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Nope, it still doesn't matter
May 23, 2005
Erik Brynjolfsson, the director of MIT's Center for eBusiness, is one of the top authorities on the connection between information technology and productivity. He has a new article in Optimize that examines what sets the most effective users of IT apart from the mediocrities.
It turns out that the technology itself isn’t particularly important. IT investments are essential, but only because they provide a catalyst for broader and much more critical changes in management, organization and process. In fact, the initial investments in a new technology often amount to only one-tenth of what needs to be invested in what Brynjolfsson broadly terms “organizational capital.” (Try plugging those numbers into your next ROI analysis of a proposed IT buy!)
Here are the seven characteristics of Brynjolfsson’s top-performing firms: (1) they aggressively adopt digital (i.e., paper-free) processes, (2) they give employees easy and open access to information, (3) they empower employees to make decisions, (4) they tie employee pay to performance, (5) they invest heavily in corporate culture (values statements and the like), (6) they recruit top-quality people, and (7) they invest in their human capital (e.g., training). These characteristics aren’t particularly surprising. In fact, they could pretty much be summed up as Good Management 101.
But in a way that’s what makes them interesting. When you boil it all down, the keys to business success in the Information Age look pretty much the same as they always have: good management, streamlined processes, thoughtful incentives, smart people and an aversion to mindless bureaucracy. As for IT, it’s very important in its ability to increase general productivity levels, at least in some industries, but when it comes to creating competitive advantage for individual firms, it doesn’t matter much.
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