Technology and Worker Efficiency

NYTimes writes:

The wise use of technology, researchers say, is one ingredient in the recipe for improving the productivity of information workers, who now represent up to 70 percent of the American labor force, or 100 million workers, from customer service people in call centers to scientists in research labs.

The main focus of recent study has been on what researchers call “organization capital.” This asset includes a company’s work practices and routines, its storehouse of corporate knowledge in computer databases and in people’s heads, and even culture and values as they guide how a company operates.

Much of organization capital is expressed in terms of work practices – how things are done in a company. When blended with technology investments, certain work practices yield the biggest gains, said Erik Brynjolfsson, a professor at the Massachusetts Institute of Technology. The companies that perform best, he said, use teams more often than their rivals. They decentralize work that requires local knowledge and interpersonal skills like product design, sales and on-the-fly adjustments on the factory floor, and they centralize and computerize work that is easily quantified, like accounts payable systems and obtaining the lowest airline fares for routine travel.

What is striking, however, is how large the investments in organization capital – “computer-enabled assets” to Mr. Brynjolfsson – are compared with technology investments. For example, one popular kind of technology-related investment in recent years at major companies has been installing an enterprise resource planning system to streamline and automate operations. Mr. Brynjolfsson estimates that in a $20 million enterprise resource planning project, the new computer hardware required costs $1 million and the software $3 million. The remaining $16 million is in organization capital – redesigning work practices, retraining workers and other such investments.

John Seely Brown, former director of the Xerox Palo Alto Research Center, says he believes that recent changes in software technology could allow big gains in productivity and innovation. The opportunity, he says, is to move beyond the limitations of centralized systems for automating business operations, like enterprise resource systems.

Mr. Brown also points to the rapid development of what he calls “social software” like instant messaging, Weblogs, wikis (multi-user Weblogs) and peer-to-peer tools – all of which make it easier for workers to communicate and collaborate online, almost instantaneously.

The combined result, Mr. Brown said, is information technology that can amplify social interaction and enhance workers’ understanding of what is happening around them. The benefit, he added, could be to increase their ability to “collectively improvise and innovate.”

I’ll be discussing this a little in my next column for Business Standard in the context of SMEs, and how technology can help them make their operations more efficient and create new opportunities in the marketplace.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.