About ten years ago I was working with the United Nations, trying to determine why one-third of the banks in a particular country had gone bankrupt. I found that the country’s government did not utilize the concept of either a social security number or an income tax number. Accordingly, individuals could borrow funds from a number of banks without any bank being aware of the other loans. When the creation of a nationwide financial information infrastructure was proposed, bankers eagerly embraced the notion that they could be informed about other banks’ transactions. “That is exactly the system we need,” asserted one bank president. When I informed him that he would also have to share his bank’s information, he balked: “Never. No information from my bank will ever go out to other banks.” The banker’s reaction is not as odd as it sounds. There is a high degree of distrust that exists across all kinds of interorganizational and intergovernmental borders, and it is a major bottleneck to productivity and efficiency.
The first quantum leap in productivity that can be attributed to information technology occurred in the 1960s and ’70s, when automated techniques in factories helped to increase the productivity of blue-collar workers. A similar boost occurred in the 1980s and ’90s, when advances in office computers and related technologies enhanced the productivity of white-collar workers. Now, the challenge is to develop pragmatic ways to increase the productivity of interorganizational tasks and processes, which will provide a third, and probably the most profound, surge in international trade and global growth.
As information-sharing technology has proliferated dramatically over recent decades, organizations increasingly operate on the assumption that any piece of information they release to one particular entity will quickly find its way into the hands of many others. Current technologies enable massive amounts of data to be disseminated instantaneously without the original owner becoming aware of it. Thus, there is a growing reluctance among companies to allow data to be exported. As each organization attempts to maximize its own profits, it fosters local rather than global optimization of industries or industry segments.
Take, for example, the transportation and distribution sector in the United States. The cost of manufactured goods can be broken into various components: the portion attributable to blue-collar labor has decreased significantly over the last 25 years; the portion attributable to white-collar labor has also declined.