Why is there less innovation? Blame old geezers like me

In the immortal words of Pogo, the comic strip character created by Walt Kelly—"We have met the enemy and he is us."

This line has been used in a myriad of contexts, so permit this Kat to apply it to yet another one, the crisis in productivity and innovation. This time the enemy is no less than this hoary Kat himself together with his entire age cohort, aka old geezers. Guilty as charged, or not? Read on.

The relationship among age, productivity and innovation was discussed in a March 30th article in The Economist, entitled (in the on-line version), "Slower growth in ageing economies is not inevitable: but avoiding it means tough policy choices." So let's summarize the background to the problem.

There are more greybeards than ever before (more people are over the age of 65 than under the age of 5). First, this means more scarce resources expended on pensions and health costs, and less on education and infrastructure. Second, there is an inverse relationship between the number of older people in the population and economic growth and productivity; the more of the former, the less of the latter.

The question is: why? According to the article, it is not that older employees are less productive. A study shows that while there may be some drop-off in the physical abilities of senior citizens, it is compensated by enhanced skills in such things as experience and connections. So it is not the decline in productivity of older workers per se.

Rather, in the words of the article, the impact of older workers on productivity is due to "their influence on those around them." In particular, the argument goes, older workers are less likely to adopt new technologies; "they prefer familiarity to dynamism." [This Kat likes to think that he is about average in adopting new technology—"hah, hah", says Merpel.] Or maybe not: perhaps it is not that older workers are per se a drag on the adoption of innovation, but it is due to the behavior of company management.

                                         Aging and innovation is not a monochromatic question

First, the article suggests, companies with more elderly employees are less likely to adopt new technology, if that means a lot of training. The reason is pure cost-benefit analysis: why invest in training greybeards that are only a couple years away from retirement. Second, when the boss is older, he or she personally is less likely to adopt new technology, with a deleterious ripple effect throughout the company, affecting both young and old employees alike.

If so, pushing out the beginning of the start of pension payments (not to mention the amount of the monthly payments), by upping the retirement age, may not have the positive impact on productivity that policy makers would like. If the result is that older employees are still around and are working longer, it is their drag on productivity, because of their reluctance to embrace new technology, which is ultimately the bigger problem.

If so, as the article suggests, let's encourage fewer barriers to job-switching (and ease the portability of pensions and other benefits to each new employer). The hope is that this will mean fewer employees sticking around for the long haul and make it less likely that the company culture, at least with respect to technology, becomes "ossified". Lest we forget: the operative principle is that a younger work force means a greater embrace of technology. ["Nothing like feeling wanted," this Kat observes.]

But even a younger work force may not be enough. The article proposes further, based on research, that—

… when younger employees are sufficiently scarce [and without immigration to fill the vacuum], manufacturers invest in more automation, and experience faster productivity growth as a result.

Out with the old, out with the young, let’s bring on those robots. Indeed, greater use of robotics might mean more patents, at least for the short term, until AI makes inventors and patent attorneys less essential as well.

Shuffleboard, anyone?

Photo courtesy of Verena von Bomhard

By Neil Wilkof