The Productivity Puzzle: Why AI Isn’t Enough

Generative AI is positioned as the next engine of productivity growth. Yet the revolution is not showing up in the numbers. 

Economists call this the initial productivity paradox: new technologies appear everywhere, except in the productivity statistics. In the early stages, the expected gains simply fail to materialise. With generative AI, that pattern seems to repeat itself. 

Why productivity growth matters 

Professor Frederik Anseel, Dean of the UNSW Business School, underlined in recent interviews that productivity growth determines how societies thrive. It shapes how much we can invest in education, healthcare and infrastructure, and whether each generation lives better than the previous one. 

He also makes a crucial distinction:

• Productivity describes how much output we create for any given input.
• Productivity growth is about increasing that output over time. And it is that growth which ultimately determines living standards.

Why AI hasn’t moved the needle (yet) 

For now, most AI-driven gains stay at the individual level. People use AI to do the same tasks slightly faster, not differently. 

“The real productivity leap happens when organisations rethink their processes entirely.” 
Frederik Anseel 

True productivity growth is not about working harder, but about organising smarter. That requires rethinking workflows, roles, structures and collaboration patterns. 

Techwatcher Peter Hinssen made a similar point in the latest Radar podcast by nexxworks. He referred to an MIT study of August showing that 95 percent of organisations experimenting with generative AI see little or no productivity gain. 

Many organisations hand out Copilot licences to their people, hoping AI will miraculously boost productivity. Hinssen warns that, unless organisations change the way they work, AI risks producing work slop: impressive looking output without meaningful value. 

“Work slop is endless AI generated garbage clogging our feeds and inboxes.” 
Peter Hinssen 

He even calls work slop his “word of the year” because it sums up the issue so well. 

Where leadership and HR come in 

Because AI’s impact is ultimately about human behaviour, it is at its core a strategic and largely HR story.

At the HRPro Conference 2025, David D’Souza, Director of Profession at CIPD, captured the challenge for the HR field as organisations face that shift: 

“The question is whether HR wants to lead that change or be shaped by it.” 
David D’Souza 

As Professor Anseel highlights, how we manage and lead organisations directly shapes productivity growth. That applies to both organisational redesign and day-to-day people management.  

Clear goals, honest feedback, focus and flexibility matter as much as technology. 

Start with evidence, not with tools 

Evidence-based management is essential, as D’Souza emphasised. Start with the challenges and outcomes that matter. 

Many organisations now rush into AI because “we should be doing something with AI”. But when the underlying problem or desired outcome is unclear, tools remain just tools. 

Learn from multiple sources of evidence, test ideas and adjust.

And stay critical. Organisations need to separate signal from noise and avoid creating their own version of work slop.

The real opportunity for HR 

AI won’t deliver productivity growth on its own. Its impact depends on how organisations use it. 

For HR, the opportunity is to reshape work at system level, so people, processes and technology reinforce each other. 

And the narrative matters. AI shouldn’t be framed only as an efficiency play, but also as a way to augment human capabilities. That shift in story is part of the leadership work ahead.

Do that well, and we strengthen both performance and wellbeing. 

Sources

UNSW Business School – The Business of Productivity podcast 
Smarter not harder: How AI is Changing the Way We Work (featuring Frederik Anseel) 
Listen on UNSW Business School 

nexxworks – Radar podcast 
Work Slop, DeepSeek & the Humanoid Loyalty Crisis (featuring Peter Hinssen) 
Listen on nexxworks 

HRPro – Conference 2025 report 
The Future of HR: Humble, Confident, and Ready to Learn (featuring David D’Souza) 
Read the summary by HRPro 

MIT Media Lab – State of AI in Business 2025 report 

Preliminary Findings from AI Implementation Research from Project NANDA  
Read the report