Talking with Erik on Enterprise 2.0

 

MIT Sloan Management Review (SMR) has a special report in its spring issue on "The Future of the Web." As part of it, they asked me and Erik Brynjolfsson to sit down together and swap ideas about what’s "Beyond Enterprise 2.0."

I jumped at the chance, largely because I was eager to hear what Erik had to say. I’ve referred to his work several times in this blog, and like all academics who study IT I’ve been deeply influenced by his work and cite it often. He did some of the earliest (and still best) work to resolve the productivity paradox of IT, and he’s been at the forefront of most important topics in the field for a long time now.

I’ve been collaborating with Erik for a while on research that attempts to assess the competitive impact on IT in the US.  Together with Feng Zhu and Michael Sorell, we’ve been looking at ways to test the simple hypothesis that when it comes to competition, "IT Doesn’t Matter." Publications on this topic are coming soon, as are blog posts. For now, let me just say that our data show that there’s clearly a strong association between IT investment and changing competitive dynamics since the mid 1990s, and that we believe IT is driving these changes rather than merely being a symptom of them.

To advance this work we meet regularly to review analyses and drafts of papers, but we’re pretty focused during these meetings and rarely have broad what’s-it-all-mean, where’s-it-all-going conversations. So when SMR proposed exactly that kind of conversation with Erik, I was eager to participate.  We both work to understand IT’s impact, but from very different starting points.  Erik is trained as an economist and often works deductively, generating and testing hypotheses using large data sets.  I’m trained as a field researcher and usually work inductively, building hypotheses and conclusions from the case studies I write. I was very interested to see how much overlap there was in our perspectives.

As it turns out, there was a huge amount.  Readers hoping for academic fencing are going to be disappointed.  We found ourselves agreeing virtually across the board, and reinforcing each other’s arguments and points.  I’m pretty sure that the unedited transcript of our talk would contain even more phrases like "I think that’s exactly right" or "and let me just build on that" than made it into the final draft. To me, this is evidence not only that Erik is a truly nice guy, but that my work on Enterprise 2.0, which got kicked off just about a year ago with the original article in SMR and the initial posts on this blog, is focused on at least some of the ‘right’ questions —  the ones of both practical and intellectual importance (what a relief!).

Rather than trying to summarize the article, which is freely available here (at least for a while) and which will show up in the spring print issue of SMR, let me pull out a few quotes that give a feel for the entire piece:

Erik (EB): "Really, what we need is ‘meta-innovation’ — innovation about ways to innovate. We need innovation not just in the technology but innovation in some of the institutions that manage the collaboration and that manage a global community working on problems."

me (AM): "The manager’s job is to increase the ambient level of participation in and contribution to these Enterprise 2. 0 environments…  One of the simplest and most effective techniques I’ve seen —  and I’ve seen it over and over – is for a boss to just say “I’m not reading any emails about this project; put all your information up on the wiki where we can all see it and use it.

EB: ".  If people in organizations have more freedom to work laterally and diagonally and in all the other directions within the organization, then you’re going to see more creativity and innovation. You’re also going to see a lot more potentially useful connections emerge organically… This doesn’t come costlessly. One of the benefits of the organization of a corporation is the potential for streamlining and efficiency that hierarchy brings to bear. Ultimately, it’s a trade-off, in terms of where you want to be on that creativity vs. efficiency spectrum. The nice thing is that innovations in technology and in organizational design are allowing us to push out the frontier of that trade-off, so that you can get more innovation without sacrificing efficiency to the same degree."

AM: "An existing company can take advantage of both the benefits of imposing structure and hierarchy and some level of managerial intervention while simultaneously, getting out of the way in other areas and letting the lateralization and the diagonal innovation emerge. And I don’t think that it’s naïve to expect that both of these phenomena can happen – just as it’s not naïve for an organization to have an ERP [Enterprise Resource Planning] system and a wiki at the same time…  One way to think about managers’ role in this era is that they grab the good ideas that percolate up and then propagate them throughout the organization."

EB: "In general, the whole concept of internal and external [to the corporation] is becoming a lot blurrier. And that’s again, partly, because of these kinds of tools…  The traditional corporate organization was tremendously successful throughout the twentieth century. But, as we said at the outset, the technology innovations are engendering a whole set of complementary innovations in organizations. The traditionally sharp distinction between markets and firms is giving a way to a multiplicity of different kinds of organizational forms that don’t necessarily have those sharp boundaries."

AM: "we find that these changes actually heighten the role of managers and executives, who need to think about how to organize and compete in the new environment. And this implies another really interesting set of issues and challenges for management: thinking about what they want to have inside the boundary of their own firm vs. what they want to have outside."

EB: " the bottleneck – the real place where there’s room to make excess returns if you’re an entrepreneur or a manager or venture capitalist – is in finding creative ways to use those technologies…  We are very far from exploiting the full potential of the technology. The set of technologies we have floating around today are fodder for at least a decade or two worth of organizational innovations."

I’d like to thank SMR’s contributing editor Martha Mangelsdorf for turning what was surely a rambling conversation into something that’s quite coherent on the page, and to Chris Bergonzi for giving us the opportunity to participate in the special report.  SMR is doing some interesting things these days, including a collaboration with the Wall Street Journal called "Business Insight."  This is a special section that will appear six times a year in the print edition on the Journal and on the websites of both publications.  Erik and I will have an article in the next edition of Business Insight on our work on IT and competition.  I think it’s due to come out in late April; I’ll let you know when it does.

Please leave a comment and tell us what you think of the ideas that Erik and I tossed around, and your take on our conclusions.