important for productivity. And so I think we really need to step away from thinking in hours of work as the currency.
Dr Juliet Bourke: This is The Business Of, a podcast from the UNSW Business School. I'm Dr Juliet Bourke, an Adjunct Professor in the School of Management and Governance. Professor Frederik Anseel, Dean of UNSW's Business School, has been studying how people and organisations learn and adapt to change for the last two decades. He says productivity growth is crucial not only for the organisation, but for society.
Professor Frederik Anseel: There's a famous quote by Nobel Prize winner Paul Krugman, and he says, "Productivity might not be everything, but in the long run it's almost everything." And I very much subscribe to that. I think we underestimate it because it is not visible in our daily lives, but productivity growth is everything because it is about our living standards. It is about how much money you will have in retirement. It is about how much a country can invest in education, in infrastructure. It is improving our standards of living. And if people today feel that they're not better off than their parents or their grandparents, that is productivity growth. And a lot of people don't see that and they blame a government and they blame inflation, or... they have all sorts of explanations, but basically this idea that every new generation has it better than their parents, that is productivity growth. It is improving standards of living.
Dr Juliet Bourke: I think we get that as an outcome. What are the inputs into productivity growth?
Professor Frederik Anseel: This is a very good question, because you're basically using the definition of productivity. It is how much output do you create for any given input. And so let me make that a bit more concrete, any given input that can be an hour of work, but it can also how much capital that we put into anything. And so productivity growth is that you basically increase the output that you generate for any given input. For instance, this is a podcast – we'll be talking for an hour, that is our input of the both of us, then we'll have recording of a podcast, and then maybe it's being listened to by 10,000 people, or if you're Joe Rogan 11 million people. And then people will maybe make decisions where to study, where to work, what to buy. And so even a podcast can have productivity and productivity growth.
Dr Juliet Bourke: I think of productivity in terms of efficiency, that you've basically got the same amount of time but you've produced more widgets in that time. Or you've produced the widgets in a far superior way, you know, greater quality in the outcome. Am I thinking about it correctly?
Professor Frederik Anseel: It is one way to think about it and that is about, sort of, a time-bound way of thinking. And so it is basically for any unit of time, and we typically use an hour of work, for instance, it is how much you produce. And that can indeed be very material – that I produce, widgets, apps, or even agriculture on a field. And for instance, it can also be as a company, if you just look at how much capital you invest, or even as a country, how much you invest. For instance, in Australia, one of the problems that people talk about productivity growth is that we invest a lot of capital in housing, which is not necessarily productive, right? And so it is about input, capital effort, hours worked, and the output that you create.
Dr Juliet Bourke: All right, so then take me back to a podcast. How could a podcast increase its productivity?
Professor Frederik Anseel: There's maybe a bit of a difference between productivity and profitability. Imagine that we engage someone like you, and we say, "Okay, we'll have 10 podcasts that we record." And of course, you can say, if we look at the time invested – an hour of speaking, but there's also the preparation, there's a whole team around it that produces it. So technology can not make that all much more effective. And then the output could also be looked at in, sort of, what we generate, right? And the hours that people listen and what people do with information, for instance, in that podcast.
Dr Juliet Bourke: And so a lot of the discussion in Australia has been productivity decline rather than growth. Why are we having that conversation?
Professor Frederik Anseel: I'm not sure if we're talking about productivity decline or basically a decline in productivity growth. It's a nuance, but it basically means maybe our productivity is not declining, but we're simply slower in growing our productivity. As I mentioned earlier, if we think about productivity growth as improving living standards, doing better than our parents did, so the growth is so important. And if you look at the... let's call it the developed world, since especially the Second World War we have seen huge productivity increases, especially the decades after the Second World War, and then we have, especially in the last 20 years, have periods of stability or slower economic growth, depending on where you are in the world. And currently, indeed, Australia is not doing very well in terms of productivity growth. I was recently reading an article where they're saying, "Oh my God, we are so slow in productivity growth compared to, for instance, Germany, Belgium, Norway." And I was reading this, I said, that is so interesting, because I'm from Belgium, and then in the Belgium media, everyone is complaining about how slow productivity growth is in Belgium. So that is probably not the standard of reference.
Dr Juliet Bourke: Yeah, interesting. So I definitely clock this idea that we think about our own standard of living and compare it to previous generations. But productivity seems to have a new conversation at the moment, and I think that's linked to technology.
Professor Frederik Anseel: Yes, absolutely. So a lot of people now talk about their individual productivity, and how can they increase their own productivity? There's all sorts of productivity hacks. And then sometimes people think, if we talk about GDP at the national level, that that is a direct translation of individual productivity. And here's one of the biggest misconceptions, is this idea that to grow productivity at a collective level, a nation, everyone needs to increase their productivity, but there's not a one-to-one link between individual growth and national collective productivity growth.
Dr Juliet Bourke: Well, I think I would have made that mistake.
Professor Frederik Anseel: Yes, a lot of people do. And it's not that there is not a link. For instance, in any given company, if you would be able to increase everyone's individual productivity, you would certainly get a bit of productivity growth. And this is what we are expecting from AI at the moment, we're thinking like, "Oh, Chat GPT will make everyone a little bit more productive." That is true, and that will increase the productivity of a company, but maybe 1% or 2%. True productivity growth comes from technological innovation where you suddenly say, "Well, everything that we've been doing, let's redesign that completely," and suddenly you have jumps in productivity of 10, 20, 30%. I'm gonna give the most famous example, probably it's the Model T Henry Ford invented assembly line. It used to be that people would work a car from the ground up – that was very slow, and suddenly somebody said, "Let's redesign this whole process and create an assembly line where people are stationary, and the car passes through the whole line." And that sped things up so quickly, made it so much more productive. And so this has nothing to do with an individual working a bit more or working a bit harder, it is changing the complete way of how we produce. And this is where the huge leaps in productivity growth will come from.
Dr Juliet Bourke: And so you mentioned before that other countries might be moving faster in productivity growth at a national level than we are in Australia. What are they doing to get that outcome? Are they coming off a low base?
Professor Frederik Anseel: That is such a good remark. Some of them do. For instance, currently in Europe, and a lot of countries are looking at Spain and Europe, and they say, "Wow, Spain has had, in the past since COVID, such productivity growth. What is their secret recipe?" And probably they've made very good investments, but honestly they came from a very low base. Now let's take a country that came from a very high base and still creates productivity growth – the US, right? And so the US is probably, at the moment, a prime example, let's say after COVID, where all the other parts of the world are looking at US and how is it possible that that was already one of the most productive countries, and they've still had probably the most pronounced productivity growth? And it's probably technology. Through innovation, they're able to quickly redesign their production processes or have new products that allow them to produce quicker, produce more, and produce smarter. There's a lot of research showing that actually how we manage companies leads to productivity growth and research showing that differential, the gap between the US and, for instance, Europe or Japan, in productivity growth is partly explained by more effective management. For instance, it is making very clear and transparent agreements on goals, targets, setting those targets, following up on those targets, giving people clear and honest feedback, also sometimes flexibility in employment arrangements. And so all these things translate into productivity growth.
Dr Juliet Bourke: Speaking of flexibility in employment, a big part of the productivity conversation right now seems to be around working from home and the push to get workers back into the office. What impact, if any, does remote work have on productivity?
Professor Frederik Anseel: It's a global discussion that is still happening. It's still not solved. So if we think about COVID, there was a very strange period where, almost overnight, people suddenly all started working from home. And what was striking was that we almost had no productivity loss, right? And so that was quite impressive. And then we started sort of thinking, so if people work from home, self-organise, talk to each other, basically that helps productivity. And indeed, then we had like a first movement. It was like a liberation. And then what happened is what I call the counter revolution, where people said, "No, these people are not productive. They're lazy bums, and they're probably sitting at the beach doing nothing. We need to get everyone back to the office." Right? And so since then, we've had this sort of several waves of working from home, moving back to the office, working from home. And often it is senior managers who have this... I call it 'the illusion of control', this idea that if they don't see people, if they don't show up, that they cannot control what they're doing, that probably people will take advantage of that situation and they won't be productive. But if you look at the research, Nick Bloom is probably the leading economist, a Stanford economist, and he basically shows that... well, there's different studies, but there's no productivity loss if people work a few days from home, let's say hybrid working. Some studies show a productivity increase, which is great. There are a few studies that also show that there might be a bit of productivity loss, but so, all-in-all hybrid working probably does not lead to productivity loss and has potential huge gains in profitability.
Dr Juliet Bourke: Is it a failure of measurement then that we're now in this "Oh, let's go back to the workplace", because we can't quite see. It's not transparent where that productivity is happening. Talk to me about the measuring of productivity.
Professor Frederik Anseel: I think this is where the tricky issue is. We always tend to revert back to measuring productivity in the hours that people work. And you've even seen it in some sort of surveillance software and monitoring where basically people are being tracked – how much they type, how much they're behind the screen. Luckily, sometimes we have a cat running over our keyboard, showing that we're still being active. And so this is the idea that it's every hour that someone has worked that that is what it counts. And you can imagine in some industries, some businesses, that is indeed the most important thing to do. Let's say, if you work in a consultancy, a law firm that thinks in billable hours, probably that makes sense. But if you think in a lot of businesses, one great idea can change everything, and I don't care then if you had that breakthrough idea on the beach, in the shower, on a bike, but that idea could compensate for 20 hours, 50 hours, maybe 1000s hours of work, which is so much more important for productivity. And so I think we really need to step away from thinking in time, in hours work as the currency, and that will especially be completely needed when we start working with AI.
Dr Juliet Bourke: I think that's been a discussion for a while though, hasn't it? That it's not about hours, but it's about insight. It's about the great idea. Why have we not moved forward on that?
Professor Frederik Anseel: I think we've not moved forward because it's hard to measure. And because it's hard, we always go back to the goals and the KPIs that are easy to measure, but I think they distort the reality. Let's go to the basics of how a university works – we do research. Research is basically producing new ideas that potentially could change the world. Changing the world, measuring that very hard to do, so we take a proxy that we can measure. And so what we've started doing across the world is measure the number of papers somebody publishes. What's a very poor measure of productivity for an academic, still the whole world works on that outcome. Then we said, "Maybe that is not good enough, because people can publish rubbish papers. Let's look at citations." That's better because if your paper is getting cited by other people it means that it's somehow influential, but it doesn't tell anything about the impact on the outside world. So we now need to move to how can we track if people's research, new ideas, actually created something in the outside world. So if our researchers, their ideas and papers, are being cited in real-world central bank decisions or even, for instance, some of our academics have been cited in a White House paper by the US president citing that research, then I sit up.
Dr Juliet Bourke: This is a very difficult discussion, right? It's hard to measure and it's also hard to think of examples where you could lift the productivity individually and as a nation, or a world, through university. It's conceptually right, but it's difficult. Can you think of examples that aren't university-based?
Professor Frederik Anseel: I can give examples of where individual productivity leads to larger productivity. For instance, if you would ask me, "What are the main obstacles currently to productivity, that is not just about one big innovation or investment in capital?" For instance, I would say traffic, right? Commuting. For instance, it is very clear that if people spend every day two hours in a commute that are unproductive hours, and for some people it's four hours every day, right? And so this is a problem that we need to solve at a societal level. And so for a government, it means that if you can create the right infrastructure, public transport, to make that much easier, or that people don't need to go in to work, can work from home or find any other way to arrange this, this could be a huge sort of productivity growth.
Dr Juliet Bourke: Those are external productivity hurdles. But of course, there are blockages internally in businesses around productivity – meetings, day-to-day bureaucracy. How can businesses reduce that kind of inefficiency?
Professor Frederik Anseel: Earlier this week, I had a meeting with our leadership team and I gave them some sort of rules, which is basically some values about things that we believe in and that we want to do. And one of my 10 rules is, "Don't feed the bureaucracy." And it literally says, "If a form, a procedure, a meeting, an email is not needed, do not create one" right? And I think that's super important, because universities, like a lot of government organisations, are large bureaucracies and they steal time. They're very greedy. So I see a lot of time management courses, and they learn individuals to manage their own time. I think the focus is wrong, because you become a bit egocentric about your own time, but you're not paying attention that you're basically imposing on someone else's time. And so what we need to do is that we need to care for each other's time. And so whenever we send an email, we organise a meeting, we ask people to complete a form, we don't need to think about this is maybe more efficient for me, we need to think about the 10, 20, 100 other people that were basically stealing their time. And I think that's a huge problem in a lot of organisations.
Dr Juliet Bourke: What do you think about the idea of sort of mandating four days a week so that people absolutely get that one day a week to think, to focus? And that could be a step change in the way that we think about productivity.
Professor Frederik Anseel: I'm never a strong proponent of every measure that is sort of uniformly applied to everyone. So I'll say that for some occupations in some industry, that could be a great idea. In others, it's not a great idea. The other thing is, I've done, personally, a lot of research on what is called "idiosyncratic deals", which basically means individual flexibility. If we give people the freedom to design their work environment and their work schedules that work best for them, that actually leads to individual productivity, and we saw in our research also slight improvements at firm productivity. And so the four days a week thing might work for some people, but it might be a bad idea for other people. And what I've seen, I work with a lot of companies, and especially HR directors, they love standardisation. They love one model for all, right? One size fits all. And I think we need to step away from that. But I do think customisation and personalisation will be the future of work.
Dr Juliet Bourke: All right, so let's talk the big innovation of the day, or let me say the big investment of the day, is AI. And obviously there are some micro benefits that happen in terms of productivity. I mean, you're shaving minutes off tasks and minutes add up into something. What do we do with that saved time?
Professor Frederik Anseel: So I think what is currently happening is indeed AI is basically a tiny incremental layer of productivity for people that are currently good at using all the Chat GPTs, Gemini, Claude. So these people, indeed, win a bit of time right now. Some surveys show exactly that a lot of people are not telling their company that they're using it. So there's a lot of hidden AI use at the moment, and some people are very good at it. And so for this brief period of time in history, I think those people get their time back, right? There's people in coding, software development, there's people in administration that are very efficient with AI, and because it's not embedded yet in organisational processes and structures, those people are really benefiting from it, and I think they get that choice to get that time back or invest it in individual productivity to advance their career. Some businesses have already discovered that and are basically already banking that time. And I'm thinking about some law firms, some elite consultancy companies that are already openly admitting that they use AI to produce their PowerPoint presentations, to do their business plans, to their analysis, and they just simply do more stuff so their profit margins go up. And I expect that to happen for most companies, as soon as they sort of realised that there's a profit to be made here.
Dr Juliet Bourke: So I'm thinking about last year when Woolworths came under fire in the media for their productivity framework, which saw warehouse employees tracked and timed as they filled out orders. When they clocked out, they would receive an efficiency score which workers claimed was unachievable. Do those kinds of productivity KPIs actually work when you're dealing with humans and not robots?
Professor Frederik Anseel: It's a very good example and phenomenon of what will happen. Inevitably it will happen. The biggest misconception that people have, and economists call this the fallacy of the lump of labour. And so we know that time is fixed, but we also tend to think that the lump of labour, that there's a fixed amount of labour that needs to be done. And if you find a way to do that quicker, you win time. And you think, "Okay, now that time is available for leisure activities or whatever you want." But that is not how it works. There's not a fixed amount of labour, there's no lump of labour. What happens if you do a certain amount of labour, new labour comes up and emerges. There's always new demands for labour, there's new opportunities, there's people doing new things, new ideas. And so labour will expand always, there will always be need. And so whenever AI makes us more productive in one area it frees up time, but that time is never freely available as a package. It will be eaten up by new things that you need to do. And so this is also why this whole discussion about AI destroying jobs and making people unemployed is probably not accurate. Well at least never in history has technology created that type of pattern, because technology always creates innovation and new demand for labour, new tasks, new things. Again, if we go back 40 years ago, there were no podcasts, there were no social media managers, there were no brand managers – new jobs, new needs come up all the time and AI will just make it easier to do some tasks, and will give us more capacity to tackle new things.
Dr Juliet Bourke: I buy that humans as a race seem to just find endless ways to use our time to work, but I'm also thinking about the downside of this investment in technology on productivity in particular. That there's a risk that we become more isolated from each other, because we start using AI to do the tasks and we have task intensification. So you no longer have these periods of time where you're, you know, just sort of wishy washy around talking to someone else, you know, doing your PowerPoint presentation or doing the slow labour. All humans do now is the intense, difficult labour and that actually has a negative consequence on our productivity, holistically, because we basically wear ourselves out.
Professor Frederik Anseel: There's a bit of research on that and we need to go back. A few years ago, Apple organises this developer conference. Everyone can go to that conference and talk about new apps, what is being developed, but it's so popular that Apple needs to limit, constrain the tickets and they organise a lottery. And so only 5000 people can go in person to the conference, but all materials are available to everyone. So everyone can read, see everything, the only thing that changes, actually, is people being able to talk to each other informally. What they basically found is a 13% drop in innovations, in app updates and developments, but also a 4% drop in positive feedback from customers of those apps. So this is very clear, concrete evidence that in-person interactions, something is happening there that is super important for related productivity that cannot be imitated or copied by any type of information dissemination. And so for a company, it means that you want to make sure that you organise events, encounters where people, if they come to the office, that they're just not sitting in their office working on their laptop. You want to organise conversations people need to bump into each other. And so you need to be clever and make sure that people see each other, talk to each other in situations that they would normally not do. A lot of people would think that having a coffee with someone, having a long chat is unproductive.
Dr Juliet Bourke: Exactly.
Professor Frederik Anseel: We will need to say to people, "You need to become unproductive to become productive in the long run."
Dr Juliet Bourke: Thanks to Frederik Anseel for joining us on this episode. If you'd like to hear more conversations about the use of AI in business, you can listen to our interview with Catriona Wallace next. She's a technology entrepreneur and Founder/CEO of Ethical AI Advisory.
Catriona Wallace: We absolutely need to start regulating, monitoring this technology. And AI is now regarded as one of the most serious threats to humanity, unless it is controlled. And then where's the leadership? It's not coming from the tech giants. It comes from business leaders who need to step into this ethical leadership, start to learn about this, understand both the benefits and the risks that this technology is bringing.
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