Irving Wladawsky-Berger

The 2010 IBM Global CEO Study

IBM recently released the 2010 Global CEO Study.  This is IBM’s fourth biennial CEO study since 2004.  It is also the largest.  For the 2010 study, IBM held more than 1,500 face-to-face interviews with private sector CEOs (80%) and senior public sector leaders (20%) from 33 different industries spread over sixty countries.

In the  past three studies, CEOs consistently said that coping with change was their most pressing challenge. This time around, the primary challenge emerging out of the CEO conversations was pretty clear: complexity.  “CEOs told us they operate in a world that is substantially more volatile, uncertain and complex.  Many shared the view that incremental changes are no longer sufficient in a world that is operating in fundamentally different ways.”

Given the realities of globalization, disruptive innovation, and profound changes across technology, markets and society, it should not be surprising that CEOs and their companies must now navigate a highly volatile and unpredictable business environment.  Nearly 80% of CEOs expect the business environment to grow significantly more complex over time, but less than half believe that their organizations are equipped to deal with it successfully.  This gives rise to what the report refers to as a Complexity Gap, that is, the difference between the expected complexity and the extent to which CEOs feel well prepared to manage it.

What are the Key Qualities of a Great City?

I have always lived in or around cities.  I was born in Havana, where I spent my first fifteen and a half years.  My family then moved to Chicago, where I went to school for the next ten years.  In 1970 I moved to the New York area and have lived there ever since, including 15 years in New York City.

It is thus not surprising that I have become so interested in smart cities initiatives, that is, how to leverage technology-based innovations to help us better understand and improve the way urban areas work.

A major reason why smart cities has become such a hot topic is the rapid urbanization of the planet.  In 1900, about 13 percent of the world’s population lived in cities.  That number is now around 50 percent.  By 2050, over 70 percent of the world’s population will be in cities.  This unprecedented global urbanization is one of the biggest challenges facing everyone responsible for managing city functions, from mayors and police chiefs, to economic planners and school administrators. 

The challenges are enormous.  Urban ecosystems are extremely complex because they are composed of many different kinds of functions and intricate organizations.  A city is essentially a system of systems, and it is the interactions and interdependencies of its many parts that makes it so dynamic and unpredictable.  Their complexity will increase significantly given the expected urban growth over the next decades.  This is why we are now looking at the use of digital technologies, information-based intelligence and sophisticated modeling and simulation to help us better manage the complex challenges involved in the daily life of a city, - e.g, education, health, safety, commerce, transportation and entertainment.

Cities are also particularly interesting complex systems to study and model. What makes cities so fascinating is, - to state the obvious, - the presence of people.  Excellent public infrastructures and services are essential for a good city, but they are not sufficient.  A truly great city needs to be an appealing place to live.  It needs to attract and retain a large pool of local, national and international talent.  Liveability or quality of life is therefore the lifeblood of a good, let alone a great city.

Smarter Public Health

The increased importance and fast rising costs of healthcare in the US and many other countries are causing a much greater interest in the subject of public health - “the science and art of preventing disease, prolonging life and promoting health through the organized efforts and informed choices of society, organizations, public and private, communities and individuals.”  

We are all very familiar with the fierce political debates surrounding US healthcare reform, which culminated with the historical Health Care Act of 2010 signed into law by President Obama on March 30.  But healthcare is not only a major political challenge, but one of the grandest overall challenges facing the world in the 21st century.  

The problems are enormous at multiple levels.  Healthcare involves lots of people and institutions - patients, insurers, device manufactures, pharmaceuticals, advocacy groups, biotech, research institutions, IT companies, governments of all sorts, state licensing, state insurance commissioners, and on and on and on.  And this is before you get to the provider side, which involves doctors, nurses, hospitals, pharmacies, non-traditional providers, medical schools, and others.

Customer-Centric Capitalism

What is the primary responsibility of a business?  Renowned management professor and writer Peter Drucker gave a succinct answer to this question in his 1954 book The Practice of Management:  “A company's primary responsibility is to serve its customers . . . Profit is not the primary goal, but rather an essential condition for the company's continued existence.”

For the last thirty years, maximizing shareholder value has replaced customer value as the key objective of many companies.  But, a number of experts are now raising questions about this widespread business practice and the extreme preoccupation with short term profits that inevitably results from putting shareholders over customers. 

A 2006 study co-sponsored by the Business Roundtable and the CFA Institute  concluded that: “the obsession with short-term results by investors, asset management firms, and corporate managers collectively leads to the unintended consequences of destroying long-term value, which decreases market efficiency, reduces investment returns, and impedes efforts to strengthen corporate governance.”  It is quite possible that this short-term oriented business culture was a leading cause of our global financial crisis.

The issue of shareholder versus customer value was the subject of a recent excellent article in the Harvard Business Review: The Age of Customer Capitalism, written by Roger Martin, dean of the Rotman School of Management at the University of Toronto.

Why are Tea Party Supporters So Angry?

A few weeks ago, the New York Times published the results of a national survey of Tea Party supporters conducted jointly with CBS News. 

The Tea Party is generally described as a populist protest movement that emerged in the US in early 2009.  Given the acute economic pain inflicted on so many by the ongoing financial crisis - e.g., increased unemployment, housing foreclosures and personal bankruptcies - it would be perfectly understandable if the people most hurt by the crisis formed the core of the Tea Party.

But the NYT/CBS poll reveals a very different story, succinctly summarized in the title of this follow-up Times article, Tea Party Supporters Doing Fine, but Angry Nonetheless: “The Tea Party supporters now taking to the streets aren’t the ones feeling the pain. . .   they are better educated and wealthier than the general public.  They are just as likely to be employed, and more likely to describe their economic situation as very or fairly good.”