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With productivity growth at an all-time, Erik Brynjolfsson, director of MIT's Center for eBusiness, has been researching just how much influence electronic business systems and the extended enterprise have had on this economic measurement. In a recent interview with Signature Series Executive Editor Julie Bort, Brynjolfsson revealed the hidden traits of companies that use technology to the best productivity effect. He calls these companies "digital organizations."

How have the e-business and the extended enterprise trends affected the companies most adept at using technology to increase productivity?

In most of the 20th century, you could make a pretty clean distinction between what happened between firms - markets - vs. what happened inside a firm - hierarchies. Markets tended to have very simple kinds of communications. Prices and quantities are examples. Inside the organization much of the communication flow was command and control. Now we are seeing the communication flows become richer and more complicated. We're seeing relationships that are neither markets nor hierarchies - they are really more like networks, partnerships and value-adding relationships.

Are you referring to exchange hubs, where competitors interact?

No, I'm thinking more like long-term supplier relationships where very rich data might be exchanged - the way Boeing exchanges CAD data with its suppliers or Dell with its suppliers, or Wal-Mart exchanging information with Procter & Gamble. The data exchange is much richer than simply, 'We'll place an order off of your product list for this price and quantity.' It's more like, 'Here are our customer needs and specifications. Here are some product components that we'd like you to help us design. Here's what some of our other partners are doing.' And gigabytes of data are being exchanged, whether that's standard data or CAD drawings. This isn't the classic market system anymore. It's really something that we've never seen before that relies on intensive data communications, on new levels of trust and on institutions that are at least as important as the technology infrastructure.

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