By Jackson DeMos
MIT professor Erik Brynjolfsson (pictured) outlined key Information Technology strategies that businesses can use to increase innovation and profit during the inaugural M{2e} — Media, Economics and Entrepreneurship — event at USC Annenberg.
M{2e} is a USC Annenberg initiative designed to spark innovation in media industries by increasing understanding of how economics impacts communication and journalism. Full video of each M{2e} speaker series event will be posted within a few days of each talk.
Brynjolfsson said the main four drivers of innovation that IT has made possible are measurement, experimentation, sharing and replication.
"IT is really behind all four of these revolutions," said Brynjolfsson, also the Schussel Family Professor of Management at the MIT Sloan School of Management, the director of the MIT Center for Digital Business, and a research associate at the National Bureau of Economic Research. "It’s lowering the cost of processing and storage, and thereby lowering the cost and making possible all kinds of detailed measurement, experimentation, sharing and replication."
He said that although each of these four processes are a revolution by themselves, they also reinforce each other.
"What makes it even more powerful is that they’re synergistic with one other," he said. "If you can do an experiment and then measure the results in much more 
Brynjolfsson called the United States' economic situation the "Great Recession" because of its length and impact on areas such as unemployment and the deficit, but finds hope in the future.
"I strongly believe that within the next five years we will also talk about the 'Great Restructure,' especially in American business," he said.
In this new world, he said there are three implications for business management:
- Innovation is far more valuable than it used to be
- Invest in technologies and platforms that collect, aggregate, codify, share and/or propagate data and innovations
- Apply the four-step process of detailed measurement, experimentation, sharing and replication
Brynjolfsson highlighted recent data showing a range of benefits for firms that follow these three guidelines, demonstrating that IT has helped widen the gap between the most and least profitable businesses within particular industries; an increasing number of businesses are concentrating within industries; and companies are not able to stay on top for long in this turbulent market.
"What we’re seeing is an economy that is based more on creative destruction than ever before," he said. "I think people have said that anecdotally and seen case studies of it. I think this is some of the first quantitative evidence that shows this isn’t just people’s intuition or gut feel. It’s not based on a few isolated examples. It’s based on a broad analysis of the whole U.S. economy."
"It's getting tougher and tougher to compete," he said. "One of the things that companies are trying to do is adopt and use information technology more effectively. But the problem is harder than simply adopting IT."
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