Productivity: The Untapped Capacity Most Organisations Overlook
Diana Bevington
Productivity has returned to the centre of Australia’s economic and business conversation. I read with interest The Australian’s reporting of the 2026 CEO Survey, which again surfaced a clear and consistent concern from business leaders across sectors. Weak productivity is widely seen as a structural problem that is constraining growth, competitiveness and living standards.
Across the survey, leaders stress that future capital allocation will be disciplined and targeted, with investment flowing only where it clearly lifts productivity, rather than in response to short-lived incentives or macro signals. Skills, technology adoption, regulatory reform and faster approvals are rightly identified as foundational conditions for sustainable, long-term productivity improvement.
This framing is accurate, but incomplete. It underplays a significant source of untapped productivity that sits inside organisations themselves, in how work is actually executed day to day.
Why traditional levers are no longer enough
Australia’s productivity growth has flattened, and recent efforts have delivered diminishing returns, even where macroeconomic policy settings have been broadly supportive. Tax reform, infrastructure spend and education investment remain necessary, but they are no longer sufficient to unlock the deep operational inefficiencies that now act as binding constraints.
Many organisations have also exhausted the obvious internal levers. Cost-cutting rounds, incremental restructures and isolated technology deployments have typically delivered modest, short-term gains at best. In some cases, they have introduced new complexity, pushed unresolved work into other parts of the business, or increased compliance load without a commensurate improvement in output or service quality.
A further challenge is the time lag between recognising a productivity issue and implementing an effective solution. Strategic reviews, operating model redesigns and large systems programs are slow to execute, and benefits often arrive later, and smaller, than anticipated. In the interim, underlying inefficiencies continue to erode value, absorb leadership bandwidth and contribute to staff fatigue.
The hidden burden of “Noise” in organisational work
The real problem often lies deeper than policy settings or high-level design. A major, frequently overlooked contributor to low productivity is what we refer to as “Noise”: the non-value adding work that permeates organisational processes. Noise comprises the rework, handoffs, checks, manual reconciliations, workarounds and exception handling that keep operations moving, but do not create value for customers, shareholders or stakeholders.
This inefficiency is not marginal. It has become structurally embedded, often normalised as part of “how things are done around here”. It consumes scarce resources, reduces effective capacity, and undermines both staff satisfaction and the reliability of service and risk outcomes. Because Noise tends to sit below the line of formal reporting, it is rarely visible in standard performance dashboards or management information packs.
How much productivity is being left on the table
Empirical research on 268 Lean Management interventions, incorporating the XeP3 methodology, shows that these inefficiencies are hiding in plain sight across virtually all sectors. Across this data set, non‑value‑adding activity accounts for an average of around 38% of work in most organisations. That equates to nearly two days per person per week spent on activity that does not add value, or roughly 96 days or 3.2 months per year of unproductive effort per employee.
The median level of Noise observed by industry varies from approximately 28% to 50% of total activity. This pattern has been documented in finance, government, healthcare, logistics, manufacturing and a broad range of service environments. In each case, the operational burden is material enough to affect economic performance, process reliability, service levels and employee wellbeing.
For CEOs, the implication is straightforward. If even a portion of this wasted effort can be identified and removed, the effective capacity released is substantial. It means more of the existing workforce’s time is directed to growth, innovation, customer service and risk management, rather than to internal friction.
Why technology alone has not solved the problem
The CEO Survey reflects broad agreement that technology, particularly artificial intelligence, is a key accelerator of productivity. At the same time, many leaders report a gap between ambition and realised value. Investments in digitisation, data platforms and AI are often slower to pay back than planned or deliver narrower benefits than promised.
Our work and the supporting research show one central reason: digitisation often automates waste. When a process is burdened by rework loops, unclear handoffs, duplicate data management, manual exception handling and ambiguous accountability, new systems tend to codify these behaviours. The result is “faster bad”: a higher volume of low‑value activity, now more tightly embedded in workflows and supported by new overhead in change, training and governance.
We also see technology chosen as the default response to operational issues, without a clear, data‑led view of whether a system change is the right intervention. This reflects a gap in the business intelligence available to leadership teams about the drivers of poor performance and the reality of how workflows across functions. In effect, organisations are investing in optimisation before they have properly diagnosed the problem.
Productivity is being constrained from the inside out
The research underpinning XeP3 and the peer‑reviewed work with Professor Danny Samson (Chair in Management, The University of Melbourne) indicates that a significant share of productivity loss sits inside organisations themselves, embedded in process design, role definition and day‑to‑day behaviours. Across sectors, the same patterns recur:
Hidden operational inefficiency that absorbs time and effort without producing value.
Rework, unnecessary handoffs and unmanaged exceptions that lengthen cycle times and obscure accountability.
Workarounds and shadow tools, including spreadsheets and parallel systems, that compensate for gaps in core processes.
Duplicated effort where multiple teams touch the same information or task, without clarity on ownership.
These activities consume management attention and workforce capacity, often with limited visibility at board or executive level. When organisations digitise or deploy AI on top of this environment, they frequently see:
Automation of waste, rather than removal of its underlying causes.
Increased exception handling and escalation volumes, as more items move through flawed workflows at higher speed.
Higher compliance and operating costs, as additional controls and checks are added to compensate for process weaknesses.
Rising change fatigue, as staff are asked to adapt to new tools without seeing commensurate improvement in their day‑to‑day experience.
This is not a failure of leadership intent. It is a systems problem that requires a systems‑level response grounded in evidence rather than assumption.
Freeing up existing capability without relying on headcount reduction
One of the consistent findings across the 268 interventions examined in Samson’s research is that, once Noise is properly identified, a substantial portion of it can be removed. Our experience with XeP3 shows that it is often possible to reduce Noise by up to 50%, depending on context and implementation scope.
The core issue in many organisations is not the absolute level of headcount or effort, but how people’s time and skills are consumed. When non‑value‑adding activity is reduced, existing capability is freed up for higher‑value work without needing to rely on workforce policy changes or broad-based reductions.
XeP3 supports this shift by:
Removing non‑value‑adding work at its source, rather than shifting it between teams.
Realigning roles so that staff spend more time using their skills on value‑creating activities, rather than administrative friction.
Providing management with clear visibility of where capacity is being released, so it can be redeployed to strategic priorities.
This approach positions productivity improvement as an opportunity to increase impact and job quality, rather than as a threat linked primarily to cost-out initiatives.
From temporary fixes to structural removal of inefficiency
Many productivity programs struggle with sustainability. Initial improvements are eroded over time as workarounds re‑emerge, priorities shift or staff turnover undermines consistency. A key design principle in XeP3 is to move from temporary suppression of issues to structural removal of their causes.
This is achieved by:
Facilitating targeted process redesign where the data show clear concentrations of Noise and constraint.
Embedding appropriate behavioural changes, including clearer role definitions, decision rights and handoffs supported by agreed standards.
Using behavioural change indicators to measure adherence to new ways of working at the level where activity occurs.
By linking each change to specific roles and tasks, and then measuring whether those changes are consistently executed, organisations can lock in improvements rather than relying on one‑off campaigns or generic training. This also creates a more reliable foundation for subsequent technology investments, which can then be targeted at streamlined, stable processes.
Building internal capability, not dependency
A recurrent theme from CEOs is the desire to build internal capability rather than ongoing dependence on external advisors. XeP3 has been designed with this expectation in mind.
The approach:
Equips internal staff with the tools and methods to capture workflow, diagnose Noise and participate directly in solution design.
Uses targeted training and guided workshops to build process literacy and analytical capability within existing teams.
Enables organisations to repeat and extend the methodology over time, applying it to new processes, business units or jurisdictions without requiring a permanent external presence.
In effect, XeP3 provides both the microscope and the operating discipline for ongoing productivity improvement, while keeping ownership of insight and change within the organisation. This aligns with what many CEOs describe as a preference for evidence‑based, practical tools that strengthen their own teams’ capability to manage complexity.
Evidence from large-scale, peer‑reviewed research
It is important that any claims about productivity improvement are supported by robust evidence. The XeP3 methodology has been the subject of extensive empirical analysis by Professor Danny Samson and colleagues, culminating in the peer‑reviewed article “Solving the paradox of Lean Management’s low success rate” in the Australian Journal of Management.
Across 268 projects using this approach:
198, or approximately 74%, implemented the recommended changes.
Every implementing site reported measurable process improvements and a reduction in Noise.
110 projects, around 56%, realised tangible financial benefits through increased revenue or cost reduction.
98 projects, about 49%, reduced lead times.
These results span 17 sectors and a mix of Australian and international organisations, although the majority of deployments were domestic. They demonstrate that substantial Noise is present across diverse contexts, and that a structured, sociotechnical approach can deliver repeatable gains in capacity, financial performance and service reliability.
What this means for CEOs considering their next steps
Taken together, the CEO Survey findings and the XeP3 research point to a clear conclusion. Australia’s productivity challenge is real and structural, but there is probably more scope for improvement within your organisation than you have assumed. A significant portion of that opportunity sits in the removal of Noise: the non‑value‑adding work that diverts time, dilutes focus and slows execution.
For leaders, the practical implications include:
Treating operational Noise as a first‑order strategic issue, not simply a local efficiency problem.
Insisting on data‑driven visibility of how work is actually performed across functions, before committing to major systems investments.
Directing technology and AI spend towards processes that have been simplified and stabilised, so that automation amplifies value rather than waste.
Prioritising approaches that build internal capability to diagnose and remove inefficiency on an ongoing basis.
The good news is that systems can be redesigned, and that practical, evidence‑based methods now exist to do so at pace and with measurable outcomes. The organisations that act on this will not only improve their own performance. They will also contribute meaningfully to lifting Australia’s productivity trajectory from the inside out.