Saturday, June 9, 2007

Technology, Productivity and the Dynamo

Interesting article in Slate magazine arguing that technology, by itself, doesn't do much to improve industrial efficiency. It's only when social or human change takes place in parallel do things really start to improve. And this doesn't happen quickly - by looking at the evolution of the dynamo and its impact on industrial efficiency early in the 20th century, Professor David (Stanford) found it took up to 5 decades for the full impact to be become apparant.

"David's research also suggests patience. New technology takes time to have a big economic impact. More importantly, businesses and society itself have to adapt before that will happen. Such change is always difficult and, perhaps mercifully, slower than the march of technology.

More recent research from MIT's Erik Brynjolfsson has shown that the history of the dynamo is repeating itself: Companies do not do well if they spend a lot of money on IT projects unless they also radically reorganize to take advantage of the technology. The rewards of success are huge, but the chance of failure is high. That may explain why big IT projects so often fail, and why companies nevertheless keep trying to introduce them."

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