Live At Impact 2011: Jon Iwata On 100 Years Of Innovation At IBM

At this morning’s opening general session of Impact 2011 here at The Venetian Hotel in Las Vegas, Jon Iwata, IBM Senior Vice President, Marketing and Communications, put IBM’s 100 years of transformation and innovation into context.

Mr. Iwata started his talk with a video demonstrating IBM’s 100 years of transformation in 100 seconds, a video MTV would have trouble matching in terms of the jump cuts.  But just watching the video segue from black and white to full color, one could sense the rich history of IBM’s contributions to innovation in industry over the span of a full century.

He used a few examples to demonstrate IBM’s commitment to making new markets, sometimes at the risk of cannibalizing existing ones: Changing from the 40 to 80 column punchcard. Being inspired by a recorded Bing Crosby radio show to investigate magnetic storage media for computing storage. Building a new computer system, the System/360, which was a bet-the-company business that took years to grow in volume, but which was truly transformative, both for IBM and for its customers.

These changes weren’t always easy.  Iwata quoted one customer frustrated by the punchard to tape change: “Not only can I see my data in a punchcard…I can feel my data.” (Big laugh from the audience.)  At first, customers didn’t quite know what to do with the System/360, but partnering with IBM, they figured it out over time, and another market was made.

To celebrate some of these milestones, Iwata explained, IBM has created 100 iconic programs of progress (including a new one introduced today for WebSphere) that mark 100 IBM Centennial milestones.  A few examples: RISC, PCs, Fractals, the Bar Code…you get the idea.

Flash forward to 2008: Despite the sudden changes in the economic climate, people at IBM were coming to a realization: Technology was moving out of the data center, the PC, through the mobile devices, and out into the physical systems of the world: Cities, pipelines, roads…we were putting computing into things never recognized before as a computer.

These new capabilities brought about “bigger” and more complex data, requiring more analytical capabilities and technologies to understand the larger trends occurring in these vast new data.

Thus was born the “smarter planet” initiative.

But there was more to the story that just saying it was so.  To help IBM customers take the most advantage of these new approaches to computing, we had to help them learn how to do so in the construct of their industries, we had to learn how to build up “agency,” to show our customers the way — learning by doing, the same way we humans learn most effectively.

Iwata then demonstrated what’s past was prologue, flashing pictures (straight from the IBM archives) of IBM offices opened around the globe the past 100 years, with IBMers sitting in classrooms: attentive, learning, preparing to share their knowledge with customers, just as we’re working to do with our customers’ smarter planet initiatives.

Three years on, Iwata explained, we’re proving we can change how the world works, and we’re doing it industry by industry.

New examples: Netherland Railway captured $57M in new fares with a smarter transportation solution. Madrid’s Emergency Response system is 25% faster, as its smart communications system better synchronizes fire, traffic, and police with a business process management system. Even a case study on how Italian fishermen are making markets for their fish via mobile devices while their boats are still out to sea.

That’s why you’re here, Iwata concluded.

Here among your peers and role models and other leaders to learn from one another, at Impact 2011.

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.

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.