What’s the value of a head start?

Horse crossing finish line
A head start along with 1 – 2% productivity growth becomes a sizable advantage

Early this morning, I was running on the treadmill and listening to an economics lecture by professor Timothy Taylor.

He said the year 1870 kicked off our modern era of economic growth. If you take the Gross Domestic Product (GDP), a measure of productivity, of the richest countries in the world in 1870 and compare them to the poorest countries, the ratio is 9:1.

By 1990 and the ratio widens to 45:1.

The professor explained that productivity growth is like a horse race. The richer countries like the U.S. started out of the gate in 1870. Whereas countries like Chad are still stuck at the gate, waiting to begin their economic development.

From 1870 to 1990, the average per capita GDP growth of the U.S. was only 2% per year. At the end of this period, the wealth gap increased by 5X. Productivity growth is not linear; it is exponential.

See also: Companies are bands of people
Managing "human energy" for long term growth

Compounding productivity growth has benefited countries. It can benefit your business too if you adopt productivity technology early. But if you wait at the gate, your competitors may run too far ahead.

What productivity technology, if adopted now, will give your company an advantage in the years to come?

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