From Production Economy to Service Economy: At What Cost?

Immediately after the Second World War, 8% of the gross domestic product of the USA came from agriculture, 33% from production and 59% from services. By 2019, the distribution was: agriculture 1%, production 20%, services 79%. The same figures were 2%, 26%, 72% in the European Union. In Turkey, the distribution was 7% agriculture, 32% production and 61% services.

The world is creating a giant service sector, under the leadership of the USA.

Of course, we have not completely shunned production. On the contrary, we produce more and more every day, with techniques that were unimaginable a short time ago, with extraordinary efficiency and speed. But do we use our knowledge and skills to manufacture and sell the right products? Why are three-quarters of the plazas full of unhappy white-collar workers while we are producing better goods at ever lower costs? Perhaps the answer lies in the story of the rapid shift from production to services.

We need to understand this transformation in terms of employees.

It all started with the increase in population. More hands, more minds, more interactions produced more knowledgeable and more skilled experts. Manufacturing techniques developed at an incredible speed.

The manufactured goods had to be sold. More production meant more sales. In the years after the Second World War, this was possible in a world trying to recover and accelerate.

However, the situation started to change after the 1970s. As production skills continued to improve rapidly, it became increasingly difficult to sell. “Sell more, offer a better experience, get closer to the consumer" slogans enlarged sales and marketing teams. New teams were born such as corporate communication and customer service.

While it was getting harder to sell, the competition heated up. As competition intensified, even more specialization was required. More specialization meant further complexity of business relationships. Purchasing teams and legal teams grew to be able to manage relationships with many business partners.

As the teams continue to grow and business relationships continue to get more complex, new teams that will support these teams have started to emerge. Human resources took off the personnel administration hat and put on the resource management hat. Their role expanded. Legal teams continued to grow. As companies grew more crowded, internal communication teams were born. Meanwhile, finance teams naturally continued growing to control increasing expenses.

As it became easier to produce, but harder to sell, companies grew fatter.

The fattening of companies could not continue at this pace. Since the early 2000s, the business world has tried to hide an unpleasant truth with concepts such as staff optimization, productivity work, and organizational lean. The reality was: a disillusioned white-collar workforce alienated from his job by excessive specialization, staff feeling lost in an organizational whirlpool, fewer managerial positions available, and new graduates constantly added to the workforce.

In order to keep the organization happy and motivated, an endless variety of “well-being” programs, corporate culture programs, change-transformation programs are designed. We are madly trying to get results without touching the actual causes of the problem.

We experience the madness of getting results without touching the causes that cause the problem.

We produce more and sell more. Our knowledge is more in every field. We say productive people are happy people. But this is not true. Could the real problem be about what we are trying to produce and sell?

While the world is warming rapidly, the brightest minds are not working to create clean energy sources. While rapidly decreasing water brings a food problem to our door step-by-step, we are looking for ways to produce and sell products that resemble a chemical mixture rather than food.

While with hybrid seeds the underdeveloped countries come under the command of very developed countries technology companies, we deny that the global socioeconomic imbalance makes economic growth more and more difficult.

Although we know that the vast majority of plants in the Amazon forests have not yet been included in any medical research, we do not take the initiatives to allow this.

The brightest young people can choose game design companies in Silicon Valley, hoping to retire at the age of 35, rather than enter the publishing industry to spread the knowledge of humanity.

The financial system has gradually disconnected from production. A substantial part of the existing money is spinning in a separate and closed world. Increasingly complex financial products live and thrive in a separate world to be used in speculation by other financiers rather than funding production.

The Minotaur can only be eliminated if questioned.

The transition from the production economy to the service economy is like recreating the Minotaur (1). Organizations that are constantly trying to grow, the struggle to cover one deficit with another deficit and with more white-collar service employees, and the effort to keep unhappy office workers with motivation programs that have extremely short-lived effects, actually point out that the system is unsustainable. It is not easy to explain the determination to sustain a system that is impossible to sustain. Perhaps by questioning this, we can all become a Theseus (2).

It will never be easier to sell a new TV to a home, where each room already has a television, to replace a four-bladed razor with a five-bladed one, to sell the seventh pair of sneakers to a youngster who already has six, to sell an extra box of detergent to the lady of the house no matter how much she wants to consume. Moreover, this will get even more difficult with increasingly complex corporate hierarchies and office politics, where everyone must take on a role whether they want to or not.

There is a better way.

In fact, there is a better way. There are new horizons waiting to be discovered in many new areas that we have overlooked up to today, perhaps not prestigious enough, and underestimated. Sustainable agriculture, clean energy, preventive medicine, homeopathy, social research, publishing are the first things coming immediately to mind. Moreover, the extent to which we grow in these areas is all about how willing we are. Companies that open up to these horizons will not spend their time and skill for managing an unsustainable organization that harms itself and makes employees unhappy but will spend on creating the new.

It is our responsibility to create a better future for all of us.

(1) The beast that is told to live in Crete in mythology and feeds on humans

(2) Mythological king who killed the Minotaur and initiated a great cultural transformation