The strategic significance of information
Nowadays, it is often said that information has become the most important resource of present-day organizations. Since it penetrates all aspects of an organization, crosses data processing and the information systems department, it is even possible to say that it can no longer be treated as a source of competitive advantage, but as a competitive necessity.
In theory, information falls within the resource hierarchy starting with data that leads to information, comes together as knowledge and results in wisdom. Data can be defined as the undigested observations, or unvarnished facts. Information follows as the organized form of data. Knowledge is then the organized information that is internalized by its user and integrated with other observations resulting from experience, study, or intuition. The final step is the assimilation of knowledge into wisdom, which is information that has been made useful by theory, relating the bits of knowledge to each other.
There are six inherent characteristics of information as a resource that determines it as different to any other resource that we as humans have previously experienced:
1. It is expandable: Information is certainly not scarce, it is available in profusion and the more we have, the more we use. This concept of “information-rich” may not necessarily be good, but may instead mean being “swamped”. There are limits to the growth of information, but they lie in the time and capacity of people.
2. It is compressible: It is possible to concentrate, integrate and summarize information for easier handling.
3. It is substitutable: Information can and does replace land, labor and capital. It is the use of computers and telecommunications that aids in this phenomenon.
4. It is transportable: Information can be tapped into just about anywhere; this has led to the idea of being remote as much more difficult to achieve since people and information can be taken to the remotest of places.
5. It is diffusive: There tends to be an ability for information to leak. This leakage allows us to have more of it and more to share.
6. It is shareable: No exchange transaction of information can take place, only sharing transactions. This leads to an entire sharing environment.
We as users, are not able to own information like we are able to own resources such as land and capital. It is, however, far more accessible than these resources and has become our key asset. The quality, relevance and usefulness of information do depend on who uses it, how astutely and for what purposes. All of this allows information to become a strategic resource, since it can be used to:
- Accomplish pioneer advantage.
- Maintain previously acquired competitive advantages.
Of course, not every type of information provides an organization with a sustainable competitive advantage. First of all, given information must create some value; otherwise it’s useless. Even worse – each piece of useless information becomes a competitive disadvantage, since it clutters up the system. Next, valuable information should differ from competitors’ – because if you have the same assets as other team players, you’re not in advantage – you’re in parity. Finally, this unique information should be made as hard to buy and/or get to as possible because the competitive advantage of your company will last as long as you’re able to keep the crucial information hidden.
By protecting information, you are protecting your growth, your advantages, your market position, your whole business. Information impacts different companies in different ways, which is the reason why management approaches, instruments and their use should be chosen appropriately. In the end, effectiveness of the company depends directly on the balance between strategic management and information technology management.