“It is the dawning of the age of the digital, age of the digital!” I couldn’t help humming the 1969 tune after attending Erik Brynjolfsson’s presentation at the SAS Global Forum Executive Conference 2011 in Las Vegas.

As Director for the MIT Center for Digital Business, Erik lives and breathes all things digital – and all things innovative. He says the key to leadership in the digital world is to use information technology to innovate -- and his research shows that there are four drivers to accomplish this.

“Any one of these drivers by themselves would be revolutionary, but together they are would allow any business to outperform and stand apart from the rest,” Erik says.

1. Measure – “I’m going to make a bold claim," Erik says. "Every revolution in science was preceded by a revolution in measurement.” He shared the example of how the measurement of DNA samples led to the discovery of microbiology, medicine and a whole new world of knowledge. “We are now on the cusp of an equally important revolution in management decision making … we now have a thousand times improvement in our ability to see what’s going on in the marketplace, and can measure that data,” he says. On the web, it’s possible to have gigabytes, terabytes of data on which you can make all sorts of inferences. From the 100 billion searches on Google every month, you can learn what people are interested in. “It’s like having ESP about what people are talking about, what they’re looking for. Gaining this tremendous visibility into what people are doing will, without a doubt, positively impact your business.”
2. Experiment – Harrah’s hired CEO Gary Loveman with no executive or casino experience. But he had a PhD and knew how to make numbers talk. He mines customer data to develop effective marketing strategies that keep customers coming back. Harrah’s went from a second tier casino to a number one gaming company in the world. “Loveman pushes people to not just look at the numbers but to do something with them,” Brynjolfsson says.
3. Share – Brynjolfsson talked about how there were over 10,000 Mac users at Cisco, but no IT support for that platform. The users developed a Wiki and taught each other how to use the Macs and created a grassroots support system. This is the power of sharing – when embraced, organizations can create processes and knowledge centers that are productive and add to the bottom line.
4. Replicate – Information technology can help organizations replicate processes. Brynjolfsson showed how CVS Pharmacy stores saw a decline in sales and determined that there was a problem with its script fulfillment process (scripts account for much of its revenue). CVS found that problems arose when customers picked up their scripts – their name was misspelled, insurance information outdated, etc. And so they had long wait times to complete the transaction, and poor satisfaction with the experience. CVS changed the process and began checking this information with the customer when they dropped off the script so problems could be corrected up front. After the new process was in place, CVS surveyed customers and found there was a much improved 86-91 percent satisfaction rate. It then rolled out the process to over 4,000 pharmacies.

Each of these principles is valuable on its own. But when working together, they create a “new kind of R&D” for your organization: one where innovation is the norm and IT is its essential partner. Brynjolfsson recommends senior executives consider these three approaches:

1. Recognize the value of innovation, and the importance of changing your organization’s culture from the “analyze and plan” mode to “experiment and replicate.”
2. Invest in the necessary technologies and platforms that collect and aggregate data and innovations.
3. Apply the above four step process.

Do this and you will be a leader as opposed to a laggard in productivity and innovation.