Book: Digital Cultures Create Intangible Assets for New Economy Businesses

Broadband's Impact October 20th, 2009

, Reporter-Researcher, BroadbandBreakfast.com

WASHINGTON, October 20, 2009 – The Information Technology and Innovation Foundation released their newest book, “Wired for Innovation: How information technology is reshaping the economy,” by Erik Brynjolfsson and Adam Sanders. With innovation a key ingredient in the information technology revolution, the book explores topics such as, what are the business practices that enhance productivity and organizational capital?

Of the practices that businesses could adopt, according to Brynjolfsson, having any form of technology that creates intangible benefits would be the best investment that a company could make in this day of age.

One example Brynjolfsson provides regards what Michael Dell, owner of Dell Computers, did with a Dell factory. Brynjolfsson visited this factory and looked around the floor. He noticed that around 40 percent of the floor was not in use.

Thinking that it was because Dell couldn’t afford using that space, Brynjolfsson mentioned his observation to Michael Dell. He discovered the open space wasn’t due to lack of affordability, but rather because they were using a new form of technology that was cutting their space requirements. They didn’t need the space. Dell contacted Brynjolfsson six months later and said that they had doubled production since the last time he was there. The previously empty space was now being used.

“He was able to build a second factory inside the first,” Brynjolfsson said. “This intangible factor [of technology advances] became an intangible asset.”

In the 152-page book, Sanders and Brynjolfsson are able to pin point the affects that come from such intangible benefits. One of the major affects demonstrated results from companies investing more information technology and “Digital Organization”-style culture. Such a distinct corporate culture and organizational practices create disproportionately higher productivity in companies with heavy use of computers and information, they said.

From there, everything else follows.

However, it is not a chain reaction. The practices of digital organization not only build off of each strategic element, but they must all fit together. They are all “part of a system. They need to fit together like gears on a wheel.”

According to Brynjolfsson, in order for companies to have a better chance of increasing productivity, investments in information technology must provide new intangible benefits, and not merely replace their antecedent analog system.

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