Irving Wladawsky-Berger

Smart Cities as Systems of Systems

I was recently in Berlin to attend a conference on Smart Cities sponsored by IBM.  This conference is part of a global dialogue on the growth of cities and urbanization in general that IBM launched a few months ago as part of its overall Smarter Planet initiative.

“Why cities?”, asked IBM’s chairman and CEO Sam Palmisano when he kicked off the Smarter Cities dialogue at the end of April.  He then proceeded to articulate the two key reasons for focusing on cities, one centered on people, the other on technology and systems.

“Well, to state the obvious - that's where the people are.  By 2050, 70 percent of people on Earth will live in cities.  Which means that cities ... more than states, provinces or perhaps even nations ... are increasingly the central arena for success or failure.”

“And a city is a system - indeed, a city is a complex system of systems.  All the ways in which the world works - from transportation, to energy, to healthcare, to commerce, to education, to security, to food and water and beyond - come together in our cities.”

The Decline, Fall, and (Hopefully) Reinvention of a Giant

I often start my seminars on business transformation by discussing why innovation is not an option, but rather an imperative for any company, -  no matter how big, powerful and successful.  Failure to innovate will invariably get a company into serious trouble, perhaps even impacting its ability to survive into the future, especially in times of rapid change and fierce competition.  To bring the innovation imperative to life with a concrete example, I use the IBM near-death experience that I lived through in the early 1990s.

I illustrate IBM’s rapid decline by first showing a Fortune cover  from 1985 about America’s most admired corporation based on Fortune’s yearly survey of company reputations.  IBM was then at the very top.  But, by the early 1990s, the picture had drastically changed.  This is graphically shown in a Fortune cover and article from May 3, 1993: “Dinosaurs? They were a trio of the biggest, most fearsome companies on earth. Here's how earnest executives managed them into historic decline.”  The hapless dinosaurs were IBM, Sears and . . . General Motors.

I was reminded of this 1993 article when reading about GM’s declaration of bankruptcy on June 1.  Luckily for IBM, after hitting bottom the company took the necessary actions and was able to successfully reinvent itself.  Not only was IBM able to survive, but it once more attained a leadership position in the IT industry.  The experience was very painful, even humiliating for those of us who went through it.  But at least it was relatively short and was followed a few years later by a very sweet redemption, including this 1999 Fortune article IBM: From Big Blue Dinosaur To E-Business Animal.

Complex Organizational Systems: Some Common Principles

Last week I attended the second Engineering Systems Symposium at MIT.  The Symposium was co-sponsored by MIT’s Engineering Systems Division and CESUN - the Council of Engineering Systems Universities.   

Chuck Vest, - former MIT president, and now head of the National Academy of Engineering, - gave an excellent keynote address.  He talked about some the grand challenges that the field of engineering faces.  Only 4.5 percent of US university graduates have degrees in engineering, he said, a number substantially lower that in other parts of the world.  Large-scale system challenges, he added, offer us the opportunity to reinvigorate engineering education and capture the imagination and intellect of the next generation of engineering leaders.

Following Vest’s keynote, I participated in a panel on Critical Issues and Grand Challenges, in which we discussed the kinds of complex and exciting societal challenges Chuck told us are needed to inject excitement into engineering.  The panel was moderated by Jim Champy, head of consulting and strategy at Perot Systems and co-author of Reingeneering the Corporation, the best-seller that launched the business process re-engineering revolution in the early 1990s.

Reflections from a "Mutt" on Empathy and Diversity

In his first press conference as President-elect on November 7, Barack Obama talked about the dog he was going to get for his daughters Malia and Sasha.  He mentioned that since Malia is allergic, the family is looking for a hypoallergenic breed.  “There are a number of breeds that are hypoallergenic, but on the other hand our preference is to get a shelter dog, but obviously, a lot of the shelter dogs are mutts like me,” he said.

Obama referred to himself as a mutt because of his mixed racial heritage.  But his remarks got me thinking about my own mixed cultural heritage.  My father Julius was born in a small town in Eastern Poland called Drohiczyn.  My mother, Rachel was also born in a small town, originally called Pruzana in Poland, now part of Belarus.  They came to Cuba in the 1920's and 1930's respectively, where I was born and grew up until the whole family moved to Chicago in 1960.  I thus combine the Eastern European Jewish background I inherited from my parents, with the Latin roots of my first fifteen years in Cuba, with my American heritage of the last several decades. 

My background is not all that unusual for many immigrants to the US, but it is right up there in the mutt, multi-cultural category.  My native tongue is Spanish, my parents native tongue was Yiddish, and since 1960 I have been immersed in English.  I learned Yiddish as a child, both from hearing my parents speak it at home and in the secular, Jewish school I attended in Havana.  I am fluent in Spanish, and speak it often with family, friends and colleagues, as well as with the large number of people living in the US for whom Spanish is their native tongue.

But, English is the language I speak best by far.  From my third year of high school on, my education was totally in English.  I use English almost exclusively in my work, except when I travel to Spanish speaking countries.  While I give talks and presentations in Spanish during such travels, I am clearly much more fluent in English.  I would be really hard pressed to write this blog in Spanish.

How Can “The Best and Brightest” Get It So Wrong?

Last week I moderated a panel on the societal implications of the financial crisis as part of the Westport Library Community Conversation series.  Our panel discussed a variety of topics, and had a lively dialogue with a very engaged, smart and opinionated audience.

I started out by asking each of our panel members to share with us their personal view of the causes of the financial crisis.  What happened?  One of our panelists, Dan Gross, -  a financial and economics writer and senior editor at Newsweek, - recently published a book on the financial crisis, Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation.  I asked Dan to go first.

His answer is along the lines of this Newsweek article that came out around the time his book was published.  He writes in the article

“The people who blew up the system weren't anarchists.  They were members of the club: central bankers and private-equity honchos, hedge-fund geniuses and Ph.D. economists, CEOs and investment bankers.  And the (overwhelmingly legal) con they perpetuated on themselves, their colleagues, their shareholders and creditors, and, ultimately, on us taxpayers makes Madoff's sins look like child's play.”

“. . . during the late, great credit bubble, an Era of Cheap Money devolved into an Era of Dumb Money, and then into an Era of Dumber Money. The culture of Wall Street and the rise of the shadow banking system spawned reckless, largely unregulated lending, borrowing, and trading, a financial culture that preferred short-term fees to long-term gains, and that confused liquidity (access to other people's money) with cash on hand.  Looking back, the investors who believed the stories told by Madoff and Stanford—that they could deliver steady, positive, market-beating returns in any type of climate, despite the manifest failure of virtually every other money manager to do so—were obviously foolish.  But our best financial minds also spun tales and theories with great assurance, making seemingly irrational and unprecedented activity seem completely sensible. And we bought them.”

What Makes Us Happy?

What does it mean to be a good company?  Why is it that some companies are able to survive a major crisis that like some mass extinction evolutionary event will obliterate many of their competitors or reduce them to shadows of their former selves?  What is the magical combination of organizational resiliency, culture and leadership that enables such companies to adapt to rapidly changing market environments? 

These are questions I have been thinking about a lot in the last few years, especially as part of my teaching responsibilities at MIT and Imperial College.

A few weeks ago, I came across an excellent article, asking related but much, much tougher questions.  “What Makes Us Happy?” is the title of the article by Joshua Wolf Shenk in the June issue of The Atlantic.  It is based on a study of adult development called the Grant Study.  The study was started in 1937 by selecting a group of healthy, well adjusted Harvard undergraduates and has subsequently followed its subjects for more than 70 years.

The 2009 MIT Sloan CIO Symposium

Last week I participated in the MIT Sloan CIO Symposium.  The CIO Symposium is an annual one-day conference on the MIT campus, now in its sixth year, “where CIOs and other senior business executives from around the world gather to explore how leading-edge academic research and innovative technologies can help address the challenges faced in today’s changing economy.”  The theme of this year's Symposium was Sustaining CIO Leadership in a Changing Economy. 

The MIT Symposium consisted mostly of interactive panel discussions, including broad audience participation.  Two key themes kept recurring throughout all the panels and discussions.  One was cloud computing, the other was the evolving role of the CIO. 

As is typically the case, panelists used somewhat different definitions of cloud computing, as they each talked about clouds from his/her own point of view.  This is what you would expect if you agree with the view that cloud computing refers not to any one product or service, but to an emerging model of computing beyond the centralized and client-server models of past decades.

The Mass Customization of Services

A recurring theme in the world of technology over the past few decades has been the potential convergence of the IT and telecommunication industries. 

This all started in the 1980s, when the telecommunications industry began to seriously transition from analog to digital technologies in all their voice equipment, from central office and private switches to the phones themselves.  Given that these digital telecommunications products were essentially special purpose computers, many thought that it would not be long before the telcos would develop versions of their products for the general computer markets, and IT companies would adapt their general purpose computers for the more specialized telecommunication applications.

In the early 1980s, everyone was geared for the marketplace battles between these two industries, and in particular, for the battle of the titans between the original American Telephone & Telegraph and IBM, the undisputed leaders in their respective industries.  Both were planning major market expansions after no longer having to worry about being shackled by the US government, since in 1982, the Justice department settled the major antitrust suit it had brought against ATT, and dropped its antitrust suit altogether against IBM.

Smart Cities and "Liveability"

In the last week of April, I participated in a workshop on Smart Cities at Imperial College.  The workshop was organized by the Innovation and Entrepreneurship Group of the Imperial College Business School, as part of a new multi-disciplinary research initiative, Ecocit, whose goal is to study how to help urban environments around the world thrive both ecologically and economically.

The study of cities has become a very important topic.  The workshop invitation writes that:  “The infrastructure of future cities needs to support vibrant, innovative and entrepreneurial communities that take advantage of the digital environment and realize their potential to become ‘smarter’.  However, resource constraints, the effects of climate change and growing population with migration to urban areas will all have an effect on the cities of the future and the infrastructure that will provide for communities’ needs.”

Over the last year, we have started to apply the term smart to our ability to infuse intelligence into the very way the world’s systems and processes work.  What makes this now possible is that just about anything we care about can be sensed and measured - any person, any object, any process or any service, can become digitally aware and networked.  We can then make all these various people, things, processes and services much more intelligent by turning the mountains of information we gather from the instrumented components and their interactions into real insights using sophisticated analysis and powerful supercomputers.

The Intelligent Enterprise

What do we mean by intelligent enterprise?  Wikipedia defines human intelligence as “ . . . an umbrella term used to describe a property of the mind that encompasses many related abilities, such as the capacities to reason, to plan, to solve problems, to think abstractly, to comprehend ideas, to use language, and to learn.” 

Another major use of intelligence relates to information gathering and analysis.  This is the kind of intelligence practiced by government agencies, like the CIA and NSA in the US; the Secret Intelligence Service in the UK, better known as MI6 and perhaps most famous as the home of Secret Agent 007; and the KGB of the former Soviet Union.

Information-based intelligence has become increasingly important to enterprises and other organizations over the past couple of decades.  The use of business and market intelligence has gone way up in recent years, as the Internet and World Wide Web have unleashed a torrent of information, which increasingly powerful computers can analyze and thus help companies better understand what is going on out there.

Cloud - the Emergence of a New Model of Computing

The buzz and excitement around cloud computing has been steadily building over the last year.  There is general agreement that something big and profound is going on out there, although we may not be totally sure what it is yet.  "There is a clear consensus that there is no real consensus on what cloud computing is," was one of the key conclusions at a recent conference on the subject. 

I believe that one of the major reasons for both the excitement and lack of consensus is that we are basically seeing the emergence of a new model of computing in the IT world.  For the IT industry, a new computing model is a very big deal.  In the fifty years or so since there as been an IT industry, this would be only the third such model, centralized and client-server computing being the two previous ones.

What characterizes a computing model?  There is no single dimension around which to define a computing model, which I believe accounts for the variety of definitions of cloud computing.  It’s like the fable of the blind men and the elephant.  Each one touches a different part of the elephant.  They then compare notes on what they felt, and learn that they are in complete disagreement.

The Entrepreneurial Society

The March 14th issue of The Economist included a special report on entrepreneurship.  The special report defines entrepreneurship as something that applies not only to new or small companies.  It uses the word in a more focused, narrower sense “to mean somebody who offers an innovative solution to a (frequently unrecognised) problem.  The defining characteristic of entrepreneurship, then, is not the size of the company but the act of innovation.”

There is so much talk out there about entrepreneurship and innovation that it is easy to forget that it is only recently, perhaps in the last decade or so, that entrepreneurialism has become cool, primarily driven by the profound technological changes all around us.  This is not only true in the US, which still leads the world in innovative new start-up companies, but in countries around the world, from giant India and China which are creating millions of new entrepreneurs, to small countries like Israel, Denmark and Singapore, each of which thrives in its own way.

I am particularly intrigued by the special report’s overall conclusion:  “The rise of the entrepreneur, which has been gathering speed over the past 30 years, is not just about economics. It also reflects profound changes in attitudes to everything from individual careers to the social contract. It signals the birth of an entrepreneurial society.”

Reflections on Smart, Global Leadership

Soft power is a term first coined by Joseph Nye, professor of international relations at Harvard’s Kennedy School of Government.  At its essence, soft power is the ability to shape the preference of others to get the outcomes you want through attraction and co-option, rather than through threats, payments or coercion.

In 2006, the Center for International and Strategic Studies (CSIS) in Washington convened a bipartisan, high-level Commission on Smart Power chaired by Professor Nye and Richard Armitage, to "develop a blueprint for revitalizing American's inspirational leadership." 

“America must revitalize its ability to inspire and persuade rather than merely rely upon its military might.  Despite the predominance of U.S. hard power, there are limits to its effectiveness in addressing the main foreign policy challenges facing America today.  Many of the traditional instruments of soft power, such as public engagement and diplomacy, have been neglected and fallen into disrepair.”

The Commission’s report, released in November of 2007, concluded that

“The United States must become a smarter power by once again investing in the global good - providing things people and governments in all quarters of the world want but cannot attain in the absence of American leadership.  By complementing U.S. military and economic might with greater investments in soft power, America can build the framework it needs to tackle tough global challenges.”

A Historical Perspective on the Financial Crisis

For quite a number of years, Carlota Perez has been predicting the inevitability of the financial crisis that ultimately engulfed us.  An expert on the historical links between technology and socio-economic development, she is Visiting Senior Research Fellow at the Judge Business School of the University of Cambridge, as well as being  affiliated with the University of Sussex and a number of other institutions,

I first met Carlota - a friend whom I therefore feel comfortable calling by her first name - when she visited IBM several years ago, shortly after the publication of her book: Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages.  In her book, articles and lectures, she eloquently explains (see this excellent video, for example) how the combination of new, disruptive technologies and financial capital looking for the next big thing come together from time to time to usher massive new changes in society.  These changes are always accompanied by a financial bubble and subsequent massive crash.

She believes that the present financial crisis is indeed a “once in a half century event”, but an event that she argues has happened four times before in the last 200 years or so.  While each such technology-based revolution has its own unique dynamics, a lot can be learned by examining their common characteristics.  If you look at the historical big picture, patterns begin to emerge, which serve as a very good guide for thinking about and planning for the future.

Capitalism Beyond the Crisis

In September of 2007 I was working on a blog about the kinds of problems that companies inevitably encounter when their underlying technologies, competitors or business models change.  I wanted to make the point that any company, no matter how powerful its position, will likely get in trouble when the environment in which it once flourished changes significantly.  While searching for the right words to convey the notion that the marketplace is much more powerful than any one company or industry, I came across and ended up using the concept of the invisible hand.
 
And that is when I first started learning about Adam Smith, the 18th century Scottish philosopher and economist, who is generally considered the father of free-market, free-trade capitalism.  Smith coined the metaphor of the invisible hand in The Wealth of Nations and other writings.  He used it to indicate that, “in a free market, an individual pursuing his own self-interests tends to also promote the good of his community as a whole,”  and that "the free market, while appearing chaotic and unrestrained, is actually guided to produce the right results by this so-called invisible hand."

The more I read about Adam Smith, the more impressed I became with his life and his work.  For years, many thought that Smith had been advocating a right wing ideological approach to open markets, reflecting a kind of survival of the fittest competition in which anything goes.  As I discovered, nothing could be further from the truth.

Gender-based Differences in Behavior

In the last few months, I have been thinking a lot about the potential causes of our global financial crisis.  I have done my best to capture my thoughts in various entries in this blog as well as in seminars I recently gave at Imperial College and MIT.  While doing research on the subject, I came across a few interesting, perhaps somewhat far-out articles that took my thinking in intriguing directions.  Let me share some of them.       

Gender diversity and the financial crisis

Is testosterone to blame for the financial crisis?, asks a Scientific American Science blog, as it writes: “High levels of testosterone are correlated with riskier financial behavior, new research suggests.  Men with more of the sex hormone made riskier investments than guys with lower levels, according to a study published online yesterday in Evolution and Human Behavior.”

An article in The Guardian reports on a separate study of traders in a London bank.

Blogging and Writing

One of the biggest differences between an academic and a business career is the importance of writing and publishing.  In business, a CV (Curriculum Vitae) will generally emphasize a person’s career history and work experience, including key professional achievements and education.  Business resumes are typically no longer than two pages.  In academia, the CVs will tend to be much longer because they include a complete list of journal articles, conference papers, books and other publications.  Publications are among the most important aspects of an academic career.

Given my 37 years at IBM, about thirty of them in management positions, I have a typical business resume, long in work experiences and short on publications.  But, as my post-IBM distributed career is now about half in business, with IBM, Citigroup and others, and half in visiting academic positions at MIT, Imperial College and SUNY’s Levin Institute,  I have been thinking a lot about what I should do concerning publications.    

In fact, I have been writing a lot for close to four years, namely this blog, which I started in May of 2005.  Ever since, writing a new blog entry week in, week out, has become a major part of my life.  I have not missed one week yet.  Thinking about the subject I want to write about, writing and revising the entry, editing it up until I actually post it, and then seeing what people say about it, both through comments in my blog as well as mentions in their own blogs, takes a considerable chunk of time each week, let alone quite a bit of mental energy.

Design, Innovation and Organizational Systems

I was back at Imperial College in London in the last week of February.  I gave several seminars and held a number of meetings, but the main reason for my visit was to once more participate in a STIR lecture sponsored by Design London. 

Design London is an initiative launched about two years ago between Imperial College and the Royal College of Art.  It aims to bring together the disciplines of design, engineering, technology and business to address jointly the challenges of innovation in an increasingly global, competitive economy.  As part of its many research and educational activities, Design London offers the STIR (Simulator, Teach, Incubate, Research) lectures, which cover a wide range of subjects from widely different personal experiences and points of view.

Our STIR lecture - CROSS OVER:  how a new approach to architecture is inspiring a new architecture for business - aimed to “explore not only how a radical approach to design has inspired a new genre in the built environment, but also how this approach can be applied to designing a new architecture for business.”

Services, Jobs and Related Subjects

The services sector is by far the largest in the world’s economy.  Services comprise 64 percent of GDP overall, about twice as large as the GDP of the industrial sector.  The services sector represents over 70 percent of GDP in advanced economies and close to 80 percent in the US. 

Jobs exhibit similar statistics.  According to the 2008 World Factbook, about 40 percent of all the jobs in the planet are in services.  The numbers go up significantly in the more advanced economies.  About two thirds of the jobs in Brazil, Japan and the European Union are in services.  In the US, UK and Israel the percentage of such jobs is around 80 percent.  

It is interesting that while constituting such a large portion of GDP and jobs in the world, the nature of services remains vague - a kind of hard-to-measure dark matter.  It is easier to define the services sector by what it does not include:  it is not agriculture or fishing, and it is not manufacturing, construction or mining.  Just about every other job is in services.  Perhaps the one definition everyone can agree to is one attributed to The Economist: a service is “anything sold in trade that cannot be dropped on your foot.”

The Industrialization of Services

In the late 18th century, the Industrial Revolution started the transition from a manual-labor based economy towards an economy based on using technologies, tools and machines to significantly improve the manufacturing of physical goods.  Over the next two hundred years we have seen the industrial sector of the economy achieve major improvements in the productivity and quality of manufacturing, ranging from very simple to highly complex physical objects.

A major step in that remarkable story of innovation occurred around thirty years ago.  Before that time, most manufacturing plants were fairly inefficient by almost any contemporary measure, and were turning out products of varying quality.  Then, driven by the huge success of Toyota and other companies around the world, the industrial sector and academia discovered the merits of applying engineering discipline as well as a holistic, systems-wide approach to manufacturing processes.  Company after company embraced the Toyota Way, Six Sigma, Lean Production and similar methods in their manufacturing and logistics operations, which have brought the industrial sector of the economy to a whole new level of productivity and quality.

The rise of IT in the last several decades has enabled us to start applying technologies to the large and diverse world of services.  In the beginning, computers were used primarily to perform calculations.  In the 1970s, we started to make a lot of progress automating highly repetitive, back office tasks like processing financial transactions, inventory management and airline reservations.  Then, a decade later, the personal computer enabled us to develop all kinds of productivity applications like word processing and spreadsheets.  The 1990s brought us the Internet and World Wide Web, which introduced revolutionary ways of dealing with content, communications and commerce.

Dealing with Increasingly Improbable Events

 For a long time, scientists and science-fiction writers alike have pursued the question whether you can accurately predict the future from the past given sufficiently large groups, historical information and computational power. 

For example, in the Foundation Series, one of science-fiction's classics of all times, Isaac Asimov introduced the fictional scientific concept of Psychohistory.  The essential idea in psychohistory, says the Wikipedia entry, is that “while one cannot foresee the actions of a particular individual, the laws of statistics as applied to large groups of people could predict the general flow of future events.  Asimov used the analogy of a gas: an observer has great difficulty in predicting the motion of a single molecule in a gas, but can predict the mass action of the gas to a high level of accuracy.”

Psychohistory relied on extremely advanced models which enabled a purely mathematic approach to predict future events.  However, it was not able to cope with totally unpredictable events.  Thus, when a mutant was born, the fictional character known as the Mule, his totally unanticipated psychic skills invalidated the assumptions underlying the models, and history then proceeded on a very different course that what had been predicted by the psychohistory computers.

 Asimov and his wonderful Foundation story have been on my mind in the last few years as I have been thinking about complex organizational systems, where people and the services they perform for each other are the primary components.  In particular, I have wondered about the limits in our ability to accurately model and predict the behavior of such people-based systems, especially as I continue to reflect on the causes of the global financial crisis - our financial systems being an example of such complex, people-based organizational systems.  Will the mutations, highly irrational behaviors and other unpredictable events inherent in such systems always befuddle mathematical models and computers, no matter how sophisticated and powerful we make them.

A Gathering Storm We Totally Missed

I think that it is by now pretty clear that there is no simple answer to the causes of the biggest financial crisis since the Great Depression. 

Plain, old-fashioned greed - that is, the pursuit of individual wealth, possessions and power - clearly played a major role.  So did the Wall Street's bonus system which practically encouraged its people to make risky investments so they can earn huge sums of money in a good year, without having to worry about the impact of their risky, short-term bets in subsequent years.

There is plenty of blame to go around: the management of the financial companies; the rating agencies; the regulators; the extreme anti-government ideology that prevailed in the US in the last several decades.  Our financial crisis is best seen as a systemic failure of massive proportions.

But, there is one group whose role in this systemic failure I personally find particularly troublesome: my own technical and research community.

Checks and Balances

The Founding Fathers is the name we give to the leaders who signed the US Declaration of Independence and participated in drafting the Constitution.  They set up a system of governance based on the principle of separation of powers under which the state is divided into different branches, each with separate and independent powers and areas of responsibility.
 
Critical to the success of this style of governance is a system of checks and balances, whose purpose is to prevent any one branch of government from becoming too powerful at the expense of the others, and to induce them to cooperate in getting things done.  The notion of checks and balances has become embedded in the culture of the country, not just as it applies to the federal government, but also to the balance of powers between federal, state and local governments.
 
It has proven to be a brilliant system of government.  Not only has it endured for over two centuries, but it has done so while adapting to the vast changes that the country has undergone during that time, including its massive growth in size, population and power; the vast diversity in the composition of its people; and the highly different political beliefs, social mores and market conditions it has experienced through all that time.  Its success is largely due to its built-in flexibility to adapt to vastly varying conditions.  If any part of the system becomes too prominent, the other parts react to limit its powers and bring the overall system back in balance.

Transparency and Open Government

One of the first documents our new President signed within his first day in office is this memorandum on Transparency and Open Government.  It is a memo that I am personally very happy to see, not only because I agree so strongly with its content.  For the last couple of months I have been a member of the Technology, Innovation & Government Reform (TIGR) transition policy group focusing on innovation and government.  This Presidential memo covers precisely the area that we worked on.

The TIGR Group

Right after winning the November 4 election, President-elect Obama's transition team established a series of Policy Working Groups "to develop the priority policy proposals and plans from the Obama Campaign for action during the Obama-Biden Administration."  There were seven such Groups: Economy, Education, Energy & Environment, Health Care, Immigration, National Security, and Technology, Innovation & Government Reform.

The TIGR group that I was part of was charged with developing "a range of proposals to create a 21st century government that is more open and effective; leverages technology to grow the economy, create jobs, and solve our country’s most pressing problems; respects the integrity of and renews our commitment to science; and catalyzes active citizenship and partnerships in shared governance with civil society institutions."  We were organized into four sub-teams: Innovation and Government, Innovation and National Priorities, Innovation and Science, and Innovation and Civil Society.  I was part of  the Innovation and Government group.

Leadership in a Time of Crisis

Leadership is the kind of subject that invariably rises to the top in a time of crisis.  Otherwise, it is one of those topics that companies talk a lot about but otherwise don't feel the need to pay much serious attention to.  When skies are blue, the business can usually cruise along quite nicely with executives who are likely top operational managers but may or may not also have good leadership attributes.

Think about how executives typically reach senior management positions?  The key responsibilities of middle management are to deliver against their operational and functional commitments.  Those who perform well in their jobs will generally be promoted to positions of higher responsibility.  The selection process will ensure that they have very good operational skills and have experience in managing different kinds of functions in the organization - finance, sales, customer service, HR, manufacturing, logistics - or all of them in the case of good general managers.

Managing a large global organization is very tough and getting tougher given our unpredictable, fast changing, intensely competitive market environment.  Being a successful manager in such an environment is truly difficult:  you have to constantly improve your products and services to keep up with fast changing technologies and markets; you have to work hard to retain existing customers and attract new ones regardless of how ferocious the competition is; and you must achieve good financial results quarter after quarter, lest  you disappoint shareholders and financial analysts, who will then start asking for your head. 

But, in highly disruptive times, let alone in a time of crisis, being an excellent manager is not enough.  Presumably the company is in crisis because the new disruptive environment is so different from everything that came before.  The tried-and-true management disciplines are no longer working.  Something else, over and above excellent management is required, namely leadership.

Learning from Experience

This past Fall, I taught my MIT graduate seminar Technology-based Business Transformation for the second time.  The focus of the course is on how to leverage emerging, disruptive technologies to significantly transform a business or even a whole industry.  I use examples from a variety of companies and industries, but in particular, throughout the course I use the concrete lessons we learned from IBM’s e-business initiative in the second half of the 1990s, as well as my personal experiences as general manager of the Internet Division during this period.

I spend the first class talking about innovation as a key business imperative.  Every business must continuously innovate in order to survive the competitive pressures all around them.  In that first session we discuss in some depth IBM’s own near-death experience in the early 1990s.  Few companies survive this kind of experience.  IBM managed to survive and reinvent itself in the process by embracing a number of major technology, market and organizational innovations - the Internet in particular, -  that transformed the company and its culture.

In my opinion, IBM's near-death experience and successful reinvention are inexorably linked.  In business, as in life in general, cataclysmic event are great learning experiences, assuming of course you manage to get over them and keep going.  Such events open the mind to new experiences as nothing else does, totally changing our previous inflexible views of life.  This is a key concept in ancient Greek tragedy.  The tragic hero need not die, but it is important that he acknowledges his responsibility in his doomed fate, learns from his mistakes and corrects them moving forward.

Lessons from engineering

Learning from mistakes is the essence of Six Sigma, Lean Production and similar methodologies that aim to identify and remove the causes of defects and errors in manufacturing and business processes.  Root cause analysis is one of the key tools they use.  It is not enough to merely address the immediate obvious symptoms in solving a problem.  You must attempt to find, and correct the root causes of the problem in order to minimize the likelihood that the problem will recur.

Reflections on the 50th Anniversary of the Cuban Revolution

On December 31, 1958 we were celebrating New Year's Eve in the home of a friend, about a block from our apartment on Calle 4 in Miramar, a nice, middle class section of Havana.  I was thirteen, in the second year of high school of our more European-like educational system, which consisted of six years of grammar school, followed by five years of high school.

The previous year, I had spent New Year's Eve gallivanting around Havana with friends, but by December of 1958 the political situation was very fragile.  The battle to overthrow the Batista dictatorship was in full force.  Havana was the scene of frequent bombings, shootings, and police roundups.  We could no longer venture around town to celebrate New Year's Eve.

The following morning, January 1, 1959, we all walk up to the news that Batista along with many high officials in his government had fled Cuba overnight.  Fidel Castro the leader of the Cuban Revolution that had been fighting the Batista regime for the last several years came to power, along with his brother Raul. 

They have ruled Cuba ever since, celebrating their 50th anniversary in power on January 1, 2009.

Life was never the same for me and my family.  Within a few months of taking power, the Castro government started its turn toward communism, nationalizing all private property, from large plantations and industries owned by wealthy Cuban families and foreign companies, to businesses of all sorts owned by middle class families, like my parents’ store.

Darwinism, Adam Smith and Global Management Models

The December 20 issue of The Economist has an excellent article "Why we are, as we are".  It touches on a fascinating theme: "As the 150th anniversary of the publication of 'On The Origin of Species' approaches, the moment has come to ask how Darwin’s insights can be used profitably by policymakers."

Inspired by the article, I started to reflect on how the lessons of Darwinism can be applied to help us understand the fundamental roots of the ongoing global financial crisis.  In addition, given my continuing faith in open markets and free trade, my thoughts also turned to my favorite economist - Adam Smith, - whose views I felt would also be quite relevant in helping us make sense of the situation.

Many have said that the underlying cause of the financial crisis is greed - that is, the pursuit of wealth, possessions and power beyond the need of the individual.  That is way too simplistic an answer.  To a greater or lesser extent, greed is part of the human condition, along with the other seven deadly sins and other vices.  Powerful evolutionary forces drive the quest for money and power, as The Economist article observes

"For a Darwinian, life is about two things: survival and reproduction.  Of the two, the second is the more significant.  To put it crudely, the only Darwinian point of survival is reproduction."

"Girls have always liked a rich man, of course.  Darwinians used to think this was due to his ability to provide materially for their children.  No doubt that is part of it.  But the thinking among evolutionary biologists these days is that what is mainly going on is a competition for genes, not goods.  High-status individuals are more likely to have genes that promote health and intelligence, and members of the opposite sex have been honed by evolution to respond accordingly.  A high-status man will get more opportunities to mate. A high-status woman can be more choosy about whom she mates with."

"Status, though, is always relative: it is linked to money because it drives the desire to make more of the stuff in order to outdo the competition.  This is the ultimate engine of economic growth.  Since status is a moving target, there is no such thing as enough money."

Do Words Matter?

About a week ago we learned that an Ecuadorian man died from injuries incurred in a beating in New York City in what authorities say may have been a hate crime. CNN reported that:

"Jose Sucuzhanay and his brother, Romel, had left a party on December 7 at St. Brigid's Roman Catholic Church when several men approached them in a car in the Bushwick section of Brooklyn, police said. The men allegedly began shouting anti-gay and anti-Latino vulgarities at the two men."

A month earlier, another Latin man, Marcelo Lucero was attacked by a group of seven high school students in Suffolk County and stabbed to death.  The Suffolk District Attorney said that "the seven students charged in the attack admitted they regularly beat Hispanics for fun.  He said one of the accused attackers, Anthony Hartford, 17, of Medford, told police 'I don't go out doing this very often, maybe once a week.'"

If such attacks against Hispanics are taking place in the New York area, among the most open-minded and diverse regions in the world, I can only begin to imagine what might be going on elsewhere in the US.  The picture that emerges is not very pretty:

"FBI statistics show an alarming increase in the number of hate crimes across the nation.  Latinos, the numbers say, have become the racists' target of choice in the last four years.  Since 2003, hate crimes against Hispanics have increased by a shocking 40%.  According to the FBI, almost 67% of crimes motivated by ethnic or national origin are committed against Latinos."

For several years now I have closely followed the immigration debates in the US.  I have seen, with considerable dismay, the negative, mean-spirited tone that powerful figures in politics and the media sometimes display when discussing immigration issues.  In particular, I have become increasingly alarmed at their mean-spirited, anti-immigrant words, especially aimed at poor Mexican immigrants.  Do these words matter?

Managing across Borders and Cultures

I was recently invited to join The Levin Institute as a Senior Fellow.  The Levin Institute is a new, independent institute within the State University of New York (SUNY).  It was established to train students, working professionals and organizations to live and work effectively in our emerging global environment.  Its mission is succinctly captured in its tag line: Managing across borders and cultures.

The Levin Institute is located in a newly renovated landmark townhouse on 55th Street between Park and Lexington, in the heart of New York City.  Its full name is The Neil D. Levin Graduate Institute of International Relations and Commerce.  It was founded by the State of New York to honor the memory of Neil David Levin, a former Executive Director of the Port Authority of New York and New Jersey who was killed during the September 11 terrorist attacks on the World Trade Center. 

The Levin Institute is led by Garrick Utley, a former broadcast journalist with extensive experience in international affairs, who reported from more than 75 countries for more than 40 years.  Mr. Utley’s Presidential message describes its missions thus:  

"We are a new 21st Century academic model and enterprise that addresses key aspects and issues of globalization. We do this through developing new learning models, research and public engagement.  We prepare individuals and institutions to learn, work and communicate across borders and cultures.  As a free standing, system wide institute within the State University of New York (SUNY) we meld management school curricula with those of schools of international relations.  The successful manager of the 21st Century will be defined by the ability to operate successfully across divisions of nationality, ethnicity, religion and languages as well as political, economic, legal and regulatory environments.

“Our research projects and studies include global talent (high end knowledge workers), China as an emerging, knowledge-driven economy and society, the growing influence of global corporations, global media and the impact of globalization on American society.  Through our conferences and events, and leading-edge information and audio visual technology, we work to give new meaning to the concept of distance learning. One of our web sites, www.globalization101.org, is a leading platform for information and learning tools."

Elitists and Populists

In a recent post, I wrote about the current meaning of political labels along the liberal - conservative spectrum, especially as they were used in the very long 2008 campaign for US president.  My personal conclusion was: "The terms ‘liberal’ and ‘conservative’ are alive and well when it comes to social issues, but they are increasingly irrelevant when applied to economic policy."

Another set of terms we heard a lot during the campaign were "elitist" and "populist."  Barack and Michelle Obama were cast in the role of chief elitists by a variety of political opponents and commentators.  The populist mantle was primarily worn by John Edwards and Mike Huckabee during the primaries, and even John McCain was cast as a populist toward the end of his presidential campaign.  But without a doubt, the role of populist-in-chief in the recently concluded campaign fell to the Republican vice-presidential candidate, Sarah Palin.

The frequent use of these terms caught my attention.  I started hearing that Barack and Michelle Obama lived in the "elite" Chicago neighborhood of Hyde Park, where their daughters attended the "elite" University of Chicago Laboratory Schools, and that Barack Obama taught constitutional law for twelve years at the "elite" U of C.

Wait a second.  I lived in Hyde Park for almost ten years, from the time I arrived in the US from Cuba in October of 1960 to the time I moved to the New York area to go work for IBM in June of 1970.  I attended the Lab Schools for my last two years of high school, and then went on to study at the University of Chicago for the next eight years.  I think of Hyde Park as a very diverse kind of community anchored by the university, home to many different kinds of people.

"Serious" Virtual Worlds Applications

Given my strong belief in the promise of virtual worlds applications, I follow closely their ups and downs in the maretkplace.  Virtual worlds continue to be most popular in video games, massively multiplayer online environments and other consumer oriented applications.  The number of applications in serious areas like education, business, government and health care remains small.  So it is particularly exciting when we see working examples of serious virtual worlds applications, because, more than the words any of us can write, they nicely illustrate their potential.  Let me highlight a couple of recent such applications. 

The IBM Academy of Technology comprises the most accomplished technical leaders from around the world who work across the spectrum of IBM's technical activities.  Established in 1989, its key mission is to identify and pursue technical issues affecting the future of the IT industry, especially those that are highly relevant to IBM's overall business and technical strategy.  There are currently about 350 Academy members.  In addition, there is an extensive global network of regional Academy Affiliate, whose membership includes the key technical leaders in each region.   

The IBM Academy is a self-governing entity that elects its own members and officers.  Its independence gives it very broad latitude in deciding what activities to pursue and what recommendations to make to IBM's senior management.  For many years I was a member of the Academy's Board of Governors, and its Chairman from October 2004 until my retirement in 2007.

Every Fall, the Academy hosts a three-day general meeting to help promote communications and a sense of community among its members, as well as to develop and debate new ideas.  Due to the deteriorating economic conditions caused by the global financial crisis all around us, the decision was made in early October to cancel the 2008 general meeting, scheduled to take place a few weeks later, and to replace it with some alternative virtual meeting that would require no travel.

As it turned out, since October of 2007, a small team of Academy members and other experts had been working to develop a virtual world platform for use in Academy meetings.  Besides its large annual general meeting, the Academy holds many smaller meetings throughout the year as part of its various studies.  Since participants in these studies come from all over the world, travel is always an issue, not just because of the expenses, but also the travel time and general wear and tear involved.

Re-inventing Management and Management Education

Through the years, I have watched with a kind of morbid fascination the number of once powerful companies that are no longer around.  It would appear that Darwinian principles apply to companies as much as to organisms.  There seems to be a kind of life cycle to a business, and beyond a certain number of years, the invisible hand of the marketplace lets you know that your time is up.  And every so often, a kind of near-mass-extinction event seems to afflict a whole industry, such as is currently happening in the financial sector around the world. 

How I came to my fatalistic view of business is not hard to understand.  IBM's near-death experience in the 1990s was very painful for me personally and for all us in the company.  Even though we managed to survive, as well as to recover and regain a position of leadership in the IT industry, the traumatic experience has definitely left its imprint and colors my views of the world.

Then there are the facts.  In her book Let Go to Grow, my IBM colleague Linda Sanford cites a number of ominous statistics.  For example, of more than 1,000 companies tracked by the Fortune 500 since 1960, less than one sixth of them are still around.

Reflections on Political Labels

We have just concluded a very long political campaign that culminated in the election of Barack Obama as the 44th President of the United States.  As is typical in such campaigns, you heard a lot of different political labels thrown around.  Candidates were called “extreme right-wing conservatives” and “extreme left-wing liberals” – depending on which candidate the speaker wanted to marginalize, at which end of the political spectrum.

Then, toward the end of the campaign, we were hit by a shot from left field.  Just as the Democratic and Republican conventions finished and everyone got ready for the final sprint to the November 4 elections, the world was hit by the worst financial crisis since the Great Depression.  Over the next weeks we saw the Bush Administration implement a series of economic programs, collectively referred to as The Bailout - the largest government interventions in the private sector since the New Deal. 

What is going on, people asked themselves?  Has the Bush Administration - generally considered among the most conservative in the history of the US - all of a sudden embraced socialism in its final few months?  Or could it be that political labels, like “liberal” and “conservative” are not what they used to be?  Do they need to be re-defined for the 21st century?  Let me offer some reflections on the topic.

Living in a Smarter Planet

Just about everyone agrees that we are living in an increasingly global, integrated, complex . . . and unpredictable world. What can you do about it? The only possible answer is to take the same information technologies that are making our planet so much smaller and flatter, and use them to make our planet smarter - all its processes, systems, institutions, economies and nations.

Last week, IBM Chairman and CEO Sam Palmisano addressed this topic at the Council of Foreign Relations in New York City, in a talk titled A Smarter Planet: The Next Leadership Agenda. Sam explained that when he talks about making the planet smarter, "This isn't just a metaphor. I mean infusing intelligence into the way the world literally works - the systems and processes that enable physical goods to be developed, manufactured, bought and sold… services to be delivered… everything from people and money to oil, water and electrons to move… and billions of people to work and live."

What makes it now possible to talk seriously about making the planet smarter? Sam mentioned three key factors. First, just about everything can now be instrumented - anything we care about can be measured, sensed and seen. We can now embed sensors in physical things, like cars, appliances, medical equipment, cameras, roadways, pipelines, pharmaceuticals or livestock. We can measure entire ecosystems - whole supply chains, business processes, cities, healthcare networks, even natural systems like forests and rivers. We will be able to gather huge amounts of real-time information about the state of the world.

Next, our world is becoming increasingly interconnected. These instrumented things can now interact with each other, much as they do in the physical world. Our instrumented processes can exchange information with each other so that together they can improve the operations of the larger systems of which they are parts. It is important that we break down the silos and begin to look at the world in a more holistic way, as an interconnected system where the various components collaborate with each other, so that together they get the job done.

Finally, all these various things and processes can be made much more intelligent by using the information we gather from all those instrumented components as well as from their interactions. Turning these mountains of information into real insights to guide our actions requires sophisticated analysis using powerful supercomputers. We can also use these powerful supercomputers to optimize the individual components, as well as the overall system. This kind of information-based intelligence will help us make companies, industries, organizations and economies more efficient, productive and responsive.

Cloud Computing: the Internet of Services

The October 25 issue of The Economist includes a special report on cloud computing - seven articles plus an introduction.  It is an in-depth look at this new model of computing, its implications, its value promise to companies and societies, as well as the pitfalls against which we have to guard.

In the lead article, Ludwig Siegele starts out his definition of cloud computing by first giving a very succinct history of computing:

"In the beginning computers were human. Then they took the shape of metal boxes, filling entire rooms before becoming ever smaller and more widespread.  Now they are evaporating altogether and becoming accessible from anywhere."

"That is about as brief a history of computers as anyone can make it.  The point is that they are much more than devices in a box or in a data centre.  Computing has constantly changed shape and location - mainly as a result of new technology, but often also because of shifts in demand."

He then goes on to define cloud computing:

"Now, this special report will argue, computing is taking on yet another new shape.  It is becoming more centralised again as some of the activity moves into data centres.  But more importantly, it is turning into what has come to be called a 'cloud', or collections of clouds.  Computing power will become more and more disembodied and will be consumed where and when it is needed."

"The rise of the cloud is more than just another platform shift that gets geeks excited.  It will undoubtedly transform the information technology (IT) industry, but it will also profoundly change the way people work and companies operate.  It will allow digital technology to penetrate every nook and cranny of the economy and of society, creating some tricky political problems along the way."

Towards an ET (Energy Technologies) Revolution

Our world is not lacking for Grand Challenges - that is, complex problems of great importance to society whose solutions require breakthroughs across multiple dimensions.  I am sure that improving the productivity and quality of health care is in just about everyone's list.  The effective management of our global, integrated, unpredictable economies and financial systems is probably going to be a newcomer to many Grand Challenge lists.  But, most experts will likely agree that the search for clean, plentiful energy is the single biggest problem facing humanity and will be at the very top of Grand Challenge lists for the foreseeable future. 

Why are breakthroughs in energy so critical?  First of all, we face major challenges in finding reliable supplies of energy, and reducing the environmental impact of energy production and use.  But, energy is also directly linked to some of the toughest problems we face in the 21st century, such as water, food, poverty, transportation, terrorism and war.  Energy likewise plays the dominant role in determining the quality of our environment.  It is a key factor in the quality of life for people around the world, arguably the single most important factor that impacts the prosperity of any society.

Tom Friedman, whose best-seller The World is Flat helped explain the forces of globalization to millions around the world, recently published Hot, Flat and Crowded: Why We Need a Green Revolution - and How it Can Renew America.  In his new book, as well as in his articles and Op Ed columns, Tom has been vigorously talking about the power of green, the incredible economic opportunities available to those working towards an ET - Energy Technology - revolution, a revolution every bit as transformative and disruptive as the IT revolution has been.

The 2008 HENAAC (Hispanic Engineer) Conference

Earlier in October I was in Houston to attend the annual Hispanic Engineer's National Achievement Award Conference (HENAAC).  HENAAC key mission is promoting science, technology, engineering and math careers in underrepresented communities, especially the US Hispanic community.  It has been doing so for twenty years now. 

The highlight of the annual HENAAC conference is the award show that recognizes the achievement of Hispanic engineers and scientists in a number of categories.  The top honorees this year were Ellen Ochoa - deputy director for NASA's Johnson Space Center and former astronaut - who was named the 2008 Hispanic Engineer of the Year, and Dan Arvizu - Director of DOE's National Energy Renewable Lab - who was inducted into the HENAAC Hall of Fame.  I was honored by HENAAC in 2001, when I was named Hispanic Engineer of the Year, and in 2004, when I was inducted into the Hall of Fame.

The conference included a variety of meetings and seminars, as well as a number of programs aimed at students, including a career fair.  Among the meetings was a panel - for which I acted as moderator, - of past Engineers of the Year and Hall of Fame inductees to explore innovative solutions to the number one issue HENAAC deals with:  how do we convince Hispanic kids and their families that the pursuit of engineering and science careers is one of the best paths to a well paying, highly stimulating job?

Participatory Governance

In early October I attended a small meeting on "Digital Media and Democratic Participation,” sponsored by the MacArthur Foundation.  The goal of the meeting, as articulated in the invitation letter, was "to explore how digital media may affect political participation and civic engagement. The Foundation is interested in understanding how digital media tools – which enable new forms of knowledge production, distribution, social networking and collaboration – might influence citizen engagement, political activity and democratic participation."

One of the items on the agenda was devoted to networks, collaboration and participation.  I was asked to make some opening remarks as a way to frame the dialogue.  I started my remarks by discussing the evolution of governance in business and other institutions.  As I have been writing in my blogs, I believe that corporations and institutions in general are undergoing dramatic, positive changes in organization and governance.  

In the industrial economy that dominated the 20th century, companies were generally centrally organized, with a hierarchic approach to management where authority and information flowed down from small groups of executives in headquarters.  This model worked well when technologies and markets changed slowly.  But as technology and market changes have accelerated, along with global competition and opportunities, corporations have had to become more flexible and adaptable, which is leading them to embrace a more distributed, collaborative organizational style.

Wise companies recognize that the real expertise is out there in the wider world, with their employees in labs, manufacturing plants, sales and customer service.  To capture such expertise, they need these employees to become much more involved in the actual governance of the company, including operational improvements, strategy formulation and innovations across products, services, processes and business models.

Diversification, Mass Extinction and Survival

The carnage underway in the financial sector reminds me of one those near-mass-extinction events that seem to strike industries and markets from time to time.  What can a company do to maximize its chances of survival at such times?

Most everyone will agree that a strategy based on diversification is the best way to reduce risks in a very complex system, especially one whose components are interconnected and undergoing rapid changes, thus causing the overall system to be intrinsically unpredictable and emergent.

Nowhere are the benefits of diversification more apparent than in biology.  Biodiversity is one of the best indicators of the health of a biological system.  The biodiversity in our planet today is the result of a few billion years of evolution.  It is evolution's way of improving the chances that as many forms of life as possible will continue to survive and thrive in spite of drastic changes in their environments, including periodic mass extinction events.  It is estimated that 99% of the species that ever lived are now extinct.  Thankfully, we are still among the 1%.

Bubbles and Fundamentals

The recent events in the financial industry brought back memories of the Internet dot-com era of the late 1990s, only a short decade ago.

In the speculative dot-com bubble that developed during those years, a lot of people were talking about the rise of a new economy that rendered obsolete many business practices, including business models based on revenue, cash and profit.  They felt that in this new Internet economy, the emphasis should now be on increasing market share, clicks and eye-balls as fast as possible regardless of the impact on the bottom line.

There was a buzz in the air that in this new economy, "born-on-the-Net" startups had an inherent advantage over existing,” brick-and-mortar" businesses.  Because of their grounding in the physical world, it was thought that such old-fashioned companies could not possibly compete in this fast-moving digital space and were therefore headed for extinction.  Thus, many otherwise smart people rushed to invest in new Web-based companies regardless of their financial soundness, hoping to strike gold in this new economy.   

At the time, I was general manager of the IBM Internet Division.  Looking back at what we accomplished in those days, I am frankly almost as proud of what we did not do as I am of what we did.

Toward a More Distributed, Collaborative Government

There is general agreement that the corporation is going through dramatic changes in the 21st century, driven by a combination of advances in information technologies, the Internet, the fast-changing market environment, and the heightened competitive pressures brought about by globalization.  Business strategist and author Don Tapscott, whose research and writings have focused on the changing nature of companies, said it nicely in this article:

"We came to the conclusion that the corporation is arguably going through the biggest architectural change in a century.  Throughout the 20th century we created wealth through vertically integrated companies that did everything from soup to nuts. . . . But the rise of the Internet means that boundaries are far more porous.  A new model is emerging, enabled by IT and networks.  Vertically integrated companies are unbundling into business Webs, or what I call the open networked enterprise.  These are companies that think and act differently, that take a new approach to doing business in a highly networked world."

Companies are embracing a more distributed organizational style.  The foremost reason is the need to become more flexible and adaptable in response to changing market conditions.  A highly centralized organization may have worked well when markets changed slowly.  It was then possible to have a command and control approach to management, where authority and information flowed down from small groups of executives back in headquarters.

But, as we know, this does not work so well today, especially for global companies that operate within complex supply chains and industry ecosystems and need to react fluidly to dynamic market conditions all over the world.  The expertise is out in the field, where the rubber meets the road, as it were.  That is where people know what is really going on and what they should do about it.

The American Dream, Innovation and the Knowledge Economy

With few exceptions - support for research and education, diversity and immigration policy - my blog does not touch on political subjects.  But it is hard not to be thinking about politics, given our upcoming US presidential election, and in particular, the recently concluded Democratic and Republican conventions.

Beyond the relatively straightforward question of how I am going to vote, I have been struggling with how best to put into words my feelings about this coming election.  What are the key concerns of individuals, families and communities?  What are some of most important problems facing our nation as a whole?

There is clearly no single answer to these questions.  The conflicts in Iraq and Afghanistan, the war on terror, healthcare reform, energy, immigration and the financial crisis are clearly among the most important issues facing the next president.  But I wonder if, in the end, the most critical questions people are asking themselves around the country are less grand in scope but much more relevant to their daily lives.  How are our families generally doing financially?  Where will the good jobs come from that are needed to preserve and hopefully increase our standard of living?  How about our children?  Are they getting the proper education so they, too, can aspire to a decent, well paying job and a good standard of living?

These are the kinds of questions that bring to mind an old fashioned phrase from the 1930s,  “The American Dream,” even as we transition from the industrial to the knowledge economy and the 21st century.

Blogging at this Particular Point in My Life

Blogging has continued to play a central role in my life since I started this blog in May of 2005.  It is something that I think about a lot every week.  First, I need to plan what to write about, as well as how to best organize whatever subject I settle on.  Then there are the many hours of writing and editing.  When things go smoothly I can probably get it done in three to four hours.  But when a subject is tough and I need to work though how to best structure what I want to say, it can take quite a bit longer.

There are also the times when I am struggling with an entry - usually because while I think that I know what I want to say, I find out otherwise when I actually try to write things down.  I then have to set aside the subject, hoping that things will go better when I later get back to it.  Typically, this is what happens, although every now and then I do have to give up on a subject altogether.       

If this all sounds like work - it most definitely is.  It is something I have been doing every week for the last three and a half years without missing one so far.  Given its role in both my work and my life, every so often I like to focus an entry on blogging itself.  Let me then quickly review my personal evolution with bloogging leading up to its current state. 

An Update on Virtual Worlds

For the last three years I have been quite intrigued by virtual worlds and all the various capabilities we group under this term.  I believe they are ushering a new paradigm for user interfaces, as well as a whole round of innovative, more human-oriented, intuitive applications.

While many are excited by these possibilities, others remain skeptical.  Virtual worlds continue to be most popular in video games and massively multiplayer online environments.  Despite our high expectations, the number of virtual world applications in serious areas like education, business, and health care remains small.  Some think that this is just one more example of the kind of hype that the IT industry comes up with from time to time.

At this early stage, both fans and skeptics are right.  The promise is there, but it remains to be realized.  I, most definitely, remain positive.  Let me attempt to explain why. 

To begin with, what do we mean by serious virtual world applications?  While there will undoubtedly be many different such applications, I’d like to focus my comment on three specific categories.

Complex Organizational Systems

The study of complex systems has been a common arc in my career.  It started with physics at the University of Chicago in the 1960s, where I was studying complex natural systems - atomic and molecular physics in particular.  Later on, when I joined IBM Research and became a computer scientist, my main research interests were centered on large computer systems, including mainframes, supercomputers and distributed systems.  In the last twelve years, my work has focused on the kinds of complex systems made possible by the advent of the Internet and the Web.  Then, in the last five years, my interests have gravitated toward market-facing complex systems involving people and services.

What makes such complex systems complex?  I found the most satisfying answer to this seemingly Socratic question in an excellent paper - Complexity and Robustness - by  professors Jean Carlson and John Doyle from UC Santa Barbara and Cal Tech, respectively.

Complex systems, whether natural or engineered, are composed of many parts.  But it is not the mere number of component parts that makes them complex.  After all, a stone or a table is composed of huge numbers of molecules, yet we would not consider them complex.  According to Carlson and Doyle, a truly complex system must consist of many different kinds of parts, intricate organizations and highly different structures at different levels of scale.  Humans, bacteria, advanced microprocessors, modern airplanes, global enterprises, urban environments, national economies and healthcare delivery are all examples of complex systems exhibiting these massive, heterogeneous, intricate characteristics.

A High Wire Act with the Whole World Watching

Like so many around the world, I was transfixed by the spectacular opening ceremonies of the 2008 Beijing Olympics.  From everything I had read I was expecting a grand spectacle - two years in the making, at a cost of a few hundred million dollars, with more than 15,000 performers.   In particular, I was really curious to see what Zhang Yimou, the overall director of the opening ceremonies, would come up with.

Zhang Yimou is one of my favorite film directors.  I first discovered his work about ten years ago.  He is part of what is known as the Fifth Generation of Chinese filmmakers, the name given to the first group that graduated from Beijing's film making school in the 1980s after the devastating Cultural Revolution.

His films are visually stunning.  Hero, for example, is one of the most gorgeous films of all time.  He is also a great storyteller, whether directing a historical epic like To Live or small, intimate films like The Road Home. 

I was eagerly looking forward to Zhang Yimou’s opening ceremonies, and he surpassed all my already high expectations.  It was truly fascinating.  It was also an incredible high wire act to put on in front of the whole world.

Indifference, Hostility, Isolation and Other Obstacles to a Healthy Innovation Environment

In most companies, just about all the cards are stacked against the nurturing of innovation, especially the kinds of new ideas and disruptive innovations that generally lead to major changes in the marketplace and within the business. 

Is that too pessimistic a view?  Perhaps.  Let me discuss some of the behaviors I have observed through the years in various companies, which have convinced me how difficult it is to create the proper environment for innovation to flourish.

Atoms, Bits and the e-word

Every two years, leaders of the computer sciences community from universities and research labs come together in Snowbird, a ski and summer resort in Utah, for what has become known as the Snowbird conference.  This year, I was invited to speak in the opening session.  So, a few weeks ago, I got up very early on a Sunday morning and flew to Salt Lake City.  I got there early enough to be able to go hiking with friends in the beautiful Snowbird mountains.  I also tried rock climbing in a nostalgic, age-defying encounter with a climbing wall -  something I have not done in close to forty years.

The following morning I gave my talk on Innovation in the Knowledge Economy.  The theme of the talk was the evolution of IT-based systems to the incredibly complex systems we are dealing with today.

In the first part of the talk, I summarized the challenges.  Driven by the advances in digital technologies, the Internet, globalization and other powerful technology and market forces, IT-based systems are becoming increasingly global and integrated; market facing and services oriented; and complex and unpredictable. 

I then talked about three major initiatives that I am working on with colleagues at IBM, which illustrate this evolution toward complex IT-based systems: cloud computing; globally integrated business systems; and virtual worlds.

The third theme of my talk was, in my opinion, the most important for the audience at the Snowbird conference.  Dealing with these incredibly complex systems requires highly-skilled people.  There is no doubt that the value of a good education is more important than ever, given all the changes going on around us.  But, to help prepare graduates to be innovation leaders in the complex world in which they will be living and working, the education needs to reflect the realities of that world.

What is Cloud Computing, Anyway?

In a recent blog I summarized the discussions around cloud computing at the conference I had just attended by writing that "something big and profound seems to be going on, although we are not totally sure what it is yet." 

Cloud computing is the kind of wide-ranging initiative that different people can look at from their own point of view and come up with their own, somewhat different definitions.  This is not surprising in the early stages of such a comprehensive initiative.  When the Internet first broke into the wider world in the mid 1990s, you similarly heard lots of different opinions on what it was and what it would be good for.

In reading through the assorted cloud definitions, five key themes keep coming up.  Let me say a few words about each of them.