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Technology, Innovation & Business Transformation Irving Wladawsky-Berger Chairman Emeritus, IBM Academy of Technology Visiting Professor, Engineering Systems,

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Presentation on theme: "Technology, Innovation & Business Transformation Irving Wladawsky-Berger Chairman Emeritus, IBM Academy of Technology Visiting Professor, Engineering Systems,"— Presentation transcript:

1 Technology, Innovation & Business Transformation Irving Wladawsky-Berger Chairman Emeritus, IBM Academy of Technology Visiting Professor, Engineering Systems, MIT Adjunct Professor, Tanaka Business School, Imperial College

2 2  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

3 3 Why is There So Much Focus on Innovation Now?

4 4  Huge Opportunities

5 5 Policy & Society Culture & Management Business Models Business Processes Services & Solutions Technology & Product Many Opportunities for Innovation Across the Board

6 6 Why is There So Much Focus on Innovation Now?  Huge Opportunities  And, - We Don’t Have a Choice: Innovate or Fade Away...

7 7 One Minute the World is Your Oyster …

8 8 … the Next Minute Everything’s Changing...

9 9 … and Suddenly It’s a Whole New World

10 10  The Rise  The Fall  The Change  The Re-Birth The IBM Story

11 11 The Rise: 1960s s s  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

12 12 IBM at the Top

13 13 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

14 14 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

15 15 The Fall – Reversal of Fortune

16 16 “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

17 17 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

18 18 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

19 19 The Rebirth: The Internet, Web and e-business...

20 20  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

21 21  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 Formulation Key External Factors

22 22  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

23 23  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 Formulation Key Internal Factors

24 24  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 base  Just about all existing products, services and installations were “web enabled” so they can easily integrate into an Internet infrastructure  Fit with organization and culture  New “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

25 25 e-business = Web + IT Industrial Strength Standards Transactions Database Systems Mgmt Scalability Availability Security TCP/IP HTML HTTP Browsers Web Servers GUIs SSL SET Java

26 26 A Culture of Open Standards OGSA Web Services XML Linux Globus WSDL SOAP SMTP SQL NNTP HTTP/HTML IRC POP/iMAP TCP/IP WAP OASIS

27 27  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

28 28  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

29 29  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

30 30  Time to Market – Early “Killer Apps”  Web-IT integration; Customer self-service; Simple e-commerce  Early visible prototypes  1996 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

31 31  Market and application segmentation  Build in-house vs acquisitions and partnerships  Financial Measurements  Management Reviews Key Internal Factors in Operationalizing Market Strategy

32 32  Market and Application Segmentation  Focused 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 measurements  Tracked 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

33 33  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

34 34  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

35 35  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

36 36  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 possible  Organizations 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

37 37  Sell the strategy “outside-in”  People will believe what they read in newspaper, magazine articles and other external sources more than internal communications  Make sure external marketing and communication activities receive wide internal visibility  Nurture core supporters  Leverage the passion and commitment of strong core supporters and “evangelists” in convincing others about the value of strategy  Often, 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

38 38  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

39 Technology, Innovation & Business Transformation Irving Wladawsky-Berger Chairman Emeritus, IBM Academy of Technology Visiting Professor, Engineering Systems, MIT Adjunct Professor, Tanaka Business School, Imperial College


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