Irving Wladawsky-Berger

Communications, Journalism and Media in the Internet Age

I spent the first week of November at USC’s Annenberg School of Communications and Journalism.  USC Annenberg is one of the largest and most comprehensive schools of its kind in the world, with research and educational programs in communications, journalism, public diplomacy, public relations, media, educations and related areas.  It is thus in a unique position to analyze and influence the impact of information technologies on the world’s news, media and entertainment industries, and on organizations and institutions in general.

Last July I received an invitation from Annenberg’s Dean, Ernest Wilson to be its first Innovator in Residence.  This is part of a program Dean Wilson is launching to bring people to Annenberg from different fields, who have real-world, practical understanding of the impacts of disruptive innovations, - because they have lived through it, as I have in IBM.  His letter said:

“ . . . The communications and media sectors are in a state of great turmoil.  Over a relatively short period of time, technological progress has altered everything from the media for information delivery to the revenue sources for the news, media and public relations business.  At this moment, there is a remarkable confluence of social, economic and technological change - all of which affect vital information flows in our democracy.”

“Rather than seeing these changes as threats, I am encouraging my team to view them as unique opportunities to lead and contribute to innovative thinking and action in the communication field.  The Annenberg School is expected to play a major role in shaping this future:  we need to be able to step up to meet the expectations, offering bold and creative solutions for the communications and media industries, and a meaningful education for our students.”   

Dean Wilson’s invitation letter was very eloquent, but frankly, given my strong interest in the subject, he had me at “Dear Irving.”

Education and Services Innovation

Richard Larson is Professor of Engineering Systems and Civil and Environmental Engineering at MIT.  Professor Larson is a pioneer in applying technology, science and engineering to a wide variety of problems in services industries, from technology-enabled education to urban service systems.  His interests in emergency response systems have led him to organize initiatives for applying engineering principles to planning and responding to global pandemics, such as the ongoing H1N1 flu.  He also leads MIT’s overall efforts to establish an inter-disciplinary services science initiative.

I met Dick Larson when I first joined MIT’s Engineering Systems Division as a visiting faculty member, almost four years ago.  Dick is one of the MIT faculty members I have worked closest with since then, so I am comfortable referring to him as Dick instead of Professor Larson..  He is one the best role models I know of the kind of systems oriented, market-facing engineers that we increasingly need to help us tackle the highly complex, multi-disciplinary problems we are facing in the 21st century.

One such problem is education.  Dick just published an op-ed article, Education: Our Most Important Service Sector in Service Science, a relatively new online journal focusing on state-of-the-art research and development in service sciences and related areas.

CNN, Latinos and Brand Values

A few weeks ago CNN broadcast Latino in America, a two-hour documentary that explored “how Latinos are reshaping our communities and culture and forcing a nation of immigrants to rediscover what it means to be an American.”  The documentary was reported by Soledad O’brien, a highly regarded CNN anchor and special correspondent who in 2008 reported the similar Black in America documentary. 

The US has over 50 millions Latinos, and by 2050 the US Latino population is expected to triple.  Latino in America portrays this incredibly complex, diverse, fast-growing community through a series of individual stories.  CNN calls it:

“. . . an ambitious documentary initiative [that] examines the growing diversity of America, revealing insight into a changing nation on the eve of the U.S. census that is expected to officially confirm that Latino Americans are the largest minority group within the country.”

It later adds:

“As the face of America changes profoundly, CNN continues to demonstrate that we are the only cable news network dedicated to delivering a diversity of opinions and coverage,” said Jon Klein, president CNN/U.S. “This landmark series will showcase dramatic personal stories from across the sweep of Latino-American society, and move the dialogue well beyond limited partisan discussions of immigration.”

Latino in America received a number of positive reviews, thanks in large part to the excellent work of Soledad O’Brien.  But Jon Klein’s attempt to move the dialogue beyond immigration has not fared so well.

Innovation, Entrepreneurship and the Evolution of Cities

Why is it that only a few cities and regions around the world have become successful innovation hubs, even though many have tried?  For the last few years I have been intrigued by this question. 

Silicon Valley and the Boston-Cambridge area are among the most prominent such innovation hubs in the world.  Their leading positions as technology-based innovation centers have been near impossible to replicate.  Others have tried to become the Next Silicon Valley.  A few of these efforts have achieved modest success, but most have fallen short of their goals.

Why is it so difficult?  The reasons are varied.  The prominence of Silicon Valley and the Boston-Cambridge area is closely related to the great engineering universities in their midst – Stanford and UC Berkeley, and MIT, respectively.  It clearly takes quite a long time to build such world class universities. 

Even harder to replicate is the entrepreneurial culture of these universities.  They strive to bring innovations to market by partnering with the private sector, including VCs to help them start new companies and established enterprises to jointly develop and commerciale new ideas.  Many other top universities have a more ivory tower culture that causes them to be suspicious of anything having to do with commerce.

Designing a Smart Healthcare System

On October 1 and 2 IBM held its second global Smarter Cities conference in New York City.  The first such conference was held in Berlin this past June, and the third will be held in Shanghai next year.

As was the case with Berlin, the New York Smarter Cities event had a very impressive agenda.  It included talks by IBM Chairman and CEO Sam Palmisano, New York City mayor Michael Bloomberg, and Melody Barnes, Director of the White House Domestic Policy Council.  The agenda also included panels with governors, mayors, and leaders of cultural institutions. 

In addition, there were break-out discussions to enable participants to share their experiences on what it takes to build a smarter city in six key areas: transportation, education, public safety, energy and utilities, government services and healthcare.  I helped organize and moderated the healthcare session.  Our panel included Denis Cortese - CEO and President of the Mayo Clinic; Ronald Paulus - Chief Technology and Innovation Officer at the Geisinger Health System; Chris Coburn - Executive Director of Innovations at the Cleveland Clinic; and Armando Ahued Ortega - Health Secretary of Mexico City.

Reflections on Economics from a Non-Economist

I have only been seriously interested in economics for the past two years - despite having been a student, majoring in physics, at the University of Chicago for most of the 1960s, - the home of the Chicago School, one of the most influential schools of economics in the world over the last sixty years.

My new interest was sparked in part by the work I have been doing over the past few years on complex systems, especially in market-facing complex systems involving people and services; and in part by my attempts to understand the underlying causes of the global financial crisis, the worst since the Great Depression.

What caused the crisis?  There are clearly no simple answers.  There is plenty of blame to go around.  But, while not condoning it, it is not difficult to understand the greed, temptations and short-term pressures of those in the financial industry, as well as the anti-government ideology of regulators and government officials over the last few decades.  But I have higher expectations from the research and academic communities, and continue to ask myself how so many of our best and brightest, including a number of Nobel Prize winners, could have failed to anticipate a crisis of this magnitude.

Then a few weeks ago I read an excellent article by Paul Krugman in the NY Times Magazine, “How Did Economists Get It So Wrong?,” that directly addresses this question.  In the article’s tag line, Krugman writes: “The Great Recession was the result not only of lax regulation in Washington and reckless risk-taking on Wall Street but also of faulty theorizing in academia.  Can economists learn from their mistakes?”

A Tale of Deception

Sometime in 2002, a colleague from IBM’s communications team asked me if I would be willing to talk to some people that were doing a documentary on corporations and social responsibility.  I was told that the request had come to us from the CEO of Burson Marsteller , a global public relations firm, who himself had been interviewed for the documentary.  He contacted a friend in IBM and recommended that someone from the company should also participate, given IBM’s strong interest and long history in social responsibility.  Moreover, we were told that the highly respected Canadian Broadcasting Corporation was somehow involved in producing the documentary, presumably to be broadcast over the CBC sometime in the future.

It all seemed quite reasonable at the time.  My IBM colleagues felt I was the right person to do this interview given my interest in the subject as well as my personal involvement in the kinds of activities we would likely cover.  They contacted the people involved with the documentary, and asked them what kinds of issues they wanted to focus on, so I could be as well prepared as possible to answer their questions.  We got back a very good set of questions, mostly asking about the kinds of initiatives IBM was engaged in that we felt would benefit societies around the world. 

It was not difficult to come up with such a list given the many relevant projects IBM has been involved in, from the use of advanced supercomputing in personalized medicine and pharmaceutical research, to the use of IT and the Internet in particular to improve education around the world.  I was also prepared to talk about another important aspect of social responsibility, namely IBM’s exemplary record in support of diversity in its work force. 

So, sometime in 2002 I went with my colleague to a suite at the Waldorf Astoria Hotel in New York City were the interview was being filmed, and after some friendly chatter, proceeded to do the interview.  Mark Achbar, one of the directors of the documentary was asking the questions.

Reflections from Another Part of the World and a Different Side of My Brain

I spent the first week of September in Chile and Argentina.  Three yeas have elapsed since I last visited Santiago, and I have not been to Buenos Aires for almost four years.  It was very good to be back in these two very nice cities.

I love to travel in Spanish speaking countries, - I go to Spain and Mexico from time to time in addition to Argentina and Chile.  The reason is not just because the people are so wonderful.  After all, in my experience, the people have been very nice in just about all countries I have been to around the world.  But, being totally immersed for days on end in my native language, is a particularly pleasurable experience, and one that, as I have thought about it, is not only personally appealing but also important to my mental health.  Let me explain.

It is well accepted that a good physical exercise plan should include different kinds of workouts, some focused on aerobics to increase cardiovascular endurance, and some anaerobic in nature to strengthen our muscles.  In addition to its benefits on our physical health, a regime of exercise also improves our mental health as well as helping to reduce depression.But, advances in brain sciences have begun to show the importance of also exercising our mental faculties.  Throughout our lives, our brains need stimulation to be healthy, in the same way that our bodies need physical exercise.  A lack of mental exercise and stimulation can result in severe problems, from the time we are born to old age.

I am convinced that as we learn more about the workings of our brains, we will learn how different kinds of stimulation best help different parts of our brain, much as we have learned how to best exercise different parts of our bodies.  Furthermore, I am sure that future advances in functional magnetic resonance imaging will show that for those of us who were immersed in different languages at different times in our lives, we can best reach feelings and concepts stored in our brain by using the language were were speaking at the time we experienced and learned them.

Soft, Smart, "Pink" Power

I first learned about the concept of soft power two years ago or so.  The term was coined by Harvard Kennedy School professor Joseph Nye in his 2004 book Soft Power: the Means to Success in World Politics.  It is all about influencing behavior based on the legitimacy of your objectives without commanding it with threats or payment.  It relies on the ability to shape the preference of others through co-option, rather than coercion.

Soft power is particularly critical in our times, due to the nature of the conflicts in which we increasingly find ourselves, in particular, the global war on terrorism.  These conflicts are sometimes called the The Long War, especially within the US Military, as a way to describe our present global struggles against a variety of enemies spread around the world, which will likely last for decades.  These enemies are organized into small groups, distributed and very local - that is, living among civilian populations - but they coordinate, recruit and fund their actions around the world in a whole new set of ways.

Such conflicts have much more of the feel of a battle of civilizations or cultures.  The main objectives of the amorphous enemies in the Long War seems to be to destroy our very way of life and impose their own.  Thus, winning the Long War is perhaps as much about winning the hearts and minds of people and nations as it is about defeating, or at least containing, an enemy that is amorphous and often hard to find.

The Health Care Debates, Tribalism and The Golden Rule

Earlier this summer, I was in Berlin to participate in a Smarter Cities conference hosted by IBM.  I had not been to Berlin in a while, and was looking forward to seeing it, especially since it is one of my daughter’s favorite cities in the world.  I was not disappointed.  Berlin is a very nice city indeed, with lots to see and do, full of young people and positive energy.

But, you cannot visit Berlin and not be struck by its history, especially if you are Jewish.  Its Memorial for the Murdered Jews of Europe is haunting in its simplicity.  Newsreel images of Berlin Nazi rallies sweep through your mind.  And a question keeps coming up.  What happened?

Richard von Wesizacker, - who was mayor of the then West Berlin from 1981 to1984, and President of Germany from 1984 to1994, which included the fall of the Berlin Wall and the reunification of  East and West Germany, - spoke at the conference on the history of Berlin. He reminded us that before the Nazis came to power in the 1930s, the city was the intellectual center of the world.  People everywhere learned German to be able to read the best textbooks and academic journals in their fields, much as they do now with English.  How could such an advanced civilization engage in such monstrous acts?

Numerous books have analyzed this question.  The answer that makes the most sense to me is rather simple.  Civilization is a relatively recent and thin veneer on human behavior.  People are capable of terrible actions against their fellow men, especially when they are under severe stress and are incited to blame others for their fears by skillful demagogues.

The Smarter Planet University Jam

For several years now, IBM has used a Web 2.0 collaborative approach to exploration and problem solving called Jams.  Jams help discover new solutions to broad, complex problems by bringing together a wide variety of minds and perspectives.  They are essentially massive online discussions, where people contribute their own ideas, as well as build on each other's ideas in a kind of structured conversation, under the guidance of subject-matter experts and moderators.  A Jam typically lasts around three days, and after it is completed, extensive analysis is used to extract insights from the perceptions and comments of the Jam participants, and to develop plans to put the insights into action.

In 2003, a Values Jam involving more than 300,000 IBM employees around the world was used to redefine the core IBM values for the 21st century.  Two years later, the Government of Canada, UN-Habitat and IBM hosted Habitat Jam.  Over three days, tens of thousands of participants from over 150 countries, including urban specialists, government leaders, and residents from cities around the world, discussed issues of urban sustainability.  Their ideas shaped the agenda for the UN World Urban Forum, held in Vancouver in June of 2006.

Then in 2006, an Innovation Jam brought together more than 150,00 people from over one hundred countries, including IBM employees, clients and partners, to help identify the ten most innovative new ideas in which to invest $100 million.  IBM’s virtual worlds initiative was one of the recommendations coming out of the Jam.  So were a number of projects, including intelligent utility networks, integrated transportation systems, smart healthcare payments, and Big Green innovations that helped form the core of IBM’s Smarter Planet initiative launched in November of 2008.

Hidden Wealth: Science, Technology and Services Innovation in the 21st Century

The Royal Society, - the UK’s national academy of science, - recently released a report: Hidden Wealth: the contribution of science to service sector innovation.  This excellent report represents the findings of a major study on the role of science, technology, engineering and mathematics (STEM) to innovation in the services sector.  It is one of the most comprehensive investigations of the impact of services innovation in the 21st century.

The services sector is by far the largest in the global economy, comprising about 65 percent of the world’s overall GDP, and between 70 and 80 percent in countries with more advanced economies.  Most of the working population in such countries are employed in services in one way or another, - roughly two thirds of all jobs in Brazil, Japan and the European Union and around 80 percent in the UK and the US.

This new report is very important and timely, given that the creation of well paying jobs is currently among the highest priorities not only in the UK, but also in the US and many other countries around the world.  As the report says:

“Our main conclusion,  . . . is that services are very like to remain central to the new economy, not least because we are at or near a tipping point: innovations now underway seem likely to change dramatically the way we live and to generate many services (though few can be predicted in detail at present). . . .”

Lessons from the "Beer Summit": To Err is Human . . .

There are a number of important lessons, if not downright teachable moments, in the July 16 arrest of Professor Henry Louis Gates by Cambridge Police Sargeant James Crowley, and the subsequent involvement of President Barack Obama when he said that the Cambridge Police acted stupidly in arresting Professor Gates in his own home.

Clearly, race relations, especially the long history of racial profiling by the police, are a major part of the backdrop for this case.  But perhaps, race acted more as the kindling that caused the relatively minor July 16 incident to flare out of control leading to Gates' arrest.  And then again, the race kindling caused the incident to explode across the nation after the President’s remarks on the arrest. 

All three principals in the case, Prof. Gates, Sgt. Crowley and President Obama, have excellent records when it comes to race relations.  Rather than playing key roles in a racially tinged drama, they are role models for how people should behave in a well-functioning multi-cultural, multi-racial society.

Looking at it in retrospect, the whole incident has the making of a Greek tragedy.  Three good, highly professional, and disciplined men, each made an out-of-character mistake and said and did things that they should not have.  Why?  Because like all human, our emotions sometimes get the better of us and get us in trouble.

Reflections on Empathy

I watched Sonia Sotomayor’s Senate confirmation hearings with mixed feelings, ranging from boredom to anger.  I found some of the questions and comments so off-putting that at times I had to look away and turn the TV off.  But overall, there was a kind of fascination to the hearings, especially in what they told us about the state of the nation’s culture wars.

It was quite a spectacle seeing several middle-aged, white males lecturing Sotomayor about the irrelevance of race, gender and life experiences for a judge.  One such senator brought up Chief Justice John Roberts’ assertion in a recent school integration case that the way to stop discrimination on the basis of race is to stop discriminating on the basis of race.  We also repeatedly heard references to Justice Roberts’ judges are like umpires dictum, declared in the opening remarks of his own confirmation hearings in 2005.

Who needs a wise Latina woman if life is that simple.  No wonder her Republican questioners forced Judge Somomayor to disown her wise Latina remark from a 2001 lecture at UC Berkeley's School of Law, where she said: “. . . I would hope that a wise Latina woman with the richness of her experiences would more often than not reach a better conclusion than a white male who hasn't lived that life.”

The Big Shift: from Scalable Efficiency to Scalable Learning

I have known John Seely Brown for many years and have served with him on several committees and boards.  John was Chief Scientist at Xerox and Director of its Palo Alto Research Center for almost twenty years.  Since retiring from Xerox, he has continued to be very busy as a speaker, writer, member of the boards of several public and private companies and lots of other activities.   In his website, he writes “Today, I’m Chief of Confusion, helping people ask the right questions, trying to make a difference through my work - speaking, writing, teaching.”

I have indeed learned that John is always asking just the right questions, be they about technology, business, learning or society in general.  So, when he recently sent me an e-mail, recommending that I look into his latest project and recent papers, I proceeded to do so. 

The project John referred me to is called The Big Shift.  It is being conducted at the Center for the Edge, which is part of Deloitte Consulting.  The Center is co-chaired by John Hagel, whom I have also worked with and greatly respect, and John Seely Brown.  They just published an article on their research in the July-August issue of the Harvard Business Review, co-written with Lang Davidson, Executive Director of the Center for the Edge, as well as a more extensive report explaining their ideas and methodologies in detail - Measuring the forces of long-term change: The 2009 Shift Index.

A Kind Of 21st Century Age of Enlightenment

Cities have long been important areas of study in a variety of disciplines, including sociology, civil engineering, architecture and urban studies.  But such studies have recently gotten a big boost for a number of reasons. 

Foremost among them is the fact that our planet is becoming increasingly urbanized.  In 1900, only about 13 percent of people lived in cities.  We recently crossed a threshold, when for the first time ever, the world’s urban population now equals its rural population.  Moreover, from now on, cities will absorb all the population growth expected over the next decades while continuing to draw some of the rural population.  By 2050, cities are project to have around 70 percent of our planet’s population.

Something must clearly be done to help cities absorb all those people, and provide them the right infrastructure, jobs, places to live, public safety, education, health care and many other services, all the while being cognizant of the impact that this growing urbanization will have on the sustainability of the planet.  This is about as daunting a task as anyone can imagine.  But fortunately, advances in technology, science and engineering are providing us with all kinds of new knowledge, innovations and concrete tools to help us in this monumental undertaking.

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.

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 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.

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.”

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.

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.

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%.