PFS-04 - Organizational Friction and the Process Redesign Gap

PFS-04 - Organizational Friction and the Process Redesign GapOrganizational friction—the cumulative managerial, procedural, and systems constraints that prevent firms from converting technological inputs into measurable productivity outcomes—has emerged as a central bottleneck in the U.S. productivity agenda. While frontier technologies and capital availability are expanding, diffusion remains constrained by legacy workflows, siloed decision rights, managerial capability gaps, and misaligned incentive structures.This paper develops a structural account of the process redesign gap, mapping the reinforcing mechanisms through which organizational inertia suppresses technology adoption and limits return on investment. It identifies four recurring failure modes—patchwork integration, pilot graveyards, metric myopia, and labor lock—and proposes an integrated public–private playbook for large-scale redesign diffusion.The study advances a national capability framework centered on Process Labs, conditional scaling grants, managerial credential acceleration, incentive realignment mechanisms, and interoperable data standards. By targeting redesign capacity directly, rather than technology acquisition alone, the paper argues that substantial productivity gains can be unlocked across firms of all sizes, particularly small and medium enterprises. Organizational redesign is treated as a quasi-public good with strong spillover effects, critical to restoring durable productivity growth between 2025 and 2035.