Businesses that hoard information in their head office and keep staff in the dark on important metrics risk falling behind their competitors, according to MIT business guru Jeanne Ross.
Companies are failing to take advantage of the wealth of information collected by corporate and business intelligence systems, Ross, director and principal research scientist at the Massachusetts Institute of Technology (MIT) Center for Information Systems Research, told silicon.com.
For organisations to fully benefit from this information, they need to share it with their staff, customers and business partners, she said. Once these groups get hold of such information, they can use it to take decisions that will boost the business. Customer service reps with a raft of data are more likely to be able to answer customer queries without having to refer the customer on, for example, and in the process save the company both time and money.
But instead of spreading this information around, businesses have a tendency to keep it in head office and share it between a small pool of managers, who use it to run the business from the centre.
“The basic technologies – the resource planning systems, CRMs etc – have been around for some time now, but people haven’t got particularly good at taking the information they provide and using it to push the decision-making out [of the centre],” Ross said.
“There is this idea [in business] that the first thing we are going to do is centralise all of our decision-making, just because we can. I think a lot of companies can get that wrong.”
One of the dangers of confining business information to management is that bosses may be making decisions based on incomplete information, Ross added. For example, if managers based at the head office of a retail chain decide what to stock in each store, those managers could make poor decisions because they don’t have a real sense of what’s happening on the shop floor.
“If you’re the retail clerk in the store and people are saying, ‘I like this sweater but do you have anything in yellow?’, you know there is demand for that item in yellow. But if you’re in corporate and the red sweater sold the best, you’re just going to keep on ordering red,” she said.
A better approach is for the retailer to give staff in each store detailed information about which items are selling and allow those staff to decide what to stock, according to Ross, who cites the example of 7-Eleven Japan – where sharing stock information with retail clerks, and giving those staff the power and expertise to make purchasing decisions, has helped the chain stay one of the country’s most profitable retailers for 30 years.
Another clear example of the benefits of sharing business information can be found in…
…customer relations, according to the IT management expert, where the more service reps know about a customer the more likely they will be able to help them.
“For instance, I’m a Verizon customer and every person I’ve spoken to at that company knows who I am, what I have and how to address my international needs when I go abroad. I am sticking with these guys because they completely understand me,” she said.
But it’s not enough for a company to simply provide staff with business information, it also has to train employees how to use it to maximum business benefit.
There is obviously a place for centralised decision-making in business, but it should not be assumed it is the only way to run an organisation, according to Ross.
One of the ways a company can benefit from taking centralised decisions based on information captured by corporate systems is by partially automating job roles. Ross gives the example of the shipping company UPS, which she said collects information on where its drivers are and sets the route they should take.
“They are reducing the personal discretion of the driver’s role to make them more efficient.
“You, as the driver, can make the decision to override [the route] but then you would have to show the benefits your decision has given you.”
People in these partially automated roles can be more effective and need less training to do the job, Ross said.
The different ways that UPS and 7-Eleven Japan use business information shows how the nature of certain roles is likely to change in future, Ross told silicon.com, with some workers gaining autonomy while others lose it.
“It’s this bifurcated approach. We will see this interesting contrast where some jobs get elevated and demand more smarts, while others can be more automated and people will have to respond in a more standardised way to the information they are presented with.”