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TechWatch: Information is Not Enough for Business

“How you gather, manage, and use information will determine whether you win or lose,” writes Bill Gates in his new book Business @ the Speed of Thought (see Book Reviews, this issue). In the age of the Internet, more information is available than ever before, and using it quickly and well is the key to business, he argues. Few would argue for ignorance so Gates has a case.

Tools from the Internet have fundamentally changed the availability of information and the speed with which it can be collected. With so much data available, however, it soon becomes clear that much more than information is required to make good business decisions. Which information, how much information, and how to make decisions without data are all important questions which need to be considered in our Information Age.

Recent sobering events outside of the business world have raised these questions, and they have clear application to business.

The tragic events of Littleton, Colorado, with terrible violence and loss of life are still clear in our minds. Finding information to make a bomb is easy today. Alienated teenagers had no difficulty with the technology. I would certainly not argue that the Internet caused the tragedy. It did not. What this tragedy did is underscore that easy access to information is not always good. The use of information without wisdom can lead to disaster.

Several weeks ago my wife was diagnosed with bladder cancer. Again, the Internet has a wealth of medical information available. Some is very reliable and well documented. A detailed document from the National Cancer Institute laid out all of the issues of diagnosis, procedures, and prognosis. The cold, hard facts were very important to read, but frightening. Other information was available as well. There were “magic cures,” diets that were “critical to success,” and many conflicting ideas put forth as fact.

Ultimately, a battery of medical tests and discussion with competent doctors put this information into perspective, and a hopeful course of treatment was decided. Even with all this information, however, the future is still unknown, and judgment must be made without having all the answers.

The principles from these examples are reflected in the business world as well, and I will give several illustrations.

Using Information Wisely

A recent newspaper review of a 3D Home Architect computer program (see Briefly Stated: Programs increase power, but not wisdom) underscored what computer generated information could and could not do. The reviewer, Phillip Robinson, examined this software for doing a remodeling job on his house.

The features of the computer program were excellent. Once learned, they offered an opportunity to trade off many design alternatives, down to the detail of wall colors and textures and even furnishings. It seemed that the entire process of design from the basic structure to the completed project could now be automated. “I realized where too much dependence on the programs could have led me astray because I didn’t know which questions to ask,” Robinson said.

I had a related conversation with a research vice president of a large corporation. We were talking about the effectiveness of powerful modeling software to simulate physical bending and breaking of large structure. He was impressed with the capability we were describing, but raised a concern about it being too easy to use. His concern centered on the ability of the user to understand and interpret the results from the simulation.

“What are the underlying assumptions of the model? What if ‘reasonable’ output is generated but the user doesn’t really understand what it means,” he asked? It is one thing to generate computer results from many sources of data through complex calculations which no human could do. It is quite another to understand if these results are reasonable, how they can be applied, and what are the limits of their applicability.

These questions are fundamentally important in our Age of Information. There are ways of answering them, but they involve a great deal more than the information itself. They require training, understanding, and wisdom.

Understanding the Nature of Information

Another issue in dealing with information is understanding the role of different types of data. Some is enduring, like the value of “pi.” I’m not sure if the often repeated story about this number is true or not, but it is told that a state legislature decided the complex representation of pi, the ratio of the circumference to the diameter of a circle, was too complicated. From henceforth it would be defined as 22/7. Regardless of how many lawmakers agree, the value of pi is still a complex number that can be calculated to any needed number of decimal places, but cannot be changed to a simple ratio.

Other data change almost instantaneously. The value of a particular stock and the state of traffic on a particular segment of the Interstate Highway are examples of highly transient data. This data must be used in a different way than pi. It may actually work against you to know the instantaneous value of a stock, if you have invested for the long term. Knowing it will go up and down in the interim is a given, and where it is at this particular instant may have very little meaning.

The traffic example raises a different point. If you were the only one to know about the accident in a particular location, it might help you to find an alternate route. When everyone knows, the alternate route may become more congested than staying with the original plan.

Knowing something, and knowing what to do with that information is a very different thing.

Decisions Without Information

Sometimes we face a major business decision for which there is no data. Ironically, one of the best examples of this is the role of information technology in productivity.
A manager would like to be able to get information to know how much to invest in technology. Because the technology becomes obsolete at a rapid pace, it would be desirable to build a business case for this investment. The data for this case remains remarkably elusive.

In the Communications of the ACM, August 1998, Erik Brynjolgsson and Lorin M. Hitt wrote an article entitled “Beyond the Productivity Paradox.” The theme of their article centered on the question of finding computing in the productivity data. One article they reference states that computers having business benefit is “the big lie of the information age.” But Brynjolgsson and Hitt conclude that some data is beginning to emerge that computers are bearing their ownweight, although the data is sketchy and difficult.

Their bigger conclusion, however, is that using computers to simply automate old work systems often leads to a worse financial picture. It is when the work is transformed that the payoff comes.

The recent healthy gains in productivity are given as the reason for the healthy economy with low inflation in a time of tight labor markets. Yet it is difficult to directly correlate this with use of computing. Federal Reserve Chairman Alan Greenspan suggested in May, 1999 that computing might have something to do with productivity (see Briefly Stated: Productivity) and might have something to do with the good results, but offered no data to support this claim.

So how does a manager make a decision on IT investment? Many have taken a course of refreshing technology every three years, building systems as overhead allows, and the like, but this is not the type of information Gates talked about for decision making. That data does not seem to be available.

Conclusions

Yes, information “at our fingertips” is a valuable resource. Getting that information right and putting it in the proper perspective is the challenge. Paul Saffo in his Harvard Business Review article “Are You Machine Wise?” (September-October 1997, pp. 28-30) concluded “Today machine-wise executives will not only know when and how to use the new tools technology brings them but also when to switch off their computers and take their own counsel.”

The biblical Job asked the question long ago: “Where then does wisdom come from? Where does understanding dwell?” His question rings down through the Information Age.

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Al Erisman is executive editor of Ethix, which he co-founded in 1998.
He spent 32 years at The Boeing Company, the last 11 as director of technology.
He was selected as a senior technical fellow of The Boeing Company in 1990,
and received his Ph.D. in applied mathematics from Iowa State University.

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