We’re all aware of the approximately two billion people now on the Internet in every part of the planet, thanks to the explosion of mobile technology.
But there are also upwards of a trillion interconnected and intelligent objects and organisms what some call the Internet of Things.
All of this is generating vast stores of information. It is estimated that there will be 44 times as much data and content coming over the next decade…reaching 35 zettabytes in 2020. A zettabyte is a 1 followed by 21 zeros. And thanks to advanced computation and analytics, we can now make sense of that data in something like real time. This enables very different kinds of insight, foresight and decision-making.
“Thoughts on the Future of Leadership”
Samuel J. Palmisano
THINK Forum Keynote
Alice Tully Hall, Lincoln Center
September 20, 2011
https://www.ibm.com/smarterplanet/us/en/leadership/stories/pdf/prepared_remarks.pdf
Welcome to you all. I cannot tell you how excited I am to be here with this remarkable assembly of leaders.
We have a fascinating and very full two days ahead of us. So, why are we here? Why you, in particular? What are we aiming for from this forum, and this program?
IBM is marking its 100th anniversary this year.
As we prepared for our centennial, we wanted to use our history not to celebrate, but to learn – to prepare our company and its people for the years to come.
We also believe there are lessons to be learned from our history that are relevant to leaders of other companies and institutions.
Probably the most vital, obvious and underestimated lesson is this: You have to keep moving to the future.
It is so easy to stick with things that have made you a successful company or institution – a winning product, a profitable business model. It’s even easier to stick with what’s made you successful as a professional – what got you to where you are.
Yet one of the core responsibilities of leadership is to understand when it’s time to change – the organization and yourself.
And it’s equally important to understand what not to change… what must endure.
Getting those right is hard. Why?
・ Because so much is changing… at greater velocity and unpredictability.
・ Because… whether you lead a business or a government… there is tremendous pressure to deliver short-term results and quick fixes.
・ Because the hardest thing to change in the universe is a person, starting with oneself.
We are going to hear from some of the most influential leaders of today – from business, government, academia, from across the world.
I hope they will provoke us to think deeply about the forces of change that will alter the enterprises and institutions that you will lead. About what leaders today are at the forefront of these emerging trends. About how leadership itself will change in the years ahead.
Now, then, why you?
We did extensive outreach among our clients and within IBM itself to identify the women and men who were poised to lead their organizations in the decades ahead… the future leaders of more than 100 enterprises and institutions in 70 countries around the world — with a very significant proportion from the emerging markets.
So, that’s our plan for the next two days. Let me kick it off by offering some observations of my own.
There are many things about the future you will confront that are unknowable. However, we do know that certain forces, now set into motion, will significantly alter the companies and institutions you will lead.
They will change the way you will interact and engage with people – your customers, your employees, citizens of the cities and countries where you do business.
They will change how you create value. And they will transform the playing field on which you will do all of this.
Clearly, one fundamental force of our age is the reality of global integration.
I use this term intentionally. We tend to hear the “global” part of that. And we get very excited about the enormous growth opportunities in the so-called developing world.
True, companies in developed markets are chasing that growth. Certainly we are at IBM.
And for companies, governments and citizens in the developing markets, this is an historic opportunity to raise the living standards of billions of people.
But perhaps, in our excitement, we overlook the “integration” part of global integration.
To state the obvious, we have never been more interconnected – economically, socially and technologically. Our world has become a global system of systems… and that’s different from being an assemblage of markets or nations or industries.
We have global systems of transportation… of energy… of communications… of finance… of food and water… of commerce… of security and more. This new reality requires new policies, approaches and organizational forms – regardless of your size or location.
A second, related force that is reshaping the world is digital, networked technology… but not in the way some have been thinking about it — smart phones and tablets… Facebook and Twitter. Those things are wonderful, but they matter most not in and of themselves, but as parts of broader systems.
Specifically, they are elements, among many others, of a planet that is becoming pervasively instrumented and interconnected, with computation being infused into things nobody would think of as a computer.
We’re all aware of the approximately two billion people now on the Internet – in every part of the planet, thanks to the explosion of mobile technology.
But there are also upwards of a trillion interconnected and intelligent objects and organisms – what some call the Internet of Things.
All of this is generating vast stores of information. It is estimated that there will be 44 times as much data and content coming over the next decade…reaching 35 zettabytes in 2020. A zettabyte is a 1 followed by 21 zeros. And thanks to advanced computation and analytics, we can now make sense of that data in something like real time. This enables very different kinds of insight, foresight and decision-making.
A third profound shift is new expectations among the people of the world. The forces of global integration and the digital network revolution are not just changing markets, they are radically empowering individuals.
For instance, workforces today have very different expectations from those of the past: People don’t want to stay at one company forever. They see themselves as citizens of the world. They want their work and career to drive a higher purpose. This places new demands not only on companies… but on communities and cities.
In the hyper-competitive global arena of the 21st century, the winners will be those who attract the most creative populations… who attract investment in future-facing capabilities… who provide infrastructure that not only enables efficient commerce, but desirable lifestyles.
Wealth, investment and people now flow around the world as never before. The question is: What will cause them to flow to you?
When we at IBM looked out a decade ago, this was the new reality we saw emerging. We believed that these were not cyclical swings, but secular shifts, representing a fundamental change in global economies and societies.
That led us to transform IBM itself in equally significant ways. Eventually, we gave it a name. You know it as Smarter Planet.
These shifts are generating new challenges. Dramatic swings in geopolitics, with regimes crumbling seemingly overnight. Enormous market volatility. Systemic failures in banking and in global security. We face dramatically accelerating urbanization. Perhaps most urgently, in many regions we are simultaneously confronting growing deficits and persistent unemployment.
If you look at these challenges through the lens of the media, or of the ideological battles here and around the world… it can seem as if this new world is getting the better of our leaders.
But underneath that… when you look at what is happening on the ground – the work being driven by forward-thinking people in businesses, government agencies, universities, schools, communities, non-governmental organizations and cities around the world – including many who are here today – it’s a very different story.
As the cyberfiction pioneer William Gibson famously observed, “The future is already here – it’s just not very evenly distributed.”
At IBM, we see this every day in our work with clients in the 170 countries where we do business. The energy, collaboration, imagination – and concrete results – that we see are extraordinary… indeed, inspiring. We’ll hear many examples of these over the next two days. You can see many more in the special THINK exhibit outside this hall, over on Jaffe Drive near Broadway.
By the way, this is not a matter of saying, “Government is broken, and all the hope lies in the market.” You might expect to hear that from a CEO… but it’s not what I’m saying. Many of the most innovative approaches we are seeing around the world are coming from the public sector.
What does this look like in practice? Let me offer a few thoughts on what we’ve learned about the keys to success, as practiced by this new breed of global leaders.
The first key is to take advantage of the powerful new capabilities we have available.
Seizing upon an instrumented, interconnected and intelligent world enables any organization to take waste out… to give customers and communities what they want… to organize work differently.
For instance, consider how Spain’s energy leader Repsol is using sophisticated algorithms to quantify drilling risks and improve success rates – and dramatically speed up time to market, in some areas by 85%.
Or how Manitoba has built an agriculture information system to track the movement of livestock across the food chain – and rapidly pinpoint risks of animal-to-animal disease exposure.
And look at how transit leaders in Stockholm, Singapore and Brisbane are reinventing urban transportation systems, using real-time data on actual movement of vehicles and people to achieve double-digit reductions in congestion, pollution and cost. They can even predict (and thus help avert) traffic jams an hour in advance.
The second key is to see yourself not only as a fierce competitor, but also as a broad collaborator. Don’t get me wrong: Competition is essential as a spur to innovation. But in a world of increasingly interdependent systems… the Wild West of competition needs to be complemented and tempered by far more collaboration across old boundaries. Across academic disciplines… and industries… and nations… and even among competitors.
The importance of collaboration applies very much to individual leadership styles. The old model of the heroic superman is increasingly archaic. The most active and successful leaders today see themselves as part of global communities and peer groups. They listen as much as they speak. They are hungry to learn from other people, from colleagues and communities… even people they will never meet in person.
One example is Globe Telecom in the Philippines. They’ve used a broadly accessible Toolbox to engage their clients – but not just in the C-suite. They’re reaching out to people in the trenches, resulting in a 95% reduction in the time and cost to develop new mobile service promotions.
Another example is IBM’s Corporate Service Corps – which sends teams of future leaders like yourselves to work on urgent societal and business-development issues in emerging markets. It has been so successful for all involved that we will be deepening our commitment, including a doubling of our programs in Africa.
And if you doubt the transformative impact of broader social engagement, let me just give you two words: Arab Spring.
Finally, you need to manage for the long term. This is something we’ve thought about a lot at IBM – especially as we approached our centennial.
We’ve asked ourselves: What is it that enables an enterprise or institution to survive and thrive through decades, much less a century? You need to confront difficult questions, such as:
How does an organization outlive its founder? We’ve learned that you should never confuse charisma for leadership. The first job of a leader is to enable the organization to succeed without him or her… and the key to that is to deliberately build a sustainable culture.
How does an organization deal with the inherent tensions among its constituents? Which has primacy? Is it the shareholder? The employee? The customer? The community? We’ve come to see that as a false choice. A lasting enterprise must maintain all of them.
How does the organization respond to relentless commoditization? This is an acute issue for the tech industry – but it actually applies in any field, from commerce to public services. Partly, it means creating new spaces to move into – for example, whether an individual business or a national government maintains investment in R&D in bad times, as well as in good. This requires a kind of institutional patience, because the upside benefits rarely come this quarter.
But it’s not just about what you create. It’s also about what you leave behind. History is a bone pile of enterprises, cities and societies that had great first acts, but were unable to achieve a second. Why? In most cases, it is because they couldn’t break their emotional attachment to what had brought them success in the past.
It’s the same thing for governments, for universities, for research institutions, for NGOs. You all make tradeoffs among constituencies. You have to resist shortterm pressures… for us, the pressures of 90-day earnings; for you, election cycles and perpetual fund-raising drives.
You have sacred cows, too. You, too, need to bring people along. And you, too, must have a sense of purpose. You must be clear on your future objective – and obviously, that shouldn’t just be to stay in power.
Without question, long-term management is a serious challenge in a world driven by short-term thinking. Fifty years ago, the average shareowner held their investment in most companies for about eight years. Today that’s down to six months. In the past 15 years, CEO turnover has increased by about 50%. And I don’t think I need to point out the impact of endless electoral cycles on our politics.
But what I find most encouraging is that the forward-thinking leaders we work with around the world are not just achieving measurable success in the shortterm… they are innovating in ways that will create virtuous cycles for a generation or more. They are not gaming systems… they’re building systems.
Consider Rio de Janeiro. Confronted with catastrophic mudslides last year, city leaders could have focused just on one element of the challenge – for example, applying new, high-resolution weather technology to pinpoint where a tropical storm will strike. Or they could have built a smarter solution for emergency response by police… or linked healthcare services and providers to the local community. Any of those would have been ambitious.
But Rio is going much farther. The command center they have built coordinates information from more than 20 city departments for real-time visualization, monitoring and orchestration of response to incidents across the entire city. Yes, the system will be able to anticipate which hills are most likely to suffer mud slides in the event of severe weather. But beyond that, it will serve as a foundation for Rio’s competitive position as a premier global city over the next century.
That is long-term systems thinking. And Rio is not alone. We’ve had more than 2,000 Smarter Cities engagements around the world over the past three years. These urban innovators are analyzing the vast quantities of data their cities generate, helping them remain prosperous and sustainable in the face of unprecedented urban growth.
These women and men are not rendered immobile by complexity… or locked into ideological straightjackets… or stuck inside traditional industry or political silos. Quite the contrary. They are diving in and acting. They are playing offense.
So we face a choice. We have two models of leadership before us, representing the past… and the future. One, I would submit to you, is failing, and is engendering dismay, anger, even despair.
The other is innovating, and is driving progress, and is characterized by factbased optimism.
I think it’s safe to say that all of us in this room are in the latter camp.
When we planned this forum, we couldn’t have anticipated just how timely its topic would prove, come September 2011.
We gather today amid a growing feeling that the world faces a crisis of leadership.
Some people look at what is happening – especially in the mature economies – and feel that there is nothing to be done… that our institutions and politics and processes are broken.
Allow me to disagree. There is always something to be done. Indeed, it’s a wellestablished truth that every deep crisis contains major opportunity.
But that opportunity won’t be grasped by the ever-louder pounding of fists on tables. This isn’t a question of willpower. It’s a question of taking a fresh look at how the world actually works. And then acting – together, in new ways – to make it work better.
What is clear is that we cannot drift… cannot simply hunker down and hope to ride it out. This shift is not cyclical, it’s secular, and the world will be very different on the other side. It will create winners and losers, based primarily on what individual leaders do.
The good news, ladies and gentlemen, is that we have an enormous new natural resource at our disposal – a gusher of data that enables us to literally see and understand the world as never before.
What the discovery of a new hemisphere was to the 15th century… and the discovery of steam power was to the 18th century… and the discovery of electricity was to the 19th century… the explosion of data is to the 21st.
It is the sudden appearance on our planet of a vast new resource, along with the means to extract and apply it. The economic and societal value of that are almost incalculable.
If we seize upon this new resource, I believe future historians will look back on this moment… not as the start of a so-called “new normal” of recession, increased protectionism or lowered expectations… but as the dawn of a new golden age of innovation, economic growth and global citizenship.
The fact that you have made the time and effort to come here, from all over the world, and to commit to an in-depth discussion at a particularly busy season in all our calendars – suggests that you, too, sense the importance… and the opportunity… of this moment.
So, let’s use the next two days to think together about what a new age could look like… and then roll up our sleeves for a collaborative work session on how to build it.
Personally, I can’t wait to get started.
Thank you.