The battle tank example used by Professor Heskett is a high risk, high gain scenario for an information technology (IT) application. The latest advances in IT have the highest marginal utility for a tank commander because it is a question of life and death. However, the majority of us prefer to deploy IT applications for medium risk, medium gain scenarios like credit card processing, market forecasting etc., and prefer the manual route where it really matters.

The battle tank example presents two distinct scenarios. On one hand, a badly implemented IT application could lead a tank commander to make a wrong decision. On the other hand, a well implemented and intuitive IT application could actually lead the same tank commander to save his life and that of his comrades. He could fight more and increase his country’s chances of winning the battle.

In business terminology, the latter scenario is equivalent to large gains in employee productivity and increased employee contribution towards winning market share. All CEOs want this to happen, but only a few succeed. Why?

It is because organizations differ in their risk-taking profiles. We can divide organizations in two broad categories. On one end, we have organizations like the pension funds that are risk-averse because their investors want it that way. Their employees tend to have the same philosophy. And because they are giant investors themselves, they pass their risk-averse sentiment along with their investments. The quarterly reporting on Wall Street represents this sentiment. Strategic investments like high-end IT applications tend to get flagged as low priority in the annual budgeting exercise, even though some of them could turn out to be market winning applications.

On the other end, we have organizations that want to experiment, and their investors want them to do exactly that. Failure is usually a part of the annual expenses. The firms in biotech and wireless are examples of this category. They are smaller in size than the typical Fortune 500 and the employees know their regular customers. They tend to know how an event could affect their revenues and profits. These firms not only sell their experimentation, but also pass their innovative methods on to their customers.

Most of today’s Fortune 500 organizations lie in between these two ends. And therefore, they vary in their zeal to try out an innovative approach, which could be an IT application.

It is true that exposing decision ­making information to frontline employees is a business risk. But a well-implemented IT application can mitigate that risk and still bring the benefits of speed into business. For example, it could help a customer service rep to identify potential sales, and pitch right away from a pool of ready-made product demos while the competition is still planning an internal meeting. It is the same as the ability of a Japanese autoworker to stop the billion­ dollar production line and correct a defect right away, and avoid expensive and embarrassing recalls later.

So, will information technology really turn organizations upside down this time? Yes it will, but only for a few organizations. These would be organizations willing to experiment with the capabilities of their frontline employees using innovative approaches. These would be organizations willing to place the knowledge acquired by the seniors in front of the juniors. And possibly, these would be organizations poised to become the new market leaders.

Reference:  https://hbswk.hbs.edu/archive/heskett-column-will-information-technology-really-turn-organizations-upside-down-this-time-readers-respond