Deloitte Center for the Edge has published its "Shift Index" for different industries and found that Silicon Valley and other tech companies have been unable to adapt to the digital infrastructure they have helped create.

Despite Silicon Valley and the tech industry having the highest labor productivity gains, this sector's return on assets (ROA) has fallen from 9.8% to 6% over the past 40 years.

Return on assets is a measure of how efficient management is in using assets to create earnings.

Deloitte says that the decline in ROA is "alarming." Only heavily regulated industries improved their ROA.

- Tier 1: Extreme corporate performance pressure. These industries are experiencing both increases in competitive intensity and declines in asset profitability. Industries in this category are technology, telecommunications, media and automotive.

- Tier 2: Feeling early effects but not yet experiencing full performance pressures.
These industries are also suffering a decline in ROA while facing a high, but steady level of competitive intensity. Banking, retail, consumer products and insurance are among the industries that are in this category, with banking at the highest risk to move into the first tier in the near future.

- Tier 3: Bucking the trend in asset profitability erosion -- for now. Healthcare and aerospace and defense are the only industries that have improved their ROA. This can be largely attributed to limited competition reinforced by public policy, especially in the form of regulation that limits entry and movement by competitors within the industry.

"Executives understandably believe that productivity drives higher returns, but that assumption appears flawed," said John Hagel, co-chairman of Deloitte's Center for the Edge. "Looking across industries, there doesn't seem to be any relationship between productivity improvement and increased asset profitability. Companies focus on automation and scale economics to squeeze continuing improvements in labor productivity, but these efforts yield diminishing returns over time. In part, this is because the cost savings are passed through to customers as competition intensifies. Given this performance paradox, firms need to re-evaluate how they create and retain value."

Deliotte said it found that 75% of the workforce is not passionate about their work. This impedes value creation.

Here are the most troubled "Tier 1" industries and Deloitte's analysis:

- Technology: The industry creating much of the nation's digital infrastructure has not yet made the leap from product innovation to institutional innovation. The ROA has declined by nearly 70 percent despite the highest gains in labor productivity in the U.S. This is due to a level of competitive intensity that has magnified almost four-fold since 1965 and is 30 percent greater than the rest of the economy. Despite Silicon Valley's reputation for entrepreneurial leadership, this sector has a surprisingly low level of employee passion.

- Telecommunications: While labor productivity in the telecommunications sector has risen sharply, ROA has plummeted by more than 30 percent. This sector has been profoundly affected by the rapid increase in technology-driven, intermodal competition, which has had a far greater impact on creating a competitive marketplace than the regulatory actions over the past two decades. While the Telecom Act of 1996 laid the groundwork for today's market-based competitive environment, financial returns in the telecom sector have continued to decline since the removal of previously regulated rate-of-return on assets.

- Media: The only sector in tier one that has experienced a negative ROA, dropping from 7 percent to negative 4.4 percent, despite gains in labor productivity. This industry has seen competitive intensity double in the last 40 years, with the rise of the Internet as the most powerful driver of this disruption. Traditional media companies have struggled with the combination of being regulated while contending against unregulated competitors, newly powerful consumers and a range of online substitutes for traditional media and entertainment products.

- Automotive: Competitive intensity has been largely driven by global competition in the light vehicle subsector and resulted in lower asset profitability, as domestic firms have been unable to quickly adjust their production capacity to meet market demand.

You see further analysis of industry sectors here:Deloitte | The Shift Index 2009: Industry Metrics and Perspectives | Deloite LLP Center for the Edge | John Hagel III