Understanding productivity in the Information Age

In today's knowledge-based economy, it pays to be an “information hub”

Erik Brynjolfsson

That's one of the implications of groundbreaking new research by three professors affiliated with the MIT Center for Digital Business. The researchers found that information workers whose strong e-mail networks allow them to receive new information sooner than their peers — or to receive more pieces of new information — are likely to be more productive than their less well-connected counterparts. Workers who are “information hubs” complete more projects in a given period of time and thus generate more revenue for their firm.

The research was supported by Cisco Systems and conducted by a team of academics affiliated with the MIT Center for Digital Business: Dr. Sinan Aral, assistant professor at the NYU Stern School of Business and an alumnus of the MIT Sloan School of Management; Dr. Erik Brynjolfsson, Schussel Professor of Management at MIT Sloan and Director of the MIT Center for Digital Business; and Dr. Marshall Van Alstyne, associate professor at Boston University School of Management and an alumnus of the MIT Sloan School. As part of a study of an executive recruiting firm conducted over a five-year period, the researchers were able to analyze ten months of the firm's e-mail traffic. While the content of the recruiting firms' e-mails was encrypted to ensure individuals' privacy, the research team could track the flow of particular encrypted words through the firm's e-mail network. The researchers then correlated those findings with data (provided by the firm and by individual employees who voluntarily took part in a survey) about factors such as individual workers' project workload, project completion time and compensation — to gain dramatic new insights into productivity in the Information Age.

For many years, Brynjolfsson explained, the productivity of information workers was considered difficult to measure. That presented economists with a conundrum in an era when as many as 70% of workers in the U.S. economy are considered information workers. Now, however, using data mining techniques to analyze patterns of electronic information flows within a firm, Brynjolfsson foresees dramatic improvement in economists' ability to measure productivity in information-intensive sectors — and inside organizations. He compares the potential effect of these new techniques to the way Antony van Leeuwenhoek's improvements to the microscope in the seventeenth century precipitated a revolution in biology. Just as Leeuwenhoek's better microscope helped researchers make new kinds of observations, “today we're developing a set of tools that I think have a similar impact on our ability to see what's going on inside of organizations,” Brynjolfsson explained. Having new tools that enable economic researchers to “see” things they could never see before within a firm, will, Brynjolfsson predicts, open up new frontiers in management research. “In the next five or ten years, I think there will be a lot more research that uses this technique of looking closely at what's happening inside companies,” he said.

Although this type of research is in its infancy, some of the initial findings have intriguing implications for information workers and managers. The study of the executive recruiting firm found that:

  • Information technology enhanced productivity by facilitating multitasking.
    Rather than using information technology to finish individual projects faster, workers who employed e-mail or databases more intensively tended to multitask more; in other words, they worked on more projects at once. That translated into higher overall productivity, but, because the workers were taking on more projects simultaneously, their technology use did not necessarily result in more rapid completion time for individual projects.
  • Multitasking can be productive — but only up to a point.
    Multitasking by working on multiple projects was associated with increased productivity up to a point — and, beyond that increased multitasking was associated with declining productivity benefits. The researchers theorize that after a certain level of multitasking is reached, having too many “balls in the air” may hinder rather than enhance productivity.
  • Access to new information has productivity benefits. Workers who received more novel information (as measured by an unusual word appearing in the company's e-mail traffic and then diffusing through part of the firm's e-mail network) had measurably higher productivity than others. In this study, encountering just 10 novel words more than the average worker was associated with $700 more in revenue generated per employee.
  • E-mail discussions occur more readily between people with things in common.
    Employees are more likely to hold e-mail discussions that convey information with other employees with whom they share demographic characteristics (such as gender), or with whom they have worked in the past.
  • A diverse network of contacts is associated with higher productivity.
    While employees who constituted hubs in the firm's information flow — in other words, people who were in the center of more e-mail flows — were more productive, those less-connected to the network suffered in productivity, on average. “The most productive people were the ones who were the information hubs,” Brynjolfsson noted. “We found that this reflected their ability to learn novel information more rapidly than their colleagues.”

For more details on this research and access to related working papers, see http://digital.mit.edu.

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