Thanks to the data revolution—big data coming at light speed from internal and external sources—we have moved beyond the Internet era into the information era, and according to experts, the data revolution is going to make the Internet revolution look like a movie trailer to the main attraction.
But what does this mean for the future of business? How will the information era change business organizations? According to Erik Brynjolfsson, Professor of Information Technology at MIT Sloan School of Management, organizations that can diffuse the outside and internal communication streams into crucial information delivered to key employees will be the most productive and the most profitable.
Brynjolfsson and his research team gathered ten months of email data and five years of revenue data and project data from co-worker relationships at a mid-sized executive recruiting firm. The experiment identified two primary types of information diffusing through the recruiting firm network—event news and discussion topics—observing the several thousand paths those pieces of information followed (known as diffusion processes).
What they found, revealed in their research study “Productivity Effects of Information Diffusion in Networks,” is no surprise, but nonetheless extremely useful to managers and senior leaders looking to improve productivity and profit. Information does not diffuse randomly. Information diffuses according to the nature of the relationships via which the information travels.
- News information characterized by a spike in communication and rapid, pervasive diffusion through the organization is influenced by demographic and network factors, but not by functional relationships (prior co-work, authority) or the strength of the relationships.
- In contrast, diffusion of discussion topics, which exhibit more shallow diffusion characterized by “back-and- forth” conversation, is heavily influenced by functional relationships and the strength of ties, as well as demographic and network factors.
- Access to key information affects productivity and profit. Individuals who learn of novel information are in a position to take actions on that information that ultimately speed the completion of projects and the generation of revenue.
Translation? According to Brynjolfsson, “The type of information and the types of social relations jointly predict the diffusion path of novel information … and that access to novel information strongly predicts employees’ productivity and the company’s overall profit.” Specifically, at the mid-size recruiting firm, employees who encountered ten additional novel words—key pieces of information—beyond the average increased their project completion by an additional 1%, resulting in an additional $700 in incremental revenue. Multiply that by several words, across additional employees more frequently, and that adds up to quite a lot of productivity and profit over time.
What Can Companies Do to Deliver the Right Information to the Right Employees?
More research needs to be done, but companies can use this information to evaluate their IT structure, as well as the efficiency of communications across the organization. There may be a gap in what leadership teams believe is effective communication and information delivery, as well as the reality of key pieces of information being delivered to employees. Even small changes—re-grouping teams that work together frequently in a closer proximity or reorganizing meeting structures to give employees ample time to catch emails and phone calls—can add up to bigger profit.