Irving Wladawsky-Berger

Technology, Leadership and Innovation in the Service Economy

At the end of January I gave a half-day seminar at MIT on Technology, Leadership and Innovation in the Service Economy.  I offered the seminar as part of MIT’s Independent Activities Period (IAP), a four week informal learning interlude between the fall and spring semesters that offers a variety of experimental short courses and seminars.

For a while now, I have been thinking about how technology and innovation can best be applied to services.  It is a subject I come back to repeatedly in this blog.  My interest started several years ago, when we launched a number of efforts in IBM to help create a research and academic discipline around services.  We coined the term Service Science, Management and Engineering (SSME) to highlight the interdisciplinary nature of this emerging discipline.  We usually refer to it as just Service Science.

A number of universities have already organized different kinds of Service Science programs, such as Services Management and Consulting at NC State University and Information and Service Design at UC Berkeley.  Several additional schools around the world are in the process of launching such programs.

My interest in technology-based services innovation was heightened last summer when I read an excellent report, Hidden Wealth: the contribution of science to service innovation, based upon a study sponsored by the UK Royal Society.  I found Hidden Wealth to be one of the most comprehensive studies anywhere on the promise of technology and innovation to services, and its potential impact to 21st century economies. 

Disruptive Innovations and Organizational Change

Over the last few years I have given a number of seminars on Technology-based Business Transformation.  In these seminars, I examine how companies can leverage disruptive innovations to go after new business opportunities or to significantly transform themselves.  Often, the transformations are needed because the business is in crisis, such as happened to IBM in the early 1990s or is the case with a number of media companies today. 

The seminars are generally organized into three section.  The first two focus on strategy formulation and execution respectively.  The last section deals with the organizational and cultural issues involved in going through such a major transformation.

Many companies fail to adequately embrace a disruptive innovation not because they did not develop the right strategy, but because the strategy was essentially rejected by the organization, and was thus doomed to fail from its very beginning.  The culture of the institution was not able to stretch enough to be able to implement the needed changes.  This happens even when the very survival of the organization is at stake.  It is as if a kind of institutional depression has set in.  

We sometimes forget that disruptive innovations are indeed disruptive, not only in the marketplace but also for individuals and organizations.  Much as we often talk about embracing change as a positive experience, change is in fact very difficult, even painful for many people.  You are asking them to move into unknown, perhaps even unchartered territory.  What will be the impact on their jobs?  Do they have the required skills for whatever is ahead?  How well will they personally do in the new environment?

Cuba, the Internet and Social Media

Last week I attended the Cuba, IT & Social Media Summit in New York City.  The summit brought together leaders in the field to discuss the use of these technologies and capabilities in Cuba,  today and in the future.  Many, but not all, of the participants were of Cuban heritage, either directly born on the island like me or whose parents were. 

The meeting was not political in nature.  I suspect that most attendees hold views similar to mine regarding Cuba, bemoaning both the repressive nature of the Cuban regime as well as the ineffectual, anachronistic US embargo.  But I don’t really know, because politics was not the primary focus of our discussions.

The key overarching goal of the meeting was “to empower Cubans on the island through technology, helping them to communicate with each other more freely on the island and with the outside world, to access information more freely, and to share information with the rest of the world.”  A second major goal was to start thinking about the future and specifically what is needed to bring Cuba into the 21st century technologically “once laws have been passed that allow the US and Cuba to trade more freely in technology, both in public and private enterprise, and by industry sector.”

A very good summary of the Cuba, IT and Social Media Summit, and in particular of its key conclusions and outcomes can be found in this entry of the blog El Yuma by Ted Henken, a faculty member in the departments of Sociology and Black and Hispanic Studies at CUNY's Baruch College.  (Yuma is a slang name often used in Cuba to refer to Americans.)  

The summit was sponsored by the Cuba Study Group, an organization founded ten years ago “to facilitate a peaceful reunification of the Cuban nation leading to a free and open society with respect for human rights, the rule of law and a market-based economy.”  Its key objectives include “respect for human and political rights and individual freedoms in Cuba, and denounce the violation of those rights and freedoms”; “substantive economic changes that improve the lives of Cubans”; and “discussion and critical analysis of ideas and formulate policy recommendations that facilitate peaceful change in Cuba.”

JumpStart NYC: Talent in Transition

As we well know, many talented people have lost their jobs as a result of our ongoing Great Recession, - the worst financial crisis we have lived through since the 1930s.  The US unemployment rate has doubled from 5% in December of 2007 to 10% in December of 2009.  The number is significantly higher, about one out of every six workers, when taking into account underemployed and discouraged workers who have had no success in finding a full time position.

Hopefully, the economy will soon improve and unemployment rates will start to come down.  But in the meantime, it is very important to offer those who got laid off as a result of the deteriorating economy as much help as possible in exploring and finding job opportunities.

In New York City, the crisis hit hardest in the financial services sector.  There are now over four hundred thousand unemployed city residents, many of them as a result of layoffs on Wall Street.  About a year ago, the Bloomberg administration launched a number of programs to help recently unemployed city residents.  JumpStart NYC is one such program.

The JumpStart program was initiated by the New York City Economic Development Corporation (NYCEDC).  Its key objective was to help people who lost their jobs on Wall street to apply their skills and abilities in opportunities beyond financial services.  Most of these people had previously worked for large firms.  A primary goal of JumpStart was to help them explore new career paths and opportunities in small and entrepreneurial firms in the New York area.

Economic Performance and Social Progress

I continue to be very interested in the study of highly complex organizational systems, that is, systems involving communities of people and the services they perform for each other in pursuit of collective goals.  Enterprises, healthcare systems and cities are prime examples of such highly complex organizational systems.

Advances in information and communications technologies are enabling us to better understand the characteristics of these systems.  We now have the ability to gather huge amounts of information about their behavior, which we can then analyze and model with powerful supercomputers.  This will enable us to better design and manage them, and in general, to make better informed, more intelligent and smarter decisions.

But, in order to properly deal with these highly complex systems, we must have a pretty good idea of the kind of information we need, the values we are optimizing around and the objectives we want to achieve.  While thinking about these matters, an article in the New York Times caught my attention a few months ago.

The article covered the release of a report by the Commission on the Measurement of Economic Performance and Social Progress.  The Commission was chartered by French president Nicolas Sarkozy in 2008, and was chaired by Joseph Stiglitz with Amartya Sen as his chief advisor, both Nobel-prize winning economists at Columbia and Harvard respectively. 

The Commission was created to address the increasing concerns raised by leaders around the world about the adequacy of current measures of economic performance, which are mostly based on GDP figures.   The GDP is a basic measure of a country’s overall economic output based on the market value of all the goods and services the country produces.  If GDP is the primary measure available to government officials, they will make economic decisions based on optimizing or growing GDP, while paying little attention to other critical societal factors.

Blogging as an Exercise of the Brain

Every six months or so, I turn to blogging itself as the topic for that week’s post.  Perhaps, as someone wrote in a comment to a previous post on blogging several years ago:  “You know that someone has run out of things to say when they start blogging about blogging.”  It is quite possible that when all else fails in coming up with a topic, a self-referential blog will do the trick, as long as you don’t do it too often.

In reality, blogging continues to play a pretty central role in my life.  I have been blogging now, week-in, week-out, since May of 2005.  Writing and editing each post consumes quite a number of hours each week, let alone the time it takes to think what to write about and how to best frame the subject.  Much to my surprise, despite the time and effort it takes to produce each blog, I have not missed a week yet since I started doing them.  Several times I have come close to finally skipping a week when I am very busy.  Other times, especially when I am having a particularly tough time with a subject, I wonder why I am subjecting myself to such seemingly unnecessary anguish.

The truth is that few will care or even notice if I miss a week now and then.  So, why then am I so disciplined about my blogs?  Is this perhaps a manifestation of a somewhat obsessive-compulsive personality?  Is it a way of bringing a certain order to my life?  A weekly blog certainly adds structure to my life, especially now that I am no longer working full time for one company and live a somewhat distributed life, working with several different private sector and academic institutions.

Is there any other kind of activity that, like blogging, I engage in with near-religious regularity even though no one else cares that I do so?  Yes, there is one other such activity in my life - physical exercise.

The Evolution of Collaborative Innovation

For over a dozen years now the concept of collaborative innovation has been at the center of much of my work.  It is a common theme in my talks and seminars, as well as in my blog.  This is not surprising given the nature of the initiatives I have been associated with during this time. 

Foremost among them is the Internet, which I have been closely involved with ever since becoming general manager of IBM’s Internet Division in December of 1995.  The Internet, and all the social media platforms and applications in its wake have been one of the major enablers of collaborative innovation the world has ever known.

Then there is my work with Linux, which started around this time ten years ago when we finalized the decision to launch a company-wide Linux initiative.  In January of 2000 we then announced that IBM was going to support Linux in all its products and services, and that I was responsible for forming a new organization to coordinate our Linux efforts across the company.

In those pre-Web 2.0 days, the community concept behind Linux and open source in general was mystifying to many.  They were surprised that IBM had so strongly embraced Linux and were wondering what its relevance would be to the world of business.  We spent a lot of time explaining that we were supporting Linux because it was an excellent operating system that ran on every single hardware platforms regardless of vendor or architecture, and would thus facilitate the integration of systems, applications and information over the Internet.

Julia Child, Innovation, and the Open Mind

I just saw Julie and Julia on DVD.  The film intertwines two stories.  The main story starts in 1948 when Julia Child and her diplomat husband Paul arrived in Paris, and traces her transformation from recently married housewife looking for something to do, to the legend she became after the publication of Mastering the Art of French Cooking in 1961.

The second story focuses on Julie Powell, who in 2002, spent a year cooking her way through all 524 recipes in Mastering the Art, chronicled her saga in a blog that quickly gained a large following, and later wrote a book about her experience: Julie and Julia: 365 Days, 524 Recipes, 1 Tiny Apartment Kitchen.

I enjoyed the movie, especially the sections on Julia and Paul Child, masterfully portrayed by Meryl Streep and Stanley Tucci.  It reminded me why Julia Child has been one of my personal heroes ever since my student days at the University of Chicago in the 1960s.

Cloud Computing and the Evolution Toward the "Outside-In," Virtual Enterprise

A couple of weeks ago, I attended a very stimulating meeting in Madrid sponsored by the Bankinter Innovation Foundation.  The Foundation was started in 2003 by Bankinter, - one of the largest commercial banks in Spain, - in order to foster entrepreneurial innovation in the country.

One of the the Bankinter Foundation’s main initiatives is its Future Trends Forum (FTF), a multi-disciplinary international think tank of over 300 experts that together aim to anticipate the major social, economic, scientific and technological trends driving innovation around the world.  The Foundation holds two meetings a year in Madrid, each focused on a major trend previously chosen by the FTF members.  In addition to a subset of the members, subject matter experts are invited to attend and speak at the meetings.

After the meeting is over, all relevant information and discussions are analyzed, and the results are published in a document that is made publicly available on the Foundation’s web site.  Twelve such documents have so far been developed, on topics ranging from mobile technologies to reinventing sustainable developments.

The 13th FTF meeting took place the first week of December.  The topic was “The Crowd in the Cloud.”  Given my interests in cloud computing, I was invited to participate.

Reflections on Surviving Disruptive Innovations

Last week I wrote a post on the impact that digital technologies are having on the newspaper, entertainment and media industry in general.  It was based on the “Social Media Implications for Business” panel I moderated during my recent week as Innovator in Residence at USC’s Annenberg School of Communications and Journalism.

The panelists pretty much agreed that many legacy media companies are going through a kind of near death experience as the industry transitions from analog to digital technologies.  Two forces, in particular, are wreaking havoc on the industry: cannibalization - inexpensive new products that are cutting into their existing revenues; and fragmentation - audiences being shared across the many new kinds of content and experiences now available to them.

Jeff Zucker, President and CEO of NBC Universal, has succinctly captured what is going on in the media industry, with his widely quoted comment that the new digital business models are turning media revenues from analog dollars into digital dimes.  The key problem for legacy media companies is thus to come up with new, innovative business models that will enable them to make money and survive as their industry continues to transition from a business model based mostly on analog dollars into one based mostly on digital dimes.

Social Media Implications for Business

I spent the first week of November as Innovator in Residence at USC’s Annenberg School of Communication and Journalism.  As part of my activities during the week, Dean Ernest Wilson hosted a conference on Social Media: Platform of Provocation for Innovation?.  The half-day conference consisted of two panels: one on the social and technological innovation being brought about by social media, and the other on the implications of social media to business.  Each panel included experts from USC Annenberg and IBM.

The first panel covered topics on social networks, 3D virtual worlds, immersive journalism, social computing research and a number of others.  It was moderated by Henry Jenkins, who moved from MIT this Fall to join the USC faculty as Provost’s Professor of Communication, Journalism and Cinematic Arts.  Henry, - whom I met at MIT a couple of years ago because of our mutual interest in virtual worlds, - was previously Director of MIT's Comparative Media Studies program and Professor of Humanities.

The full video of the first panel can be seen here.

I wouId like to focus this blog on the second panel, which I moderated.  The panel focused on the implications of social media to the communications and media industries as well as to organizations in general.  Panelists included Marc Cooper, Jonathan Taplin and David Westphal from the Annenberg School, and Melissa Cefkin and Steve Canepa from IBM.

The full video of the second panel can be seen here.

The MIT Distributed Leadership Forum

The MIT Leadership Center is one of several research groups in the MIT Sloan School of Management.  Its key focus is distributed leadership “. . . the idea that leadership today, even more than in the past, must come from every level of an organization or every part of an organizational network.”   Central to the Leadership Center is the belief that “the development of skilled, thoughtful, passionate leaders must be rooted in real world experience.”

Earlier this month, the Center sponsored a Distributed Leadership Forum, which brought together an invited group of people from industry and academia to explore the key attributes of distributed leadership required for effective 21st century organizations.  I am a member of the Leadership Center and was involved in the planning of the Forum.

Communications, Journalism and Media in the Internet Age

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

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

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

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

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

Education and Services Innovation

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

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

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

CNN, Latinos and Brand Values

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

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

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

It later adds:

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

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

Reflections on Smarter Healthcare Systems: Practical, Concrete, Expert Advice

On October 1 and 2 IBM held its second global Smarter Cities conference in New York City.  I subsequently wrote about the excellent talk, Great Expectations for US Healthcare, given by Dr. Denis Cortese, CEO and President of the Mayo Clinic on the first day of the conference.

The next day, there were break-out discussions in six key areas relevant to building a smarter city: transportation, education, public safety, energy and utilities, government services and healthcare.  I was co-moderator of the healthcare session, along with Dan Pelino, IBM’s General Manager of Healthcare and Life Sciences.  Our panel of experts included Dr. Cortese; Chris Coburn - Executive Director of Innovations at the Cleveland Clinic; Dr. Ronald Paulus - Chief Technology and Innovation Officer at the Geisinger Health System;  and Dr. Armando Ahued Ortega - Health Secretary of Mexico City.  Let me summarize their practical and concrete remarks.

Innovation, Entrepreneurship and the Evolution of Cities

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

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

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

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

Designing a Smart Healthcare System

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

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

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

Reflections on Economics from a Non-Economist

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

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

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

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

A Tale of Deception

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

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

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

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

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

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

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

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

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

Soft, Smart, "Pink" Power

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

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

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

The Health Care Debates, Tribalism and The Golden Rule

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

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

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

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

The Data Center in the Cambrian Age

When I started to seriously think about Cloud Computing a couple of years ago, the metaphor that first came to mind was that the IT industry was now entering its Cambrian age. 

The Cambrian geological period marked a profound change in life on Earth.  Before it, most organisms were very simple, composed of individual cells, sometimes organized into colonies, such as sponges.  But, starting around 550 million years ago, and over the following 70 or 80 million years, evolution accelerated by an order of magnitude and ushered what is termed the Cambrian Explosion, -  a highly diverse set of larger, more complex life forms.

Although with far shorter time periods, the IT industry has been going through something similar.  Over several decades, we were perfecting our digital components - microprocessors, memory chips, disks, networking and the like, and we used them to build a variety of computers.  Then about ten years ago, the digital components started to become powerful, reliable, inexpensive, and ubiquitous.  The acceptance of the Internet introduced a whole new set of technologies and standards for interconnecting all these components, not only in IP networks but across the World Wide Web, different kinds of communications, computer Grids, distributed applications, and so on.

Today, digital components are becoming embedded into just everything and connected to the Internet through an IP address, so that personal devices of all sorts, - consumer electronics, medical equipment, cars, buildings, and just about the whole physical infrastructure around us,- is now part of IT’s life forms.  We are using variations of the same digital components to build very large servers and supercomputers with hundreds of thousands of nodes.  When we look into the future, we see a not far-off world of billions of mobile devices, trillions of smart-sensors, and a variety of million-node servers, all optimized and co-evolving to support different kinds of workloads.  Indeed, it feels like IT is now entering its own Cambrian age.

The Smarter Planet University Jam

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

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

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

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

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

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

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

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

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

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

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

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

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

Reflections on Empathy

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

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

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

The Big Shift: from Scalable Efficiency to Scalable Learning

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

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

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

A Very Tough Balancing Act

Managing large companies has never been easy.  But, managing is particularly tough given our fast changing, global, intensely competitive market environment.  With increasing frequency, senior executives have to make major strategic decisions which could have a huge impact on the future of the company, - perhaps even its very survival.

Among the toughest decisions facing the senior management of a company is finding the proper balance between investments in their current operations, and investments made in new, promising areas for the future.  It is indeed a very delicate balance, even more so given an unpredictable future where major changes are likely to take place in technologies, markets and global economic conditions.   Often, the consequences of these strategic decisions may not be apparent for years.
 
What is the right balance between carefully managing existing operations, and investing in potentially disruptive innovations for the future?  There is clearly no set answer, as every industry has its own dynamics, and every company has a different mix of circumstances driving its decisions.  A recent article reminded me of the challenges involved in making such strategic decisions, especially in the energy industries, which are particularly tough because of the multiplicity of choices now available, the long term implications of the decisions, and the highly uncertain market and political environment in which this industry operates.

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.

Reflections from a "Mutt" on Empathy and Diversity

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

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

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

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

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

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

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

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

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

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

What Makes Us Happy?

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

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

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

The 2009 MIT Sloan CIO Symposium

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

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

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

The Mass Customization of Services

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

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

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

Smart Cities and "Liveability"

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

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

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

The Intelligent Enterprise

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

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

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

Cloud - the Emergence of a New Model of Computing

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

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

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

The Entrepreneurial Society

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

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

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

Reflections on Smart, Global Leadership

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

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

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

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

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

A Historical Perspective on the Financial Crisis

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

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

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

Capitalism Beyond the Crisis

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

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

Gender-based Differences in Behavior

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

Gender diversity and the financial crisis

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

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

Blogging and Writing

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

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

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

Design, Innovation and Organizational Systems

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

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

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

Services, Jobs and Related Subjects

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

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

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