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Management article
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Reference no. SMR43411
Published by: MIT Sloan School of Management
Published in: "MIT Sloan Management Review", 2002
Length: 4 pages

Abstract

The proliferation of sanctioned information intermediaries will increase the productivity of interorganizational tasks and processes and spur the next surge in global growth. 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 evolution of trusted agents for different domains will be the key to the next major surge in interorganizational productivity. For collaborating organizations, the instantaneous access to accurate, trusted, timely and appropriate external information will, in turn, create internal efficiencies in manufacturing and planning. Over time, a trusted agent in one domain may interact directly with those in other domains. Ultimately, a web of trusted agents will enable end-users to deal with many different disciplines with a sophistication that exceeds that of individual specialists today. Amar Gupta is the co-director of the Productivity From Information Technology (PROFIT) Initiative of the MIT Sloan School of Management.

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Abstract

The proliferation of sanctioned information intermediaries will increase the productivity of interorganizational tasks and processes and spur the next surge in global growth. 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 evolution of trusted agents for different domains will be the key to the next major surge in interorganizational productivity. For collaborating organizations, the instantaneous access to accurate, trusted, timely and appropriate external information will, in turn, create internal efficiencies in manufacturing and planning. Over time, a trusted agent in one domain may interact directly with those in other domains. Ultimately, a web of trusted agents will enable end-users to deal with many different disciplines with a sophistication that exceeds that of individual specialists today. Amar Gupta is the co-director of the Productivity From Information Technology (PROFIT) Initiative of the MIT Sloan School of Management.

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