MIT Sloan economist and digital-business expert Erik Brynjolfsson tells how the rising data flood and emerging tools for analyzing it are changing the ways innovation gets done.
There’s always been a performance gap between companies that embrace technology and companies that
resist it–what MIT professor Erik Brynjolfsson calls the productivity gap between “leaders and laggers.”
What’s new is that the gap has widened, and it has widened most in IT-intensive industries whose
leading companies, what Brynjolfsson calls “digital organizations,” know how to tap the flood of data
created by information technology with a “higher information metabolism.”
IT is setting off a revolution in innovation on four dimensions simultaneously, he says: measurement
(nano data, including the “trillions of bits of information thrown off by enterprise planning systems”);
experimentation (such as Amazon’s “A/B experiments”); sharing (using, for instance, internal wikis to
share best-practice “micro-innovations”); and replication (being able to scale up innovation quickly).
Brynjolfsson notes that each dimension is important by itself, but done together, they reinforce each
other and create a new kind of R&D.
What we’re going to see in the coming decade, he argues, are companies whose whole culture is
based on continuous improvement and experimentation, with IT changing the innovation process itself.
Brynjolfsson likens this revolution to the scientific revolution of the 16th and 17th centuries.
2 Comments On: The 4 Ways IT Is Revolutionizing Innovation
One significant point that Dr. Brynjolfsson makes is that the information gather from IT can reveal causality. I have used function models to reveal how, when and when and system delivers value. This causality is easy to model in say a manufacturing system. We clearly know what functions (useful and harmful) are provided by pieces of equipment in a manufacturing plant. Understand functions and their causal relations in products and services is not so clear. The kinds of experiments Dr. Brynjolfsson describes are key to getting causal information about functions in a system. Once modeled you can look for contradictions between useful and harmful functions in the system which fundamentally limit the delivery of functionality. Resolution of these contradictions can lead to breakthroughs in performance. One question that I would like to hear more about is what can the IT organization do to get senior management to recognize the value they can unleash?
Peter Hanik
If we live in the “information age” and data is the raw material, then it stands to reason that Data Management needs to become a practice understood and embraced by business executives.
Dr. Brynjolfsson’s answers Mr. Hopkins questions never address the “how” of data management, and the risks associated to poorly managed data. DAMA International is a not-for-profit, vendor-independent, global association of technical and business professionals dedicated to advancing the concepts and practices of information and data management. The organization offers a community that is working across all industries to elevate the awareness of the profession. This volunteer-only organization has collaborated to create a Guide to the Data Management Body of Knowledge from more than 100 practicing professionals around the world. http://www.dama.org/i4a/pages/index.cfm?pageid=1
Experiments will only provide value with a good sample; and a sample is only as good as the data!