Irving Wladawsky-Berger

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.

Complex Organizational Systems: Some Common Principles

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

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

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

The 2009 MIT Sloan CIO Symposium

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

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

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

The Mass Customization of Services

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

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

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

The Intelligent Enterprise

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

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

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

Cloud - the Emergence of a New Model of Computing

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

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

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

The Industrialization of Services

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

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

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

Dealing with Increasingly Improbable Events

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

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

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

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

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.

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."

"Serious" Virtual Worlds Applications

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

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

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

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

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

Cloud Computing: the Internet of Services

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

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

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

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

He then goes on to define cloud computing:

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

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

An Update on Virtual Worlds

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

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

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

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

Complex Organizational Systems

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

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

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

Atoms, Bits and the e-word

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

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

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

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

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

What is Cloud Computing, Anyway?

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

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

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

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.

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.

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?

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.

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.

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.

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?

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.

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? 

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."

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.

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.

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 Dance? by Lou Gerstner.  Second, I’ll focus on my personal experiences leading technology-based businesses, in particular IBM's Internet Division. Third and perhaps most important, we’ll explore the students' own experiences and feelings, gained through whatever jobs they have had in their young careers, as well as their education and outside reading.

Re-inventing the Corporate Research Lab

Last month, my colleague Paul Horn announced his retirement from IBM.  He had been the leader of IBM Research since 1996, a position that John Kelly has now assumed.

I have worked closely with Paul for many years.  His accomplishments are impressive.  Under his leadership, IBM Research developed the Deep Blue supercomputer, which in May of 1997 defeated chess grandmaster Garry Kasparov in a six day match.  A few years later, the Blue Gene initiative was launched, a family of highly parallel supercomputers aimed at solving some of the most complex problems in science and industry.  Since 2004 Blue Gene has been number one in the Top500 list of the most powerful supercomputers in the world.

In technology, the Research division pioneered a number of semiconductor breakthroughs, such as the use of copper wiring to help build faster microprocessors and the use of self assembly, - inspired by biological mechanisms, -  in semiconductor manufacturing. 

Beyond individual products and technologies, Paul led in the creation of entire new disciplines, most famously Services Sciences, which is aimed at helping us better understand the nature of services,  - by far the largest sector in the economy of most countries, - in order to improve their productivity and quality through the use of technology, science and management principles. 

Paul played a major role in the launch of the Autonomic Computing initiative, aimed at making complex IT systems increasingly self-managing.  In 2001 he published the Autonomic Computing Manifesto, a challenge to the IT industry, and the research community in particular, to deal with the growing complexity of IT systems - the largest obstacle standing in the way of continuing progress. 

But, impressive as these accomplishments are, I believe that the key legacy from Paul Horn's tenure as director of IBM Research is his leadership role in transforming the very culture of the institution, and in the process laying the foundation for the corporate R&D lab of the 21st century.

A Kind of Cambrian Explosion

Over the last few years, the complex engineering systems community has been turning to biology as a source of new ideas for dealing with the kinds of systems that we are now increasingly able to develop.  As digital components continue to become ever more powerful, inexpensive and standardized, these complex systems are growing in breadth and capabilities at a dramatic rate.  Moreover, the kinds of problems we are now able to address are significantly different from what they were in the past.

IT systems are "going up the stack."  They are increasingly being used for businesses and societal applications that need to be able to change and adapt to whatever is going on in the marketplace, and those changes are coming at a very rapid pace.  These market-facing, people-oriented complex systems need to be flexible and adaptable.  Biological systems clearly exhibit these kinds of properties - flexible, adaptable, highly complex and continuously evolving, - which is why biology has become such a source of inspiration for the study of dynamic, complex engineered systems.

Looking at biology as a metaphor, - and begging forgiveness for any poetic license I might have taken in a subject that I am far from an expert - one can very roughly speaking identify an era where the cell was perfected and single cell organisms made their appearance several billion years ago.  This was followed by  multi-cell organisms a billion years ago or so.  Then, around half a billion years ago another dramatic change took place, which is known as the Cambrian Explosion.  Evolution essentially took off, accelerating by an order of magnitude, ushering in a highly diverse set of organisms that were far larger and more complicated than anything that existed before.

The IT industry has been going through a similar process.  If we think of digital components as playing the role of cells in biology, for the first several decades of the industry our focus was to improve and perfect these components - microprocessors, memory chips, disks and so on.  We were building computer systems that were mostly based on a relatively small number of processors.  The lack of standards made it difficult to cluster or network large numbers of such processors into an integrated system.

"Killer Apps" and Virtual Worlds

Last week I went back to the AlwaysOn Stanford Summit.  It was a very stimulating event, both because of the talks and panels as well as the people that this conference attracts.  I participated in a panel on How Real is the Virtual Web?, which was moderated by Jaron Lanier, a pioneer in Virtual Reality and currently Scholar-in-Residence at UC Berkeley.  The panel included Craig Sherman, CEO of Gaia Interactive; Chris Melissinos, Chief Gaming Officer at Sun Microsystems; and Philip Rosedale, founder and CEO of Second Life, who also gave a short talk - A Brief Look at Second Life just prior to the panel.

We discussed a wide range of subjects, including the use of virtual worlds for serious applications beyond online games and related social environments.  When will virtual worlds become a real business?, our moderator asked.

I expressed my opinion that meetings and learning and training may very well be the killer apps of virtual worlds, that is, those applications that turn out to be unexpectedly useful and help propel the success of a new product or service in the marketplace.  For example, there is general agreement that spreadsheet applications had a lot to do with the initial adoption of personal computers in business.

Some panel members agreed with me, while others thought that it would be a pity if the reason business adopts virtual worlds is for something as mundane as conducting virtual meetings.  But remember, spreadsheet applications were successful not because they were exciting.  The reason that spreadsheets and word processing are viewed as killer apps is because they helped validate that PCs were becoming a tool for real work and would improve personal productivity.

Similarly, I think that virtual meetings and virtual learning and training are helping drive the adoption of virtual worlds in business based on my impressions of how they are already being used by thousands within IBM and in other companies we are working with.  I also see quite a number of universities experimenting with the use of virtual worlds for online courses.

Think, Play, Do: Technology, Innovation, and Organization

Last month I attended Supernova 2007 in San Francisco.  Along with Sun's CTO Greg Papadapolous and former Microsoft CTO Nathan Myhrvold, I participated in a panel on What will drive future growth and innovation in the technology sector?

In my opening remarks I focused on the opportunities to leverage the huge advances in technologies, standards and communications to enable us to look at a whole organization - an enterprise, an industry eco-system or an economy - as a holistic, integrated system, linking together processes, information and people.  Needless to say, these are incredibly complex systems. The tools we are using to design, build and manage them today are quite primitive, and they thus require considerable labor-based services.

We need breakthrough innovations to enable us to better deal with these increasingly complex organizational systems.  Engineering has done a very good job developing advanced tools and methodologies - e.g., CAD/CAM, simulations, models, etc - to help us deal with very complex physical systems, like airplanes, skyscrapers and microprocessors.  This has enabled very high quality and productivity in the production of physical objects. 

Our challenge and opportunity now is to develop similarly sophisticated tools and methodologies to deal with complex organizational systems like those found across industries and economies.  Compared to what we’ve done so far, this is hard, - very, very hard.

Why is that so?  To begin with, organizational systems must continuously evolve to keep up with the requirements of a fast-changing marketplace.  Moreover, people play a prominent role in such systems.  People-based processes and activities are particularly unpredictable, a point I glibly expressed in my Supernova remarks by saying that "processes involving people are a lot more complicated because people are a pain in the ass. They are not deterministic."

The NYPD Real Time Crime Center

On May 3 we held our fourth Innovation Lecture in the series jointly sponsored by IBM and MIT's Engineering Systems Division.  Systems Solutions to Real World Challenges at NYPD: The Real-Time Crime Center was delivered by Jim Onalfo, CIO and Deputy Commissioner of the New York Police Department (NYPD) .

The NYPD is the largest municipal police force in the world.  It handles 11.5 million 911 calls, sends out 4.5 million police cars on radio runs, is responsible for 45,000 prosecutions and has a staff of roughly 53,000 people, of which over 37,000 are police officers.  The NYPD is led by Police Commissioner Raymond Kelly, to whom Jim Onalfo directly reports.

From the moment a crime is detected and reported, and throughout its investigation, police departments have become very good at generating broad and diverse streams of information related to that crime.  However, it has been very difficult to bring all that information together along with the proper tools to make it usable in practice.  When Ray Kelly was appointed by New York mayor Michael Bloomberg to his second term as NYPD commissioner in 2002, he entered the job with a key vision:  let police officers focus on what they do best - solve crimes and apprehend criminals - by freeing them from the overwhelming paperwork they have to deal with, and providing them with the systems and tools they need to quickly find the information required to do the job.

A Few Thoughts on a Long Career

Last week I attended one of my favorite events of the year, IBM's annual Corporate Technology Recognition Event (CTRE).  At the CTRE we recognize and reward individuals and teams who made significant technical contributions to IBM and to the world of science and technology.  We also announce our newest IBM Fellows, the company's most prestigious technical honor. 

Given my imminent retirement, this year's CTRE took on a particularly nostalgic feeling.  It is interesting for me to think about the arc my professional career has taken, much of it spent among members of our technical community, like those being honored at the CTRE.  I like to think back to decisions I made at various forks in the road and how they turned out, as well as on the impact of circumstances that were beyond my control.  After a while, amidst the various zigs and zags, a definite pattern started to emerge in my career, a pattern that I could not have anticipated but had to discover as I went along.

SOA, Services and Business Architecture

At the end of May, I will be participating in an IBM sponsored conference - Impact 2007.  The conference will focus on Service Oriented Architectures (SOA), " ...  a business-centric IT architectural approach that supports integrating your business as linked, repeatable business tasks, or services."  SOA is being embraced by an increasing number of companies because it helps them build a more flexible IT foundation that can respond quickly to rapidly changing business conditions and user requirements.

There are many ways to view SOA, but to me its most compelling features are the introduction of standard, modular, interchangeable components to the world of software.  This enables developers to build composite applications by drawing upon pre-defined components from multiple sources within and beyond the enterprise.

The introduction of standard, interchangeable parts was one of the critical innovations that helped bring about the Industrial Revolution a couple of centuries ago and ushered in the concept of mass production in many different kinds of industries.  Modern engineering practices - especially those used for developing complex systems or objects like airplanes, bridges and microprocessors, - are built around the concept of standard, modular components.  Such components are a pre-requisite for sophisticated tools like those used in Computer-Aided Design (CAD) and Supply Chain Management. 

These kinds of advanced engineering, mass production, and similar capabilities have brought large productivity improvements to the manufacturing of physical goods in countries around the world.  However, in services - which in advanced economies like those of the US, the UK and Japan account for roughly 75% of GDP and a similar percentage of the labor force - productivity improvements have been significantly slower.  This is largely because in the people-intensive service sector of the economy, we have not been able to bring to bear the kinds of engineering and production capabilities that have been successfully applied in manufacturing, including standard, modular components and engineering-based tools and processes.

21st Century Grand Challenges

On May 25, 1961, President John F Kennedy addressed a  joint session of Congress and said "...I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the Moon and returning him safely to the Earth.  No single space project in this period will be more impressive to mankind, or more important in the long-range exploration of space; and none will be so difficult or expensive to accomplish... "

President Kennedy's historic speech served as a call to arms to the nation.  By issuing a near-impossible Grand Challenge, President Kennedy brought together all the key constituencies in academia, industry and government that needed to work closely together to make his challenge a reality.  The goal was achieved with the Apollo 11 mission on July 20, 1969.      

In the 1980s, the US scientific and engineering community issued its own Grand Challenges, that is, a set of fundamental problems of great importance to the nation, the solution of which required breakthrough improvements across all dimensions of supercomputing, including technology components, hardware architecture, software, algorithms, programming tools and applications.  They also required close collaboration among academia, industry and government, as well as between the developers and users of advanced supercomputers. 

Some of the key grand challenge applications being pursued at the time were the study of computational fluid dynamics for designing hypersonic planes; weather forecasting for short and long term effects; the efficient recovery of oil; molecular design calculations; and nuclear weapons simulations.

These efforts culminated in the federal government’s launching the High Performance Computing and Communications Initiative (HPCCI) and the National Information infrastructure (NII) in the early 1990s.  These programs contributed greatly to the huge advances in the power of supercomputers over the next decade, as well as to the well known explosion of the Internet into the larger society in the mid ‘90s.

The Life Cycle of a Business

As I near retirement from IBM at the end of May, I have been thinking a lot about the institution that I have spent 37 years in, and more generally, I have been reflecting on the intrinsic nature of the world of business in which I have lived all these years. 

What is a business - anyway?  As usual, Wikipedia offers a pretty good definition:  "In economics, business is the social science of managing people to organize and maintain collective productivity toward accomplishing particular creative and productive goals, usually to generate profit."  Not surprisingly, as is the case for any highly complex system or entity, this is just one of multiple definitions. 

In quantum mechanics we learn that questions like "what is an electron?" are meaningless unless one also asks "what is your purpose in asking this question?"  An electron is sometimes best thought of as a particle, and sometimes best thought of as a wave depending on what models or measurements one is after.  Similarly, one cannot separate asking what a business is from how one wants to use the answer.  But I am actually most satisfied with the people-centric definition Wikipedia gives, because I truly believe it is the most important one.

If you look at complex systems as a kind of spectrum, with natural biological systems – e.g., living organisms, ecosystems and evolution - at one end and physically engineered systems - e.g., bridges, airplanes and microprocessors - at the other, organizational systems like business fall someplace in between.  While business systems are clearly engineered, that is, designed, built and managed by people, they share many characteristics with biological systems, in particular, the need to be flexible and adaptable so they can evolve and survive as their environment changes.

Reflections on Complex Systems

Last week I attended the Almaden Institute, a meeting held annually at IBM's Almaden Research Center, located in Silicon Valley.  The theme of this year's Institute was Navigating Complexity: Doing More with Less, and featured a number of talks and panels on a variety of themes relating to complex systems.

I have long been fascinated by complex systems, perhaps because it constitutes the most natural bridge between physics - the discipline I got my advanced degrees in at the University of Chicago in the 1960s, and computer sciences - the discipline I switched to when I joined IBM Research in 1970 and have been working in ever since.  In the last few years, as advances in IT and the Internet in particular are enabling us to address increasingly complex problems in fields as diverse as medicine and global supply chains, the study of complex systems is drawing a lot more attention.  I’d like to comment on a couple of the talks given at the Institute.

A Kind of 21st Century Digital Animation Studio

On March 22 we held our third seminar in the series Engineering Systems Solutions to Real World Challenges, which is co-sponsored by IBM and MIT's Engineering Systems Division.  The objective of the seminars is to show how industry leaders are using engineering-based approaches – e.g., design, tools, processes, analysis, simulations, etc – to address complex problems in their industry or institution. 

The first seminar by IBM executive Linda Sanford focused on the IBM transformation initiatives which she leads, covering not only the key role played by technology but also the critical importance of culture to successfully transform a complex organization.  Next we addressed healthcare - and in particular the really innovative work taking place at Vassar Brothers Medical Center.

Our latest seminar showcased the importance of applying systems thinking and innovation in a perhaps unexpected area.  The seminar titled Engineering Systems Solutions to Real World Challenges in Media and Entertainment focused specifically on digital animation.  It was led by Larry Kasanoff, film producer and CEO of Threshold Animation Studios, a small digital entertainment company - employing fewer than 200 - that does digital visual effects for films, TV, theme parks, commercials, video games, music videos and private industry.  I have personally known Larry for several years because Threshold has a close technology alliance with IBM.

Beyond the Ivory Tower

The March 3rd issue of The Economist has an excellent article, “The Rise and Fall of Corporate R&D - Out of the Dusty Labs” on the evolution of corporate R&D since the end of the Second World War.  The article starts by describing the vision laid out by presidential science advisor Vannevar Bush in his 1945 seminal report, Science The Endless Frontier.   "New knowledge can be obtained only through basic scientific research" conducted in universities and research labs, which is then applied to develop new products by the private sector and new and improved weapons by the defense sector, he said in the report. 

Vannevar Bush's report was truly influential, and served as the blueprint for R&D in post-war America.  "The Government should accept new responsibilities for promoting the flow of new scientific knowledge and the development of scientific talent in our youth," he further added.  This led to the creation of the National Science Foundation a few years later.  Large enterprises also embraced his recommendations, and organized corporate research labs, such as Xerox PARC and IBM Research. 

But today the picture is very different.  "Technology firms have left the big corporate R&D laboratory behind, shifting the emphasis from research to development," the article says and proceeds to then pose the key question "Does it matter?"

Moving On

After thirty-seven years at IBM, I will be retiring this coming June.  I will continue to be involved with the company on a part-time, emeritus basis, contributing as appropriate where I can.    

Thirty-seven years in one company is a long time indeed, especially in this day and age.  I suspect that few will ask me why I am finally moving on.  Indeed, many may wonder what took me so long.

In truth, I have been thinking about this change for a while now, especially since becoming eligible to retire seven years ago.  But I could not quite bring myself to do it until now.  Why is that?  Well, IBM has been such a special place for me that it made my decision to retire very difficult.  Let me offer some personal reflections by way of explanation.

A Key Trend for 2007 - and Beyond

As the New Year begins, it is traditional to review key events from the last year and make predictions for the coming one.  I followed that tradition a year ago when I chose Reflections on Blogging as the theme for my last blog entry of 2005.  I had started this personal blog in May of that year, so a year ago blogging was still a relatively new experience for me - as well as for most people. 

What a difference a year makes!  The sense I get from blogging now, - for me personally and for the world in general, - is that it has achieved liftoff and taken off, no longer a novelty but a part of the environment in which we live in, important for some of us, irrelevant for many.  This is not unusual.  New technology-based capabilities often go from relative obscurity to market acceptance in one short year, - from being used primarily by leading edge adopters in research labs and universities, to being embraced by a wider marketplace. 

At the beginning of 1996, for example, most people were trying to understand the implications of the Internet and World Wide Web.  What was surfing the Web all about?  Why would anyone other than teenagers with time in their hands want to do something so silly?  But, by the end of 1996, a big shift had taken place.  In rapidly increasing numbers, people around the world were going on-line, and more and more companies were starting to formulate e-business strategies to avoid being left behind by the growing number of new and existing companies already leveraging the Internet for business value. 

So, let me start the year by commenting on a key trend that I believe will similarly take off in 2007 and become more widely accepted in the marketplace as the year progresses.  I believe that highly visual interfaces and virtual worlds will become increasingly important for interacting with applications, communicating with people and engaging in commerce,  - what we in IBM have started to call v-business.

Applying "Lean" Thinking to Healthcare Solutions

The second Innovation Lecture Series: Engineering Systems Solutions to Real World Challenges took place on December 14 at MIT.  The series is co-sponsored by MIT's Engineering Systems Division and IBM's University Relations as part of its Skills for the 21st Century initiative.  The first lecture in the series was held in October and featured IBM's Senior Vice President Linda Sanford, discussing the IBM transformation initiatives that she leads.    

The Innovation Lecture Series are delivered by business and technical leaders, who discuss their concrete experiences in leveraging technology and engineering capabilities to address complex problems in their organizations.  This past lecture focused on healthcare and featured three top executives of the Vassar Brothers Medical Center, a regional medical center and hospital in New York State's mid-Hudson Valley: Dr. Daniel Aronzon, President and CEO; Nicholas Christiano, Vice-President and CIO; and Dr. Stephen Katz, Chief Medical Officer and Senior Vice-President of Medical Affairs.  A webcast of the lecture as well as additional materials are posted in the Innovation Lecture Series web site.

Skills for the 21st Century - Engineering Systems Solutions to Real World Challenges

As technology continues to permeate all aspects of business, society and our personal lives, the possibilities for innovation seem truly endless.  But realizing these possibilities requires talent, - the best trained technical talent, - so more than ever, our engineers and scientists are essential to innovation.  They must master a wide range of interdisciplinary skills to create effective, resilient systems solutions to the increasingly complex problems they are called on to solve, and be able to recognize those critical enablers and inhibitors to marketplace success that can emerge along the technical, business, organizational, and societal boundaries.

Over the past decade, several studies have considered how to restructure engineering education and other technical educational programs to better equip students with the skills required for 21st century careers.  They have all pretty much concluded that a technical education must be more diverse, broad and forward-looking than in the past.  Sophisticated applications - such as those increasingly encountered in business, health care, government and education - require the ability to comprehend, synthesize and integrate lots of different factors into a holistic, human-oriented design.  This is very complex indeed.   

When examining educational programs that address complex systems, one finds that universities generally do a pretty good job of teaching the base, foundational skills.  However, a proper education in complex systems should be complemented with concrete, real-life examples or case studies of how businesses and other institutions are using engineering systems to address complex problems in their organizations. 

That is why the Innovation Lecture Series: Engineering Systems Solutions to Real World Challenges was organized.  The series is co-sponsored by MIT's Engineering Systems Division and IBM University Relations as part of its Skills for the 21st Century initiative.  In each seminar, a business or technical leader will discuss a real-life example of how they leveraged advanced technologies and how they applied disciplined systems and management thinking to a variety of problems in their organizations.  Acting in my role as Visiting Professor of Engineering Systems at MIT, I host the seminars and moderate the Q&A session.

Information - It’s All Around Us

Last week IBM announced a new kind of software platform, IBM Information Server, designed to help businesses and other organizations integrate and derive more value from the disparate sources of information that are spread across their systems.  The announcement was made at a major conference we held in Anaheim, Information on Demand 2006.  I participated in the conference and led a discussion on Technology and Innovation with a panel of some of our top technical experts in information management in IBM.

We are so surrounded by information in our everyday lives that we don't notice it.  It is like the air we breathe.  Information comes at us from all sides.  Some of it is well structured, such as our bills, financial statements and pay stubs. Most of it is highly unstructured - TV programs, movies, newspapers, books, pictures, conversations, phone calls and e-mails, for example. 

From its inception, the IT industry has been dealing with information.  After all, the "I" in IT stands for Information.  Before the term IT became widely used, we generally referred to commercial computing as Data Processing, because that is what commercial applications did - they processed data stored in highly structured file and database systems.  But, while data and information in general have always been a major part of the IT industry, until relatively recently the key focus of the industry has been on applications and their underlying platforms and development tools, rather than on information and related technologies.

Beyond Technology and Automation

Last week, I wrote about complex systems and services, and the various conferences on these subjects that I had attended in the previous two weeks.  I concluded my blog entry by saying:  "It is particularly gratifying that while technology is the catalyst enabling such a [business] transformation, our biggest breakthrough is our newfound ability to integrate people into all aspects of our systems designs."  I'd like to elaborate on that thought.

Because of advances in technology, in particular information technologies, all kinds of new opportunities have arisen for applying IT in innovative ways in business, society and our personal lives.  In general, when we think of technology-based innovations, especially in complex problems, we think of automation, that is, applying those technologies to automate tasks or processes previously done “by hand.”  Machines and automation have been the hallmarks of technology-based revolutions over the last couple of centuries starting with the Industrial Revolution.

Since the early days of computers in the 1960s, we naively assumed that it was only a matter of time and of our computers becoming faster and cheaper before we would similarly apply technology to automate major human capabilities like intelligence, knowledge and natural language understanding.  While much progress has indeed been made in those areas in the ensuing forty years, it is fair to say that artificial intelligence, knowledge management and natural language processing are known as much for their exaggerated claims and failures as for their many successful applications such as Deep Blue and the Mars Exploration Rovers.

People-Oriented, Services-Intensive, Market-Facing Complex Systems

In the last couple of weeks I have been immersed in complex systems, services and related subjects.  First, on Tuesday, September 26 I gave a talk entitled "At the Threshold of a 21st Century Business Revolution" at the 2006 MIT Engineering Systems Conference – the theme of which was Complex Systems, Complex Times: Reflections on the 21st Century Enterprise.  Later that same week, I participated in a two day workshop on Complex Engineered, Organizational and Natural Systems sponsored by the National Science Foundation (NSF). 

A week later, on October 6 and 7, IBM sponsored a conference on Education for the 21st Century focused on the emerging discipline of Service Science, Management and Engineering (SSME).  My role was that of wrap-up speaker at the end of the first day. 

In my comments I recapped not just the IBM SSME conference but what I had heard at the three meetings I attended in the previous two weeks.  In particular, I said that the two main themes of these meetings - complex systems and services - are very similar areas around which we are framing the very complicated problems of business and societal systems that we are trying to understand.