Author(s): Erik Brynjolfsson; Adam Saunders
A wave of business innovation is driving the productivity resurgence in the U.S. economy. In Wired
for Innovation, Erik Brynjolfsson and Adam Saunders describe how information technology directly or
indirectly created this productivity explosion, reversing decades of slow growth. They argue that
the companies with the highest level of returns to their technology investment are doing more than
just buying technology; they are inventing new forms of organizational capital to become digital
organizations. These innovations include a cluster of organizational and business-process changes,
including broader sharing of information, decentralized decision-making, linking pay and promotions
to performance, pruning of non-core products and processes, and greater investments in training and
education.
Brynjolfsson and Saunders go on to examine the real sources of value in the emerging information
economy, including intangible inputs and outputs that have defied traditional metrics. For instance,
intangible organizational capital is not directly observable on a balance sheet yet amounts to
trillions of dollars of value. Similarly, such nonmarket transactions of information goods as Google
searches or views of Wikipedia articles are an increasingly large share of the economy yet virtually
invisible in the GDP statistics.
Drawing on work done at the MIT Center for Digital Business and elsewhere, Brynjolfsson and Saunders
explain how to better measure the value of technology in the economy. They treat technology as not
just another type of ordinary capital investment by also focusing on complementary investments--
including process redesign, training, and strategic changes--and ton he value of product quality,
timeliness, variety, convenience, and new products.
Innovation continues through booms and busts. This book provides an essential guide for policy
makers and economists who need to understand how information technology is transforming the economy
and how it will create value in the coming decade.
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