Monday, August 16, 2010

Read More, Make More

I’m betting heavily on the value of information. From everything I know in theory and intuitively, without timely access to information, not much can get done, and certainly very little can get done well. This is true for societal progress in general and for organizations. Without information there would be a lot of resources wasted reinventing the wheel and we would lose the benefit of access to the collective ideas around us. Still, this value seems sort of intangible. How do you put a number on it? Some folks in Boston from MIT and BU have tried to do just that.

In a study titled Productivity Effects of Information Diffusion in Networks Sinan Aral, , Erik Brynjolfsson and Marshall W. Van Alstyne asked the question:

Does better access to information predict an individual's ability to complete projects or generate revenue?

They did their study in a medium sized recruiting firm and looked at how news about events and discussions spread through email within the company over a ten month period. And the answer to the question: Access to information strongly predicts project completion and revenue generation.

• Each additional ten words seen are associated with an additional 1% of one project completed.
• Greater mean rank (i.e. the rank order in the news chain among co-workers) and longer average times to receive words (how long it took to hear about it) were associated with fewer projects completed holding constant traditional demographic and human capital variables.
• And AMAZINGLY, an additional ‘word seen’ was associated with about $70 of additional revenue generated (that’s 3000 Rs per word over a ten month period).

So the conclusion:
Access to information diffusing in the network is a much stronger predictor of productivity than traditional human capital variables such as education or industry experience.

So now, if you’ve got this far you have just read 318 words! That could be worth $22,250 (about 9.5 lakhs for you folks in India). Unbelievable!

No comments:

Post a Comment