Service Productivity Paradox

Services face persistent productivity challenges compared to manufacturing:

- Difficulty in standardization and automation - Quality often requires human interaction - Measurement challenges—how to quantify consultant advice or teacher impact? - Baumol's cost disease—as wages rise, service costs increase without corresponding productivity gains

Yet technology offers potential solutions: - AI automating routine service tasks - Platforms enabling efficient matching - Remote delivery expanding market reach - Data analytics optimizing service delivery