(microsoft word - when the fog falls_jan fazlagi\346.doc)

When the fog falls - information overload as a challenge from the
business education perspective

Congress track: GLOBAL BUSINESS EDUCATION
Jan Fazlagic, the Poznan University of Economics, Poznan, Poland
[email protected]

In this day and age, market information is extremely valuable. At The thing is that every day a company receives valuable
the beginning of the 1990s, in the USA alone, specialists were paid information in a jungle of worthless information or misinformation. 375 billion dollars a year for information services and products. The ability to choose the right information at both the level of The year 1991 is even considered by some researchers as the individual employees, as well as the level of a whole company, is beginning of a new era, when global investments in information currently the key to success. technologies exceeded investments in production assets. In the At the end of the 20th and the beginning of the 21st century - “information era” the nature of traditional products and service thanks to a great advancement in information technology, and changes. 1 The multibillion-dollar information market exists due to progressing since the 1960s - it was possible to create very efficient an asymmetry – buyers are uncertain and lack knowledge, hence, IT systems. Managers began to treat seriously the promise of a they buy it from those who know more. Knowledge has become an “well-informed decision”. Information has always been the basis item of exchange. The knowledge and information market is ruled for making managerial decisions, but the possibilities offered in by laws different to those in the market of material commodities, recent times by ICT solutions have considerably increased the .e.g. businesses that sell information of low quality can yield the expectations of managerial staff towards what can be called highest profits, whilst sellers of high quality information can have “information support”. The ways in which people use information difficulties staying in the market. Messages of high quality fight for have become the subject of research. The thing is that generally survival. In the case when a manager is seeking information about a there is a great deal of irrationality in how people use information. very difficult market - for example regarding mobile telephony in Sanford Grossman, an economist from the University of Indonesia because they want to invest 100 million dollars there - Pennsylvania, described a certain phenomenon which was named they have to take into account the fact that the forecasts will not be “Grossman’s paradox”. It is assumed in classical economics that a accurate. The investor, with an aim to decrease their own risk, market functions correctly if all market participants have full purchases more than one report about the market, provided that information. They can, as a result, mutually predict the each of them has been compiled in a different way and presents the consequences of their actions and adapt their strategies accordingly. market from a different angle. In light of the fact that the reports Ideally, markets would not offer any stimuli for the market have been made in various ways, it can be said that they are not participants, as everyone would have full information about the substitutes – they offer different information on the same subject. competition’s activities. In such a situation, no activity would bring In such a situation, the reports will almost be like complementary profit. Companies which would not benefit from new information goods for the investor. Considering that the offers will not compete would stop acquiring new information. Grossman suggests that with each other, they can establish monopolistic pricing, i.e. “perfect information” is pure fiction. In other words, the market “businesses that sell information of low quality yield the highest economy in actual fact develops THANKS TO the fact that profits!” companies do not possess all the information. Traditional models of describing economic phenomena based on The experiments of the Security Studies Program (SSP) carried such paradigms as Alfred Marshal’s law of diminishing returns - out by the renowned MIT together with the American Army show stating that the increase in supply of a given commodity in the that the amount of information gathered is not necessarily market results in the decrease in margins and profits of sellers in conducive to the improvement of military situation in a battle field. the given market – are still used in educating managers. As we The military strategy theorist Sun Tzu stated that “He who knows know, the network economy works under the principle of himself and the enemy shall always win. He who doesn’t know his increasing returns. It means that the more copies of a given opponent but knows himself, shall be defeated at times and at times information product the manufacturer supplies to the market, the shall win. He who knows neither himself nor the opponent is higher their value becomes. Additionally, effective marketing inevitably doomed for failure.” Sun Tzu was not, however, able to methods in the network economy have also changed. Success of a imagine to what extend technology would advance and how many given product is increasingly determined by irrational factors, not different methods there are of acquiring information, not only about possible to foresee or programme. For instance, Apple owes its i- the enemy himself, but also about his actions on the battlefield. It is pod success to chance - white headphones were designed for it to obvious that the information alone changes little. It is interpreting distinguish them from computer headphones. As a result, the white and connecting the facts together that can bear fruit in the form of a headphones became a “fashion item”. Customers started buying the tactical plan or strategy. Conclusions drawn can at times be i-pod just to be able to show their individuality in the street. contradictory, particularly if the amount of information possessed is The main challenge for modern management is transforming vast. Sonars, satellites, spy planes, and a whole range of other ICT companies from “information seekers” to “information choosers”. devices have been developed with the mere purpose of acquiring accurate information about an adversary’s actions. Today’s 1 Ph. Kotler, G.S. Carpenter, L. Lodish, Tajniki marketingu, K.E. technology has certainly removed some of the ‘fog’ from the Liber, Warszawa, p. 356 – 361. strictly confidential information about the strategic moves of an adversary. Thanks to this, the movements of hostile units are just as The paradox of meta-information is that “the tail starts to wag the visible to us as the movements of our own army. Additionally, dog”, i.e. activities in the real world are subordinated to meta-numerous communication channels make it possible for information. An example of this is artificial maintaining of AAA commanders to follow the actions of their armies from large rating for the USA whose debt is around 12 trillion dollars and distances, and control the situation on an ongoing basis. Analyzing might even reach 14 if the Democrats’ plans succeed in Congress. the data about the movements of an opponent’s troops may be by The point is that lowering the rating (i.e. – attention – creating and definition unclear, and clarifying it on the basis of a range of publishing reliable information!) suits neither the USA government available information can lead to contradictory conclusions. (increase in debt servicing caused by the increase in debt service However, it’s not the information we have that decides the costs), nor financial markets in the world. outcome, rather than luck, preparation, experience and involvement „Option acceleration”
in a given undertaking. Also, when a threat to human life appears, „Option acceleration” – describes a situation when a the time element gains in significance. Decisions must be made behaviour strategy is changed as the result of acquiring new quickly. Thorough analysis of all the information might be information. The information which was originally supposed impossible, especially when a commander of armed forces or a to optimize actions within the framework of the original flight controller starts to receive from 10 to 1000 times more strategy is not at all used for this purpose. The new information per time unit. Having detailed information is not information isn’t used to fulfil the mission’s objectives – necessary, and it’s the key factors that can ensure survival of the more frequently it is used to REDEFINE THE MISSION’S threatened people that become significant. It’s not a question of OBJECTIVES. The perception of the value of information “How much information we have?” that becomes important, but “What does this information mean?” and “HOW can it be used?” Until recently it was taken for granted that increasing the amount Available IT solutions currently cause increasing dependency on of processed information leads to an increase in efficiency and ICT among managerial staff. In theory, IT should provide a optimization of resource use (e.g. saving ammunition). During war multiplier effect (P * IT – strengthening efficiency). Practice proves games it would appear – to everyone’s surprise – that up to five that managing a company equipped with advanced IT solutions times more ammunition than normal was used during similar without proper training leads to the same results as those from an actions. The sudden increase in the amount and quality of average driver behind the wheel of an 800-horse power Formula 1 information meant that new targets appeared in the decision area. It car. Experience shows that IT may weaken the organization’s turned out that the formula: performance (P/IT). We do not yet know why it happens this way, more information = better information
but these are the experiences of some companies. Great benefits does not, however, ensure more effective and better decision- that are brought about by big investments in IT should be assessed making. A new quality has also been introduced by the increasing MERELY in the context of enormous costs. A precise formula for prevalence of false information. Sun Tzu described in The Art of the IT sector has not yet been developed so far: War the importance of revealing false information and simulating costs/benefits
fleeing in panic when fighting an enemy, as this was supposed to It has, however, been established that highest class IT lure the adversary into a trap – “pretending to be weak when you infrastructure strengthens – not weakens – pathologies connected are strong, pretending to be hungry when you are full, showing with decision-making. Those that managed investment funds before fatigue when you are rested”. the crisis “knew” about speculative bubbles but they invested False information is becoming an increasingly significant anyway. Having “the right information” at the right time does not problem, e.g. recently, target price recommendation of the LOTOS lead to making “the right decisions”. The experiences of the USA
company PLN 0,0 caused a sudden drop in its price, although there army show that more transparency on the battlefield does not
were no objective reasons for that to happen. Similarly, Steve Jobs guarantee greater military performance. Even if the most intelligent
had for a long time been saying “we are not going to enter the video decision-makers receive the highest grade information, they will
market”, thereby dulling the vigilance of the competition for always make sub-optimal decisions. The problem is that growth in
several years, only for him to later present an i-pod with a video the supply of information causes changes in the behaviour of
feature. Currently, a new category of information product has organizations and individual employees. Many of those behaviours
appeared in the market: “information about information” (meta- will be, from a rational point of view, inefficient. Organizations
information product). Examples of such a commodity are: rating must learn to act in conditions of OVERLOAD, and not DEFICIT
opinions. Moody’s Investors Services, a rating agency, earned USD (of information). Information available in excess is wasted as much
2806m between 2003 and 2007 by giving “opinions”. Financial as any other economic resource: organizations have a tendency to
markets are dependent on the work of rating agencies. Only a waste resources which are in abundance. Conclusion: information
month before its bankruptcy, Lehman Brothers bank enjoyed an that is better, cheaper and supplied quicker is wasted (just like
opinion that did not indicate any problems with settlement of bullets in a battlefield when they are in abundance). Boosting the
liabilities. AIG was among the safest companies in the world in supply of information in a company causes new problems. The new
terms of solvency, with a rating at the highest level AA in information must now be analysed, the costs of coordination
September 2008. When the agencies suddenly started to lower the between departments increases, and more conflicts appear.
ratings of the American insurer, they dragged it down into even
In business education in the 21st century new elements resulting more trouble. The EC holds rating agencies partly responsible for from the nature of the present-day economy must be introduced to the current crisis in global financial markets, and this is how the curricula. This also means abandoning or marginalizing certain they’ve justified the need to take legislative action. There are over standard models of market description, such as marketing-mix. 40 laws based on credit ratings which, according to other Cooperating with a competition element has a greater significance regulations, currently can only be provided by 10 accredited than ever before in the network economy (co-opetition) - as a entities. The European market is tied to the agencies through a result, the Porter’s five forces model also becomes inadequate to directive on capital requirements. According to this directive, the describe a company’s position in the market. Modern businesses assessment of credit worthiness can be used when the weight of operate in a number of markets simultaneously and compete: risk pertaining to banks’ investments is established. - for talents in the global labour market - in the fields of creativity and innovation - in the field of establishing market standards (and this means that information deficit should be presented in simulation games and in the end there is only one winner and there is no possibility of case studies – the challenge is to choose the right information and “market division” between several key players).2 As a result of this, strategic management is based less and less on predicting the future, and more and more on shaping it. In light of the above-mentioned arguments, it’s worth considering Table 1. Management factors in conditions of information
what business education should look like in the coming years. First deficit and overload
of all, a review of curricula must be carried out in order to eliminate
tools and concepts which are by nature inadequate to a modern
Management
with Management with
market. Among such concepts, which deserve to be marginalized or information deficit
information
eliminated from business education, the concept of marketing-mix overload
is worth mentioning. Moreover, many ideas on quality management that were developed in the second half of the 20th century have now Metaphor
become outdated. For instance, the concept “customer’s satisfaction Dream of the To see more
is inappropriate in the case of innovative businesses that have to organization’s
supply solutions which the customer has not yet become familiar with”. More and more goods and services in the market are Strategic
recognized as experience goods. Satisfaction assumes a certain challenge
parameterized predictability of a result, but after all, the unique experience which creates customer value is by nature impossible to Operational
programme. Modern business education should take account of the fact that competing in the market currently happens in a multidimensional system – the same company can be a rival in one market, and an ally in another. 20th century style thinking about management obviously originates from the experiences of American companies and is deeply rooted in American culture. In the 21st century, it’s Asian economies that become increasingly Action mode
important players in the market. Why not then, instead of promoting American individualism and protestant values relating to the responsibility of an individual for their own existence, focus our competences
attention on the values that are important in Chinese or Hindu The review of curricula should not be limited to outdated Source: own work. concepts. It is equally important to include new elements, and, among others, the following must be mentioned: 1.Introduction of simulation games and case studies in which many correct solutions can be found, i.e. in which success and defeat References:
criteria are fluid. A modern market is unpredictable and relative. Changes happen in a non-linear fashion and the rules change during 1. Leveraging Corporate Knowledge, Edit. Edward Truch, 2.Teaching the skill of asking the right questions – the educational 2. Michael Schrage, Perfect Information and Perverse process here is not based on an assessment of the quality of an Incentives: Costs and Consequences of Transformation answer to a presented fragment of reality, but on the quality and Transparency, May 2003 SSP Working Paper assessment of the questions asked by class participants. The idea is 3. Ph. Kotler, G.S. Carpenter, L. Lodish, Tajniki that the same information can be interpreted in a variety of ways. marketingu, K.E. Liber, Warszawa, p. 356 – 361. Due to this, an analysis of the process of asking questions, as well as work on its improvement are the keys to transforming information into knowledge (see: table 1). 3.Ability to handle info-stress – special simulation programmes combined with drama elements can create, in laboratory conditions, situations in which a student can experience the effect of information overload. Information overload affects the quality of decision-making, therefore, the ability to deal with this phenomenon is of great significance for management efficiency. 4.Competing for talents – managers of present-day corporations should become familiar with conditions and circumstances in which the creative class representatives regard their company as an attractive workplace. 5.Management in conditions of full information – situations in which the person managing a company does not experience 2 In 2006 Toshiba announced that they quit promoting and supporting their HD-DVD standard, in effect giving the field to the 3 J. Fazlagić, Sztuka zadawania pytań – Quizzics, CEO, 7--8/2008, rival standard Blu-Ray by Sony. Toshiba had invested USD 600m p. 34-37. into promoting their standard.

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