Question

(Related to the Apply the Concept on page 374) Segment.com reorganized its office as part of its "antidistraction campaign." According to an article in the Wall Street Journal, the company cut back on its internal text messaging service and moved "some of its communication back to email to reduce the number of notifications employees were receiving." a. Is it possible that this movement from a new technology-text messaging-to an older technologye-mail-represented positive technological change at Segment? Briefly explain. b. Suppose that competition for software engineers results in Segment.com having to pay them higher salaries. Would the fact that the firm will now face an increased cost of providing its services be an example of negative technological change? Briefly explain.

Short answer

In part (a), the shift from a newer technology (text messaging) to an older one (email) could represent a positive technological change at Segment.com if it can enhance productivity by reducing interruptions and inefficiencies. In part (b), paying higher salaries to software engineers due to competition does not signify negative technological change at Segment.com because despite being an additional cost, it doesn't directly impact technological productivity.

Step-by-step solution

Understanding Positive Technological Change

Technological change is positive when it increases the overall level of productivity within the company. This occurs when the company is able to deliver more output using the same amount of input. The question here is whether shifting communication back to email from text messaging is improving productivity.

Analysing the Shift from Text Messaging to Email

While email is an older technology compared to text messaging, if the change was made because it reduces interruptions and increases overall productivity, it can be considered a positive technological change. It would be a positive change if, for instance, employees were wasting time with unnecessary notifications from text messaging and this change streamlined their communication and made them more efficient.

Understanding Negative Technological Change

Negative technological change is when productivity decreases within a company. This can happen when more resources or input is needed to achieve the same amount of output.

Analysing the Impact of Higher Salaries for Software Engineers

Suppose Segment.com has to pay higher salaries because of competition, it would increase the company's costs of operation. This increased input (i.e. salaries) is not directly related to technology’s impact on production or productivity. So, it is not an example of negative technological change, it is just a rise in costs.

Key concepts

Productivity

Productivity is a measure of how efficiently a company can convert inputs into outputs. Typically, higher productivity means more goods or services are being produced using the same amount of resources. Understanding productivity is crucial for businesses as it directly affects profitability and competitiveness.

When a company like Segment.com evaluates its internal processes, changes that increase productivity can have significant impacts. For example, if employees are able to perform tasks quicker and more efficiently, it can lead to cost savings and an improved bottom line.

For businesses, tracking productivity over time helps identify areas of strength and opportunities for improvement. If Segment.com found that employees were distracted by text notifications and emails reduced these distractions, this change could boost productivity. Thus, the efficiency of work processes is an essential aspect of evaluating technological changes in a workplace.

Positive Technological Change

Positive technological change happens when a company implements new processes or tools that enhance its productivity. This means achieving more with the same or fewer resources. However, it doesn't always involve newer technology. In some cases, reverting to older technologies can still be positive if they enhance productivity.

For Segment.com, moving from text messaging to email might seem like a step backward at first glance. But if this change reduces unnecessary interruptions and boosts overall employee focus and productivity, it represents a positive change.

This highlights an important point about technological change: its success is measured by productivity gains, not necessarily by how modern or advanced the technology is. Companies must continuously assess how their tools and processes impact efficiency and make adjustments for sustainable growth.

Negative Technological Change

Negative technological change occurs when technological shifts result in reduced productivity. This usually happens when more inputs are needed for the same level of output.

In the context of Segment.com, the increase in salaries for software engineers is a shift in economic conditions rather than technological change. So, while these higher salaries mean increased costs, they do not directly equate to negative technological change since they aren't caused by technology affecting productivity.

Negative technological change would be exemplified by adopting a new software system that complicates tasks, requiring more time and effort from employees without any real benefits. Businesses must be vigilant in monitoring technological impacts to ensure changes do not unintentionally hinder productivity.