The information is actually the infrastructure on which the activity of any organization is based
In essence, information is actually the infrastructure on which the activity of any organization is based. Moreover, information is actually the basis on which all social, cultural and economic activity rests. In the knowledge-rich society in which we live, an intelligent use of information is requested, so that the economic activity will yield optimal results. In fact, even in past years it was impossible to function without any flow of information, but today the scope of information is so vast, to the extent that it has become a quality in itself, and there is today an unprecedented awareness of the meaning of the concept of information.
The intelligent use of information must be done with the understanding that its utilization will be based on an economic rationale. One must make use of the accepted economic concepts while adapting them to the period and, if necessary, develop new concepts as well. Organizations, as they become flatter today, must still maintain a hierarchical framework even if they adopt new organizational patterns.
No organization can operate without planning functions and executive functions. The flow of information is carried out in two-way vertical and horizontal communication channels. The downward vertical flow of information moves from the most senior decision makers to the floor of the pyramid where those officials who perform the basic or production operations of the organization are located, and the upward vertical flow of information begins at the floor of the pyramid and reaches its apex. The upward flow includes the reports on the progress of the work and the downward flow refers to policy setting, quality control, compliance with schedules, production of goods to the required extent, compliance with the nature of formal and informal communication, and more.
The horizontal flow of information is designed to coordinate different operations, the final result of which is the integration of different items into assemblies. Each step point in the vertical channel or each meeting point is a decision node. The decision made is a function of the scope of the information that reaches it, the speed of the information's arrival and the relative importance of each item of information. On the face of it, it seems that the larger the amount of information that reaches the decision node and the faster it arrives, the better the quality of the decision will be, but this is not necessarily the case, for the following reasons:
A. Different items of information have different costs. There will be cheap items and there will be expensive information items.
B. Different items of information have different relative importance. There can be extremely essential pieces of information that the cost of producing or recalling is expensive and there can be alternative but cheaper pieces of information and vice versa. Less essential pieces of information can be expensive and replacement pieces of information can be cheap. Hence the conclusion that the decision whether to use a certain item of information is a function of its importance, its availability and its cost.
third. The production of a certain product requires a given amount of information items and no more than that. It is not necessary to have all the existing information for the production process.
d. A situation can arise where items of information arrive too early and they will therefore cause bias in decision makers and the end result will be a wrong decision.
A situation can certainly arise in which a lot of information reaches the decision node, but only some of it is relevant. The decision whether to use a certain piece of information is also a function of the law of diminishing marginal productivity. It should be taken into account whether a certain item of information, beyond a given threshold, adds something significant to the decision-making process. There is a possibility that the recall of an item of information will cost more than the amount of use made of it. The use of the law of diminishing marginal productivity prevents the decision node from being flooded with too much information. A constant flow of information in large volumes is considered a flood that may lead to the collapse of systems.
The communication channels can often get blocked or broken for various reasons. When information does not flow at all, or the rate of its flow slows down, or when there is a very high pressure of current in the communication channel, production may be damaged in the best case and in the worst case, departments, divisions and sometimes even organizations may collapse, a phenomenon that can be found in the water supply system. The higher that blockage is at a junction point in the organizational hierarchy, the greater its damage, and this is for the reason that with the increase in the organizational hierarchy, the importance of the decisions made there increases. The cost of the damage is a function of the location of the blockage in the organizational hierarchy. Therefore, you must act quickly to release the blockage. Failure to take appropriate steps will lead to the accumulation of damage to such an extent that it will be necessary to build a new flow channel.
In the same way that the aggregate demand at the macro level is defined as the sum of the consumer demand for consumer goods and the business demand for investment goods, so it is also possible to refer to the aggregate demand for information at the micro level. The aggregate demand for information is defined as the total number of information items that are in circulation in the organization in a certain period. In the organization there are two types of information items. One type of information is all the items of information that are used once, whether by a single person or a department or division. A second type of information is the sum of the items of information that are reused for different needs as a function of their importance in the decision-making processes. Information produced in the organization or acquired from external sources, its reuse is cheaper because it already exists and its only cost is the cost of retrieving it. Therefore, when you come to make a periodic calculation, you must also refer to this nature of costs. It is therefore advisable to use existing information as much as possible to reduce the cost of its production.
A special form of information flow is that of the Internet. This information can sometimes be provided for free and sometimes you have to pay for it. Since in many fields the information is very abundant and sometimes infinite, a situation can arise that even if the information is provided for free, finding it requires a lot of time. Here it is necessary to use a new concept, which is the cost of retrieving the information. An appropriate organizational function is therefore required, and that is the information. The more you have to invest in locating the information, the more computer time is required and the more skilled the informant is, the higher the cost of hiring him. A skilled informant is the one who locates the required information in as short a time as possible and who can provide his services to the maximum possible number of requesters in the organization.
The provision of free information such as the ability to download software from the Internet is accompanied by the promotion of sales of various products that come to support these software. This is actually a special version of the complementary product idea. While in normal products, the complementary products come as additional income to the factory that produces them, in the field of information the bulk of the income actually rests on the complementary products.
The application of these rules in different organizations and enterprises, while referring to their quantitative aspects, can allow for further characterization of different entities in terms of the way of using the various communication channels, and the wise use of them from an economic point of view.
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