Live @ Lotusphere 2011: IBM Senior VP Jon Iwata On Making A Social Business Market

Greetings, Lotuspherians…and those beyond who wish they were here.

After a night of Tweetups and parties and bar talk and heaven only knows what other tidings going on in here in Orlando, it was time to awaken early and get your social business vitamin shot.

IBMs’ Mike Rhodin and Jon Iwata delivered early and often in their opening remarks on Day 2.

IBM's Mike Rhodin explains the challenges and opportunities of social business for the Lotusphere 2011 audience in Orlando, Florida.

Rhodin is Vice President, IBM Industry Solutions, and picked up on a theme he started to deliver in the marketplace at last fall’s IBM Industry Summit in Barcelona.

With a nod to Alister Rennie’s comments from Day 1, he acknowledged that the market is shifting to a new era of social business, and that we heard yesterday from a wide variety of clients about the obstacles and opportunities.

And, more importantly, noted Rhodin, we heard from one another, our fellows in business and industry about the steps we’re taking to build smarter, more social businesses.

Rhodin then encapsulated the challenges and opportunities.  The challenges: Information overload (15 petabytes per day and growing), shared complexity (both infrastructure and organizational), and the need to create more shared connections.

The Social Business Opportunity

The opportunity? Social businesses embrace networks of people to create business value, and there are a few key entry points: The need to deepen client relationships, to drive operational efficiencies, and to optimize the workforce.

We’ve all had to focus on getting leaner and meaner these past few years, to the first point.  But we can also get new products to market faster, and use the market as a listening and sounding board more effectively.

Most key to social business, we can optimize our workforce by finding ways to extract new value from an increasingly distributed workforce (think globalization), and to do so without impacting productivity (in fact, quite the opposite) and to help our people become more focused on innovation.

Rhodin then posed some provocative questions: What are consumers saying about your business?  Are you listening?  What about your employee’s digital reputations, which have never been more important?

Did you know 20% of the top search engine queries in the world were now going back to consumer generated content?

Is your organization applying social analytics practices to conduct sophisticated sentiment analysis that can help you understand not only your brand reputation but also help you improve your products?

Then, Rhodin put up a slide that I thought told the entire story in one sweeping motion: The transition from traditional, hierarchical enterprises transitioning to social synergistic ones consisting of vast numbers of communities and a culture of sharing and innovation, which will soon start to separate the leaders from the masses.

It was then that Rhodin introduced IBM senior vice president, Jon Iwata, whom I also had the pleasure to hear speak about IBM’s 100-year legacy last fall in Barcelona.

What’s Past Is Prologue: From “e-business” to “S-business”

Iwata provided another quick flashback, but this time to explain we’ve all been here before.  It was 1995, and IBM bought Lotus as the commercialization of the Internet was underway and everyone in the market was talking about browsers and content.

IBM, and then CEO Lou Gerstner, were talking about the potential impact on business, even though to many it appeared IBM had no real involvement with the Internet.

Quite the contrary, and as IBM introduced the idea of “e-business,” it soon became clear Gerstner and others were correct, and the impact on business and organizations around the globe since then has been profound.

We made a market.

And today, Iwata explained, we’ve got another opportunity to lead and to make a new market, and in the process to provide our companies with game-changing capabilities.

Two years ago, IBM started a global conversation about the next era of computing and its impact on society, the “smarter planet.”

We identified three broad trends there: 1) Instrument the world’s systems 2) Interconnect them 3) Make them intelligent

With this strategy, we could start to see for the first time what was happening in key infrastucture: Our energy grids, our supply chains, etc., and we could make them more sustainable and, in a word, smarter.

But, Iwata went on to explain we also saw all the ways people interact would also become smarter, from the interconnectedness using social software to the mobility new devices would bring.

Now, we could connect billions of people, use social analytics to analyze all this new data (including our connections to one another!), and tap into the core human reality that people are inherently social.

Sometimes we work socially in a public way (retail), sometimes in a private, secure way (banking), but we’re all social.

People Working Together Better

Hence, social business, like e-business, is an opportunity to transform the enterprise, the way we work, extract, and create value, and yes, the ways we interact with one another.

IBM’s proof point, Iwata pointed out, was “Generation Open,” our own internal software development community that allows IBMers to develop software of their own choosing, and the reputation monitoring and feedback included to motivate and reward those developers.

The results? Generation Open delivered 160,000 new projects last year, drove down development costs by one-third, and increased asset reuse by 4X.

Social business.

And that’s what IBM continues to deliver in its market communications: strong, tangible proof points of how social business can deliver real business outcomes.

Take social engagement, for example: There is lots of focus on internal collaboration and expertise sharing, but what about when you go outside the firewall.  You may want to designate certain teams to monitor the social media, or provide CRM.

Realistically, Iwata suggested, all of our employees will soon adopt social technologies if they haven’t already.

So, how can we help enable them?

At IBM, we recently launched an enablement program, named aptly enough, “Social Business @ IBM,” which helps increase the social acumen of 400,000+ IBMers, educating them on policies and guidelines, and also enabling them with tools that allows them to monitor their personal networks, participate in key social media vehicles, and the like.

We expect to educate 50,000 IBMers by the end of this year alone, explained Iwata.

This new type of change requires new systems of management and leadership.  Traditional vertical functions (sales and marketing, HR, etc.) will require more integration, driven by transparency and the need to have a single view of the customer.

Iwata began his close with a call to action: Those of you who are champions of social media will soon find yourselves becoming an integrating force in your organizations.

Be prepared to help the organization make this disruptive transition, and concurrently, think about how you can leverage secure, scalable technology (including that from IBM) combined with tangible business outcomes and responsible management practices to successfully navigate your way to the new world.

The time to act is now, concluded Iwata, and the way to act is together.

What’s Big And Yellow And Lands Every January In Florida

If it’s January, you know what time of year it is, at least ’round these parts.

It’s time for….Lotusphere 2011!

Last year was my first foray to Lotusphere, but as I surmised then, hopefully not my last.

And so now I’m getting excited that January 30th is just around the corner (that’s only 10 days away!)

I’ve been participating in a number of team and planning calls around our communications and marketing efforts for Lotusphere 2011, and again also getting very excited about the caliber of speakers, thought leaders, and subject matter experts who will be in attendance.

If you’re planning on attending, or even if you’re not, you can use this page as a conduit to a number of the other key resources relevant leading into, during, and even after the event.

This year, I’ll be once again joined by my partner-in-crime, developerWorks’ own Scott Laningham, where I’ll be blogging some of the general sessions and also doing some live and on-demand interviews of IBM executives, business partners, and perhaps even some random strangers from off the street.

You’ll be hearing a lot about social business coming out of this year’s event, a drumbeat that began at the Lotus social business kickoff events held in NYC and around the globe last September.

To keep up with all the action, I would recommend you utilize this IBM Lotusphere 2011 Social Media site, which will help you follow any variety of voices emerging from and around Lotusphere 2011.

Also, as mentioned in a prior post, there’s our first-ever IBM Social Business Industries Symposium, where line-of-business execs and their ilk will come together to learn about social business opportunities and challenges.

(Word has it that Wired editor Chris Anderson will also be in attendance.  Click here to read my interview with Chris Anderson from 2007.)

So, you say, that’s all great and stuff, but I’m ready to get going sooner rather than later, and I want to participate even if I can’t attend in person.

Well, I don’t know what to tell you, there, kimosabe.  I guess I could throw out some red meat coverage from last year’s L’sphere, to whet your appetite.

But I could also point you to points beyond.  In February, IBM is going to be hosting its first ever “IBM Social Business Jam.”

THERE’s your opportunity to have your voice heard and to help shape the social business discussion moving forward.

This is going to be a web-based event from February 8-11, 2011, one that transpires in this, IBM’s centennial year, and which is going to provide an opportunity for thousands of leaders from around the world to pool their knowledge and experiences to examine the next generation of business.

Lest you think getting your jam on won’t be a good use of yours or IBM’s time, “jamming” is the means by which IBMers reinvented their corporate values in the early 2000s, and also how we initially developed the investment ideas (smarter cities, electricity, etc.) that later made up the core of the IBM Smarter Planet initiative.

So, be a part of history and come jam with us in February.

And, be a part once again of that which is big and yellow and lands in Orlando and come see us at Lotusphere 2011!

IBM Industry Summit: Smarter Analytics — From Insights To Outcomes

IBM Business Analytics and Optimization global leader, Fred Balboni, walks the IBM Industry Summit audience through the new IBM global analytics study.

I mentioned in an earlier post from here at the IBM Industry Summit in Barcelona, Spain, that there are a number of key “memes” emerging.

One that emerged loud and clear yesterday was the opportunity to channel new business insights into concrete business outcomes, and the presentation on the productive use of analytics by Fred Balboni, global leader with IBM’s Business Analytics and Optimization practice, painted a very clear picture of this trend.

Balboni even shared some data of his own, results from “The New Path to Value,” a new study conducted in collaboration with MIT Sloan Management Review and IBM.

This worldwide survey of nearly 3,000 respondents helped IBM, and now the world, better understand how companies are using analytics in their businesses to provide valuable insight.

For example, the study discovered that those organizations which lead in using analytics outperform those who don’t some 3X. Top performers are 5.4X more likely than the average organization to use an analytical approach to business decision-making than those using “intuition.”

Here’s a not-gut-hunch for you: It’s organizational — not data or financial concerns — that are holding back adoption, Balboni informed us. He also explained that it’s not just about having data — organizations want to see insights more clearly and then act on them.

That means moving from simple visualization of data to adopting scenarios and simulations to understand the practical application of analytics to business processes.

The next key finding was that analytic use propagates across functions in a predictable pattern, so start with areas of your business where practical application will be self-evident.

And finally, as adoption spreads, there will be a growing demand for a greater variety of skills and deeper expertise.  Makes sense.  The deeper insights you can gain, the more need you’ll have for more specialized analytical and business skills.  So, like the Boy Scouts, be prepared!

Balboni continued and pointed out how analytics programs can create value for organizations.

One, through infrastructure productivity (taking out costs and improving efficiencies).

Two, through business productivity (improving business control and the bottom online).

And three, helping a return to growth (creating new value for the business).

And finally, as with most every session at the IBM Industry Forum, Balboni provided five recommendations on how organizations can start down the path to this new value and operationalizing their own analytics:

1. Focus on the biggest and highest value opportunities (Something the business really values.)
2. Start with the questions that the business wants to ask. Within each opportunity, start with questions, not data.
3. Embed insights to drive actions and deliver value. Embed analytics practically into processes.
4. Keep existing capabilities while adding new ones (don’t throw the baby out with the bathwater). Add new functionality/insight to your business.
5. Use an information agenda to plan for the future. This is a roadmap as to how your organization is going to adopt analytics and use it to enhance your business.

You can learn more about the IBM Global New Intelligent Enterprise study on analytics here.

IBM Industry Summit: John Kao On Getting Innovation Done

If you’ve never had the opportunity to see John Kao speak in the flesh, then you’ve probably never heard a greater champion of innovation (and improvisation as one means to that end…Kao was once a student of Frank Zappa, and a longtime pianist).

Innovation expert John Kao speaks about innovation disruption at the 2010 IBM Industry Summit in Barcelona, Spain.

I first saw Kao speak about his book, Jamming: The Art and Discipline of Business Creativity, the ideas from which helped lead to IBM’s own massive internal jam that helped we IBMers reinvent T.J. Watson’s core business values for the 21^st century.

Kao keynoted the morning session today and explained he went out to Google the word “innovation” earlier today, and there were over 92M results! His point was that innovation continues to be important, but the word is used so often, it becomes a meaningless term.

Kao asserted in his talk that we need to restore meaning to the word, to bring “innovation to innovation,” and that his life’s work has been dedicated to understanding it as both a science and discipline.

With a little audience Q&A, Kao discovered that though 98% of the Industry Forum audience in attendance asserted that innovation was key to their business success, only about 5% of the hands went up when he asked how many had a system for innovation.

He then observed why the IBM smarter planet agenda was so compelling to him, because, he said, “it’s putting a map of innovation on top of the whole world.”

Kao used that as an elegant launching point for providing his own five point perspectives on innovation:

Definition, Disruption, Dissemination, Design, Digital

By definition, Kao explained that we have to be specific about what we mean, that creativity and innovation, for example, are not the same thing.

Creativity is enabling the human ability to be able to generate new ideas, and innovation is creativity applied to a specific purpose to realize value. Innovation is the muscle that brings creativity towards some intended end.

He then explained point number two, disruption, of which is there is no current shortage. Kao made reference to the “ghost dance” of native Americans, driven to their deaths after they denied they denied the disruption being brought about by the “white man.” A very sophisticated form of denial, that dance, but the buffalo outfits did little to stop the bullets.

Another example of disruption: Facebook co-founder Chris Hughes, who went to work for then candidate Barack Obama and social media-fied his campaign, leaving the top down, command-and-control Clinton campaign babbling in its social media fallout.

Disruption can also mean great opportunity, as Bilbao, Spain, demonstrated with its Frank Gehry-designed museum now drawing 1M tourists a year to the Basque country.

Next up, dissemination: How do we innovate from a systems perspective? After WWII, the US was the main innovation game in town, but we’ve since seen, particularly with globalization, the advent of innovation centers sprouting up around the globe.

Kao walked the audience through a series of airport pictures of advertisements for those centers: Qatar, Singapore, Shanghai…the list went on and on.

That expansion enables smart managers to now pick from a global buffet of innovation offerings, and with the innovation web including a dog’s breakfast menu of disciplines to choose from.

Call it, Kao said, “innovation arbitrage.”

Next up, the importance of innovation, another lens for how innovation needs to be reinvented. If innovation is the big answer you seek, Kao asked, what is the question? Doing the work of design thinking (user centric, using tacit knowledge, prototyping, etc.), organizations can tap into the reservoir of design depth needed to bring innovation from dream to reality.

And finally, digital. Digital with a capital “D.”

He asked the audience to remember 1998: No mobile phones. No social networks. No digital music. (Yes, but let’s remember, there WAS a whole lot of commercial Internet hype).

But his point was well taken. This is no longer your mom and dads’ innovation. H.G. Well’s “world brain” is coming to reality, and as we increase the nodes of participation in the global brain, we increase the interaction between our brain cells.

The higher the ratio of brain to body cells…well, that’s why we humans are at the top of the food chain, and this syndrome Kao referred to as “encephalization.”

Innovation will no longer be just about better, faster, cheaper, or incremental improvements. It will be about major disruption, and the ability of organizations to adapt and embrace that disruption and turn it into an enhanced capability to innovate.

And that, Kao concluded, comes about as the by-product of effective leadership.

IBM Industry Summit, Day 3: Getting Vertical

Starting yesterday afternoon, and continuing on in to today, the IBM Industry Summit kicked into an entirely new, and more industry-specific, gear.

Living up to its moniker, here in Barcelona leaders from around the globe, and from across a wide range of industries, have begun breaking out into individual leadership roundtables to share anecdotes, stories, experiences, pain points, and best practices with one another.

I’ve been able to attend a couple of those sessions, and others no IBMers, or other outsiders, were allowed, as we wanted our customers to have the benefit of being in the same room with their colleagues and to be able to share those experiences with no outside intervention or intermediation.

In future posts, I will share some of what I’ve heard in those discussions, as well as recapping some of the other keynotes we’ve heard, including this morning’s from John Kao, “Mr. Innovation.”

Though the IBM Industry Summit is coming to a close, it seems it’s having its intended effect, in terms of instigating a comprehensive conversation about the IBM smarter planet agenda, but importantly, increasingly in the context of specific industries.

Keep a continued eye out on the Turbo blog for future posts from the Summit. Even though the event ends today, the content will continue rolling for a bit, as today I’m focused on gathering even more information, but which will take some time to process!

Thanks to those of you who have been listening and sharing these posts via your Retweets, and I hope you’ve found the recaps of some of the sessions as fascinating as I have found listening and writing about them.

We are truly in the midst of a fascinating change in our world, and the leaders here in attendance who will start to depart Barcelona later today will no doubt be integral players in helping shape that change.

More soon.

IBM Industry Summit: Frank Kern On Mastering The Tsunami

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 6^th to 2^nd 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

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.

IBM Industry Summit: IBM’s Jon Iwata On Making Markets For Smarter Industries

Jon Iwata, IBM senior vice president of marketing and communications, visited the Barcelona IBM Industry Summit stage this morning with a little bit of Alice in Wonderland in tow: In order to understand how we were moving forward, Jon invited the audience to first take a glance back.

Jon Iwata, IBM Senior Vice President, Marketing and Communications, uses an image of the IBM System/360 as an object lesson as he explains how IBM is "making new markets" with its Smarter Planet agenda.

In a very matter of fact way, Iwata observed that it’s not very often one’s industry moves to an entirely different realm, but that when it does, it presents a unique opportunity for an organization to make new markets.

By way of example, Iwata explained that IBM will be turning 100 next year, celebrating its centennial as an ongoing business concern, and that it has made markets numerous times in its past.  It’s also missed opportunities to make them.

But by reminding ourselves of these moments, Iwata suggested, we start to see a pattern, one in which emergent technology plays a role often so powerful that new clients don’t quite know what to do with it.

In those circumstances, it’s important that we not only introduce new products and services, but also that we identify a new kind of client or buyer, possibly even a new vocabulary.

At these moments of inflection, however, it has not always been in IBM’s interest to embrace the new.

Arguably, Iwata explained, the first market IBM ever made, made IBM: The Hollerith tabulation machine.

But further innovation didn’t come when we tried to outsmart the competition, in this case Remington Rand, to try and counter their 90 hole punch card.

No, it was embracing vacuum tubes (which could compute faster than punch cards) and, later, the recording tape (which, in 1947, delivered the first recorded radio broadcast).

As Iwata explained, a whole room full of engineers in Poughkeepsie wondered whether that recorded audiotape could also serve as a new way of storing information — soon, an entire new inflection point was created.

Good thing, too: IBM customer New York Central Railway was punching 75,000 punch cards a day, and devoting entire floors of their Manhattan offices to storing those cards.

An IBM executive dropped by the Poughkeepsie office, saw the hullabaloo regarding the recording tape, and said “Interesting technology…but don’t forget the IBM company was built on punchcards.” (At the time, IBM derived one-third of its revenues from punchcards).

Yes, a good business…but still an inflection point.

Even with the new magnetic storage technology, IBM had to make the market.  That meant change, and not always change that was welcomed by customers (“We could see the data with the punchcards, but not with tape!”).

New technology, new applications, change the market.

Flash forward a few more years: A press conference presided over by then IBM CEO Thomas Watson, Jr.: The announcement of the System/360.

This was a bet-the-company move: $2B in R&D ($34B in today’s dollars), the first 8-bit byte, six processors in a family, 54 different peripheral devices.

IBM took 1,000 orders in the first month, and sold several thousand more the following months: But it took five years to ramp up to meet customer demand in volume.

Make the market. But in so doing, cannibalize virtually all of IBM’s existing product lines.

Later that decade, clients embraced radical new concepts like “online transaction processing,” and IBM technology even helped send men to the moon to allow both computing, and mankind, to go places neither could have gone before.

But at the time, it wasn’t obvious.  It was a market in the making.

Iwata explained, now flashing forward to the fall of 2008, another inflection point.

In the Smarter Planet agenda, we saw a similar pattern.

Despite the market fallout two years ago, we’ve witnessed a continued explosion in technology, much of it even now disposable, and with that an explosion of data in form, type, and speed.

New workloads, new applications — we had to develop a different vocabulary to be able to explain it both to ourselves, and to our customers.

Two years ago, we set out to make a new market, one that would open opportunities for IBM, our partners, and our customers.

We set out to modernize the understanding of IBM’s differentiation, to demonstrate IBM’s relevance to what people cared about, to take a leadership stance at a time the world was calling out for it.

But it almost didn’t happen.

When that global financial crisis hit, we hit pause, briefly, waiting for the next Great Depression…Panic…Uncertainty…All heading into a presidential election.

But as the fallout of the crisis settled in, IBM CEO Sam Palmisano hit “play” and introduced the ideas behind what drives a smarter planet at a speech before the Council on Foreign Relations.

That was two years ago this week.

It wasn’t introducing a new marketing campaign, explained Iwata.

IBM was initiating a conversation with the world to forge a shared belief.

What do you need to believe something, Iwata asked the audience in Barcelona? Facts. Data. Evidence.

In Palmisano’s speech, the word “IBM” never appeared once.  In the advertisements and editorials that began to emerge as part of the campaign, the focus was on the evidence, the data, the proof of the gathering storm that indicated the new market was emerging, but it was one represented not by IBM-speak, but rather by business-changing facts emblematic of what IBM customers were doing to improve their businesses and, in turn, the world.

The results: Two years later, 85% of IBM clients would consider IBM as a key partner having had prior knowledge of the smarter planet agenda.

Yes, it creates a more favorable selling environment, conceded Iwata.

But as IBM enters the third year of making this new market, even our friends at Gartner suggest that the smarter planet agenda is doing something more, is enabling IBM to stake a claim to a significant role in business and societal transformation.

Now, we’re providing client and partner references with hard facts, and lessons learned.  We’re helping clients understand the “how to’s” of building smarter systems.

We’re developing clearer paths to value, and we’re focused on quantifying outcomes, often via industry-specific measures.

We’re building progressive paths to provide clear roadmaps and to help partners chart outcomes and quantified value for their clients.

And we’re showcasing some of our most progressive clients, as well as using the social, digital eminence of IBM experts (by industry, technology, and so on) to reach out and demonstrate that value and make those experts accessible to the marketplace.

We’re making a new market, admittedly…but we’re trying to build a better world in the process.

IBM Industry Summit: Smart Planet, Smarter Business Opportunity For Partners

At this morning’s kickoff keynote session at the IBM Industry Summit here in Barcelona, IBM general manager, Rich Hume, IBM Global Business Partners, set the tone for the day and the event by highlighting what he hoped IBM’s partners and customers would gain from the next few days. In the process, he also outlined the large business opportunity looming on the horizon.

Referring to the IBM growth roadmap, which IBM CEO Sam Palmisano shared with the analyst community earlier this year, Hume explained that IBM would grow in four notable areas through 2015, including through its Smarter Planet effort, business analytics, cloud computing, and in growth markets.

At the IBM Industry Summit in Barcelona, Spain, IBM Software vice president Mike Rhodin paints a compelling portrait of the immense opportunity that industry-specific context will increasingly provide for IBM and its business partners around the world.

Each would contribute its own sizable share of market opportunity, and IBM, as well as its partners, are poised to share in the bounty — but only if they cultivate a renewed sense of focus around core industry expertise, and by providing industry-specific solutions for IBM clients.

Hume then passed the baton to Mike Rhodin, IBM vice president, IBM Software Solutions Group, who spent the next 45 minutes articulating the details and challenges of that business opportunity, and who explained the key role IBM Business Partners would be playing in this renewed industry focus.

Joking that “We even brought the Pope in over the weekend to bless the event,” Rhodin then got down to business by asking a simple question: “Why are we all here, in Barcelona, in the middle of the fourth quarter?”, a courtesy nod to the investment in time and money of so many key IBM partners to gather for several days here.

The answer was multifold: The world today looks very different than it did a decade ago.  The Internet of commerce has radically evolved to the Internet of “people and of things.” Rhodin cited the enormous amount of transistors (over 1B) in the world, of the enormous number of people connected to the Internet, and to the Internet RFID tags and those transistors, all of which was producing an enormous amount of new data (some 15 petabytes per day!).

The Internet of things was expected to soon reach 1 trillion, but what of it if companies and institutions aren’t in a position to take full advantage of that data and turn it into actionable insight, new products and services, and the like.

With a nod to social media, Rhodin then explain that “the Internet’s really about people and how they connect on a global scale,” joking (but still serious) that we’ve even invented new words that were unheard of a decade ago (“friending”), and that social networking has become the basis of how a globally connected world interconnects and communicates.

Of course, the Internet of Things is its own interconnection, one between the digital and physical world. High percentages of the world’s population are now online and creating unheard of amounts of data.

But what do you do with it all? It’s great we’re collecting it all, said Rhodin, and it’s coming in real-time, but how does one make real-time decisions based on this, how does one use fact-based analytics to make better decisions, and to steer away from our legacy of making decisions centered on batched, historical, and increasingly out-dated information???

Rhodin then captured the essence of the discussion in one small sound byte (which also nicely set up IBM senior VP Jon Iwata’s following talk on market-making…more on that in a future post):

“Smarter planet is not a marketing campaign…it’s a description of what’s happening in the world.”

Rhodin then probed on what it would take for IBM and its partners to fully capitalize on how they could respectively capitalize on the opportunity and help one another.

For example, by taking proven solutions, patterns, and capabilities, and then applying those techniques to new domains.

The explosion of new information — when integrated, analyzed, and acted upon using new types of intelligence — enables solutions that help build a smarter planet, and increasingly, through industry-specific approaches.

We can now actually predict traffic jams 45 minutes into the future, Rhodin explained, and then make that analysis a closed loop process that allows traffic monitors to adjust the timing of their traffic lights on the fly in order to prevent those jams from ever happening. (And hearkening back to my posts from the Information on Demand conference from two weeks ago, that’s why the Big Data chicken has to cross the road!)

Rhodin explained that CEOs don’t wake up thinking to themselves, “I need to buy a server today.” (Well, most of them.) No, they’re looking for a way to stay competitive in an increasingly complex world (see yesteday’s set-up post for more from the IBM Global CEO Study).

That means IBM and its partners have to change what and how we sell moving forward.

Our clients, Rhodin explained, need repeatable solutions and industry expertise (and yet only one-third of partners believe they are well-prepared to address customer industry solution needs).

There is currently too much first generation delivery, when customers (and partners, for that matter) don’t want to start over on a new version every single instance of change. They want to build on what they have.

Rhodin then explained a recent customer scenario, whereby IBM, in a retail context, offered up new value by helping the customer achieve a specific desired outcome (in this case, dynamic inventory optimization that would lead to 80-90% of inventory replinishment).

The key driver, Rhodin pointed out, was a strategic business driver, not an IT buying outcome.

Whether they be socioeconomic pressures, changing consumer behaviors, or competitive and/or technological considerations, the retail industry, again as the example here, is facing some substantive pressures. But by identifying and working to resolve specific industry-relevant outcomes, IBM and its partners will be able to both seize the momentum and start to create industry opportunity.

Continuing the example into the new world, smarter IBM retail industry solutions would create several layers of value: a smarter shopping experience, one that’s more personalized; smarter merchandising and supply chain, which delivers localized, relevant, and tailored offerings and optimized inventories; and smarter operations, which drive operational excellence through cost efficient management of people, processes and technology.

Rhodin also explained how IBM’s hungry acquisition spree filled in key aspects of IBM’s solution marketplace needs, from the predictive analytics capabilities of SPSS to the risk management profile of OpenPages.

This, along with the industry context, will allow partners to bring together the best of IBM hardware, software, and services the way customers increasingly want to buy.

In the meantime, Rhodin indicated that IBM was expanding its industry focus through the announcement of its 13th industry framework here at the event, the Product and Service framework for the manufacturing sector.

Pointing to the Industry Solutions expo next door, Rhodin explained “With the solutions center next door, what we hope to do is show you how far we’ve come already, and where we’re going, with the capabilities we think you need to win in the marketplace.”

He indicated that the biggest fear IBM’s competitors had in the market was if IBM ever got its act together across the entirety of its business, integrated by a common fabric (such as the industry-contexts).

“Well,” he said, “it’s happening.  Integrated Industry Solutions bring smarter planet to life. But we can’t do it alone. We need you to invest, to build skills. We’re going to provide thought leadership, assets, training, and the like, and the air cover in the marketplace on a global scale.

He concluded: “We’ll provide the market – but we need you to engage.”

Barcelona

Hola from Barcelona.

I arrived here Sunday morning, expecting the worst in traffic due to Pope Benedict’s visit, but was pleasantly surprised, able to quickly arrive go from the airport to my hotel near the Palau de Congressos de Catalunya, the location for this week’s IBM Industry Summit here.

Though I didn’t have the opportunity to witness the Pope in person, Spanish TV carried extensive coverage of his consecration of Antoni Gaudi’s Sagrada Familia, and I certainly was able to see the aftermath near the Museu Picasso later in the day as traffic was blocked to ensure the Pope’s motorcade had the run of the city.

There was a lot going a lot going on this weekend in Spain.

Elsewhere, in Madrid, “Desperate Housewive’s” (and Corpus Christi, Texan) Eva Longoria hosted the MTV Europe Music Awards, where noshow Lady Gaga (she was performing elsewhere, in Budapest) took the top honors for Best Pop, Best Female, and Best Song (for “Bad Romance”).

Speaking of bad romance, if you’re a Dallas Cowboys football fan, the romance between fans and team this season is definitely over (while I was sleeping, they lost to Green Bay 45-7).

I had already mentioned that, fair weather fan that I am, I was in the market for a new football team. If it weren’t for alienating mi amigos in Madrid, I might say I’d found one in La Liga, the Spanish soccer league, where Barca beat Getafe 3-1 last night.

Instead of taking sides and possibly instigating an intra-IBM futbol conflagration, however, let me be the eternal diplomat I am and let me just say I love ALL European football — if for no other reason than the fact that none of it involves the Dallas Cowboys.

Like football teams everywhere,  just about all great artists have their blue periods, and it was Pablo Picasso who defined them.

This is my second time in Barcelona, but somehow I missed the Picasso museum my first time here.

I won’t make mistake again. Though I’m no Picasso scholar, if you’re looking for a one-stop-shop venue to learn more about the artist and his evolution, this is the place.

I visit museums whenever and wherever I can in my travels, and Museu Picasso was up there on the list.

In fact, Picasso’s Velazquez-inspired “Las Meninas” alone was worth the price of admission — in my case, free (but only on the first Sunday of the month after 3 PM!) — as the video presentation outside the exhibit demonstrated how Picasso was both paying homage to Velazquez, but through his Cubist tendencies, completely re-envisioning the great work.

Finally, and before I segueway in immediate and future postings back to the business at hand, the IBM Industry Summit here, I’ll leave you with this factoid: Did you know that Picasso is the most stolen artist in the world?

At last count, the Art Loss Register had 550 of Picasso’s works listed as missing.

Most recently, Picasso’s “Dove With Green Peas” was stolen, along with pieces from several other famous artists, in a brash burglary at the Paris Museum of Modern Art this past May.

For the record, I was nowhere in the vicinity!