technology, innovation & business transformation irving wladawsky-berger chairman emeritus, ibm...

Technology, Innovation & Business Transformation

Irving Wladawsky-BergerChairman Emeritus, IBM Academy of TechnologyVisiting Professor, Engineering Systems, MITAdjunct Professor, Tanaka Business School, Imperial College

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Technology-based innovation and business Survival

Formulating a market strategy around a new, complex technology

Executing a multi-faceted strategy in the marketplace

Organizational and cultural Issues

Agenda

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Why is There So Much Focus on Innovation Now?

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Why is There So Much Focus on Innovation Now?

Huge Opportunities

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Policy & SocietyPolicy & Society

Culture & Management

Culture & Management

Business ModelsBusiness Models

Business ProcessesBusiness Processes

Services & Solutions

Services & Solutions

Technology & Product

Technology & Product

Many Opportunities for Innovation Across the Board

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Why is There So Much Focus on Innovation Now?

Huge Opportunities

And, - We Don’t Have a Choice: Innovate or Fade Away . . .

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One Minute the World is Your Oyster …

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… the Next Minute Everything’s Changing ...

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… and Suddenly It’s a Whole New World

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The Rise

The Fall

The Change

The Re-Birth

The IBM Story

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The Rise: 1960s - 1970s - 1980s

S/360 Architecture - Compatible Family of Processors

Software - Operating Systems, Transaction Processing, Storage Management, Network Management, . . .

Industry Eco-System

Technical and Business Skills

Multi-National Company

IBM PC

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IBM at the Top - 1984

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Tragedy … depicts the downfall of a noble hero or heroine, usually through some combination of hubris, fate, and the will of the gods.

The tragic hero's powerful wish to achieve some goal inevitably encounters limits, usually those of human frailty (flaws in reason, hubris, society), the gods (through oracles, prophets, fate), or nature.

The hero need not die at the end, but he / she must undergo a change in fortune.

Wikipedia

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The Fall: Late 1980s, Early 1990s

Rising Power of Microprocessors

PC Explosion – Microsoft/Intel (Wintel) Supremacy

New Distributed Computing Model – Client/Server

New Competitors – Sun, HP, SGI, Compaq, . . .

Disaggregated, Horizontal Markets

Mainframe Profit Margins Collapse

Massive Restructuring Required

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The Fall – Reversal of Fortune

1984 1992

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“The IBM Era Is Over ... what was once one of the world’s more vaunted high-tech companies has been reduced to the role of a follower, frequently responding slowly and ineffectively to the major technological forces reshaping the industry.”

The New York Times, December 16, 1992

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The Change: Getting Ready for the Future

Technology Shift Anticipated by IBM’s Technical Community

Search for Alternatives in R&D Labs

Mainframe Reinvented Using Microprocessors and Parallel Architectures

Solutions Validated with Experimental Prototypes

Market Acceptance: Mainframe Compatibility and Capabilities at Competitive Prices

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The Change: Cultural Transformation

Market-based Strategies

Embrace of Open Standards

Transition from Mainframe-Centered Strategy to Integrated Multi-Vendor Distributed Systems

Transition from Hardware-based Strategy to Hardware, Software and Services-based Integrated Solutions

Embrace Collaborative Innovation

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The Rebirth: The Internet, Web and e-business...

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Technology-based Innovation and Business Survival

Formulating a market strategy around a new, complex technology

Executing a Multi-Faceted Strategy in the Marketplace

Organizational and Cultural Issues

Agenda

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How advanced is the technology?

What is the marketplace saying about it?

What are competitors doing?

How are your clients reacting?

Formulating a Technology-based Strategy FormulationKey External Factors

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How advanced is the technology?The Internet and Web were breaking out of the research community into the “early adopter”

general marketplace

What is the marketplace saying about it?The marketplace started paying more and more attention, especially after the Netscape IPO

in August, 1995

What are competitors doing?Major competition was arising, both existing companies – e.g., Sun, later Microsoft, and new

companies – e.g., Netscape and many new “dot coms”

How are your clients reacting? Clients were beginning to experiment with the Web – both putting up web sites, front ends to

their existing systems, and developing brand new applications, …

Formulating an Internet-based Strategy

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What are your capabilities or “core competencies” to deal with emerging technology?

How well does new technology fit with existing “legacy” products, services and installed base?

How well does new technology and related products and services fit with existing organization?

Does your company have “brand permission” to go into this space naturally, or will it take a major marketing campaign?

Formulating a Technology-based Strategy FormulationKey Internal Factors

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Capabilities and “core competencies”The Internet and Web were becoming an integral part of the next generation IT infrastructure

requiring systems, software and services

Fit with legacy products, services and installed baseJust about all existing products, services and installations were “web enabled” so they can

easily integrate into an Internet infrastructure

Fit with organization and cultureNew “dot com” were much faster moving in the marketplace than existing companies and

seemed to play by different rules that they were inventing as they went along

Brand permission and market acceptance There were lots of discussions that we were entering a “new economy” in which only “born to

the web” companies could play and survive and existing businesses were destined to fade away

Formulating the IBM Internet-based Strategy

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e-business = Web + IT

Industrial Strength

Standards

TransactionsDatabase

Systems MgmtScalability

AvailabilitySecurity

TCP/IPHTML

HTTP Browsers

Web Servers GUIs

SSL

SET

Java

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A Culture of Open Standards

OGSA

Web Services

XML

Linux

Globus

WSDLSOAP

SMTP

SQLNNTP

HTTP/HTML

IRC

POP/iMAP TCP/IP

WAP

OASIS

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Make sure you have required skills and talent for new initiative

Leverage existing products, customer set, installed base, and overall organization as much as possible

Don’t stray too far from your brand and its accepted value

Align strategy with the forces of the marketplace

Strategy Formulation: Lessons Learned

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Technology-based innovation and business survival

Formulating a market strategy around a new, complex technology

Executing a multi-faceted strategy in the marketplace

Organizational and cultural Issues

Agenda

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Time to market is critical – pick segments where “good enough” products and services are adequate

Establish early market presence with major events and customer prototypes

Formulate a set of key market messages and make sure everyone is “on message”

Communicate extensively through to a variety of constituents through various channels

Key External Factors in Operationalizing Market Strategy

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Time to Market – Early “Killer Apps” Web-IT integration; Customer self-service; Simple e-commerce

Early visible prototypes1996 Olympics web site; Grammys;

Many customer prototypes; focus on customer references

Key market messages

Major e-business marketing campaign

Key message: leverage Internet fur business value

Communications Many press articles, interviews, IT and financial analysts, customer events, etc

Key External Factors in Operationalizing Market Strategy

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Market and application segmentation

Build in-house vs acquisitions and partnerships

Financial Measurements

Management Reviews

Key Internal Factors in Operationalizing Market Strategy

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Market and Application SegmentationFocused on key segments where IBM had skills and enterprise had needs: hosting, security,

back end integration, web application servers, . . .

Build in-house vs acquisitions and partnerships

Did not participate in “browser wars”; embraced open source Apache web server vs internal effort; partnered with Sun on Java

Focused internal efforts on enterprise quality software: WebSphere

Financial measurementsTracked directly a number of key, “pure” Internet projects Focused primarily on larger Internet impact on overall revenues

Management reviews Reviewed progress closely in early days of e-business initiative, including with CEO and top

senior management

Key Internal Factors in Operationalizing Market Strategy

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Focus, Focus, Focus, . . . .

Extensive market prototyping and experimentation, including client projects

Don’t try to do it all by yourself; partner extensively

Critical importance of highly disciplined marketing and communications

Operationalizing Strategy: Lessons Learned

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Technology-based Innovation and business survival

Formulating a market strategy around a new complex technology

Executing a multi-faceted strategy in the marketplace

Organizational and cultural Issues

Agenda

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Build a company-wide virtual organization

Include as much of the company as possible in the initiative

Spend considerable efforts in internal communications and education

Sell the strategy “outside-in”

Nurture core supporters, e.g., technical community, marketing, . . .

Support of senior management is critical

Organizational and Cultural Issues

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Company wide virtual organization For trasformative, company wide initiatives, best to have a relatively small full time core team

coordinating activities across the different functions in the organization

Be inclusive of as much of organization as possibleOrganizations will likely not support new initiatives at first, especially if they are not involved and

feel excluded

The more everybody feels part of new initiative, the more they will support it and help it succeed

Internal communications and education Don’t underestimate the need to explain new initiatives, educate people on what it is all about,

their role in it - over and over and over

Organizational and Cultural Issues

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Sell the strategy “outside-in” People will believe what they read in newspaper , magazine articles and other external sources

more than internal communicationsMake sure external marketing and communication activities receive wide internal visibility

Nurture core supportersLeverage the passion and commitment of strong core supporters and “evangelists” in convincing

others about the value of strategyOften, strongest supporters will be those with strongest external connections – technical

community, research, . . .

Senior management support

Disruptive, transformative company-wide strategies must have strong senior management support to be successful

They will inevitably fail otherwise

Organizational and Cultural Issues

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Businesses must innovate continuously especially in times of rapid change – else they will fade away

New major technologies can help companies achieve or regain a leadership position if the proper market strategy is put in place

Execution is critical and very difficult because of all the factors that go into it and have to work together

Organization buy-in is probably the key ingredient to be successful, especially with a complex, transformative market strategy

Summary

Technology, Innovation & Business Transformation

Irving Wladawsky-BergerChairman Emeritus, IBM Academy of TechnologyVisiting Professor, Engineering Systems, MITAdjunct Professor, Tanaka Business School, Imperial College