Welcome back to “Two-for-One,” our monthly look at a persistent issue in business process management—and two practical, research-backed solutions to address it.
This month’s topic tackles a surprisingly common conundrum: why rising IT investments haven’t translated into corresponding gains in productivity.
Despite advancements in cloud computing, AI, and enterprise software, many businesses report stagnant output. They’ve bought the tools. They’ve rolled them out. And yet, they’re not seeing the productivity payoffs they expected.
The reason is surprisingly straightforward: technology without complementary process change rarely moves the needle. Without aligning how people work with what the technology enables, organizations risk becoming more digital—but not more effective.
The situation is a familiar one: a business implements a sophisticated ERP system to streamline operations. But instead of driving efficiency, employees bypass new workflows, departments cling to old processes, and confusion increases.
IT systems are often deployed with the hope that better tools will naturally lead to better outcomes. But as Erik Brynjolfsson, Seth Benzell, and Daniel Rock argue in their 2020 paper on the modern productivity paradox, productivity doesn’t automatically follow technology. The gap between digital potential and real-world performance is persistent, measurable, and systemic.
This paradox—first observed in the 1980s and now seeing a resurgence in the age of AI—reflects a broader truth: new tools don’t change results unless they change how people work.
To tackle the Productivity Paradox, organizations need to go beyond system implementation. They must redesign workflows and structures to make use of new capabilities. This means questioning not only “how can we digitize this process?” but also “should this process even exist as is?”
Business Process Redesign (BPR) is the act of fundamentally rethinking how work gets done to achieve improvements in efficiency, quality, and speed. It’s not about minor tweaks. It’s about structural realignment to support digital effectiveness.
William J. Abernathy and Phillip L. Townsend (1975) proposed a model of process evolution that shows how productivity gains are not just triggered by new technology, but by organizational changes that accompany it. Their insights remain surprisingly relevant nearly 50 years later.
This approach builds a more agile, responsive organization, able to scale and adapt quickly. Over time, redesigned processes unlock the productivity benefits that were buried under old habits—finally resolving the tension between IT investment and business impact.
Even with well-designed processes, IT transformation stalls without investment in people and culture. That’s where intangible capital comes in.
This includes training, change management, leadership engagement, and team collaboration practices. It’s everything that supports people in adapting to and maximizing new tools.
Erik Brynjolfsson and Lorin Hitt (1998) were among the first to quantify the link between IT investment and intangible assets like training and process change. They found that firms investing in both saw significantly higher performance than those investing in IT alone.
Varun Grover et al. (1998) took this further, empirically demonstrating how process redesign mediates the effect of IT diffusion on productivity. In short, IT doesn’t improve outcomes unless people are empowered to use it effectively.
Unlike tangible assets, intangible capital compounds over time. A workforce trained to think digitally becomes better at adopting future technologies. A culture that supports experimentation becomes more innovative. These are the hidden levers of sustained digital performance.
As you consider these solutions, ask yourself:
Technology can be transformative. But without rethinking processes or supporting people, it’s just a faster way to maintain the status quo.
To see real gains, business leaders need to look beyond the software and ask tougher questions about how the organization works—and why. Only by redesigning processes and investing in people can the full promise of IT transformation be realized.
Need help turning IT spending into productivity gains? Reach out to us to learn how we help organizations redesign for real impact.