IBM Opens Lab To Bring R&D To The CEO

One of the things we heard about extensively during our time on the ground at SXSW Interactive 2013 in Austin over the past week was the importance of the customer experience.

Whether that be in applications in mobile devices, in customer service via the social media, the physical experience of a brand’s product or service…the customer experience rules!

And this anecdotal data is supported by IBM’s own research, including last year’s Global CEO Study, which queried 1,700 CEOs from 64 countries and 18 industries and found that CEOs are changing the nature of work by adding a powerful dose of openness, transparency, and employee empowerment to the command-and-control ethos that has characterized the modern corporation for more than a century.

The study revealed that the advantages of this fast-moving trend are clear: Companies that outperform their peers are 30 percent more likely to identify openness — often characterized by a greater use of social media as a key enabler of collaboration and innovation — as a key influence on their organization.

Those “outperformers” are also embracing new models of working that tap into the collective intelligence of an organization and its networks to devise new ideas and solutions for increased profitability and growth.

In order to forge those closer connections with customers, partners, and a new generation of employees in the future, CEOs plan to shift their focus from using e-mail and the phone as primary communication vehicles to using social networks as a new path for direct engagement. And while social media is the least utilized of all customer interaction methods today, it stands to become the number two organizational engagement method within the next five years, a close second to face-to-face interactions.

Big Data, Big Opportunity

Given the data explosion being witnessed by many organizations, CEOs also recognized the need for more sophisticated business analytics to mine the data being tracked online, on mobile phones and social media sites. The traditional approach to understanding customers better has been to consolidate and analyze transactions and activities from across the entire organization. However, to remain relevant, CEOs must piece together a more holistic view of the customer based on how he or she engages the rest of the world, not just their organization.

The ability to drive value from data is strongly correlated with performance. Outperforming organizations are twice as good as underperformers at accessing and drawing insights from data. Outperformers are also 84 percent better at translating those insights into real action.

From Theory to Action

To this end, IBM today announced the creation of the IBM Customer Experience Lab, dedicated to helping business leaders transform the way customers experience their products, services and brands through the use of mobile, social, cloud and advanced analytics technologies.

IBM Research scientists and business consultants will co-create with clients to deliver systems that learn and personalize the experiences of each individual customer, identify patterns, preferences and create context from Big Data, and drive scale economics.

The IBM Customer Experience Lab will provide CEOs, CMOs, CFOs, heads of sales and other C-suite executives direct access to a virtual team of 100 researchers, supported by the deep industry and domain expertise of thousands of IBM business consultants addressing the opportunities of the digital front office.

In the new age of Big Data and analytics, organizations are reassessing how to move from addressing mass audiences to personalized relationships. The same technologies allow enterprises to engage in new ways with their employees, allow government agencies to build new relationships with citizens, or enable new models of interaction among students and educational institutions.

IBM Research is developing technology assets and capabilities that can help deliver front office capabilities as a service from a cloud, design novel products to match customer preferences, and leverage math and psychological theories of personality to improve marketing effectiveness.
Client Engagements

The Lab focuses on innovation breakthroughs in three primary areas:

• Customer insight. Applying advanced capabilities such as machine learning and visual analytics to predict differences in individual customer behavior across multiple channels.
• Customer engagement. Using deep customer engagement to drive insight and continuously deliver value by personalizing engagement, versus transactional experiences.
• Employee engagement. Embedding semantic, collaborative, and multimedia technologies to foster employee engagement and insight – in person and online.

Among the clients engaged with IBM on advancing their innovation process are Nationwide Building Society, the world’s largest building society serving 15 million members in the United Kingdom, and Banorte, one of the largest banks in Mexico with more than 20 million customers.

“Mobile and social technologies, and the ability to access information anytime, anywhere, is driving significant change in the way consumers bank and in the services they expect,” said Martin Boyle, Divisional Director of Transformation, Nationwide Building Society. “Our ability to innovate and anticipate, and not just respond, is what sets us apart from the competition and helps us to provide our customers with new and better ways to do business with us. By partnering with IBM, we can tap into its vast research and innovation expertise and facilities, which has already proved invaluable in our transformation program and will continue to be an important part in how we continue to innovate our service for customers.”

New Tools and Capabilities

The Lab provides IBM clients with an innovation process, assets and platform to give line of business leaders the exclusive ability to work side-by-side with IBM researchers and business consultants to analyze business challenges and jointly create solutions that integrate next-generation mobile, social, analytics and cloud technologies.

Co-creation with clients includes an innovation model called Innovation Discovery Workshops, which generate ideas, roadmaps, prototypes and solutions that draw on research assets, business consulting and IBM Software solutions in areas such as Smarter Commerce, Big Data, analytics, and Mobile First products.

The IBM Customer Experience Lab will be headquartered at the Thomas J. Watson Research Center in Yorktown Heights, N.Y., supported by researchers at IBM’s 12 global labs including Africa, Brazil, California, China, India, Israel, Japan, Switzerland, and Texas.

The Lab brings together skills across disciplines including service science, industries research, mathematics and business optimization, social, mobile, Smarter Commerce, data mining, cloud computing, security and privacy, cognitive computing and systems management. IBM invests more than $6 billion annually on research and development and employs about 3,000 researchers worldwide. IBM Global Business Services deploys business consulting, applications and delivery expertise globally, including market-leading business analytics, Smarter Commerce, mobility and applications management practices.

Visit here for more information about the IBM Customer Experience Lab, and follow IBM’s innovation breakthroughs on Twitter at @IBMResearch.

IBM Midmarket CEO Study: Collaboration and Transparency Key to Providing An Edge

IBM continued its rolling tide of market insights with the announcement this morning of its global study of midmarket CEOs.

The headline: Nearly twice as many smaller- and medium-sized business CEOs see creating a more collaborative work environment with a higher level of openness and transparency as a top priority compared to the findings from the IBM CEO study conducted in 2010.

A total of 45 percent of midmarket CEOs see the need to create a more open business environment, a close to 50 percent jump from two years ago.

The study also unearthed the following:

• Nearly 70 percent of midmarket CEOs aim to partner extensively with other companies as external relationships will play a more critical role to CEOs’ overall business strategies
• 64 percent of midmarket CEOs are focused on creating a more collaborative environment to engage employees with a new way of making faster and better decisions in an increasingly changing business environment
• 71 percent are focused on improving their understanding of individual customer needs.

Impact of Social: Changing The Way Products And Services Are Marketed

CEOs also discussed the whirlwind of “social”change they’re witnessing. Facebook, Renren, Twitter, Weibo, Foursquare and other social media upstarts have changed the way products and services are marketed to consumers.

Despite the surge in social media adoption around the world, only 15 percent of midmarket CEOs are using social media platforms to connect with the individual consumer today. Three to five years from now, that number is poised to spike to 50 percent.

Market dynamics and technological advances continue to force more organizational change, significantly impacting how midmarket businesses engage with customers and employees and drive innovation.  Midmarket CEOs are now looking to technology not only to make them more efficient but also to enable increased collaboration and create relationships — essential connections to fuel creativity.

Rising Complexity, Escalating Competition Drive Partnering

Rising complexity and escalating competition have also made partnering a core innovation strategy for many organizations.  As midmarket businesses become more geographically diverse and interact with other organizations, the importance of sustaining a collaborative business culture will only continue to grow.

Those that are perceived to be collaborative often find it easier to partner with other successful companies.  In fact, about 50 percent of midmarket CEOs see partnering or collaborating as a way to stay on the path of innovation.

Greater Openness, Transparency, And Focus On Talent

In addition, given the market pressures to operate with greater openness and transparency, CEOs are looking for employees who will thrive in this kind of atmosphere. CEOs are increasingly focused on finding top talent with the ability to constantly reinvent themselves. These employees are comfortable with change; they learn as they go, often from others’ experiences.

CEOs regard interpersonal skills of collaboration (72 percent), communication (68 percent), creativity (58 percent) and flexibility (66 percent) as key drivers of employee success to operate in a more complex, interconnected environment.

Organizations are under intense pressure to respond to not only how customers want products and services delivered, but also when and where. Businesses can profit from unique insights they discover about customers. In fact, 65 percent of midmarket CEOs identify customer insights as the most critical investment area.

To effectively engage individual consumers and clients, organizations must weave together insights about the whole person from a variety of sources. They will need stronger analytics capabilities to uncover patterns and to act on insights. Two such examples are as follows:

Mobility: A Change Agent

Finally, mobility is elevating customer expectations and creating new challenges for CEOs.   Midmarket clients have a tremendous opportunity to create value out of immediacy to be ready with relevant services and information in the context of the moment.

As mobile commerce is expected to reach $31 billion by 2016, companies will need to take advantage of location based services and new forms of commerce in which mobile is integrated into a consumer’s multichannel experiences, tailored to the individual, to stay competitive.

“Midmarket CEOs are establishing more open and collaborative cultures —in which employees not only connect more with each other and the outside world to innovate, but to reinvent themselves. Learning from each other, they stay ahead of the skills curve and open to change,”   said Andy Monshaw, General Manager of IBM Midmarket Business.

“Business leaders are embracing technology in completely new ways to spot oncoming threats, capture an immediate, unexpected business opportunity, address business challenges with a clear focus on partnering with other organizations to seize these opportunities to drive growth and innovate.”

You can learn more about the IBM Midmarket 2012 CEO Study here.

Former IBM CEO John Opel Passes Away

John R. Opel, IBM’s fifth CEO, died on November 2, 2011. He was 86 years old.

John R. Opel was IBM's chief executive officer from January 1981 through January 1985 and chairman of the board from February 1983 through May 1986. He joined IBM as a sales representative in 1949, working in the Jefferson City, Missouri, branch office. He became a vice president in 1966, the head of IBM's Data Processing Product Group in 1972, and president of the company in 1974.

After he graduated from the University of Chicago with an MBA in 1949, Opel had two job offers. One was to rewrite economics textbooks and the other was to take over his father’s Jefferson City, Missouri, hardware store. Neither seemed especially appealing. He went fishing with his dad and a family friend to mull things over.

While they were out in the boat, the friend, Harry Strait, an IBM sales manager, hooked Opel rather than a fish — offering him a job selling business equipment in central Missouri.

That chance encounter launched a career for Opel at IBM that spanned 36 years and culminated with him presiding over one of the most successful companies in the world.

Opel’s years at IBM coincided with the company’s rise from a modest-sized maker of accounting devices to become the leader of a burgeoning computer industry and a trend-setter for the Information Age. He was president from 1974 to 1983 and CEO from 1981 to 1985, navigating the company safely through a number of minefields, including the advent of the personal computer and a long US antitrust investigation.

“He was a great leader,” recalls Patrick Toole, a long-time IBM executive who joined the company in 1960. “He was good with customers and his colleagues. Everybody trusted him.”

Asked in a 2010 interview what had sustained IBM for nearly 100 years, Opel said it was the values engendered by Thomas J. Watson Sr., who ran the company from 1914 until he retired in 1952. Watson preached that the company should be run based on its beliefs, which included respect for the individual, dedication to customer satisfaction, and a pledge to perform every task in a superior way.

For Opel, the way the company treated people was its most important attribute. “Mutual respect and openness and honesty among people is what makes a company work well over time,” he said.

In an era when many chief executives were driven by ego and some belittled those around them, Opel was self-effacing and sensitive to other people’s points of view and feelings. An English major at Westminster College in Missouri, he read voraciously throughout his life, including poetry. He was a bird-watcher as well as a fisherman.

Yet he was no pushover. “He challenged people’s assumptions. He was always pushing the edge,” recalls Nicholas Donofrio, a longtime IBM executive who joined the company in 1964. Donofrio recalls a meeting of the corporate management board in the early 1980s when Opel addressed the issue of cigarette smoking. Most of the men in the room were smokers, yet Opel looked around at them and predicted that within a decade IBM would be a smoke-free environment. And he had the nerve to ask his smoker colleagues to help him lead the transition.

Opel learned how to manage people at the side of Thomas J. Watson Jr., who ran the company from 1952 to 1970. Watson summoned Opel from the hinterlands and made him his executive assistant in 1959 after watching him teach a couple of sales classes in Endicott, New York. Working with Watson at IBM headquarters in Armonk, New York, Opel was impressed with the way Watson dealt with his executives. He’d insist on a full debate on any fundamental disagreement, and he didn’t let his personal feelings about any executive prevent him from giving the individual a fair hearing.

Opel hadn’t an inkling that he was headed for the top of the corporate ladder when he joined the company and began selling electronic accounting machines and time clocks in poor, dusty towns in Missouri’s Ozarks region.

Back in those days, an IBM salesman installed the equipment he sold, so Opel became adept with pliers and screwdrivers even while he learned how to make an effective sales pitch. He told a story to IBM’s Think magazine in 1974 that captures the flavor of being an IBM salesman in a rural area during that era. He had a clock system in Centralia, Missouri, that was connected to a fire alarm.

During a maintenance call, he made a mistake when he adjusted the timer. The next morning, a Sunday, when the entire volunteer fire department was in church, the alarm went off improperly and the church practically emptied out. “We had programming difficulties in those days, too,” he told the Think interviewer.

During his long career, Opel wore many hats. After selling for a decade and then working as Watson’s assistant, he made his mark by managing the launch of IBM’s System 360 mainframe family in 1964. He later headed up communications, ran product divisions, and served as the chief financial officer.

When he was president, Opel and his mentor, CEO Frank Cary, set up a skunk-works project that resulted in the introduction of the IBM Personal Computer in the summer of 1981, just a few months after Opel took the reigns of the company. That marked the beginning of the rapid adoption of PCs by businesses.

In those days, he said, it was in IBM’s nature to adapt quickly when new technologies came along. “We constantly were willing to change and were accelerating our ability to change,” he said.

Opel rejected the idea that good leadership could be codified in a set of detailed rules. “You can’t write rules about things like that,” he said. “You just have to be alert, and be thoughtful. And you have to rely a lot on the wisdom that exists in your employees.

He will be missed by his IBM family.

IBM Board Names Ginny Rometty New IBM President & CEO

The IBM board of directors has elected Virginia M. Rometty president and chief executive officer of the company, effective January 1, 2012.

She was also elected a member of the board of directors, effective at that time. Ms. Rometty is currently IBM senior vice president and group executive for sales, marketing and strategy. She succeeds Samuel J. Palmisano, who currently is IBM chairman, president and chief executive officer. Mr. Palmisano will remain chairman of the board.

“Ginni Rometty has successfully led several of IBM’s most important businesses over the past decade – from the formation of IBM Global Business Services to the build-out of our Growth Markets.”

“Ginni Rometty has successfully led several of IBM’s most important businesses over the past decade – from the formation of IBM Global Business Services to the build-out of our Growth Markets Unit,” Mr. Palmisano said.

“But she is more than a superb operational executive. With every leadership role, she has strengthened our ability to integrate IBM’s capabilities for our clients. She has spurred us to keep pace with the needs and aspirations of our clients by deepening our expertise and industry knowledge. Ginni’s long-term strategic thinking and client focus are seen in our growth initiatives, from cloud computing and analytics to the commercialization of Watson. She brings to the role of CEO a unique combination of vision, client focus, unrelenting drive, and passion for IBMers and the company’s future. I know the board agrees with me that Ginni is the ideal CEO to lead IBM into its second century.”

IBM Board of Directors Elects Virginia M. “Ginni” Rometty President and CEO of IBM: Samuel J. Palmisano and Virginia M. “Ginni” Rometty at IBM’s corporate headquarters in Armonk, N.Y.  Rometty, an IBM senior vice president, was elected by the IBM board of directors to become the company’s president and ninth CEO on January 1, 2012.  Palmisano, currently IBM chairman, president and CEO, has significantly transformed IBM.  During his tenure as CEO, the company has delivered record financial performance and breakthrough innovations, such as Watson. Mr. Palmisano will remain IBM’s chairman. [Photo: Jon Iwata/IBM]

Ms. Rometty said: “There is no greater privilege in business than to be asked to lead IBM, especially at this moment. Sam had the courage to transform the company based on his belief that computing technology, our industry, even world economies would shift in historic ways. All of that has come to pass. Today, IBM’s strategies and business model are correct. Our ability to execute and deliver consistent results for clients and shareholders is strong. This is due to Sam’s leadership, his discipline, and his unshakable belief in the ability of IBM and IBMers to lead into the future. Sam taught us, above all, that we must never stop reinventing IBM.”

Mr. Palmisano, 60, became IBM chief executive officer in 2002 and chairman of the board in 2003. During his tenure, IBM exited commoditizing businesses, including PCs, printers and hard disk drives, and greatly increased investments in high-value businesses and technologies. He has overseen the significant expansion of IBM in the emerging markets of China, India, Brazil, Russia and dozens of other developing countries, transforming IBM from a multinational into a globally integrated enterprise. In 2008, he launched IBM’s Smarter Planet strategy, which describes the company’s view of the next era of information technology and its impact on business and society.

Since Mr. Palmisano became CEO, IBM has set records in pre-tax earnings, earnings per share, and free cash flow. During Mr. Palmisano’s tenure, IBM increased EPS by almost five times, generated over $100 billion in free cash flow, and invested more than $50 billion in research and development – creating over $100 billion of shareholder value since 2002 through an increase in market capitalization and dividends paid.

As global sales leader for IBM, Ms. Rometty, 54, is accountable for revenue, profit, and client satisfaction in the 170 global markets in which IBM does business. She is responsible for IBM’s worldwide results, which exceeded $99 billion in 2010. She also is responsible for leading IBM’s global strategy, marketing and communications functions. Previously, Ms. Rometty was senior vice president of IBM Global Business Services. In that role, she led the successful integration of PricewaterhouseCoopers Consulting — the largest acquisition in professional services history, building a global team of more than 100,000 business consultants and services experts. She has also served as general manager of IBM Global Services, Americas, and of IBM’s Global Insurance and Financial Services Sector.

Ms. Rometty joined IBM in 1981 as a systems engineer. She holds a Bachelor of Science degree with high honors in computer science and electrical engineering from Northwestern University.