Are Happy Workers More Productive? Maybe Not

Are happy workers productive workers? That always seems to be the assumption, just it always seems assumed that “better broadband produces higher economic growth.” But it that a reasonable assumption? Yes, most studies suggest. But some question the theory that happiness leads to productivity.  

Industrial psychologist Fredrick Herzberg is among those who might argue the link is not as causal as most of us believe.

One issue is what we actually are measuring, though. Is it morale, engagement, employee satisfaction scores, fulfillment, or something else that is the proxy for “happiness.” Sometimes such measurements look at job satisfaction. 

Other times “well being” is what researchers try to measure. By definition, well being involves not only the job, but also everything else in a person’s life. In other words, it might be possible that people are happy for other reasons, or engaged for other reasons, also are able to produce more effectively. 

At least in principle, organizations might have a mix of happy, yet low-performing employees, as well as unhappy low-performing employees. Organizations might also have unhappy high performers or happy high performers. 

source: Professor Charles D. Kerns 

Though studies suggest all are correlated with higher productivity, the empirical results vary based on which proxy is used.  

But some argue--perhaps counterintuitively--that happiness doesn’t necessarily lead to increased productivity. 

“A stream of research shows some contradictory results about the relationship between happiness — which is often defined as “job satisfaction” — and productivity,” according to researchers André Spicer, professor of Organizational Behavior at Cass Business School in London and Carl Cederström professor of Organization Theory at Stockholm University.

“One study on British supermarkets even suggests there might be a negative correlation between job satisfaction and corporate productivity,” they note. The more miserable the employees were, the better the profits, they note.

But it also is fair to point out that the direct relationship between performances and positive attitudes has not been proved, at least not yet. 

The belief that happy workers “must be” more productive workers is widespread. Most of us instinctively wish to believe it. The correlation might generally exist (though the causal relationship remains arguably unproved). 

Correlations might be enough, though, in the sense that people act as if the statement were true, regardless of fact.  

Most of us act as though “broadband causes economic growth.” Correlations obviously exist. But nobody yet has been able to prove causation, as there always are other explanations. 

Places with high economic growth tend to produce wealthier and better-paid employees, who are in position to pay for better broadband. Places with high employment of knowledge or information workers likewise might also be places where demand for faster broadband is highest, both for reasons of “we can afford it” as well as “we prefer and want it.” Higher income is always correlated with higher demand for quality broadband. 

Such places also tend to be populated by people with advanced college degrees, and that also correlates with demand for more-costly or faster broadband. Places with more younger people have higher broadband demand than places populated with older people. 

Demand for better or more-costly broadband also correlates with workforce status. Retired people tend not to have as much demand for the “fastest” services, which also are the most costly. People still at work have higher levels of demand. 

We might generally prefer that employees be happy, for all sorts of reasons. Whether they also are more productive for that fact is what is harder to prove, especially since there is no unquestioned way to measure “happiness” directly. What we actually can measure are proxies for “happiness.” 

And we might even have that wrong. The point is that we actually cannot “prove” that happier workers are more productive. In extreme cases, the “happiest” employees might be those who are paid generously, yet produce questionable results, and are not expected to do so. 

Few of us would question the likely negative impact of unhappy workers at any workplace. But it is also possible to argue that removing the sources of unhappiness has value. 

That arguably is a different process from fostering higher productivity. Low pay might make you unhappy. But high pay might not produce long-term happiness or productivity. Unsafe work conditions might make you leave a job. That does not mean making the workplace safe necessarily increases one’s productivity. 

Think of “unhappiness” and “happiness” as being on two separate scales, not one. The task is remove sources of unhappiness and low productivity on one scale, and hopefully increase happiness or productivity on the other scale. 

Industrial psychologist Frederick Herzberg is known among organization theorists for his motivation-hygiene theory of satisfaction and dissatisfaction. Put simply, the opposite of satisfaction is no satisfaction.

The opposite of dissatisfaction is no dissatisfaction. Satisfaction and dissatisfaction are in separate dimensions.

Is More Facilities-Based Competition Coming for Australia NBN?

National telecom infrastructure policy in big countries is an example of turning a huge ship in a new direction: it takes time. Consider Australia’s NBN. Over the last decade the national broadband network--designed as a single wholesale network--has faced acrimony, slower than expected build rates and potential policy reversals. 

Only now there are moves toward facilities-based competition that tend to raise the question of whether the plan to build a wholesale network was the right choice. 

On the face of it, the NBN’s new plan to lower prices for business customer connections in suburban areas is a simple reflection of growing competition from facilities-based firms. 

The move likely is a response to growing facilities-based competition, from municipal broadband to 5G offers from Telstra. After a seemingly endless struggle to get the NBN designed, funded and built, at least some officials believe facilities-based competition should be reintroduced.

Traditionally, wholesale facilities have made sense where there is no easy way to enable rival physical networks, for whatever reason. Under such circumstances, regulators often have opted for one physical network that sells wholesale service to any telecom services retailer. 

The stated advantages include lower overall capital investment and possibly faster time to deployment. The downside, some of us would note, is a loss of innovation and differentiation possible when different facilities-based networks compete with each other. 

Perhaps the best examples so far are the role of cable operators in the broadband business. In the U.S. market, for example, cable operators have 70 percent of the installed base and get virtually all the new net additions in the fixed network broadband business, and have done so for years.

 Possibly the next examples are entry by mobile operators, in the 5G era, into the home broadband business, using fixed wireless for higher-bandwidth use cases but even standard 5G for many users. 

In 2019, about 19 percent of customers were mobile-only for internet access, for example, according to the Australian Communications and Media Authority. That percentage is expected, in some quarters, to increase over time as 5G and following mobile networks increasingly are able to supply bandwidth enough to substitute for a fixed connection in a growing number of use cases. 

source: ACMA 

  

As part of the new plan, NBN says it will invest up to $700 million to create up to 240 NBN Business Fiber Zones across Australia, in 85 regional areas. The effort includes financial incentives for its retail partners, in the form of waiving the typical charges to build out an access lateral.

NBN says that all businesses within these zones will have access to Enterprise Ethernet, at significantly reduced wholesale prices. In total, these zones are expected to cover more than 700,000 businesses, NBN says. 

Businesses in Business Fiber Zones also will see Enterprise Ethernet pricing reduced, some by up to 67 percent. 

Enterprise Ethernet is NBN’s fastest symmetrical wholesale product and premium-grade business offering. It has options for prioritised traffic, high capacity and symmetrical upload and download wholesale speeds from 10Mbps to close to 1Gbps.

NBN also says that when an internet retailer places an order for Enterprise Ethernet, for an estimated 90 per cent of business premises in the national NBN network footprint, NBN will not charge the retailer for building the connection to the customer, it seems.

If an internet retailer signs up for a three-year Enterprise Ethernet plan, NBN will not charge the retailer an up-front connection cost.

Change or Die? The Advice You Always Hear

At a recent session of the PTC Academy, APTelecom President Sean Bergin starkly contrasted the choices connectivity providers (telcos and others) now face. As demand for traditional connectivity services continues to decline, service providers face two basic choices: stick to the core business or create a new business. 

The former strategy includes options such as reducing operating costs, perhaps making acquisitions to gain scale or taking other steps that lower costs to match declining revenues, thereby sustaining profit margins. 

The latter strategy, admittedly riskier, requires creation of new products beyond the current offerings, and almost always involves some degree of movement into different parts of the ecosystem or value chain.  Think of the former as “role” (connectivity, device, application). Think of the latter as “function” (semiconductors, devices, connectivity, platform, app, business model) within any single role. 

As a practical matter, not every firm in the connectivity business can actually “change roles or functions.”  Doing so requires new competencies, capital, different supply chains and often different sales channels as well. 

source: IP Carrier

Of course, telcos are not the first firms ever to confront operating in a declining or changing business. There are some strategies that make sense, if they are not pleasing or even easy. 

Sometimes firms must withdraw from parts of the market where they are not the present market share leaders and are  unlikely to be leaders. They can reduce costs and find other ways to be more efficient about core business processes. They can try to sell greater volumes or complementary products to customers, or acquire rivals to increase scale, which offers a chance to reduce costs. Sometimes, expansion beyond the current service boundaries is possible. 

source: Julius Bailey

Sometimes a firm can focus on a still-growing part of the portfolio, but only when growing segments are available. Beyond that, specialization in a more-defined portion of the present business might be possible. 

source: Julius Bailey

Looking at some of the business or consumer opportunities one often hears suggested, you can see immediately that nearly all the proposed opportunities require moving outside the core connectivity competence. Even some of the “core competency” opportunities, such as over the top messaging or voice, have proven quite problematic.

source: A. Saghaeian

To be sure, telcos have shifted voice operations from analog to digital, using VoIP to support their remaining voice operations. But has that boosted revenues? In virtually all cases, the answer is no. Text messaging, at the same time, has continued to generate less revenue. every year, as customers choose messaging alternatives.

Two decades ago, one frequently heard advice to “partner with OTT providers.” What the means always requires some explanation, but the advice was to partner with the likes of Skype and others as a way of either entering the VoIP market or at least trying to protect some voice revenues. 

You can judge for yourself whether that has worked. On a global basis, service revenues from fixed voice services are expected to decline at a compound annual growth rate of -5.64 percent between 2018 and 2023, with service provider revenue dropping from $142 billion in 2018 to $106 billion in 2023, according to Omdia.

Globally, fixed voice subscriptions will fall from 931 million in 2018 to 821 million in 2023, a CAGR of -2.49 percent, driven by fixed-to-mobile substitution.

The big problem is not only that OTT providers take so much of the growth, or that they take so much revenue from mobile or fixed service providers. Rather, the big problem is that OTT messaging and voice essentially destroys the service provider markets for voice and messaging. 

Text messaging revenue could decline 40 percent over the next three or four years in the European and Middle East markets, many executives predict. About 84 percent of respondents to a Telco 2.0 survey thought the main reason for such declines was the expected price reductions mobile service providers would adopt to compete with OTT services and apps.

The point is that survival, for many firms, might well hinge on essentially “getting into a new line of business or getting out of the business.” That is one reason why connectivity provider consolidation is expected to be massive. 

Either major choice--sticking with the core competency and current services or moving elsewhere--carries great risk. In the former case, your business continues to shrink and you eventually exit the market, through sale or death. In the latter case you run a great risk of failing and likewise exiting the market, through bankruptcy or sale. 

But only one of those paths normally leads to sustainability, and that is the “up the stack” or “across the ecosystem” strategy.

Latest FTTH Stats from A.D. Little

As a rule, the countries with the highest fiber to home levels tend to be small city-states or  smaller countries. But among the top-10 globally are several medium-sized countries as well, A.D. Little reports. 

source: A.D. Little 

As always, there is a difference between making a product available and propensity to buy. Take rates may hinge on competition in each market, government support and regulatory framework. Faster deployment arguably is possible with wholesale models where all retail internet service providers use one physical network.

source: A.D. Little

The choice of physical media, measured here, is important, but an incomplete indicator of bandwidth. There was a time when FTTH meant 10 Mbps speeds. These days, speeds can be almost arbitrarily high. 

Nvidia GPU Performance Increasing Faster than Moore's Law

Graphics processing unit improvement seems to be occurring faster than Moore’s Law would predict. Nvidia’s GPUs today are 25 times faster than five years ago. If they were advancing according to Moore’s Law,  they would have increased their speed only by a factor of 10, says Nvidia CEO Jensen Huang.

Between November 2012 and May 2020, Nvidia’s chip performance increased 317 times for a major class of AI computing, says Bill Dally, chief scientist and senior vice president of research at Nvidia. On average, the performance of these chips has more than doubled each year.

How AI Can be Applied by a Connectivity Provider

Artificial intelligence is a capability, not a product. 

“You don’t focus on ‘I’m going to go do AI,’ says Peter Guerra, North America chief data scientist at Accenture. “You focus on ‘I’m going to do supply chain better, and I’m going to leverage AI to do that.’” Peter Guerra, North America chief data scientist at Accenture.

In the connectivity business, potential applications include network operations monitoring and management, predictive maintenance, fraud mitigation, cybersecurity, customer service, marketing virtual digital assistants, customer relationship management preventive maintenance and battery optimization, for example. 

In the network operations monitoring area, that might include anomaly detection for operations, administration, maintenance and provisioning (OAM&P), performance watching and optimization, alert or alarm suppression, bother price ticket action recommendations, automated resolution of bother tickets, prediction of network faults or congestion prediction, for example.

What Does Your Business Look Like if the Key Constraint is Removed? You Get Microsoft, Netflix, Google, Facebook, Amazon

What does your business look like if the key constraint is removed? It is a question so challenging--and often so seemingly impossible--that most of us never ask it. As a much younger profit center manager, I was once asked “what would it take to destroy our competition.” Truth is, I had no immediate answer. 

There was a most-likely answer. But I also knew that one thing would “never happen,” as the stakeholders who could authorize the change were--and remained--steadfastly unshakeable in supporting our only competitor. 

But young Bill Gates, before Microsoft was a household name--in fact when the company name actually was Micro-Soft, and was based in Albuquerque, N.M.-- did ask the question. So did Reed Hastings, founder of Netflix. 

If you are a user of computing or communications, what is your behavior if both are nearly free? 

If you are a supplier of computing or communications, what are the implications for your business? What business are you in, and what business should you be in?

Those remain the key strategic questions for connectivity providers.

“The original insight for Microsoft was this: What if computing was free? ” Bill Gates, former Microsoft CEO and chairman, once said. He has said similar things several times, more recently about price trends in communications. 

In 2004, then Microsoft Chairman Bill Gates argued that "ten years out, in terms of actual hardware costs, you can almost think of hardware as being free--I'm not saying it will be absolutely free--but in terms of the power of the servers, the power of the network will not be a limiting factor," Gates said. 

About a decade before, in 1994, Gates mused that  “we’ll have infinite bandwidth in a decade’s time.” In 1995, Gates said “And for this new era, communications is what’s becoming cheap.  So you get to thinking, well, what if communications was free, what could people do?” 

My own analysis is that Gates believed in Moore’s Law and its impact. That analysis would lead you to believe that computing costs would in fact decline substantially, every 18 months, upending assumptions about the use of computing.

Reed Hastings was very clear about the application of Moore’s Law to the foundation of Netflix. At a time when dial-up modems were running at 56 kbps, Hastings extrapolated from Moore's Law to understand where bandwidth would be in the future, not where it was “right now.”

“We took out our spreadsheets and we figured we’d get 14 megabits per second to the home by 2012, which turns out is about what we will get,”  Reed Hastings, Netflix CEO, said.  “If you drag it out to 2021, we will all have a gigabit to the home." So far, internet access speeds have increased at just about those rates.

So as crazy as it might seem, what Moore’s Law has enabled, in computing, communications, applications, hardware and business opportunities, is precisely a clear understanding of what is possible if the key constraint in any business is removed. 

Near zero pricing is the term I use to describe the larger framework of connectivity provider pressures towards ever-lower prices. Others might prefer to emphasize marginal cost pricing. The point is that there is a reason the phrase dumb pipe exists. What we need to remember is that dumb pipe now is the foundation of the whole connectivity business. 

A caveat is that what people usually mean by “dumb pipe” is that a product is sold at low prices and generates low profit margins. But think about it: industry revenue growth now is lead by broadband services (internet access), which is, by definition, a dumb pipe service. It is a way to get access to applications, not an actual application itself. 

You might call that trend another example of the impact of Moore's Law on business and economics. And near zero pricing is a big industry issue. It might be the single-biggest issue. 

In a recent survey by Telecoms.com, the number-one threat to long-term business success was “increased pressure to lower prices” and “lower profit margins,” for example. 

source: Telecoms.com 

Agility or “speed” was also a major concern. Third on the list was competition from webscale firms including Google, Amazon or Microsoft. 

But there are good reasons why “lower prices” and “lower profit margins” are the top issues. Simply, they are the most-important result of other industry threats causing the price compression and lower profit margins: competition, the shift to internet protocol as the next-generation platform and the embedding of the whole connectivity function within the larger internet ecosystem.

Aside from deregulation of the telecom industry, which lead to competition and price competition, technology is among the root causes of price pressures. Near zero pricing is a scary thought for a connectivity provider, but it is reality.