Productivity reimagined

(68 pages)

At a glance:

1. The power of the few has a message for all
   In a sample of 16,200 German companies, 29 companies—or just 0.2 percent—accounted for 47 percent of total productivity growth in the group analyzed from 2019 to 2023. The fault line does not run between industries. What distinguishes these champions is their willingness to make bold strategic decisions.
2. The ground rules have changed, but bold action remains the exception
   Geopolitical turmoil, shifts in lead markets China and the United States, accelerated capital flows, and AI as the new pivotal market force: the strategic plays that worked in the past are no longer sufficient. Those who merely optimize what already exists are structurally losing ground. And yet our data shows that taking disruptive and transformational action is still the exception, not the rule. German companies today generate just 6 percent of their revenues in new growth arenas—less than a third the percentage of Chinese companies.
3. A new playbook lays out ways to drive productivity growth
   Proven strategic plays are no longer enough. The new playbook comprises four strategic levers that lift companies to a new level of productivity: renew the portfolio, accelerate innovation, reimagine scaling, and treat AI as the new operating system. Add to this the human factor as an overarching prerequisite. Every company that sets these levers in motion creates growth that extends far beyond the company itself.
4. Among decision-makers, the transformation has begun—but it has yet to reach corporate culture and performance
   Some 65 percent of C-level executives surveyed see an acute need for disruptive change. Nearly half are beginning to scale AI from pilots across the entire enterprise. Yet, while three-quarters report productivity progress, our analysis of 16,200 companies shows that across the breadth of the German economy, productivity barely increased during the period analyzed. C-suite executives see the greatest obstacles in corporate culture and the regulatory environment—tied at the top with 29 percent each.
5. Entrepreneurial courage needs the right framework
   Growth-oriented regulation, a flexible labor market, and competitive energy costs are not nice-to-haves—they are fundamentals for productivity growth. Germany has considerable ground to make up on all three fronts compared with other countries. At the same time, companies can act without waiting for these external factors to improve. The room to maneuver is greater than the current debate may suggest.