Organizational innovation
Organizational innovation
Since general-purpose technologies have burst into the production form of human societies, it has been observed that the full exploitation of the benefits they drive requires "complementary investments" such as human capital, redesign of organisational processes and business models. Such intangible investments are not easy to measure but have a short- and long-term impact on production.
In fact, several studies (Brynjolfsson, Rock and Syverson 2018) indicate that Robert Solow's "productivity paradox" would be an adaptive process where new technology is available but society as a whole is making intangible investments and redefining production to take advantage of it. A clear example is the discovery of electricity: there is a long lag between the invention of the technology and its adoption by the production system in its core business. In the case of electricity, this lag was one generation (op.cit.).
In this sheet, we will focus on those aspects of intangible complementary investment that organisational innovation produces. New general-purpose technologies have a significant capacity to transform society, affecting its social and economic structures. This has been the case since the steam engine, electricity and the internet (to mention a few milestones). The creation of new assets, new ways of employing existing capital and labour, inevitably occurs, though not immediately.
As the adoption process unfolds, organisations invest in redesigning their structures, the way they organise work and create value. This can be seen in a number of ways: through the demand for more skilled workers where decisions are more team-based but at the same time each individual has greater autonomy in the way they apply their workforce, leaving room for creativity.