Information Theory – A Paradigm Shift For Business?

In a very general sense, information is structured, processed and organised data. It provides context to previously processed data and allows decision making to be based on real time available information. For instance, a single customer’s sale in a particular restaurant is data this becomes information if the business can identify which is the least popular or most popular dish. This is information that a business can use to create new products, change existing products, launch new services, or even respond to dissatisfied customers. The use of information has become increasingly important for businesses over recent years because of the rapid pace at which change occurs in organisations today.

The term ‘information theory’ was first used by Richard Lazarus in his landmark paper ‘On Information.’ The focus of the paper was on a model of information management whereby managers were able to extract and process data from an unpredictable input, in an unpredictable situation, which would typically cause unpredictable behaviour from users. The resulting concept has since then been refined and its applications have been extended globally. Most of this work has been done in the scientific and academic communities but it has also had a large impact on businesses and in particular on how they deal with uncertainty in the modern world.

There are many facets of the theory and its applications. However, perhaps the most important aspect of its wider impact is its role as a catalyst for change. Because information technology is generally viewed to be a relatively slow process and because of the long lead times required to build technologies and to make them commercially available it can sometimes seem like an unrealistic use of time.