Wednesday, February 04, 2015

Shift Index Looking Beyond Short Term Business Metrics

Hagel III et al. (2011) attempt to find a way to measure the way technology, and in particular digital technology, transforms business and the economy. They describe the effect of digital technology as the "Big Shift" and develop a "Shift Index" to measure it. This index is intended to measure longer term trends than is usual with most short term business metrics. The authors make the point that the digital adoption rate for is "two to five times faster than previous infrastructures, such as electricity and telephone networks" (2011, p.21). Their "shift index" measures the effect of three waves of this adoption:
  1. Foundation Index: "... reflects new possibilities and
    challenges for business as a result of new technology
    capability and public policy shifts."
  2. Flow Index: " is characterized by the increasing flows of capital, talent, and knowledge across geographic and institutional boundaries"
  3. Impact Index: "reflects how well companies are exploiting foundational improvements in the digital infrastructure by creating and sharing knowledge"
As might be expected for a report from a management consulting company, Hagel III et al. (2011, p. 24) suggest that "unless firms take radical action, the gap between their potential and their realized opportunities will likely grow wider". However, the authors seem to be working from a very limited view of what a firm is and how it can work, they say "Until now, companies were designed to become more efficient by growing ever larger ..." (Hagel III et al., 2011, p. 24). That may be the way Deloitte's clients like to see the world, but there is considerable research to show that larger firms are not necessarily more efficient.

Hagel III et al. seem to want to replace a romantic notion of the efficiency of large 20th century firms with an equally unrealistic view of 21st century ones: "largely propelled by individuals, especially the younger workers, who put digital technologies, such as social media, to their most effective use"  (Hagel III et al., 2011, p. 24). In this new age firm, management is to play a supporting role, finding "passionate employees" and "providing them with platforms and tools". Stripped of the new age language, this sounds like the traditional role of management: to identify staff with potential and give the the tools to apply their skills. Also the idea of staff having to step outside the boundaries of the organization in order to get the job done is hardly a new one.

Hagel III et al.'s message about productivity seems to become a little confused when discussing "creative cities" (2011, p. 24). They comment that "Talent is migrating to the most vibrant geographies and institutions because that is where individuals can improve
their performance more rapidly by learning faster." which is hard to argue with (but has been the case for thousands of years). They have identified the top and bottom ten creative cities (but only in the USA) and point out that the top ones outpaced the bottom for population growth, as if this is a good thing. The authors seem to think that bigger cities are in some way better. But the ADC Cities Report: Enhancing Liveability (Report part 1 & Report part 2, 22 October 2010), sets the optimal size for a city at 250,000 to 300,000 people.


Hagel III, J., Brown, J. S., Kulasooriya, D., Bhatia, S., Lally, M., Wong, J., ... & Lu, S. J. (2011). The 2011 Shift Index Measuring the forces of long-term change. Deloitte Center for the Edge, 1(2011), 17. Available online at

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