benchmarking for the digital organization erik brynjolfsson, xiaoquan (michael) zhang and shinkyu...

Center for eBusiness@MIT and Shinkyu Yang
Center for eBusiness
Productivity Paradox
“We see the computer age everywhere, except in the productivity statistics”
-- Bob Solow, 1987
Copyright © 2004 Erik Brynjolfsson
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Sheet3
-Erik Brynjolfsson
Executive Recruiting Case
Productivity
Move from analog to digital business processes
Open information access
Empower the employees
With the following attributes:
Providing actionable advice
Accessible from anywhere
400 large firms
New wave of data gathering underway
-- Data from public sources
National Income and Product Account from Bureau of Economic Analysis
Productivity Statistics from Bureau of Labor Statistics
-- Data from private sources
Harte-Hanks data: IT capital (~1000 firms)
IDC data: IT expenditure (~500 firms)
New data recorded in a survey table
Each new survey linked to a user, who is then linked to a company
Companies categorized by SIC2 code
The complexity arises because the number of companies in each category is not uniform
So for each SIC2 code, we create two databases, one for manufacturing firms, one for the other firms
…See the next two slides
Straight-forward Comparison of Data
1. Build Digital Processes
Embedding standard procedures in technology allows employees (and customers!) to work with less supervision
Versatile use of technology supports a richer set of communication channels: using the Web allows customers (and employees) to “self-serve,” reducing costs
“on the Net” at Cisco
Source: Woerner, S. “Networked at Cisco” Center for eBusiness Case Study http://ebusiness.mit.edu/education/cases/cisco/CiscoCase3.pdf
2. Open Information Access
Access to information both vertically and horizontally helps an organization:
Vertical information provides managers with a “dashboard” to keep their finger on the pulse of an organization
Horizontal information allows frontline employees to access more information from outside their department
Throughout the organization, encourage free access to internal and external information
Use technology to foster lateral communication and coordinate among employees
Use technology to foster vertical communication between employees and their managers
Do not put restrictions on Internet access for employees
The 'first law of scientific management'
“It is necessary in any activity to have a complete knowledge of what is to be done and to prepare instructions … the laborer has only to follow instructions. He need not stop to think."
-- Meyers, 1914
WalMart “empowers” workers with more decision rights
Both firms are using more network technology over time
Both firms are shifting more decision rights to workers
Sites at each firm with more network technology are also more likely to empower workers with decision rights
WalMart is maintaining its lead in technology, employee empowerment and, most importantly, performance.
4. Strong Performance-linked Incentives
More incentive pay, linked to individual performance
Somewhat more likely to use stock options for a broader set of employees
Actively invest in promoting culture
More executives involved in recruiting
More likely to hire new employees on a variety of criteria including: education, analytical skills, computer skills
Somewhat more likely to screen for interpersonal skills and for fit with the corporate culture
“Human Capital”
Provide training for a larger percentage of employees once they are hired
Do more online training
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M
FP
IT3
Professors Dimitris Bertsimas and Georgia Perakis
Platform Technologies and Leadership Strategies in the
Internet Economy
Professor Chrysanthos Dellarocas
Dynamic Pricing to Improve Supply Chain Performance
Professor David Simchi
Professor Lawrence Wein
Professor Roy Welsch and Dr. Alexander Samarov
January 2001 Awards
Individual and Corporate Performance
-
Professor Benjamin Grosof
Professors John Hauser, John Little, and Duncan Simester
e
Dr. Rob Laubacher and Professor Thom
as Malone
eBusiness
on the Web
Professors Drazen Prelec
nomics
Professor Nader Tavassoli

benchmarking for the digital organization erik brynjolfsson, xiaoquan (michael) zhang and shinkyu...

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