A couple of weeks ago we kicked off GIO 3.0 with back-to-back meetings in New York City, one of which I was the host for. The Global Innovation Outlook is an experiment that we started in 2004 to help us better surface new and unforeseen opportunities for business and societal innovation. In the "old days" we explored such future strategic directions mostly with our own experts in IBM, complemented by a few outside consultants. However, in an increasingly open, collaborative, multi-disciplinary, global, - and unpredictable world, this is clearly no longer enough.
The GIO brings together IBM executives with thought leaders from business, the public sector, nongovernmental organizations (NGOs) and other influential constituencies around the world to peer collectively into the future and identify major trends, insights and opportunities.
I have been involved with our GIO initiative from its inception and participated in GIO 1.0 and GIO 2.0. But over the last several months, my appreciation for the GIO process and its potential has become deeper and sharper. In my introduction to the GIO meeting I hosted, I mentioned that my view of the GIO has been strongly influenced by an excellent book I recently read and wrote about in my blog - Innovation - the Missing Dimension, written by MIT professors Richard Lester and Michael Piore.
Professors Lester and Piore describe two kinds of innovation, which they call analysis and interpretation. The first kind of innovation - analysis - is essentially rational decision making and problem solving. It is the standard approach underlying management and engineering practice, and works quite well when you are looking for a solution to a relatively well defined problem.
But where do the problems come from in the first place? How do you decide what problems to work on and try to solve? This second kind of innovation - interpretation - is very different in nature from analysis. You are not solving a problem but looking for a new insight about customers and the marketplace, a new idea for a product or services, a new approach to producing and delivering them, a new business model. Their research showed that interpretive innovation takes place through a process of conversations among people and organizations with different backgrounds and perspectives. This is what the Global Innovation Outlook is all about.
Each GIO has focused on three topics. For GIO 3.0 the topics are: Media and Content, the challenges every organization and individual faces resulting from the changing nature of content creation, distribution and ownership; Africa, investment strategies and policy implications as the African continent more fully enters the global economy; and Security and Society, balancing societal and individual interests in the areas of personal, commercial and national security.
The two New York City meetings focused on Media and Content. I did not attend the first meeting but here is how a colleague described it in the blog we have created to follow the progress of the GIO: "We spent all day batting around ideas with executives from powerful, profit-driven corporations concerned about how their brands are being perceived. We talked about how advertising is changing, and we wrung our hands over the challenge of convincing consumers to pay for media and entertainment content."
The next day we had a somewhat different meeting. For the first time, in addition to adult thought leaders we invited younger people - students, some in college, some in graduate school. As I said at the meeting, it is very natural to add "kids" to a conversation looking at major trends in media and content for the future. Young people are often the leading-edge adopters of new ideas, and this has accelerated in the last decade. The Web, instant messaging, social networks and massively multiplayer online games are among the really powerful forces in business and society that were first embraced by young people. So it makes sense to include them in a meeting exploring innovative and unanticipated new trends, insights and opportunities.
The students had little sympathy for the media companies' struggles to protect their copyrighted material. What the media companies call piracy, the students often referred to as sharing.
We had a fascinating conversation about the potential analogies between open content and open source software. I mentioned that one of the major cultural changes we have gone through in IBM is our embrace of open source initiatives - especially as we realized that open source was going to be a major force in the IT marketplace, with or without us. We had to adjust our business models to offer a mixture of open and proprietary software. Having done that, we are all very comfortable that collaborating with open source communities is now a major part of our strategy in IBM.
So, why couldn't media companies similarly embrace a mixture of open and proprietary content? We talked about the growing spectrum of channels for delivering content, from an IMAX kind of setting at the very high-quality end, to mobile devices at the other. Perhaps media companies could develop new innovative, high-quality content channels that are easier to protect and that most everyone will be very comfortable paying for, and charge little or nothing for the low-quality channels, which, arguably, could be viewed as part of the marketing strategy to draw attention to the paying channels.
I recently visited RPI, one of the top technology-based universities in the country, and toured the new Experimental Media and Performance Arts Center (EMPAC) that is going up on campus. EMPAC is described as "a place and a program where the arts challenge and alter our technology, and technology challenges and alters the arts." In addition to being a center for the performing arts, EMPAC is a new kind of research facility for exploring totally new high end media experiences that may lead to new marketplace media categories that consumers will be happy to pay for.
Over the last five years I have seen some of the most powerful companies in the world aggresively attack open source software, and IBM itself has been sued for billions for alleged violations related to our embrace of Linux. Perhaps that makes me somewhat less sympathetic to those media companies that seem to be spending all their energies defending their past business models instead of aggressively pursuing innovative business models that would be more in harmony with where the world seems to be going. I know that these executives would like to monetize every possible content channel, but, unfortunately, the unpredictable and uncontrollable marketplace will often not cooperate with our wishes.
The students told us that they are tired of being constantly marketed to, especially when such marketing is so inaccurate and intrusive - maybe even insulting. A young man sort of stopped the meeting when he said that he did not want to get another seemingly targeted add for feminine hygiene products. You would think the answer is clear: make sure that you accurately target adds to the proper audience. Not so fast. A young woman told the story of a friend of hers that felt her personal privacy invaded when she got a friendly reminder from her supermarket that it was time to purchase feminine hygiene products, since she would soon have her period. She proceeded to cancel all personal electronic contact with the supermarket.
On the other hand, we sang the praises of those brands whose personalized recommendations are truly valuable, such as Amazon.com and Netflix. I recounted my personal experiences with Netflix.
About two years ago, while travelling abroad, I went to the Netflix web site to check on a movie, and as usual, I got some personalized recommendations. One in particular was for a movie called Blue, part of a trilogy Blue, White and Red by a Polish director, Krzysztof Kieslowski of whom I had never heard. I checked out reviews and reader comments, and was intrigued enough to place Blue at the top of my online Netflix queue. I loved Blue, as well as White and Red, and in particular, I found Kieslowski's ten hour mini-series, The Decalogue, which I subsequently watched, to be one of the film masterpieces of all times. Ever since then I pay a lot of attention to Netflix's recommendations, and I must say that I have rarely been disappointed.
The young people reserved their harshest comments for the lack of authenticity they often find in the messages they are bombarded with from companies pushing their brands, politicians trying to get elected, bloggers and others writing about fascinating personal experiences that turn out to be fiction, and so on. A young woman was particularly dismissive of companies who send out hired help to places where young people congregate, and then proceed to sing the praises of whatever they were hired to push - a new drink, cell phone or e-commerce site - pretending to be delighted consumers. It is one reason that social networks have become so prominent, as people turn to trusted online communities-of-interest to find kindred – and, one hopes, authentic - spirits. I am pretty sure that the quest for authenticity will emerge as one of the overriding findings in GIO 3.0.
Over the next couple of months, additional Media and Content GIO conversations will take place in Mumbai, Seoul, Shanghai, Helsinki, London and Los Angeles. Similar conversations, focused on Africa and Security and Society will also take place in cities around the world. I look forward to the new, innovative trends and insights they will unearth when all the information is analyzed and the GIO 3.0 findings come out later this year.
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