Irving Wladawsky-Berger

Breaking the Petaflops Barrier

Last week, the US Department of Energy announced the first supercomputer to achieve a petaflop of sustained performance.  It will be housed at the Los Alamos National Laboratory in New Mexico.  The machine designed and built by IBM, is named Roadrunner, after New Mexico's state bird. 

A petaflop is a million billion calculations per second, that is, a 1 followed by fifteen zeros.  That is how many calculations per second Roadrunner can perform.  When talking about petaflops, the numbers are so large that it is hard to comprehend what they mean.  We are almost into numbers of astronomical dimensions. 

The IBM press release used a few analogies to describe the power of Roadrunner, such as "The combined computing power of 100,000 of today's fastest laptop computers";  and, "It would take the entire population of the earth, - about six billion - each of us working a handheld calculator at the rate of one second per calculation, more than 46 years to do what Roadrunner can do in one day."

The previous major milestone for supercomputers was the teraflop - which is a 1 followed by twelve zeros.  Crossing the teraflops barrier was a huge deal for the supercomputing community when we did it in the late 90s.  And here we are - only ten years later - with a machine which is 1000 times more powerful than a teraflop machine.

In my opinion, the most important explanation in the press release to help us appreciate Roadrunner's achievement is: "A complex physics calculation that will take Roadrunner one week to complete, would have taken the 1998 [teraflops] machine 20 years to finish – it would be half done today."  I may add that a calculation that would have taken the teraflop machine a week to complete, can now be done in 10 minutes in a petaflop supercomputer.  Doing something in a week instead of twenty years, or in 10 minutes instead of a week is a huge deal indeed.

How does Roadrunner do it?  Technology has advanced a lot in ten years, but clearly nowhere near 1000 times.  The innovative architecture of Roadrunner takes advantage of some very powerful market forces.  Roadrunner uses about 6500 dual core AMD processors, the kind used in high end personal computers.  But the extraordinary power of Roadrunner comes from its 12,240 Cell processors. 

The Cell processor was originally designed by IBM, Sony and Toshiba for the Playstation 3 game player.  It is noteworthy that IT is now so integrated into all aspects of society, business and our personal lives that the most advanced technologies are now coming from the world of consumer electronics - e.g., mobile devices, HDTVs and video game players.  The use of commercial technologies in Roadrunner will make it possible for IBM to sell supercomputers based on its architecture for all kinds of scientific and business applications.

The US Department of Energy has been funding the development of the world's fastest supercomputers as part of its National Nuclear Security Administration (NNSA)  initiative.  The NNSA is responsible for the US stockpile of nuclear weapons.  These weapons were mostly produced 30 - 40 years ago, and given the 1996 Comprehensive Nuclear Test- Ban Treaty, their reliability must be certified without conducting nuclear tests.  It takes a huge amount of supercomputing power to accurately simulate the extraordinary complexity of nuclear weapons systems, especially as you try to understand what happens in the first fraction of a second during an explosion.  This is why DOE needs advanced supercomputers like Roadrunner.

Beyond its military applications, leadership in supercomputing is viewed around the world as a symbol of national economic competitiveness and of technical and scientific leadership.  When a Japanese machine was ranked as the top performing supercomputer for several years starting in 2002, many articles were written bemoaning the loss of US technical prowess and prestige.  The articles only stopped when IBM's Blue Gene gained the number one spot in 2004, a position Blue Gene is now passing on to Roadrunner.

The advent of petaflop supercomputing will enable major advances in applications of all sorts, - in medicine, science, engineering and business.  Los Alamos researchers have already started to use Roadrunner in a project called Petavision that simulates extremely complex neurological processes.  Petavision models the human visual system, mimicking more than 1 billion visual neurons and trillions of synapses.  Applications like Petavision are critical to help us better understand the structure of the brain, which hopefully will lead to breakthroughs in treating major disabilities like Alzheimer, autism and schizophrenia.

Petaflop supercomputing will help us explore the major challenges associated with climate change, making it possible for scientists to test global climate models with far higher accuracy than has been possible so far.  We can expect advances in a wide range of application of critical importance to society, such as the development of biofuels, the design of more fuel efficient cars, personalized genomics-based medicine, and the ability to better understand and manage the behavior of our global, integrated – and increasingly unpredictable - digital economy.

For me personally, the Roadrunner announcement is a source of great pride.   Supercomputing has been a major part of my professional career, from my work toward a doctorate in physics - when I realized that I enjoyed the computing part of the research more than the physics and became a computer sciencist, - to the years I was general manager of IBM's fist parallel supercomputing initiative - the Scalable POWERParallel family - in the fist half of the 90s.

I am really proud of the achievement of my IBM colleagues who developed Roadrunner.  And, I feel really good about the innovation energy that Roadrunner is about to inject into the world's supercomputing community – urging them on to tackle grander challenges and achieve greater breakthroughs. 

Now, on to the exaflops machine, that is 1,000,000,000,000,000,000 operations per second.  We won't have to wait all that long . . . . .

The Systems Challenge in Education

Growing up, I really enjoyed math, so when I started college in 1962 at the University of Chicago I was a math major.  I loved calculus and related subjects, but as the math courses I was taking got more and more abstract - e.g., algebra, projective geometry, topology, - I realized that pure math was not for me.  What I enjoyed most about math was its more applied side, the side that you used to help you solve problems in a variety of disciplines.  So, I switched my major to physics, and eventually left the U of C with a Ph D in physics in 1970.

But a career in physics was not for me either.  I did my graduate work under the supervision of Professor Clemens Roothaan, one of the pioneers in scientific computing, back in the early days of computers, when they were viewed as suspect by many established scientists.  Toward the end of my graduate studies, when it was time to look for a job, I realized that I enjoyed the computing side of my work more than the physics, and thus I switched fields once more and became a computer scientist.  Professor Roothaan was a consultant to IBM at the time, and through him I met a number of computer scientists from IBM who encouraged me to interview for a job at the Thomas J. Watson Research Center.  I did, and ended up joining the computer sciences department of IBM Research in June of 1970.

During my first several years at IBM I continued to do fairly academic work, now in computer sciences.  It was OK, but not great.  It was not until the late 1970s when I became involved in more applied systems projects, that I discovered my true passions.  I loved complex systems, both their design and analysis in the lab, and the challenges of bringing them to market.  In particular, I loved working on disruptive, new system ideas like parallel supercomputing, the Internet, and cloud computing - the more complex and innovative, the better.

If I look back at the arc of my career choices, I went from contemplating becoming a mathematician to finally settling down to essentially being a complex systems engineer.  While all the careers in this spectrum of choices are technical in nature, they are very different, calling for significantly different skills.  At one end, you have the purer mathematicians, who are generally very deep and relatively narrow in their fields of interest.  That end of the technical career spectrum tends to attract people who are very good at abstract reasoning as well as highly focused in the pursuit of solving a problem.  As I learned, this is not what I was cut out for.

At the other end of the spectrum, - the one where I finally landed - you have engineers, especially those engineers working on complex, marketplace oriented systems, like the ones I have been involved in over the last thirty years.  The skills required for such technical careers are generally quite broad.  You have to be good at technology, but also at understanding markets, organizations, people and management.  Rather than being a deep expert in any one component of the problem, you have to be good at holistic thinking, where the whole is more than the sum of its parts.  You have to be comfortable working on ill defined problems, and on highly complex, integrated systems whose properties will tend to be unpredictable or emergent.

While struggling to find my bearings in my late teens and 20s, I seriously contemplated switching out of a technical career altogether until I finally found myself in my early 30s.  Looking back, I am grateful that I hung in there, and have ended up having a fulfilling, stimulating and varied technical career.

But, I wonder how many young people end up not pursuing technical careers even though they have the skills to be really good at some of them given the wide spectrum of choices.  I worry that many young people, who like me are attracted to science and technology because they are good at math, end up giving up altogether on technical careers once they discover that the math has gotten a bit too abstract for their liking, not realizing that such abstract math is not required in the vast majority of technical careers.

I am afraid that this is particular problem with blacks, Hispanics and other minorities that are under-represented in technical careers, perhaps because the students and their families don't have the role models that would give them a more complete view of what technical careers are really like and the many choices available to them.  Women have also been under-represented, although the situation has been changing, as more and more of them are now pursuing technically oriented careers, especially careers related to biology.  I was happy to learn that the number of women undergraduates at MIT is now approaching 50%, and the number of engineering majors is over 35%.  The national average for women engineering majors is under 20%, so we still have lots of work to do.

What can be done to better acquaint young people with the large number of systems oriented technical careers we would like them to consider?  I think the answer is simple to state, but very difficult to implement.  We need to introduce the concepts of systems thinking in core courses in high school and college, right alongside math courses.  We need to develop courses that introduce students to systems methods and applications in a variety of industries - health care, supply chains, media and entertainment, retail, finance and so on.  We want to make sure that the systems courses emphasize design - perhaps the more holistic part of systems - as well as analysis. 

If balancing the view of technical careers by acquainting young people with both the math and the systems ends of the spectrum would help us attract and retain more of them to such careers - why is it so difficult to make it happen?   

I think this is due to the conservative nature of education.  Up and down the line, from K - 12 through college and graduate school, educational programs change very slowly, and seem to be somewhat insulated from the forces of the marketplace that most other industries need to pay attention to in order to adapt and survive. 

This is a very tough problem.  But given the central role that technology now plays in just about all fields, and its major role in innovation, economic development and job creation, this is a national challenge that we need to continue to push hard on.

Innovation Teams 2.0

It was not all that long ago that innovation was viewed as something that took place almost exclusively in academia, as well as in R&D labs in the private and public sectors.  The scientific and technological knowledge resulting from such research, then made its way to new products and services in the private sector, and advanced weapons for the military.  Such a lab-centric model of knowledge and innovation, relied primarily on the scientists and technologists working in the labs to come up with new ideas and products, which they then threw over the transom to those responsible for marketing, selling and customer support. 

This ivory tower view of innovation made sense in the industrial economy of the last two hundred years, when our primary focus was on inventing, developing and manufacturing physical objects.  But the model started to break down several years ago.  A surprising finding in the IBM 2006 Global CEO Study was that when asked where they looked for fresh ideas and sources of innovations, CEOs cited clients, business partners and employees in general about two to three times more often than their own R&D labs, which were mentioned by just over 15%.  This clearly would not have been the case only a decade ago.

I believe that this is another indicator of the massive shift that is taking place in the very nature of innovation, as we are transitioning from an industrial to a knowledge-based economy.  A growing portion of a company's innovation is now taking place in the marketplace, where clients, business partners and a large fraction of the employees are found - not just in R&D labs as was the case in the past.  How then do you now organize innovation in a company - when the real experts are those employees closest to the marketplace and the products and services that their clients buy and use?

This is a very tough question, one that I have struggled with over the past few years.  Can you create such a thing as a market-facing Innovation Lab, along the lines of the R&D labs of the past?  I frankly don't think so.  I strongly believe that the old ivory tower model of research is gone, which is why so many private sector research labs have essentially closed, and why universities and national labs need to transform themselves or else risk becoming less relevant and losing their funding. 

Increasingly, the toughest problems - requiring the kinds of breakthroughs you get from the very best technologists and scientists, - are out there in the real world, in the marketplace, in areas like healthcare delivery, energy and the environment, systemic risk management and so on.  So, if the toughest problems that inspire the biggest breakthroughs are out there in the marketplace, then that is where the research people should personally go, and hopefully come up with innovative solutions to the problems, as well as new ideas that might lead to fundamental advances in sciences and technology.  This is what the few companies like IBM, Microsoft and Google that still have world class research labs are doing.

But, how about tapping into the collective wisdom of the employees in the trenches, the best of which are surely full of ideas on how to improve the products, services, processes, business models and policies of the company?  No research lab can ever make up for that kind of real world knowledge.  How can you somehow get those employees seriously involved in the innovation and market strategies of the company - and through them, - also get access to the ideas of the clients and partners they deal with every day.  How do you do that without taking them out of their daily jobs, - which few of them would want anyway?  If the key to their expertise and ideas is that they live where the rubber meets the road, removing them from the marketplace action seems self-defeating.

In talking to people at Citigroup, - where I am now working part time as strategic advisor for innovation and technology, - I learned about a program called Team Challenge.  The program was created in 1996 by then CFO Victor Menezes and then CEO John Reed.  It brought together a number of Citi's most promising young leaders to spend some time working in teams on the toughest problems facing the company.  After studying the problem for a while, they then proposed a course of action, which they presented to senior executives before returning to their jobs.  The program was generally viewed as quite valuable to the company and popular with employees, but for a variety of reasons, it was later abandoned. 

As it turned out, the ideas underlying Citigroup's Team Challenge lived on.  A few weeks ago I met with Professor Deborah Ancona, who is in the faculty of MIT's Sloan School of Management and is the faculty director of the MIT Leadership Center.  We discussed the Center's work on team leadership, and in particular, their concept of X-Teams, which they recently wrote about in X-Teams: How to Build Teams that Lead, Innovate and Succeed.  I remarked to Professor Ancona how similar the X-Teams concept sounded to the way Citi's people talked about Team Challenge, and she said that it was not a coincidence, since John Reed is in their advisory board, and they have worked with Victor Menezes from time to time. 

For most companies, putting in place such programs is not easy.  In today's fiercely competitive, global world, how can you afford to take your best people out of their jobs for a chunk of time to work on innovation, no matter how important that might be?  Many line managers will be against such a program.  They need their best people doing their jobs, running operations, dealing with clients, developing products.  They cannot afford to let them go for weeks at a time.  They may even argue that if they let their people participate in such programs for the good of the company, it could seriously jeopardize their ability to make the quarter.

I think that we can address these valid concerns in a kind of Team Challenge 2.0.  I have become convinced that most highly talented people, - especially those destined for high management and technical positions, - are essentially ambidextrous when it comes to their work.  They are able to do their day jobs with flying colors, while simultaneously participating in innovation activities, as part of virtual teams working with their equally talented colleagues across the business and around the world on complex, strategic company problems.

In general, the teams only need to meet physically two or three times for a few days - when the project is first formed, when presenting the final recommendations to top management, and perhaps once in between, - but the rest of the time they are collaborating over the Web, while continuing to do their normal job.

Where will overworked employees, already straining to keep some semblance of work-life balance, find the time for these additional innovation activities?  This is another valid concern, but in fact, most talented people are already involved in multiple work related activities.  They somehow make the time to participate in professional organizations, go to conferences, give speeches, and make a name for themselves in their industry and discipline, while continuing to be top performers in their day jobs.  It is a big part of why they are on executive and technical resources tracks.  It is why they get noticed, both within their own company as well as by competitors that will undoubtedly try to hire them.

Talented people are full of innovative ideas anyway.  That is what makes them so good at their jobs.  The key question is whether their companies will be smart enough to provide the right environment to help harvest all this creative energy.  Will the company capture and take advantage of all this innovation by providing the right technologies, tools and platforms, as well as a disciplined, well organized innovation process, along the lines of X-Teams or Team Challenge?

I honestly think that if managed properly, this  can be a win-win for both sides.  The companies will avail themselves of the best possible source of innovation ideas.  And their talented employees will actually feel honored and challenged to be asked to be a major part of planning the future of the company.

The 2008 IBM Global CEO Study

IBM just released the 2008 Global CEO Study.  IBM has been conducting such studies every two years for the last several years by interviewing hundreds of CEO's around the world.

Four years ago, the 2004 study found that CEOs were emerging from the depressed business environment caused by the bursting of the dot com bubble, and were beginning to shift their priorities from cost cutting to driving profitable growth and strengthening overall financial performance. 

The overriding theme of the 2006 Global CEO Study was innovation.  CEOs were starting to recognize that innovation cannot be treated as just a marketing initiative and delegated down in the organization.  They realized that their organizations had to make fundamental changes to respond to the significant external forces all around them.  They were learning how difficult it was to drive change in the organization.  Therefore, to be successful, innovation had to be orchestrated from the top, with the CEO personally leading the charge.

The Enterprise of the Future is the key theme of the 2008 CEO Study.  The study is based on face-to-face interviews with 1130 CEOs in 40 countries across 32 industries.  They are distributed fairly evenly around the world, with roughly one third each from the Americas, EMEA and AP.

There were no major surprises or unexpected findings in the study.  I think that it is the best so far because the points made are very sharp, clear and written in simple language. 

The CEO interviews identified five core traits for the enterprise of the future: 

• Coping with change: Organizations are bombarded by change, and many are struggling to keep up
• Surpassing customer expectations: CEOs view increasingly demanding customers not as a threat, but as an opportunity to differentiate
• Global integrated business designs: Nearly all CEOs are adapting their business models, with two-thirds implementing extensive innovations
• Disruptive, innovative enterprise and industry models: CEOs are moving aggressively toward global business designs, deeply changing capabilities and partnering more extensively
• Corporate social responsibility: The next generation of socially minded customers, workers and investors are carefully watching a company’s every move

These themes have been appearing over the last few years as companies and nations around the world have embraced innovation.  While the findings are not new, it is good to see quantitative evidence of that we have all been hearing anecdotally.  The full report includes a lot of information, and additional conclusions.

For example, almost half of the CEOs rated market factors and people skills as the top external forces with the greatest impact on their organizations.  Next comes technological changes, which about one third of CEOs identified as a major force they have to deal with. 

83% of CEOs said that change was needed in their organization, and 61% felt comfortable managing these changes based on past successes.  The equivalent numbers for the 2006 study were 65% and 57% respectively.  Thus, the number of CEOs who feel change is critical to their companies has gone from 65% to 83% in two year, and the gap between their capability and the challenge ahead, that is, their level of discomfort, is widening - 22% now versus 8% in 2006.  This is not surprising, given that CEOs are increasingly bombarded by faster, broader and more uncertain change.

Two thirds of CEOs see major opportunities in the rising prosperity and purchasing power around the world.  They plan to increase their investments to benefit from this trend, especially in the growing markets in emerging economies.

Over three quarters of CEOs see the rise of increasingly informed and collaborative customers as a chance to differentiate their products and services.  It gives their companies an opportunity to better reach out to these customers, learn about them, and target their offerings to address, - and hopefully surpass, - their expectations.  The best companies are leveraging the rise of better informed and collaborative customers to identify new markets, new business relationships, and new products and services.

A large majority of CEOs are planning major changes to their business to capitalize on the rising levels of globalization.  The study revealed that CEOs are planning deep changes in their organizational capabilities and skill mix, as well as extensive partnering to help them quickly reach new markets and customers.  They are implementing new business design, including globalizing their brands and offerings, optimizing their operations around the world, and driving a company culture that views diversity as a key competitive advantage in a rapidly globalizing world.

Without a doubt, CEOs have generally become more sophisticated in dealing with innovation since the 2006 study.  Two thirds said that they are implementing extensive innovations in their companies, especially around their business models.  They are rethinking their basic enterprise model, including a strong focus on collaboration, both with outside partners as well within their own companies.  They are becoming more focused, looking hard at which processes are best done in-house, and which should be done with partners.  The better performing companies are also driving innovation in industry models, aiming to redefine existing markets, move into new industries, and perhaps create entirely new industries which they can shape and lead.

The newest finding uncovered by the 2008 study is the rise of corporate social responsibility.  Eighteen percent of CEOs are now focusing on environmental issues, double the number from two years ago.  This percentage will surely increase over the next several years.  The number is lowest in the Americas, where only 12% of CEOs cited environmental issues as an area of focus, compared with 21% in both EMEA and AP.  The majority of CEOs see the rise of corporate social responsibility as an opportunity, not a threat.  They view it as a way to become better aligned with the concerns of society, and thus help attract top talent to the company, enhance its brand around the world and break into new markets.

To me, the key message that comes through loud and clear in the 2008 IBM CEO Global Study is that the key success factor for the enterprise of the future is talented people.  Successful companies must be able to attract and retain top talent, both at the top of the organization - starting with the CEO - and across the organization - where employees and partners around the world have to quickly deal with the requirements of rapidly changing markets. 

Technology, without a doubt, is indispensable.  It is necessary, but far from sufficient.  Above all, the study revealed the dramatic increase in the number of CEOs who see important change ahead.  It highlights how the organization's ability to absorb and manage change will be the key distinction between winning and losing companies in the global economy.

Funding of Research and Education in the 21st Century

For over sixty years, the Federal Government has assumed the major funding responsibilities for basic research and higher education to promote science and technology in the US.  The blueprint for government support of R&D was laid out in 1945 by presidential science advisor Vannevar Bush in his seminal report, Science The Endless Frontier.  In the report he wrote that "The Government should accept new responsibilities for promoting the flow of new scientific knowledge and the development of scientific talent in our youth."  His recommendations led to the creation of the National Science Foundation a few years later.

Ever since, we have looked to key Washington institutions - the National Science Foundation, as well as the Departments of Defense, Energy, Health and Human Services, Commerce and others, - as having the lead responsibility for funding advanced research.  This is particularly true when it comes to Grand Challenge problems, that is, problems that are both very important to the nation and very difficult, and thus require breakthroughs from multiple groups across multiple disciplines.

But, I wonder if something is changing in the funding model for fundamental research and higher education.  Over the last few months, I participated in a few meetings where similar questions keep coming up: can we continue to look to the federal government to help organize and fund major important national initiatives?  We are not so sure any more.  Even beyond the fact that research and education have not been high priorities in the present administration, perhaps something more profound is going on.

The post-World War II R&D blueprint advocated by Vannevar Bush, was generally focused on government support of science and engineering research aimed primarily at the defense sector.  While this research also resulted in huge benefits to the private sector, - e.g., the Internet, supercomputing, civilian airplanes, - the funding for these projects was originally justified by national security and cold war oriented considerations.

But, the Berlin Wall was dismantled in 1989, signaling the end of the cold war.  And as we know, a historical transition is underway towards a global, knowledge-based economy whose dynamics are very different from those of the past sixty years. 

The national problems in need of research and talent are very different as well.  So are the underlying technologies.  In the past, new technologies were generally developed to solve big problems in defense, science and engineering, and then trickled down and were embraced by the private sector and consumers.  Think of the transistor, computers and the Internet, for example.  The opposite is the case now.  The most advanced new technologies are usually now developed in the private sector and first commercialized in consumer products and services.  Subsequently, they trickle up to benefit the military, as well as big science and engineering projects.

There is general agreement that energy and the environment, and health care delivery are among the most important Grand Challenges  facing the US and the world in general over the next decades.  The federal government has been supporting energy research, largely because the Department of Energy has long been charged with that task.  But, while just about everyone agrees that health care issues are among the most important and complex facing the nation, little funding for research and education has been forthcoming from the Department of Health and Human Services.

How about jobs and the economy?  There is an ongoing debate whether the US can continue to create well paying jobs, or whether such jobs will largely be outsourced to countries with lower labor costs, or will be taken over by the influx of immigrants coming to the US who are willing to work for less pay.  Demagogues in politics and the media are busy blaming China and India one day, illegal Mexican immigrants the next.

On the other hand, many of us have been working hard to promote increased investments in innovation, - including education, infrastructure and research, - which will lead to many more good jobs, as has been the case throughout history.  The biggest opportunity for good, new jobs lies with higher end services and know-how, a very large segment of the US economy, and the one where new technologies and innovation can bring the highest payoffs in productivity.  This is why IBM has been strongly advocating the creation of new programs like Services Sciences which aim to significantly improve the productivity, skills and pay of services-based jobs.

In February of 2006 the White House announced the American Competitiveness Initiative to increase investments in research and development, strengthen education, foster innovation and encourage entrepreneurship.  But unfortunately, even though both the administration and Congress agreed on its importance, no funds were allocated to support its recommendations.  Washington had other more pressing priorities.

Perhaps many of the pressing issues in the 21st Century - health care delivery, economic competitiveness, innovation, jobs, education, - are presently beyond the federal government's ability to tackle seriously.  Other large countries are better able to address these issues at a national level - the UK, Brazil and China among others.  But our structure is somehow different.  We must continue to fight the good battle, especially given the ongoing presidential campaign, and hope that we can convince future administrations and members of Congress to evolve their priorities.  But while we do this, we must also look for alternative ways of addressing these pressing problems facing the country.

What are alternative sources of funding in the US for these important new areas, which are quite different from the pressing issues of 1945 that Vannevar Bush had in mind when he wrote Science The Endless Frontier?  Let's start with government.  Perhaps areas like health care, economic development and advances in education are more the province of state and local governments given the size of our country, where different regions compete with each other to attract private sector investments and jobs. 

California, for example, is making its own investments to promote stem cell research and regenerative medicine to benefit the state.  New York state has been making major investments in nanotechnology.  And, North Carolina has established the Renaissance Computing Institute (RENCI) to address multidisciplinary problems that will spur innovation and economic growth in the state.  We can expect additional such state and local initiatives

The private sector is also doing more.  At MIT, the Deshpande Center, - established in 2002 to increase the impact of MIT technologies in the marketplace, - funds novel-early state research and connects MIT's innovators to the business community.  It was founded with an initial donation by Desh Deshpande, co-founder of Sycamore Networks, and his wife.  It depends on the financial and professional support of MIT alumni, entrepreneurs and investors.  Another example is BP, which pledged $500M to establish the Energy Biosciences Institute (EBI) to conduct research in clean, sustainable energy sources.  EBI is a partnership between BP, UC Berkeley, the University of Illinois, and the Lawrence Berkeley National Lab.  Finally, IBM has extensive University Relations programs around the world that support basic research, curriculum innovation and educational assistance in selected areas, such as services sciences, information-based medicine and advanced supercomputing.

Innovation and talent are the critical ingredients for leadership in the knowledge economy.  Any country that aims to attain a strong position in innovation and talent must seriously invest in research and education.  This is what the US did after 1945, and it is a major reason that we won the cold war and achieved such a leading economic position in the world. 

There are now many new opportunities amidst an intense, global competitive environment.  The stakes are high.  There is a lot to do and everyone must do their part.  Perhaps state and local governments, the private sector and academia cannot rely on the federal government to the extent that they did in the past.  But, given the highly important and complex challenges ahead, and the extensive resources required, US leadership in the knowledge economy will continue to require the serious contributions of the federal government.  Let's hope that this is a top priority for our new administration.

Some Thoughts on Global Companies in the 21st Century

Given my long association with IBM, the close relationships I have enjoyed with a number of our clients, and my recent involvement with Citigroup, it is not surprising that I am very interested in exploring what it takes for an organization to thrive in our increasingly global and highly diverse world.  Perhaps my personal multi-cultural background is also part of the reason I am so attracted to the subject.

Managing a large, global organization is indeed very difficult, especially in our unpredictable, emergent, fast changing and intensely competitive market environment.  While some might thus conclude that the answer is for a company to resist doing business around the world, the reality is that managing a business, any business, is a very tough job fraught with perils, as evidenced by the high mortality rates of companies from start-ups to those in the Fortune 500.

Are there any basic principles that might serve as guidelines in the management of globally integrated companies?  Based on my personal experiences, I think there are a few, that if carefully applied might prove useful.  Let me share my thoughts on the subject.

First, there is a huge difference between back-office tasks, which form the basic infrastructure of the business, and front-office activities, which are the company's interfaces to their clients and markets.  Very different management disciplines should apply to each.

In general, the most important principle for managing the infrastructure of the enterprise is constant simplification, through consolidation, standards and integration.  This applies as much to a company's IT infrastructure as it does to its information and business process infrastructure.

After a few years, every company will have built up a legacy infrastructure.  Such legacies come to be in a variety of ways, - through the normal growth of the original company, through the creation of new divisions and departments, and through mergers and acquisitions.  One would expect that as the company's infrastructures grows, economies of scale being to apply, with higher volume processes resulting in lower costs, and larger amount of information leading to considerable new insights and market intelligence.

But in fact, this is often not the case.  If not carefully managed, the complexities and costs of a legacy infrastructure will likely become a serious obstacle to the continuing evolution of the business.  Instead of being a competitive advantage and providing economies of scale, it will hinder the business from effectively competing with faster moving, often younger companies, which are able to get new offerings to market significantly faster and at lower costs.

Why does this happen?  The answer, in a nutshell, is a lack of management discipline.  Departments are allowed to purchase and operate their own IT equipment, which they then often run at low utilizations, incurring high system management and energy costs.  Different divisions around the world are allowed to have their own separate processes for essentially the same functions.  Information becomes very difficult to integrate due to a lack of standards.  Merged companies are allowed to continue to operate as separate entities. 

In my experience, every group will try to argue that it is unique, and that the consolidations that top management is trying to impose across the company should not apply to them.  I guess it is just a matter of human nature to want to run your own show and be independent from, - what appears to you as - faraway, arbitrary decisions. 

But with few exceptions, allowing such differences and independence when it comes to back office infrastructure makes no sense at all.  By definition - the back office is all internal to the company and invisible to its customers, who could care less how the company operates as long as they get excellent, highly personalized, competitively priced products and services.  Companies that allow their IT, information and process infrastructures to grow every which way will pay a very dear price for their lack of management discipline.

But while the back office assets of a company - its technology, machines, information and processes should be managed for maximum simplicity and efficiency, its front office tasks - those dealing with clients and markets - should be managed to achieve the maximum personalization and differentiation at the most reasonable costs.  Products and services might be commodities, but you never, ever want your customers to feel like they too are just commodities to the company.  A successful business will make each of its clients – institutions as well as individuals - feel special by understanding and addressing their unique requirements. 

How do you do this?  How can a global company provide such a high quality of experience to both individuals and institutions around the world at affordable costs?  To do this well, you need a top notch back-office infrastructure.  You need the ability to integrate and analyze lots of information, so you can gain insights into the various markets in which the company conducts business, as well as to understand how to best serve each client in each of those markets.  You need a common set of well managed processes to be able to provide services to clients around the world in as productive a way as possible.  You need to embrace industry standards to facilitate access to information and applications across the enterprise and beyond.  And you need a highly reliable, scalable, efficient, open IT infrastructure to support all the information, processes and applications.

This is all very, very difficult.  Which is why, above all, you need highly talented people in the organization.  I wonder if access to the diverse talent and innovative ideas now available around the world might be the biggest potential advantage of truly global companies over their more local or regional competitors.  Given my strong belief that innovation in the knowledge economy is all about connecting dots out there in the real world, the more wide-spread and diverse the dots, the bigger the opportunities for breakthrough innovations.

Finally, it all comes down to not only strong management, but top leadership.  To be successful in our complex, unpredictable markets, a company needs the kind of leadership that recognizes, attracts and retains the best possible talent from all over the world, and creates a culture of innovation that encourages them to address and solve these highly exciting but seemingly impossible challenges we face in the 21st century.

Reflections on Cloud Computing

Over the last year, I have become intrigued by the rise of cloud computing.  An increasing number of articles are being written on the subject, as a quick online search of the term will attest.  More and more companies are taking a serious look at cloud computing.

Last summer, IBM launched a study of cloud computing sponsored by the IBM Academy of Technology and led by our top experts in the area.  The study was very positive about the opportunities of cloud computing for the IT industry.  But it also highlighted the many challenges to be addressed in deploying cloud computing, especially in existing data centers.

So, what exactly are we talking about?

A recent report by Forrester Research said in its executive summary that: "Cloud computing is a new IT outsourcing model that doesn't yet meet the criteria of enterprise IT and isn't supported by most of the key corporate vendors.  It's wildly popular with startups, exactly fits the way small businesses like to buy things, and has the potential to completely upend IT as we know it.  And there's a high likelihood developers inside your company are experimenting with it right now.  Forrester spoke with more than 30 companies in this market to determine its worthiness for enterprise consideration and found that it provides a very low-cost, no-commitment way for enterprises to quickly get new services and capabilities to market that entirely circumvents the IT department.  Infrastructure and operations professionals can try to ignore it as it is just in its infancy, but doing so may be a mistake as cloud computing is looking like a classic disruptive technology."

The Forrester report further said:  “Cloud computing looks very much like the instantiation of many vendors' visions of the data center of the future; it's an abstracted, fabric-based infrastructure that enables dynamic movement, growth, and protection of services that is billed like a utility. It also has all the earmarks of a disruptive innovation: It is enterprise technology packaged to best fit the needs of small businesses and start-ups--not the enterprise." 

BusinessWeek said something similar, albeit in more layman's terms: "A move towards clouds signals a fundamental shift in how we handle information.  At the most basic level, it's the computing equivalent of the evolution in electricity a century ago, when farms and businesses shut down their own generators and bought power instead from efficient industrial utilities."

In the past month, I have given a couple of talks on cloud computing, and as always, presentations force you to think very hard about your views on a subject, as well as how best to communicate your ideas.  I think of clouds basically as Internet-based networks made up of a very large number of servers and storage components.  They contain vast amounts of information, and provide a variety of services to large numbers of people - to their mobile devices as well as their PCs.  The users of clouds only care about the services and information they have access to, not about the underlying details of how the cloud works.

So far, this all sounds like a number of concepts we have been talking about for at least half a dozen years: Grid computing, virtualization and IT-as-a-service, let alone the Internet and the World Wide Web.  Fundamentally, we are talking about the evolution of IT and the data center in the 21st century.

But, in my opinion, two key factors take cloud computing into a qualitatively different dimension.  One is massive scalability.  I believe that the kinds of advances that we have become used to in the world of high-end supercomputing are now coming to the more general purpose computing world.  I expect that a number of the new applications that data centers will be asked to support will grow by two to three orders of magnitude over the next decade.  A 10X - 100X growth over 10 years means roughly that the applications are growing at between 25% and 60% CGR.

Then there is the much higher quality of experience that cloud applications provide to their users.  Cloud applications are very different from classic IT applications, whose intrinsic complexities are barely hidden from their users.  You truly want users of cloud applications to just be able to access them in the most natural and simplest way possible.  Cloud applications should be able to provide a really high quality of experience to massive numbers of users without missing a beat.  They should significantly improve the way people deal with the many tasks and devices that surround them in their everyday life – at work, at home, on-the-go, and wherever they happen to be.

Do we have any such workloads in the horizon that will likely grow at prodigious rates and require a human-like quality of experience?  Quite a few, I believe:  real-time information access and analysis, such as RFID-based supply chains, transportation management and security systems; myriads of new consumer applications - in entertainment, healthcare, payments and financial services; social networks and virtual worlds involving large numbers of people interacting with each other; support of billions and billions of new mobile devices and sensors; and so on.

Are such massively scalable, high-quality-of-experience workloads important only to companies like Google, Yahoo, Amazon, MSN, IBM and similar companies already developing cloud computing infrastructures?  Not at all, any more than the Web proved important only to its early adopters.  As with the Web in the mid-‘90s, every enterprise will have to develop its own cloud-like capabilities, or work closely with partners that do.

Will companies follow the pattern of electricity’s evolution a century ago and shut down their data centers, relying on highly efficient, professionally managed service providers instead?  I expect that many small businesses will do just that, as well as perhaps a number of mid-size companies.  But I suspect that many larger companies will not only continue running their own data centers, but find new growth opportunities by selling business services to the wider marketplace that were developed and only available for use within the company, as is already the case with Fidelity, UPS, IBM and a number of other companies.

How well prepared are most enterprise data centers for a 10X - 100X scalability?  By their own admission, most are not ready at all.  In fact, many CIOs think of their data centers as something like a dog's breakfast of technologies that have evolved over the years with little architectural discipline or company-wide governance.

Many data centers have grown through mergers and acquisitions with a variety of companies, each having brought with them their own separate equipment, architectures and processes.  Different departments in the business have often insisted on getting their own servers for their own applications, rather than using the global, shared data center facilities.  Small and mid-size servers have proliferated in many companies, each dedicated only to its particular applications, and thus often running at utilizations of 20% or less - that is, those servers are only doing real work 20% or less of the time, while they consume electricity 100% of the time.  The costs of managing such highly distributed installations are typically very high.

As we learned in manufacturing over the last thirty years, you cannot achieve world-class productivity and quality unless you leverage engineering disciplines and real-time information and considerably simplify your processes and architectures.  Similarly, you just cannot scale a messy data center, especially given the fast growing workloads that they will be required to support over the next decade.  System management and energy costs will prove prohibitive.  Quality, security and availability will suffer. 

Integrating the capabilities of cloud computing into enterprise data centers will require a much more disciplined approach to architecture and governance.  Just about every CIO I have ever met advocates such an approach.  But because IT cuts across just about all lines of businesses and processes of the organization, they need the strong support of the CEO and top management.  Otherwise the enterprise will just follow human nature and prioritize short-term expediency over longer-term discipline.  Given the fierce, global, competitive environment we live in, that can prove to be a very costly mistake.

Social Pheromones and X-Reality

The MIT Media Lab is launching a new research initiative - X-Reality.  Broadly speaking, X-Reality will focus on the integration between the virtual and real worlds at several levels.  The new initiative aims to bring together related Media Lab projects in this new area, to share their diverse viewpoints and research approaches, and hopefully accelerate progress.  A series of weekly seminars has been organized, and I was invited to speak to the group a few weeks ago.  Let me share some of my comments.

I have believed for a while that the killer apps for new interactive, immersive, visual interfaces will be virtual meetings, and distance learning.  Everything else being equal, physical meetings and classroom learning are much preferred over their virtual and distance counterparts.  But, as we well know, this is not always possible, or even desirable.  That is why telecommunications and networks have been among the most successful technologies in history - from the telegraph and telephone, to the Internet and mobile devices.

It is stating the obvious to point out that many meetings cannot possibly be held in person, especially when the participants are in geographically distant locations, and when different meetings in the same day involve different people in different locations.  Moreover, many workers consider it a godsend not to have to travel hours just to attend a short meeting that they can more efficiently handle electronically from their homes or offices. 

So, the real research question is not which are better, virtual or physical meetings, distance or classroom learning.  Rather, the key question is: what is the right balance of physical and virtual interactions needed to have really effective working meetings and learning experiences?  We all pretty much agree that even though you often have to work with people that you have never physically met, it is far better to work with people that you have met physically at least once, and even better, that you continue to interact with them physically from time to time.

Why is that so?  Why is it important to have the proper balance between physical and virtual human interactions in good X-Reality applications?  One of the nice qualities of the Media Lab, which is justifiably renowned for its focus on leading edge innovation, is that no research question is off-limits, as they might perhaps be in more classic, formal departments.  So during the seminar, I raised the hypothesis that perhaps there is something like Social Pheromones that we humans exchange when we meet physically, which get imprinted in our brains and then make subsequent interactions, whether physical or virtual, more satisfying.

Pheromones are chemicals produced by living organisms that signal their presence and triggers a behavioral response in other members of the same species.  Pheromones are particularly associated with sexual attraction and reproduction, but they have also been identified in other activities very important to a group, such as raising an alarm when there are predators around, and properly delineating the group's territory.

I am using the term social pheromones not in its strict scientific sense involving chemical signals, but as a metaphor for all the signals - chemical, visual cues, verbal intonations, etc - that social animals, - including humans, - use for establishing the coherence of their group.  People clearly use lots of such non-verbal signals, and in fact, this is a serious area of study at the Media Lab.   The more we understand the social signals humans use for non-verbal communications, the more we should be able to explicitly use them in virtual interactions to facilitate those communications.   

You somehow expect that when you first meet someone physically, you imprint their persona in your brain, a kind of image formed through both explicit communications and implicit, non-verbal signals.  Subsequent interactions, whether physical, via phone, the Internet or anything else, will likely rely on the image of that person imprinted in our brain to provide a context for the interaction.  Thus, one might speculate that if we have never met the people physically and have only formed our mental image of them via virtual communications, the image is likely to be much less accurate, and the personal relationship will not quite work as well.

But, what is the right balance?  For example, more and more universities are establishing an international presence.  If you are teaching a course in an international outpost of your university, as is increasingly happening, what is the minimum number of physical interactions needed to have a satisfying learning experience?  How well would it work, for example, if a professor with small children, travels once a month to physically lecture while teaching the rest of the class from their home base through sophisticated distance learning platforms including virtual world interactions? 

Research into these X-Reality subjects is both fascinating and very important because we will learn not just a lot about how to have effective work and educational interactions, but our findings will enable us to develop far better virtual meetings and distance learning technologies and platforms.

We need something.  The Graphical User Interface (GUI) that continues to dominate the way we interact with most IT applications is over thirty years old.  Think of all the advances in every other area of IT over the same period.  A major reason I feel so positive about the potential of virtual worlds and related subjects is that after thirty years we need massive innovations in user interfaces.  I am hoping that these new visual and X-Reality technologies can eventually get us there.

Towards the Knowledge Economy

This is the time of year when you traditionally review key events of the past year and think about your expectations for the one that is just starting.  Two years ago, I reflected on blogging, why I did it and where I thought it was heading.  It was all still very new to me - having started this blog several months earlier in May of 2005.  No longer a novelty, for me personally or for the world in general, blogging is now a part of the general environment.  Blogging has achieved liftoff, that is, it has made the transition from being used primarily by leading-edge adopters to being embraced by a wider marketplace. Technorati is now tracking over 1102 million blogs.   

Last year, I wrote about virtual worlds as a key trend that would similarly take off and become more widely accepted in the marketplace as the year progressed.  While the level of activity and marketplace experimentation is increasing, we are not quite at the liftoff stage yet.  I am convinced that highly visual, collaborative platforms and interfaces - which is what virtual worlds are all about - will become increasingly important to help us deal with IT applications in a much more human and intuitive way.  But as is often the case, it is much easier to predict that something will happen than it is to predict when it will happen.

So, for 2008, what do I find as intriguing as blogging two years ago and virtual worlds last year? 

I have frankly been struggling with this question.  My mind is full of ideas, but none as specific as those of the last two years.  I started to wonder if perhaps I am suffering from a bit of writer's block - "a phenomenon involving temporary loss of ability to begin or continue writing, usually due to lack of inspiration or creativity."  What a downer that would be to start the New Year!

So I went back and looked at some of the blogs I have written in the last few months, and then it hit me.  What I am sensing is that perhaps 2008 will be a key year in the transition to an IT-based knowledge economy.  Something this large cannot possibly involve any one trend, which accounts for my struggles.  Rather, there will be a set of indicators that something is afoot.  One such indicator is the emergence of the kind of global technology platform that is needed to support an information-rich, knowledge-based future.

In the last few months we have seen a number of major stories on Cloud Computing - such as this BusinessWeek story, and this one in the New York Times.  Most of these stories focused on Goggle, which runs the biggest cloud-based data center.

What is cloud computing?  It is basically an Internet-based network made up of large numbers of servers - mostly based on open standards, modular and inexpensive.  Clouds contain vast amounts of information and provide a variety of services to large numbers of people.  Users of the cloud only care about the service or information they are accessing - be it from their PCs, mobile devices, or anything else connected to the Internet - not about the underlying details of how the cloud works.

Google's cloud, for example, consists of hundreds of thousands of such commodity servers, supporting search, maps, news, e-mail and many of the other services being offered by Google over the Internet.  Yahoo, MSN, Amazon and eBay have their own version of such clouds.  In November, IBM announced that it would bring the benefits of cloud computing to enterprise data centers.

Why do I believe this is such a big deal?  As the BusinessWeek article says, "a move towards clouds signals a fundamental shift in how we handle information.  At the most basic level, it's the computing equivalent of the evolution in electricity a century ago, when farms and businesses shut down their own generators and bought power instead from efficient industrial utilities."  Many enterprises will want to evolve and become such information and services utilities to their business customers or to consumers.

And for any enterprise, clouds hold the promise of orders of magnitude more information and computing capacity, to be used in a variety of innovative ways - from providing a diverse set of services to a business’s customers, to the anticipation and avoidance of risks, to more efficient and intelligent ways of managing the business.

How easy is it to build such highly scalable enterprise data centers?  Paradoxically, even though the individual components are inexpensive commodity servers, when you aggregate them in such large numbers - hundreds of thousands, going to millions - the overall IT infrastructure has to be very carefully developed and operated.  You are dealing with systems at such a scale and complexity, that some of us have been turning to biology as an inspiration for how to deal with such complex systems. 

You need a much more disciplined overall data center architecture, with particular attention to:

• integration of all the components, not just with each other but with the other systems in the enterprise data center;
• virtualization – that is, making the overall cloud appear as one virtual system;
• management – a huge challenge, because it is directly related to keeping the system working all the time, regardless of individual component failures, and doing so while keeping down the overall costs of managing the system; and
• efficiency – making sure that the system delivers the most computing power for the least use of energy.   

For sure - lots and lots of exciting things to keep us busy in 2008 and beyond.

A Grand Challenge Crying Out for Leadership

The November 25 Sunday New York Times included yet another editorial bemoaning "The High Cost of Health Care."  It is a good editorial, and I generally agree with both its list of Causes as well as its recommended Solutions.  But I wonder if anything will come of it.

The editorial points out that "health care costs are far higher in the United States than in any other advanced nation, whether measured in total dollars spent, as a percentage of the economy, or on a per capita basis."  This would be fine, or at least tolerable, if the U.S. enjoyed a quality of health care commensurate with its higher costs.  But as we well know, this is not the case. 

The Commonwealth Fund, a private foundation, reported in a recent article, "Despite health expenditures that are twice those of the median industrialized country, a new national scorecard of U.S. health care system performance finds the nation falls short on key indicators of health outcomes, quality, access, efficiency, and equity."  It goes on to say that "Among 19 industrialized countries, the U.S. ranked 15th on mortality from conditions amenable to health care, or deaths before age 75 that are potentially preventable with timely, effective care. The U.S. rate was more than 30 percent worse than the benchmark—the top three countries. The U.S. also ranks at the bottom for healthy life expectancy and last on infant mortality."

There is nothing new here.  We have all been reading editorials and reports like these for a while now.  Calls for action abound.  Among the top recommendations of the 2004 U.S. National Innovation Initiative was a call to build a health care test bed, including electronic health reporting, standards for an integrated health data system, pilot programs for international exchanges on health care research and delivery, and the use of performance-based purchasing agreements.

Finally, the 2005 report, A Healthy System issued by the Technology CEO Council, concluded, "If there's one thing that everyone agrees on about the U.S. health care system, it's that it isn't, in fact, a system," and that "the sad truth is that in health care today the whole is much less than the sum of its parts."  The report went on to say, "We will never fix this problem simply by tinkering with its parts. As a practical matter, and as a moral imperative, we have to address the systemic problems of health care.  And the most glaring - and promising - is health care's shocking lack of modern, networked information technology (IT), and the lost quality and efficiency that result."

What is going on?  How can a problem be such a national priority and yet be so frustrating, with progress that is both woefully insufficient and very slow.  I have been thinking a lot about this in the last year, especially in my work with colleagues at MIT, as we are trying to define how best to apply to health care the kinds of systems, technologies and engineering practices that have been so successfully applied in a variety of other industries.  Let me offer some personal thoughts.

First of all, health care systems are incredibly complicated, perhaps the most complex engineered systems in our midst, rivaling natural systems like those in biology in their intrinsic complexity.  Health care is a true Grand Challenge problem - in my opinion, the grandest such challenge for anyone studying and developing complex engineered systems. 

Generally, when faced with a problem that is demonstrably hard to solve, and whose solution will have a significant economic and social impact, the federal government gets involved, usually by funding the proper research in universities, involving its national laboratories, and forming partnerships with industry.  That has certainly been the case with high performance supercomputing and with advanced networking technologies and platforms, including the Internet.  The National Science Foundation (NSF), the Department of Energy (DoE), the Department of Defense (DoD), and other federal agencies have a distinguished track record of supporting grand challenge technologies and applications.  Similarly, the National Institute of Health (NIH), the nation's top medical research agency, supports the most advanced research leading to medical discoveries that improve health and save lives.

But who supports research in health care systems - how to deliver it, how to improve its efficiency and quality, how to lower its costs  and how to reduce its unacceptable error rates?  I have asked many people that question, and the answer is not at the tip of anyone’s tongue, as it is for advanced supercomputing or medical research.

The U.S. Department of Health and Human Services (HHS) seems to have the lead here, through its Agency for Healthcare Research and Quality (AHRQ), whose stated mission is "to improve the quality, safety, efficiency, and effectiveness of health care for all Americans.”  In addition, HHS supports a relatively new Health Information Technology initiative, whose primary mission is to help achieve access to an interoperable electronic medical record for most Americans by 2014, as well as to use such electronic records and other health information technology to help control costs and reduce dangerous medical errors.

This sounds promising, but there is a lot to do.  I frankly had not heard of AHRQ until I started doing research for this blog entry, perhaps because it is all so new.  I think that it is also telling that when you hear complains about the state of the U.S. health care system, as in the editorial and articles above, you rarely hear calls for HHS, let alone AHQR, to take action.  They are just nowhere near as well known as NIH, NSF, DoD and DoE as supporters of research, especially the grand challenge style of research needed to make progress in such an incredibly complex area.

Then there is prestige.  Health care reminds me of manufacturing thirty years ago.  As we know, U.S. industry, especially the auto industry, did not pay serious attention to manufacturing, including key issues like productivity, quality, costs and tapping into the expertise of the plant floor workers.  Neither did our top engineering schools, or the government agencies that funded their research.  Manufacturing was just not considered a glamorous field of study or a career to be pursued by graduates of engineering and management schools, unless you had no other choice.

This past June I heard a fascinating talk by Fujio Cho, chairman of Toyota, at the IBM Business Leadership Forum.  Cho-san explained to us, in clear and simple language, the commonsense innovations underlying Toyota's revolutionary production system, which has become known as The Toyota Way. The system is essentially based on the constant education of both employees and parts suppliers, so they can improve in the performance of their functions; working on innovation as a team, so that people in related functions come together and share ideas; and the concept of kaizen or continuous improvement.   

Above all, Cho-san told us, Toyota focused its efforts on the principle of clearly separating work from waste.  They analyzed each step in the work process, identified what was absolutely necessary to get the work done, and everything else was classified as waste.  By eliminating such waste on the production floor, Toyota saw tremendous simplification in the work processes. Productivity, as well as quality, started to rise dramatically.

Today, medical research is viewed as a very glamorous field, the recipient of billions and billions of dollars in funding from NIH and other sources.  Everyone knows that eventually, the fruits of all that research have to get to the people that will hopefully be helped by them through the health care system.  But that aspect of the problem has not received much organized attention until recently, a state of affairs that has led us to our current near-out-of-control situation.

Perversely, the more numerous and sophisticated our advances in medical research are, the more of a strain they cause on the health care system, whose job is to deliver these advances to patients.  As we know, the system is already way overtaxed and lacks the resources, especially the research and education, to do its job properly, let alone absorb even more medical advances coming its way.  No wonder we find ourselves in our current situation.   

What this grand challenge problem is crying for, more than anything else, is leadership.  We have more technology than ever at our disposal, which if properly organized should enable us to start making progress in improving the productivity and quality of health care - from the Internet, to sensors, to mobile devices and real-time information analysis.   

Someone - the next U.S. President, regardless of who he or she is, it is to be hoped - will stand up and, like John Kennedy in May of 1961, declare that our nation should commit itself to improve significantly the productivity and quality of health care for all over the next decade.  And, like JFK in that memorable speech to Congress, the new President needs to tell the country that no single project in this period will be more important to the nation, or more difficult or expensive to accomplish.  Let's hope we do so before the situation deteriorates even further.

Do We Need to Go Through a Near-Death Experience in order to Successfully Reinvent Ourselves?

A few weeks ago I participated in the BIF-3 Collaborative Innovation Summit in Providence, RI.  BIF-3 is sponsored by the Business Innovation Factory, a community organization whose mission is to "explore business model innovation through a series of experiences designed to get ideas off of the white board and onto the ground as quickly and cost effectively as possible."

I was interviewed on-stage by Walt Mossberg, the renowned journalist whose Personal Technology column has appeared in the Wall Street Journal for sixteen years.  Walt has received numerous awards for his writing.  In fact, I was there this past summer when he received a Visionary Award from SD Forum, a Silicon Valley business and technology community, which every year honors industry leaders who have pioneered innovation and fostered the spirit of entrepreneurship.

Walt started out by asking me how IBM has changed the way we work with new research ideas, since, in his opinion, fifteen years ago or so little innovation was coming out from IBM compared to the present.  IBM's transition over the last twenty years is something I have been reflecting on quite a bit recently, especially given my recent retirement from full-time responsibilities with the company, as well as the seminar I am teaching this semester at MIT.

Few companies survive the kind of near-death experience that IBM went through in the early 1990s.  Fewer still not only survive but are able to transform their culture and re-invent themselves to the degree IBM has.  IBM used to be the very model of an inward-looking company that pretty much built everything by itself based on proprietary technologies.  This was a model that was appropriate for the early days of the computer industry, but by the late 1980s it had become fatally outmoded and almost caused the demise of IBM.  After surviving its downfall, IBM has gone on to become a leader in open, market initiatives like the Internet, Linux and Service Oriented Architectures, with a culture almost diametrically opposite to its previous one.

Could these phases in IBM's existence be inexorably linked?  Must a successful organizational re-invention be preceded by the kind of cataclysmic events that open up the mind to new experiences - essentially cleaning the brain from its previous inflexible views of life?  The ancient Greeks certainly thought so, as reflected in their tragedies. 

"Tragedy" - says the Wikipedia entry - "depicts the downfall of a noble hero or heroine, usually through some combination of hubris, fate and the will of the gods.  The tragic hero's powerful wish to achieve some goal inevitably encounters limits, usually those of human frailty (flaws in reason, hubris, society), the gods (through oracles, prophets, fate), or nature. Aristotle says that the tragic hero should have a flaw and/or make some mistake.  The hero need not die at the end, but he / she must undergo a change in fortune.  In addition, the tragic hero may achieve some revelation or recognition about human fate, destiny, and the will of the gods."

So, in reply to Walt's initial question, I told him that I believe that IBM's near-death experience was - in my opinion - an essential part of our successful transformation.  We used to think that we were the marketplace - the kind of hubris that the gods in Mount Olympus will absolutely punish.  Having invented RISC microprocessors and relational data bases in our research labs, as well as established the IBM PC as the leader in the marketplace, we let others reap the benefits of our work because we were making so much money from our proprietary mainframes, compared to the returns from these puny, emerging businesses.  They don't call them tragic flaws for nothing.

Walt pointed out that Apple had recently gone through a similar change in fortunes, being 90 days from bankruptcy only a few years ago.  And, just as IBM clutched the Internet like a lifeboat taking us into the new open, market-oriented world where we now live, Apple is using the iPod, iPhone and other digital consumer products to move into the future.

He then mentioned that at The D Conference, which he runs with partner Kara Swisher, Microsoft's CEO Steve Ballmer had mentioned the need to move from the business model they had so successfully developed around desktop and enterprise software – both, in Walt's opinion, being gifts from IBM - into new positions that are key to its long term growth. The examples he cited were search and advertising to better compete with Google, and consumer electronics to better compete with Apple.  So, Walt asked me, can Microsoft accomplish such a shift, not having gone through the organizational brain cleansing experiences IBM went through?

Excellent question.  The reality is that I don't know.  Perhaps Microsoft will prove to be the exception to the Greek Tragedy rule and will successfully move into the future with minimal pain and disruption.  But, I said to Walter, I keep wondering how much damage they are doing to their own culture by so ferociously attacking Linux and OpenDocument format (ODF).  I totally understand that they worry about the impact that Linux and ODF could have to their present business model.  But, in my opinion, it is hard for your organization to embrace the future when you are circling the wagons against the inevitable forces of the marketplace.  You send a message to your own people that you are strong enough to defy the common wisdom of markets, and you will move ahead - damn the torpedoes and the Greek gods.

In the end, we all see the world through our experiences, and painful experiences generally influence the mind far more than happy ones.  I know that IBM's insular, proprietary culture had to be ditched before we were able to move ahead into the future.  Part of what makes the study of organizations so interesting is to observe how different companies react to the marketplace forces that will inevitably derail their best laid plans, the many, very human mistakes they often make in reacting to the forces, as well as the great examples of true innovation that they sometimes display in their will to survive.

Playing (Serious) Tricks on the Mind

The Turing Test was proposed in 1950 by the famous English mathematician and cryptographer Alan Turing, as a pragmatic and innovative approach to testing a machine's capability to exhibit intelligence.  Turing developed it to help him consider the question: Can machines think? 

In the Turing Test, a human judge engages in a written, natural language conversation with two other parties, whom he or she cannot see. One is a human and the other a computer.  If the judge cannot tell which is which, then the computer would be said to have passed the Turing Test. 

For years the Artificial Intelligence (AI) community has worked hard on developing software that could pass the Turing Test.  One such computer program was ELIZA, developed around the mid-1960s to behave like - perhaps parody is a better description – a psychiatrist conversing with a patient.  ELIZA did little more than rephrase the patient's statements as questions posed back to him or her.  For example, if a patient said, “I am feeling unhappy,” ELIZA would simply reply, “Why are you feeling unhappy?”

A more serious experiment on machine intelligence was IBM's Deep Blue supercomputer, which famously defeated then chess world champion Garry Kasparov in a six game match in May of 1997.   

I was reminded of the Turing Test recently, as I have been watching the huge progress we are making in social networks, virtual worlds and personal robots.  Our objective in these applications can perhaps be viewed as the flip side of the Turing Test.  We are leveraging technology to enable real people to infuse virtual objects - avatars, personal robots, etc - with intelligence, - as opposed to leveraging technology to enable machines and software to behave as if they are intelligent.

The latter, which includes programs like Deep Blue and autonomous robots, continues to be an important and challenging AI objective.  But the former class of applications, with people providing the intelligence to the virtual objects, although perhaps technically less challenging than classic AI, has proven to be very useful on many fronts, and is leading to a rich variety of innovative applications. 

Let me give a few examples.  In a panel at a recent conference, I expressed the opinion that meetings, learning and training are the killer apps of virtual worlds.  Killer apps are applications that turn out to be both useful enough and within the reach of the technology at its present stage of development to break out as market-creators.  I am convinced that meetings and learning will help unleash all kinds of innovative new applications and propel the success of virtual worlds in the marketplace.

There is something almost magical in finding yourself in a virtual room full of people’s avatars - even though the people are physically located all over the world.  I have experienced this feeling particularly when participating in virtual world events, such as a press interview conducted in Second Life to which the public was invited, as well as an all-hands meeting with employees of IBM China, physically conducted by Chairman and CEO Sam Palmisano in Beijing while many of us in different parts of the world joined him through Second Life.

It is amazing for those who have not experienced it to see how quickly you forget that you are in a virtual world, rather than a real one.  You are fully immersed in the meeting or class, surrounded by avatars, each of which represents a real person.  Everyone is interacting with you just as real people do, even though their representation might appear a bit weird at first.  If your virtual location is recognizable to you - say, a classroom, auditorium or conference room - and the avatars around you are behaving realistically enough, then your mind quickly adjusts. You may as well be in a real room surrounded by real people. 

While virtual worlds are still at a relatively primitive stage, they are beginning to take off for those applications for which the technology is adequate.  Think of PCs and the Web in their early days, and of how much better they got over time.  Something similar will happen for sure with virtual worlds as the technology improves, we get better tools and platforms and we learn much more about how to use the capabilities for meetings, learning and many other kinds of applications.

MIT's Media Lab is taking serious, technology-based mind tricks a few steps further through a variety of devices and physical objects that integrate into social networks and virtual worlds.  A few weeks ago I briefly wrote about The Huggable, a project in the Media Lab's Personal Robots group. 

The Huggable is a robotic communication avatar designed for social interactions, education, healthcare and other applications.  It is essentially a very cute teddy bear, with a sensitive skin, embedded "intelligence" (i.e., hardware and software), wireless communications and the ability to see, hear, speak, touch and move.  But what I find so compelling about The Huggable is that it can operate as an autonomous personal robot and as a semi-autonomous robotic avatar that is part of a human social network, providing a much richer set of interactions to the members of the network than is possible using PCs and similar devices. 

There is a lot of activity in intelligent, autonomous, mobile robots for entertainment, education, protection and many other applications.  Applications range from helping doctors and nurses perform their duties better (even remotely), to providing assistance to the elderly for improved mobility and strength (e.g., vacuuming, helping in getting out of bed, even companionship).  Aging populations around the world are a big driver of personal robot products and applications.

The concept of semi-autonomous robots integrated into a social network is new, at least for me.  But once you start thinking about potential applications, many come to mind, in areas as diverse as family communications, healthcare, education and entertainment.

For example, imagine faraway grandparents being able to interact with their young grandchildren who are holding and playing with The Huggable.  You can talk, read stories and sing to them. You can (virtually) hug them. You can watch and listen to their reactions as well as sense the way they hold and touch the teddy-bear-like device.  Imagine a similar scenario with soldiers stationed around the world, being able to interact with their young children in a far richer, more emotional and satisfying way than a phone conversation.  Or imagine the help it could provide children not getting enough nurturing and stimulation from their parents, by enabling family members, professionals or volunteers to get involved in their care.

We are only beginning to discover the power of Internet-based social networks and virtual worlds.  Physical devices like The Huggable add a whole new class of possibilities.  You are playing tricks with minds, but in a somewhat different way than the tricks involved in the Turing Test.  You are no longer trying to convince the mind that the software programs, avatars or robots exhibit human-like intelligence.  You are now trying to convince the mind that the human-controlled avatars and semi-autonomous robots are realistic stand-ins for the people you are interacting with, so they do not get in the way as you immerse yourself in the application in as natural a way as possible.  This is a subtle, but very different kind of mind trick, one that I am sure will result in many important innovations.

Reflections on Leadership and Innovation

Over the last few months I have been thinking a lot about leadership skills in anticipation of the graduate seminar I am teaching at MIT this Fall - Technology-based Business Transformation.  In this course, I want to examine how to leverage disruptive innovations to significantly transform a business or even a whole industry.  I want to focus, in particular, on what a company has to do when faced with a disruptive innovation so that it becomes the disruptor rather than the disruptee.

The course started last week.  At our first meeting, I told the students that the overriding objective of this course is to develop or enhance their leadership skills so they can better deal with complex systems, complex markets and complex organizations.  This entails a subtle balance of at least three kinds of skills - technical, management and social or people-oriented skills. 

Can leadership skills be taught, or are these things that you are born with - you either have them or you don’t?  If they can be acquired, how do you develop such skills?  Each of us is better at some things and less good at others, but we can always improve our talents in a given area if we work hard at it.  This applies to leadership as well.

My approach toward working on leadership skills in the class is through lots of discussion focused on three key areas. The first is the material in our reading list - including The Innovator's Solution by Clay Christensen and Michael Raynor, and Who Says Elephants Can't D