Irving Wladawsky-Berger

The Nature of the Firm in the Digital Economy

In early July I participated in the 2013 Roundtable on Institutional Innovation sponsored by the Aspen Institute’s Communications and Society Program.  The Aspen Institute is an educational and policy studies organization that aims “to provide a nonpartisan venue for dealing with critical issues.”  It holds a variety of seminars, public conferences and other events throughout the year in its Aspen, Colorado and Wye River, Maryland campuses. 

This year’s Roundtable took a close look at the impact of digital technologies on institutions and organizations.  Over a number of sessions we discussed the various factors that are transforming the basic structure of companies.  In particular, we explored whether the continuing advances in IT infrastructures and the accompanying emergence of a global digital economy are likely to lead to increased economic concentration or to increased economic fragmentation. 

The Roundtable was sponsored by Deloitte’s Center for the Edge.  The Center’s co-leaders John Hagel and John Seely Brown, recently published Institutional Innovation, an article on the evolution of organizations.  A short pre-read paper based on the article was distributed to Roundtable attendees, in which the authors wrote:

“There are two dominant narratives about the institutional changes we are experiencing and neither one of them gives anyone much respite: the first is that companies will fragment to smaller and smaller entities and even down to individual providers; the second is a winner take all world where only the largest survive.  We believe that both of these narratives are too simplistic.  We see a world where both of these narratives co-exist and are mutually reinforcing rather than conflicting.  Scale and fragmentation interact in a symbiotic relationship where the growth of each is what drives the growth of the other.”

Smart Homes - Building for America's Bravest

In the Fall of 2007, I taught a graduate course in MIT - Technology-based Business Transformation.  The course focused on the major challenges that a business must deal with to successfully bring a disruptive innovation to market, including technical and market strategies as well as organizational and cultural issues.  The course drew heavily on my concrete experiences at IBM, especially what I learned as general manager of the Internet Division in the second half of the 1990s.

Within the limits of a one-semester course, I wanted to give the students a fairly comprehensive picture of what it takes to bring a disruptive innovation to market, including the key role played by marketing and communications.  I wanted the class to hear from a top professional in the field what brand and strategic marketing are all about, so I invited Chris Wall, - Vice Chairman of Ogilvy and Mather, one of the top marketing and advertising agencies in the world, - to be a guest lecturer in the class.  For a number of years, I worked closely with Chris and his O&M colleagues in the development of marketing campaigns for IBM initiatives I was leading.  These included the award-winning e-business campaign launched in 1997, - which explained what we meant by e-business in a series of really clever 30 second vignettes, - and the Linux campaign a few years later which included this incredible ad. 

In his excellent class seminar, Chris explained the difference between trying to establish a brand through mindless jingles or paternalistic assertions that no one believes, versus engaging your audience in a conversation about the future.  To engage in such a conversation, you need to essentially tell a story about your aspirations for the brand and how these aspirations are driving your strategy.  And, the more powerful and complex the messages you are trying to convey, the more important it is to do so by telling a compelling, emotionally resonant and simple story.

Chris and I became friends, and over the years he has shared with me some of the marketing campaigns he’s worked on that he is particularly proud of.  A couple of weeks ago he sent me an e-mail telling me about his latest project with a small foundation, Building for America’s Bravest.  Chris and a few of his Ogilvy colleagues created the integrated marketing campaign for the foundation, including its website, ourbravest.org which has just gone live, and includes a few short video clips along with pictures and stories.

I was frankly left speechless by ourbravest.org.  Compelling and emotionally resonant does not begin to do justice to its content.  The video clips and pictures truly grab you by the throat, or rather, by the heart.  I cannot possibly describe them in words, so please take a look and judge for yourself.

From the Digital Divide to Inclusive Innovation: the Case of Digital Money

On June 26 I participated in a panel discussion on digital money at the Royal Society of Arts (RSA) in London.  The RSA, - whose full name is the Royal Society for the encouragement of Arts, Manufactures and Commerce, - was founded in 1754 to “embolden enterprise, enlarge science, refine art, improve our manufacturers and extend our commerce”.  Today, it calls itself “an enlightenment organisation committed to finding innovative practical solutions to today’s social challenges”. 

The panel was organized to mark the publication of an RSA pamphlet - From the digital divide to inclusive innovation: the case of digital money.  I was a co-author of the pamphlet, along with Imperial College professors David Gann and Gerald George and University of Queensland professor Mark Dodgson.  The four of us were joined in the panel by Citigroup executive Tomasz Smilowicz.

We discussed the profound transformative power of digital money.  Economic transactions are increasingly moving from the physical to the digital realm, democratizing financial services around the world and helping billions join the global digital economy and improve their standard of living.  As we wrote in the pamphlet: 

“Just as communications and publishing have been transformed by digital technologies, so too will financial services.  The progress of digital money will inevitably surprise us and it will develop in unexpected ways, but we believe it is on the cusp of delivering a remarkable transformation in the global economy.  It will end the divide between those who can and those who cannot participate in formal economic transactions.  It may usher in a new era of more inclusive innovation that involves billions of more people around the world in constructing the services that affect their future.”

Big Data Takes Center Stage

A few recent articles have expressed concerns that big data may be at the peak of inflated expectations in the so-called hype cycle for emerging technologies, and will soon start falling into the trough of disillusionment.  This is not uncommon in the early stages of a disruptive technology.  The key question is whether the technology will keep falling through the trough and be soon forgotten, or whether it will eventually move on toward the slope of enlightenment on its way to a long life in the plateau of productivity.  How can you tell which it is going to be? 

In my experience, a disruptive technology will succeed if it can keep attracting serious researchers and analysts, who will, over time, cut through the hype and bring discipline to its development and marketing, coming up with solutions to the many technical obstacles any new innovation encounters, sorting through its unrealistic promises and reframing the scope and timelines of its objectives.  The Internet recovered from the hype that led to the dot-com bubble and has gone on to a highly successful future.  Cloud computing is now going through a similar period of serious evaluation and development.  So is big data. 

In The Rise of Big Data: How It's Changing the Way We Think About the World, an article just published in Foreign Affairs, Economist editor Kenneth Cukier and Oxford professor Viktor Mayer-Schönberger do a very nice job in articulating why “big data marks the moment when the information society finally fulfills the promise implied by its name.”  The article is adapted from their book Big Data: A Revolution That Will Transform How We Live, Work, and Think published in March, 2013.

The Era of Cognitive Computing

Tools have played a central role in human evolution since our ancestors first developed hand axes and similar such stone tools a few million years ago.  Ever since, we’ve been co-evolving right alongside the tools we create.  “We shape our tools and they in turn shape us,” observed noted author and educator Marshal McLuhan in the 1960s. 

The Industrial Revolution led to dramatic improvements in productivity and standard of living over the past two hundred years.  This is due largely to the machines we invented to make up for our physical limitations - the steam engines that enhanced our physical power, the railroads and cars that made up for our slow speed, and the airplanes that gave us the ability to fly. 

Similarly, for the past several decades computers have been augmenting our intelligence and problem solving capabilities.  And, according to IBM’s John Kelly and Steve Hamm, there is much more to come.  In Smart Machines: IBM’s Watson and the Era of Cognitive Computing, Research director John Kelly and writer and strategist Steve Hamm, note that “We are at the dawn of a major shift in the evolution of technology.  The changes that are coming over the next two decades will transform the way people live and work, just as the computing revolution has transformed the human landscape over the past half century.  We call this the era of cognitive computing.”