Wired for innovation: how information technology is reshaping the economy

Abstract

Review "Brynjolfsson and Saunders have written an important roadmap for future technology innovation. Anyone interested in the business and economics of information technology should read this book."-Chris Anderson, Editor in Chief, Wired Magazine, author of Free: The Future of a Radical Price Erik Brynjolfsson is Schussel Family Professor at MIT's Sloan School of Management and Director of the MIT Center for Digital Business. He is the coeditor of Understanding the Digital Economy: Data, Tools, and Research (MIT Press). Adam Saunders is a PhD. candidate in the Information Technologies Group at the Sloan School."If e-business had an oracle, Erik Brynjolfsson would be anointed."-Business Week "If you want to read just one book on digital economy, Wired for Innovation should be it. This easy-to-read, yet comprehensive and analytical handbook provides essential insights for understanding how and why information technology is transforming business and the economy. Anyone reading this book will come away understanding just how important and transformative the IT revolution has been, and will be in the future."-Robert D. Atkinson, President, Information Technology and Innovation Foundation, author of The Past and Future of America's Economy (Robert D. Atkinson "This is the answer CIOs have been waiting for, scientific proof of the productivity and competitive advantage gained by investments in IT."-Leo Apotheker, CEO, SAP (Leo Apotheker "If e-business had an oracle, Erik Brynjolfsson would be anointed." - BusinessWeek "If you want to read just one book on digital economy, Wired for Innovation should be it. This easy-to-read, yet comprehensive and analytical handbook provides essential insights for understanding how and why information technology is transforming business and the economy. Anyone reading this book will come away understanding just how important and transformative the IT revolution has been, and will be in the future." Robert D. Atkinson , President, Information Technology and Innovation Foundation, author of The Past and Future of America's Economy About the Author Starting in 1995, productivity growth took off in the U.S. economy. In Wired for Innovation, Erik Brynjolfsson and Adam Saunders describe how information technology directly or indirectly created the lion's share of this productivity surge, reversing decades of slow growth. They argue that the turnaround in productivity reflects the delayed effects of the massive investments in business processes accompanying the large technology investments since the late 1990s. Companies with the highest level of returns to their technology investment did more than just buy technology: they invested in organizational capital to become digital organizations. Brynjolfsson and Saunders 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 but amounts to trillions of dollars of value. Similarly, such nonmarket transactions of information goods as Google searches or Wikipedia edits are an increasingly large share of the economy yet virtually invisible in the GDP statistics. The authors, drawing on work done at MIT and elsewhere, show how to better measure the value of technology in the economy. They describe new methods that don't treat technology as just another type of ordinary capital investment but also measure complementary investments-including training and consulting-and the value of product quality, timeliness, variety, convenience, and new products.Innovation continues through booms and busts; this book provides a crucial guide for policy makers and economists who need to understand how information technology is transforming the economy and where it will create value in the coming decade. "This is the scientific IT productivity research that CIOs have been waiting for." Leo Apotheker , CEO, SAP