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Archive for November 10th, 2010

IBM Industry Summit: Frank Kern On Mastering The Tsunami

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IBM vice president Frank Kern explains to the IBM Industry Summit in Barcelona how they can begin to master today's information tsunami.

Frank Kern, senior vice president of IBM’s Global Business Services followed a tough act in Ginny Rometty, but provided yet another valuable and, dare I use the word, “insightful” look at the smarter planet agenda.

He began, appropriately enough, with data.

From the IBM 2010 Global CEO Study, which IBM conducts every couple of years (and which I wrote about extensively in a prior post), Kern indicated it’s always a pleasure to meet with over 1,500 CEOS from around the world so IBM can “listen and learn.”

And learn we did. Lessons, in fact, that are driving IBM business decisions, and creating a harmony across IBM’s various product lines unseen since…well, forever.

So what’s on the CEO agenda, Kern asked, particularly coming out of a recession?

First, accelerating global complexity, driven in large measure by our increasing interconnectedness and voluminous amounts of new data. Systems linked, if you will, to other systems.

Second, CEOs identified a gap between that accelerating complexity and their organizations ability to deal with it, some thirty percentage points between those who are embracing the complexity and those befuddled by it.

Creativity, therefore, is the top leadership quality, Kern reported, that CEOs indicated could best equip them to get out of this mess.  Creativity, not operational rigor or management discipline (although a little of those probably wouldn’t hurt, either).

CEOs are also telling us there has to be a willingness to break with the status quo, to break current models, even if they still work.

The top organizations that performed best during the growth years, and during the downturn, were those which are also the most likely to take on new possibilities — 23% more likely to advocate change to their business models, and growing revenue 6% more than the average Joe Company.

Technology, Kern said, also continues to rise in importance on the CEO agenda, from 6th to 2nd position (ahead of macroeconomics and governemnt regulation).

People alone won’t get fast enough, smart enough, capable enough, Kern indicated, to deal with all this uncertainty. The smartest, best-intentioned people just can’t help do some of the things that need to be done: Uncover new revenue sources; build operating dexterity; reinvent customer relationships.

Creativity unlocked by new technology is required to capitalize on those new opportunities.

Or, conversely, Kern posed the question, “Does anybody here think our customer relationship is going to be reinvented by increasing sales face time???”

There are other new and exciting opportunities on the horizon.

Enterprises are starting to hear global conversations going on about their brands, across social networks. They can capture, analyze, decide, and act. They can be fast, and they can be right.

Who needs Mark Zuckerberg?

Apparently, everybody. And LinkedIn. And all the other venues around the globe where important conversations are taking place, and business decisions are being made, and people are being influenced.

Social business, is what we’re calling it at IBM.

All this realtime information is out there, tremendous amounts of it. We’re processing more information than ever before, but less of what is available, and radically less than what’s generated in real time.

That’s why customers fear they are operating with blind spots growing bigger, even as they sense this huge opportunity if they can master the tsunami.

Threat or opportunity, Kern continued. Last year that was an open question: It is not a question anymore.

Today, Kern explained, we see examples of clients that are looking to exploit this historic explosion of data to their advantage.

The New York City Police department, for example, who, by using analytics, can now predict where the bad guys are going to go after they’ve committed a crime (Hint: The location is not their friendly local NYPD precinct.)

Just last month, IBM released a report on electronics spending for Nov/Dec 2010, and the forecast said spending would be up 4% in US. (We were probably right…I just bought a new laptop, which surely sent the numbers up a few fractions of a percentage point).

North Carolina’s Health and Human Services is helping detect fraud in public services with a fraud detection solution (I’m hopeful we’ll be able to use this one for politics as well).

There’s that inflection point again, said Kern, driven by a pressurized, intense environment, shifting from value propositions that were labor-based journeys to ones focused on committed business outcomes.

What makes this outcome orientation different from ten years ago?

An idea whose time has come, said Kern. We’re seeing a a broader and deeper substitution of technology for labor. We’re replacing custom work with standard repeatable assets.

We’re developing asset content that’s embedded in solutions, all the way through delivery. Without this repeatability, and throughout the life cycle, it’s hard to get a path to these committed business outcomes.

With IBM business consulting, along with IBM research and yes, even IBM software, we can infuse our consulting with repeatable solutions born out by real world implementations.

Why now? Standardization, in a word.

In a world that’s grown increasingly complex, we can now have greater certainty with our outcomes using repeatable, predictable progression paths. Say that three times quickly, then overhaul my business while you’re at it.

Finally, we’re on to higher order problem solving. We have to be.

Companies and organizations must use technology, business analytics, smarter systems, and underlying infrastructures that better allow them to adapt to all the aforementioned complexities.

Then, we can move along to the next orders of value, predicting market behaviors and even consequences of individual decisions.

The key theme here, noted Kern, is about new insights, and how they must be operationalized. How you can align your insights with your business strategy, and your organizational processes?

Easy to say, hard to do.

If we take a step back, concluded Kern, we’re seeing indicators of something important and even optimistic (And we could all go for a little of that about now, couldn’t we?)

We’re at a remarkable point in time, entering a new normal of economic conditions, one with an accelerating climate of unpredictability, and emerging out of all of this is this question on the minds of global business leaders:

What’s my greatest possibility?

When you got from what’s the problem to what’s the possibility, what are the prospects, what’s available to my enterprise that was never there before…well, this is a prospect worth the best efforts of us all.

And with our clients and partners we can enable and participate in all that.

THUNDEROUS APPLAUSE

IBM Industry Summit: Ginny Rometty On The Business Evolution Towards A Smarter Planet Agenda

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At the kickoff sesion of this morning’s IBM Industry Summit, IBM senior vice president of sales, marketing and strategy, Ginny Rometty, articulated a vision for organizations around the globe on how they could practically execute against the smarter planet agenda.

IBM Senior Vice President Ginny Rometty guides the IBM Industry Summit audience as to how companies can navigate their way to smarter business in the "new normal."

But first, she helped to rearticulate the problem statement through an example many may have already forgotten, the rice shortage crisis from early 2008.

Rometty explained she was traveling in Asia, and befuddled that in this day and age there would be a run on rice.

Once back at her office, she polled several colleagues from IBM Asia, and asked them what they thought was the cause of the shortage: Market speculation, climate change, growing demographics, what? In truth, it was all these things, but the “system of systems” had been overrun by its own complexity.

And ironically, a report released over a year later from the U.S. Dept. of Agriculture stated that 2007-08 had been a record crop for rice!

Too much complexity, indeed.

There were huge inefficiencies in the vast distribution and supply chain system for rice, and not unlike the global financial crisis, it was those inefficiencies and interconnectedness that led to the rice riots to occur in the midst of the greatest rice crop in years.

With that as the backdrop, and the problem statement established, Rometty then began to explain what organizations around the globe must do if they wish to embrace the complexity of such “systems of systems,” and start to capitalize on the new opportunities they present.

Because this one example was emblematic of broader, but common challenges facing the world: All the systems that govern our businesses are really interconnected.

Also, companies everywhere have started to realize the increasing costs of their longstanding inefficiencies.

Which leads to the third understanding: We have to change. This is clearly not sustainable.

Rometty mentioned a study which revealed that since the global crisis hit, one-third of all CEOs have been replaced (Monster.com, anybody?)

To respond (and keep their jobs), CEOs must start to focus their energy on productivity and structural change, continued Rometty.

“You’re going to either take a market, or make a market.”

Therein lies the promise and the aspiration of a smarter planet. It really is a new way of thinking about your business and its opportunity in the world.

So how as a business do I get started on this concept of a smarter industry, Rometty asked?

Rometty answered the question by outlining the fact that IBM has done over 600 engagements around the globe, and half were done with partners like those in the room here in Barcelona.

Rometty then fully hit her stride and outlined for the CEOs and partners gathered in the room the three general phases people go through as they move towards a smarter business:

  1. Instrument to Manage
  2. Integrate to Innovate
  3. Optimize to Transform

The first step is simple: Understand the performance of your business by instrumentation.

You can’t know how fast you’re driving if your car doesn’t have a speedometer.

That’s why IBM has related this idea of embedded technology (RFID, sensor data, etc.)  To bridge the digital and analog world, we have to instrument, measure, and then manage it.

As an example, Rometty mentioned a Vietnamese seafood company which uses RFID sensors to monitor, from trawler to market, its fish catches to ensure quality control, manage inventory, and prove the premium value of its catch.

Second, companies must integrate to innovate. Organizations must be willing to evolve and adapt horizontally, across all their systems and structures, so that they can then be prepared to apply business analytics more effectively.

Rometty mentioned Toyota, which built an industrial waste efficiency project that the company spun off as a separate business unit, Ecomanage Network Corporation, to help other manufacturers facing the same waste management challenges.

Rometty also mentioned how supercomputing capability has evolved during the past decade. We’ve gone from Deep Blue, a supercomputer playing a chess game (but one with ultimately finite moves) to “Watson” (named after IBM’s founder, Thomas Watson), the new supercomputer learning how to play against humans with infinite possibliities in the “Jeaopardy” TV game show.

The host provides the answers, Watson has to come up with the questions.  Watson’s currently in training against other humans, but Rometty indicated that “She’s learning quite fast.”

Much laughter in the audience before Rometty moved on to the third step: Optimize to transform.

Now that you’ve built a foundation using instrumentation and new analytics, you can now move on to the art of the possible: Optimizing your system towards a specific business goal.

Predictive analytics is very different from the “looking backwards” model businesses have historically depended on.

The next decade, argued Rometty, will be one of predicting the future before it happens.

Unless you think she was now on to soothsaying, Rometty mentioned the Singapore Land Transit Authority, where technology is helping Singapore predict bus arrival times at a 98% accuracy rate, and helping commuters understand bus seat inventory via their mobile devices.

So what’s required to pull off this transformation, Rometty asked?

Three things. Leadership featuring an analytics based-culture. Systems thinking. And new forms of collaboration.

With regards to analytics, it’s actually simple to say (harder to do): Get your company and its people to move from guessing about your business via HIPPO (Highest Paid Person in the Room) and gut judgment, to one based on facts and trusted data that yields action.

Two, don’t get caught in the rice shortage paddy! Develop a culture of systems thinking so your organization is more adept and able to respond to unexpected crises, no matter their orientation.

And three, build a culture of collaboration. Your partners, your suppliers, your customers, all are key constituents in a supply chain of new ideas and possibilities for your business, but only if you facilitate and tap into their expertise and insights.

Pioneering companies which rethink their business systems and models, reinvent their outdated processes, and leverage analytics effectively moving will be poised to move beyond the “new normal” and instead realize new growth and outcomes for their companies.

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