Debates on Productivity Paradox

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Overview of perspectives/debates

Erik Brynjolfsson’s 1993 paper on productivity paradox introduces central concept - definition
The productivity paradox arises as a result of a discrepancy between the expectations associated with technological innovation and the outcomes experienced after implementation. We see a parallel between the learning curve of the productivity paradox and the transition from the neoclassical approach to economic modeling to an information economy. We trace the productivity paradox as it manifests first in the corporate world, then in the digital marketplace, and finally as it rears its head in the socio-cultural context. As digital technology becomes accessible in each new context, lessons from the prior context contribute to a diminished learning curve, indicating that people are becoming more sensitive to the potential for unanticipated externalities, which results in the incorporation of this potential into the economic models that set expectations for the outcomes of innovation.
An observed phenomenon in the early age of computing, the productivity paradox is best viewed as a moment of friction in the transition from a manufacturing economy to a knowledge economy.
This transition has seen a growth of knowledge workers whose contributions lend themselves to more perfect information, allowing various sectors of the economy to better and more quickly identify and adjust for negative externalities. Thus, as the information economy grows, friction is reduced, productivity ceases to be the only metric of success, and the learning curve shortens as a result of lessons learned by burgeoning industries from the inefficiencies of earlier organizations.
The sectors where this transition is most evident are the traditional workplace, e-commerce, and society and culture.
Introduce Amazon example as it weaves through the three sectors?

Labor and Management

How does the productivity paradox manifest in the workplace and managerial relationships?
    Open plan offices: workers with private offices more satisfied than those in open plan offices
        sound privacy: lack of privacy while having phone conversations, casual conversations with co-workers, overhearing conversations you don’t want to hear, etc (
        health problems: high stress, blood pressure (
    Collaboration: groups that are too large or disparate may actually waste time coming to a consensus rather than unilateral decisions being taken (Williamson on simple hierarchies)
    Email and other digital distractions
        social networking sites, online games, instant access to information like Wikipedia, catching up on the news are all just a click away from the working window
    What methods exist to increase productivity in the workplace? That is, what advances have been made since the introduction of computing?
        alternative office designs
            allow for cross-pollination of ideas and work processes
            more fun, community oriented workspace
            can encourage creativity (as opposed to pure productivity)
        collaboration software like Asana, Confluence, basecamp, home-grown software, versioning software allow people to work remotely, collaboratively, effectively without ever stepping one one another’s toes
        inbox handlers and other digital tools
            apps to triage email, such as Handle, to allow people to worry less about the clerical aspects of their job and focus on the goals they must reach
            browser plug-ins that block certain distracting websites for pre-determined lengths of time
    What is the future of work and how will it affect productivity? What is still unknown?
        works for some, but not for all - tradeoffs (
        “Those who volunteered to work at home reported improved work satisfaction and experience less turnover, but they also felt that the chance of getting a promotion decreased since they were isolated from other employees.“
        has been successful at Yahoo
        may be simpler in the future through things like teleprescence robots, virtual conferences, collaborative wikis, and non-email communication tools (facebook messenger, gchat, etc that allow instant communication between members of groups to quickly reach a decision)
    flatter organizations
        with less hierarchy comes fewer deterrents to sharing and challenging ideas
        employees feel more empowered to contribute/make a difference
        greater transparency and therefore greater trust
        decreasing friction in distance collaboration as software becomes faster, more usable, better at documenting changes
        emphasis in creative over productivity in the post-industrial economy
        look to quality, not quantity
    mismeasurement: output is not the only way to measure success, and even if it were, consistency is very difficult to maintain over the years as the economy changes. Why shouldn’t the metrics change with them?

Are E-commerce and the Digital Market Place Productive for Companies? (

    How is Productivity Measured?
        Improving Operational Efficiencies
            No store creates no traditional overhead costs of heating, lighting, storefront, etc.
            Distribution and shipping is slowed due to a one-item-at-a-time model. (Possibility of automation?) (
            Reducing transaction costs. (Specifically in B2B)
            Increased labor productivity (Specifically in B2B) (
            Access to greater number of customers.
            Open at all times.
    Creating a Competitive Advantage
        Curation and personalization. A direct relationship with the customer. (
        Online shopping a less stressful experience for shopper.
        The best online price will typically succeed
        Online + Instore options. (In-store Pick-up)
     What are the outstanding problems and unknowns with digital transactions?
        Closely tied to viability of nations transportation network
        Is mass delivery more efficient than individuals driving?
        Amazon subsidizing USPS to deliver mail on Sundays. (
        Same functionality in countries without a strong mail network
        Payment Security Issues
    How does this affect the Marketplace
        Intelligence-Laden Content
        User-Generated reviews/photos incorporated into online-buying. Company like Olapic. (
        Network Effect, Swift to rise and fall (
        Subscription Commerce/Replenishment as available through E-commerce. (Example - Dollar Shave Club)
        Minimized costs of Returns
        Loop Commerce, Online gift ordering that lets the recipient choose size, color, etc. (
        Instant Gratification
        Shutl Startup. Courier Service to deliver within the hour. (
        Change in Payments
        BitCoin Usage. Bitcoin as a payment network, No need for merchants to deal with Banks. (

Socio-cultural context

    Definition and measurement
        How productivity is measured in the socio-cultural context
            productivity paradox boils down to any discrepancy between the outcomes of some change in the status quo and one’s expectations for how that change will affect a particular effort
            implementation of ideas, practices, and trends can generate overestimation of progress toward some goal
            doesn’t have to be only technological innovation
                Atkins Diet example
            Define culture as the societal context that influences how meaning is ascribed by an individual
            Assumptions about how innovations like social media address Maslow’s hierarchy of needs
            Productivity paradox derives from a failure to account for the value associated with non-monetary rewards when setting expectations for innovation. See Defining the productivity paradox and Factors contributing to the productivity paradox
    Outstanding problems/issues: other externalities may offset gains from more (and more granular) information
            Decision making (example: health/QR)
                decisions about basic needs like shelter, water, and nutrition can be considered some of the elements contributing to health
                The promise of technological innovation for better health management may be best illustrated by the increasing popularity of the quantified self movement. See Is it really so paradoxical?
                    assumptions about the power of data mining to address health issues
                Factoring in the opportunity costs of pursuing big data could result in a different resource allocation, which might help individuals satisfy needs better. See Is it really so paradoxical?
                    potential to refrain from medical treatment?
                Negative externalities See Next-generation personal genomic studies
                    health information and trustworthiness
                    low barriers to entry ensure diverse perspectives
                    trustworthiness issues
                    money still affects exposure/algorithms
                The introduction of Internet technology has had significant effects on personal safety in both physical and virtual ways See Next-generation personal genomic studies
                    connotes a measure of stability to assuage the instinct to be on guard constantly
                    tradeoffs between innovation benefits and relinquishing control over one’s data
                    gaining insight into one’s health
                    convenient participation in the market
                    interpersonal relationship building
                    the Internet provides more perfect information
                This information is still controlled by power dynamics
                Difficult to discern trustworthiness
                    NSA revelations have drawn attention to the insecurity created by innovation
                    accelerates the learning curve
                Social media ostensibly was created to help us connect better by eliminating that which confounds our ability to interact: distance and time. See Social networks and the productivity paradox.
                Online dating
                    signaling is manipulated
                    social media networks
                    work vs. life
                    potential for various identities
                    potential for unexpected information “seepage” from one domain into another
                    are we more connected?
                    mobility creates need for other means of connection
                    detrimental to loyalty (work and non-work)
                    increased isolation
                entails a sense of personal achievement
                how continual measurement affects self-esteem
                measures of success
                online personae create the opportunity to cast oneself in good light for selection by others for jobs, dating, etc.

            state of fulfillment in which an individual knows oneself and interacts with the world in a way that is consistent with his or her sense of self
            Does technology make it easier for an individual to find fulfillment? See Productivity as art
            Learning curve trajectory is not as steep as with technological innovation in business and e-commerce
                NSA revelations
            More people
                crowdsourcing and diminishing returns as network expands
            Reactions to information overload
            Integration of the potential for externalities into the economic model
                reassessment of the value of information in light of externalities
                increases in resistance to Internet ubiquity
                    retro style


            Boundaries for personal information
            Calls for increased transparency
            Social media skepticism


            Expectations should take into account the other sources of value in our culture. How do the methods and variables we use to assess productivity affect our expectations for technological innovation? See Defining the productivity paradox
            The ability to encounter an unrestricted reality see Productivity as art


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