"The Digital Organisation" - Jobsworths and control freaks need not apply

January 2004

It's official, investing in computers does increase productivity! This startling conclusion, based on the work of Eric Brynjolfsson, an MIT economics professor, was the basis of a full page article in the Financial Times recently. Given the overwhelming importance of productivity growth, both to individual companies as they strive to compete and to the economy as a whole, I decided to look up the published works of professor B. and see how he had come to his conclusions.

As an aside, I can't help thinking that Brynjolfsson is an ideal name for the internet age, type it into Google hit enter and there he is, the one and only. Try that with a name like Smith or even Qualtrough and you will be spoilt for choice.

Anyway, getting back to the point, the essence of professor B's argument seems to be that across a wide cross section of companies and business sectors there is an overall positive relationship between the investment in IT hardware, and productivity. But, and it is a very important 'but', the variation in performance between individual companies with similar levels of investment is huge.

In fact, the investment in hardware is only the beginning and takes a significant amount of time and considerable additional investment to bear fruit. The suggestion is that the US economy is only now starting to see the benefits of the huge spike in IT investment that happened during the technology boom three years ago; and that this explains the fact that productivity growth (in the US) is currently running at the highest rate for 20 years.

Professor B. goes on to investigate the other factors which distinguish organisations that are successful in exploiting IT and has come up with a cluster of related factors which he terms ‘the digital organisation'. Particularly interesting are the things that relate to the skills and attitudes required of people working at all levels in the organisation.

The most obvious thing computers can do is automate routine tasks. They are generally good at collecting, storing and transmitting data and can carry out instructions to the letter. What they can't do is use judgement and human insight to resolve exceptions to the rule. That's what people are there for, so Jobsworths look out, the computer can do it so much better whilst leaving the time for more creative and helpful staff to deal with situations which don't fit the norm.

A common complaint from senior management in companies that have recently invested in new information and communications systems is that they are suffering from 'information overload', and it is certainly true that better, more joined up, business systems are usually accompanied by more volume and complexity of management information. Also new communications media such as email inevitably generate more communication, just as new roads seem to generate additional traffic…

Professor B's prescription for information overload and senior management decision making bottlenecks seems to be to adopt a more decentralised approach to decision making, that is to delegate decisions and the associated information processing and analysis tasks to the most appropriate level, thus reducing the demands on scarce human resources higher up in the organisation.

In general the conclusion seems to be that IT investment has tremendous potential to improve the productivity of an organisation but only when combined with complementary investment in appropriate working practices organisational structures and above all human skills. The digital organisation, it would seem, is no place for jobsworths or control freaks.