Transcript The On Demand World - Massachusetts Institute of Technology

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
Agenda
 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
2
Why is There So Much Focus on Innovation Now?
3
Why is There So Much Focus on Innovation Now?
 Huge Opportunities
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Many Opportunities for Innovation Across the Board
Policy & Society
Culture &
Management
Business Models
Business
Processes
Services &
Solutions
Technology &
Product
5
Why is There So Much Focus on Innovation Now?
 Huge Opportunities
 And, - We Don’t Have a Choice:
Innovate or Fade Away . . .
6
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 IBM Story
 The Rise
 The Fall
 The Change
 The Re-Birth
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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
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1992
“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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Agenda
 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
20
Formulating a Technology-based Strategy Formulation
Key External Factors
 How advanced is the technology?
 What is the marketplace saying about it?
 What are competitors doing?
 How are your clients reacting?
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Formulating an Internet-based Strategy
 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, …
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Formulating a Technology-based Strategy Formulation
Key Internal Factors
 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?
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Formulating the IBM Internet-based Strategy
 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
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e-business = Web + IT
Industrial Strength
Transactions
Database
Scalability
Systems Mgmt
Availability
Security
Standards
TCP/IP
HTTP
HTML
Browsers
Web Servers
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SET
GUIs
SSL
Java
A Culture of Open Standards
Linux
WAP
SOAP
WSDL
SMTP
OASIS
POP/iMAP
TCP/IP
Globus
Web Services
NNTP
XML
SQL
IRC
OGSA
HTTP/HTML
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Strategy Formulation: Lessons Learned
 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
27
Agenda
 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
28
Key External Factors in Operationalizing Market Strategy
 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
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Key External Factors in Operationalizing Market Strategy
 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
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Key Internal Factors in Operationalizing Market Strategy
 Market and application segmentation
 Build in-house vs acquisitions and partnerships
 Financial Measurements
 Management Reviews
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Key Internal Factors in Operationalizing Market Strategy
 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
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Operationalizing Strategy: Lessons Learned
 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
33
Agenda
 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
34
Organizational and Cultural Issues
 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
35
Organizational and Cultural Issues
 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
36
Organizational and Cultural Issues
 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
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Summary
 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
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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