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Management article
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Reference no. SMR51330
Published by: MIT Sloan School of Management
Published in: "MIT Sloan Management Review", 2010
Length: 8 pages

Abstract

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 whoseleading companies, what Brynjolfsson calls ''digital organizations,'' know how to tap the flood of datacreated 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.

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Abstract

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 whoseleading companies, what Brynjolfsson calls ''digital organizations,'' know how to tap the flood of datacreated 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.

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