Irving Wladawsky-Berger

Entrepreneurship and Innovation in Large Companies

In March of 2009, The Economist published a special report on entrepreneurship.  Its lead article said: “For most people the term “entrepreneur” simply means anybody who starts a business, be it a corner shop or a high-tech start up . . .  A disproportionate number of entrepreneurial companies are, indeed, small start-ups.  The best way to break into a business is to offer new products or processes.”

But the article then went on to define entrepreneurship as something that applies not only to new or small companies.  It defined the term as: “somebody who offers an innovative solution to a (frequently unrecognised) problem.  The defining characteristic of entrepreneurship, then, is not the size of the company but the act of innovation.”

Given my forty year association with IBM, as well as my more recent involvement with Citigroup, it is not surprising that I am particularly interested in entrepreneurship and innovation in large companies.  I have little experience with startup companies, but I have lots of experience with large, global companies, not just IBM and Citigroup, but many others I interacted with as part of my work, or that I closely followed because they were competitors.

Open Innovation Re-visited

Recently, some colleagues were talking about the upcoming LinuxCon 2010 in Boston - “The Linux Foundation's annual technical conference that provides and unmatched collaboration and education space for all matters Linux.”  Hearing about this conference brought me back to 1999, when we started a number of studies that culminated in the announcement of the new IBM Linux initiative in January of 2000.

By the summer of 1999, Linux was picking up steam in the marketplace, especially in areas where IBM was very involved, including Internet infrastructure and supercomputing.  At the time, a number of research institutions and leading edge companies were already using clusters of Intel processors running Linux as a way of building relatively inexpensive, and increasingly powerful supercomputers, as well as highly scalable web servers, distributed file and print servers, network firewalls, and other Internet infrastructure applications.

We commissioned a couple of studies, one focused on the use of Linux in supercomputing, and the other on Linux as a high-volume platform for Internet applications.  Both studies strongly recommended that IBM embrace Linux across its product lines, that IBM should work closely with the open Linux community as a partner in its development, and that we should establish an organization to coordinate Linux activities across the company.

I was given responsibility for our new Linux strategy and organization.  A few weeks after we announced the initiative in January of 2000, I gave a keynote presentation at the Linux World conference in New York City.  I used this opportunity to explain IBM’s decision to embrace Linux across all its products and services.  Around the same time, I also discussed IBM's Linux strategy in an interview with Charlie Rose - A Conversation about Linux.

Mainframes and Clouds

On July 22, I attended IBM’s announcement of its new generation of mainframes, the zEnterprise System in New York City.  As you would expect with any product announcement, this new mainframe is significantly better and faster than its predecessors.  The new z196 platform has better and faster processors, more processors per box and offers significantly greater energy efficiency.

But, what I found most compelling about the announcement, is its role in the continuing re-invention and evolution of the mainframe, which was first announced as S/360 in 1964.  With this announcement, IBM is positioning the mainframe as an architecture for integrating and managing heterogeneous systems in the data center, not just platforms based on the z processor architecture, the descendant of the original S/360.

IBM’s engineers have deconstructed the mainframe architecture into two major parts:  the processor architecture, including its instruction set, which is mostly implemented in the hardware of the machine; and the management architecture, including virtualization, which is mostly implemented in firmware and software although it is often supported with some hardware assists.  The major new part of this announcement is that the mainframe management architecture is now being supported not just on systems based on the z processor architecture, but also on systems with totally different processor architectures. 

IBM is now extending the benefits of its mainframe management architecture, including high efficiency, scalability, security and reliability, to other platforms in the data center, starting with Intel-based Linux systems and Power-based Unix systems.  This means that you can now integrate heterogeneous systems in the data center and manage them using the mainframe management architecture, which most everyone agrees is the most advanced in the industry.  This is important because the ability to operate highly efficient, reliable, safe data centers with different platforms and workloads is an absolutely critical requirement in the age of cloud computing. 

IT in the Age of the Cloud

IT is undergoing its biggest changes since the advent of client/server computing in the 1980s.  These changes are being driven by many factors, chief amongst them the emergence of a different model of computing, - cloud computing.  We are entering the Age of the Cloud.

For the IT industry, a new computing model is a very big deal.  In the fifty years or so since there has been an IT industry, this would be only the third such model, centralized and client-server computing being the two previous ones.  Not surprisingly, there are lots of discussions underway on the implications of this major transition to all aspects of the industry, from the technology and education requirements to the future roles of the corporate IT functions and the CIO position.

I recently came across a very interesting study on The Future of Corporate IT by The Corporate Executive Board, a consulting firm that provides research and analysis to business executives and professionals around the world.

The Executive Board study investigated the five-year outlook for corporate IT.  It interviewed and surveyed hundreds of IT and business leaders.  Its overall conclusion is that fundamental changes, already underway, will take place in how the IT function is organized and managed: 

“The IT function of 2015 will bear little resemblance to its current state.  Many activities will devolve to business units, be consolidated with other central functions such as HR and Finance, or be externally sourced.  Fewer than 25% of employees currently within IT will remain, while CIOs face the choice of expanding to lead a business shared service group, or seeing their position shrink to managing technology delivery . . . This study argues that the changes will be rapid, permanent, and radical.  We have advocated for a decade that IT leaders become demand shapers, not order takers.  Similarly, we now recommend that IT leaders devote the time, energy, and resources to actively shape the coming transition.”

Extreme Scale Computing

Supercomputing has been a major part of my education and career, from the late 1960s when I was doing atomic and molecular calculations as a physics doctorate student at the University of Chicago, to the early 1990s when I was general manager of IBM's SP family of parallel supercomputers.

The performance advances of supercomputers in these past decades have been remarkable.  The machines I used as a student in the 1960s probably had a peak performance of a few million calculations per second or megaflops.  Gigaflops (billions) peak speeds were achieved in 1985, teraflops (trillions) in 1997, and petaflops (a 1 followed by fifteen zeros) in 2008. 

The supercomputing community is now aiming for exascale computing, - 1,000,000,000,000,000,000 calculations per second.  The pursuit of exascale-class systems was a hot topic at the recent SC09 supercomputing conference. 

In the quest for the fastest machines, supercomputers have always been at the leading edge of advances in IT, identifying the key barriers to overcome and experimenting with technologies and architectures that generally then appear in more commercial products a few years later.

Cloud Computing and the Evolution Toward the "Outside-In," Virtual Enterprise

A couple of weeks ago, I attended a very stimulating meeting in Madrid sponsored by the Bankinter Innovation Foundation.  The Foundation was started in 2003 by Bankinter, - one of the largest commercial banks in Spain, - in order to foster entrepreneurial innovation in the country.

One of the the Bankinter Foundation’s main initiatives is its Future Trends Forum (FTF), a multi-disciplinary international think tank of over 300 experts that together aim to anticipate the major social, economic, scientific and technological trends driving innovation around the world.  The Foundation holds two meetings a year in Madrid, each focused on a major trend previously chosen by the FTF members.  In addition to a subset of the members, subject matter experts are invited to attend and speak at the meetings.

After the meeting is over, all relevant information and discussions are analyzed, and the results are published in a document that is made publicly available on the Foundation’s web site.  Twelve such documents have so far been developed, on topics ranging from mobile technologies to reinventing sustainable developments.

The 13th FTF meeting took place the first week of December.  The topic was “The Crowd in the Cloud.”  Given my interests in cloud computing, I was invited to participate.

Reflections from Another Part of the World and a Different Side of My Brain

I spent the first week of September in Chile and Argentina.  Three yeas have elapsed since I last visited Santiago, and I have not been to Buenos Aires for almost four years.  It was very good to be back in these two very nice cities.

I love to travel in Spanish speaking countries, - I go to Spain and Mexico from time to time in addition to Argentina and Chile.  The reason is not just because the people are so wonderful.  After all, in my experience, the people have been very nice in just about all countries I have been to around the world.  But, being totally immersed for days on end in my native language, is a particularly pleasurable experience, and one that, as I have thought about it, is not only personally appealing but also important to my mental health.  Let me explain.

It is well accepted that a good physical exercise plan should include different kinds of workouts, some focused on aerobics to increase cardiovascular endurance, and some anaerobic in nature to strengthen our muscles.  In addition to its benefits on our physical health, a regime of exercise also improves our mental health as well as helping to reduce depression.But, advances in brain sciences have begun to show the importance of also exercising our mental faculties.  Throughout our lives, our brains need stimulation to be healthy, in the same way that our bodies need physical exercise.  A lack of mental exercise and stimulation can result in severe problems, from the time we are born to old age.

I am convinced that as we learn more about the workings of our brains, we will learn how different kinds of stimulation best help different parts of our brain, much as we have learned how to best exercise different parts of our bodies.  Furthermore, I am sure that future advances in functional magnetic resonance imaging will show that for those of us who were immersed in different languages at different times in our lives, we can best reach feelings and concepts stored in our brain by using the language were were speaking at the time we experienced and learned them.

The Data Center in the Cambrian Age

When I started to seriously think about Cloud Computing a couple of years ago, the metaphor that first came to mind was that the IT industry was now entering its Cambrian age. 

The Cambrian geological period marked a profound change in life on Earth.  Before it, most organisms were very simple, composed of individual cells, sometimes organized into colonies, such as sponges.  But, starting around 550 million years ago, and over the following 70 or 80 million years, evolution accelerated by an order of magnitude and ushered what is termed the Cambrian Explosion, -  a highly diverse set of larger, more complex life forms.

Although with far shorter time periods, the IT industry has been going through something similar.  Over several decades, we were perfecting our digital components - microprocessors, memory chips, disks, networking and the like, and we used them to build a variety of computers.  Then about ten years ago, the digital components started to become powerful, reliable, inexpensive, and ubiquitous.  The acceptance of the Internet introduced a whole new set of technologies and standards for interconnecting all these components, not only in IP networks but across the World Wide Web, different kinds of communications, computer Grids, distributed applications, and so on.

Today, digital components are becoming embedded into just everything and connected to the Internet through an IP address, so that personal devices of all sorts, - consumer electronics, medical equipment, cars, buildings, and just about the whole physical infrastructure around us,- is now part of IT’s life forms.  We are using variations of the same digital components to build very large servers and supercomputers with hundreds of thousands of nodes.  When we look into the future, we see a not far-off world of billions of mobile devices, trillions of smart-sensors, and a variety of million-node servers, all optimized and co-evolving to support different kinds of workloads.  Indeed, it feels like IT is now entering its own Cambrian age.

The 2009 MIT Sloan CIO Symposium

Last week I participated in the MIT Sloan CIO Symposium.  The CIO Symposium is an annual one-day conference on the MIT campus, now in its sixth year, “where CIOs and other senior business executives from around the world gather to explore how leading-edge academic research and innovative technologies can help address the challenges faced in today’s changing economy.”  The theme of this year's Symposium was Sustaining CIO Leadership in a Changing Economy. 

The MIT Symposium consisted mostly of interactive panel discussions, including broad audience participation.  Two key themes kept recurring throughout all the panels and discussions.  One was cloud computing, the other was the evolving role of the CIO. 

As is typically the case, panelists used somewhat different definitions of cloud computing, as they each talked about clouds from his/her own point of view.  This is what you would expect if you agree with the view that cloud computing refers not to any one product or service, but to an emerging model of computing beyond the centralized and client-server models of past decades.

Cloud - the Emergence of a New Model of Computing

The buzz and excitement around cloud computing has been steadily building over the last year.  There is general agreement that something big and profound is going on out there, although we may not be totally sure what it is yet.  "There is a clear consensus that there is no real consensus on what cloud computing is," was one of the key conclusions at a recent conference on the subject. 

I believe that one of the major reasons for both the excitement and lack of consensus is that we are basically seeing the emergence of a new model of computing in the IT world.  For the IT industry, a new computing model is a very big deal.  In the fifty years or so since there as been an IT industry, this would be only the third such model, centralized and client-server computing being the two previous ones.

What characterizes a computing model?  There is no single dimension around which to define a computing model, which I believe accounts for the variety of definitions of cloud computing.  It’s like the fable of the blind men and the elephant.  Each one touches a different part of the elephant.  They then compare notes on what they felt, and learn that they are in complete disagreement.

The Industrialization of Services

In the late 18th century, the Industrial Revolution started the transition from a manual-labor based economy towards an economy based on using technologies, tools and machines to significantly improve the manufacturing of physical goods.  Over the next two hundred years we have seen the industrial sector of the economy achieve major improvements in the productivity and quality of manufacturing, ranging from very simple to highly complex physical objects.

A major step in that remarkable story of innovation occurred around thirty years ago.  Before that time, most manufacturing plants were fairly inefficient by almost any contemporary measure, and were turning out products of varying quality.  Then, driven by the huge success of Toyota and other companies around the world, the industrial sector and academia discovered the merits of applying engineering discipline as well as a holistic, systems-wide approach to manufacturing processes.  Company after company embraced the Toyota Way, Six Sigma, Lean Production and similar methods in their manufacturing and logistics operations, which have brought the industrial sector of the economy to a whole new level of productivity and quality.

The rise of IT in the last several decades has enabled us to start applying technologies to the large and diverse world of services.  In the beginning, computers were used primarily to perform calculations.  In the 1970s, we started to make a lot of progress automating highly repetitive, back office tasks like processing financial transactions, inventory management and airline reservations.  Then, a decade later, the personal computer enabled us to develop all kinds of productivity applications like word processing and spreadsheets.  The 1990s brought us the Internet and World Wide Web, which introduced revolutionary ways of dealing with content, communications and commerce.

Cloud Computing: the Internet of Services

The October 25 issue of The Economist includes a special report on cloud computing - seven articles plus an introduction.  It is an in-depth look at this new model of computing, its implications, its value promise to companies and societies, as well as the pitfalls against which we have to guard.

In the lead article, Ludwig Siegele starts out his definition of cloud computing by first giving a very succinct history of computing:

"In the beginning computers were human. Then they took the shape of metal boxes, filling entire rooms before becoming ever smaller and more widespread.  Now they are evaporating altogether and becoming accessible from anywhere."

"That is about as brief a history of computers as anyone can make it.  The point is that they are much more than devices in a box or in a data centre.  Computing has constantly changed shape and location - mainly as a result of new technology, but often also because of shifts in demand."

He then goes on to define cloud computing:

"Now, this special report will argue, computing is taking on yet another new shape.  It is becoming more centralised again as some of the activity moves into data centres.  But more importantly, it is turning into what has come to be called a 'cloud', or collections of clouds.  Computing power will become more and more disembodied and will be consumed where and when it is needed."

"The rise of the cloud is more than just another platform shift that gets geeks excited.  It will undoubtedly transform the information technology (IT) industry, but it will also profoundly change the way people work and companies operate.  It will allow digital technology to penetrate every nook and cranny of the economy and of society, creating some tricky political problems along the way."

What is Cloud Computing, Anyway?

In a recent blog I summarized the discussions around cloud computing at the conference I had just attended by writing that "something big and profound seems to be going on, although we are not totally sure what it is yet." 

Cloud computing is the kind of wide-ranging initiative that different people can look at from their own point of view and come up with their own, somewhat different definitions.  This is not surprising in the early stages of such a comprehensive initiative.  When the Internet first broke into the wider world in the mid 1990s, you similarly heard lots of different opinions on what it was and what it would be good for.

In reading through the assorted cloud definitions, five key themes keep coming up.  Let me say a few words about each of them.

The Promise and Reality of Cloud Computing

Cloud Computing continues to be a very hot subject.  At the end of June, I participated in a conference in Cambridge on The Promise and Reality of Cloud Computing, sponsored by Xconomy - a communications company whose tag line is Business + Technology in the Exponential Economy. 

The sense of the meeting was succintly captured by Bob Buderi, founder and CEO of XConomy: "There is a clear consensus that there is no real consensus on what cloud computing is,"  following his earlier summary:

"Our speakers put cloud computing in its historical context - from the Cambrian explosion all the way through the rise of electric utilities.  They showed how businesses today can use this emerging technology for cost-effective and powerful computing solutions. And they also gave us a feel for the real paradigm shift the cloud could bring to the computing world, especially how large software companies might find themselves vulnerable to disruption (although some firms are still in denial about this)."

In other words, something big and profound seems to be going on, although we are not totally sure what it is yet.

Reflections on Cloud Computing

Over the last year, I have become intrigued by the rise of cloud computing.  An increasing number of articles are being written on the subject, as a quick online search of the term will attest.  More and more companies are taking a serious look at cloud computing.

Last summer, IBM launched a study of cloud computing sponsored by the IBM Academy of Technology and led by our top experts in the area.  The study was very positive about the opportunities of cloud computing for the IT industry.  But it also highlighted the many challenges to be addressed in deploying cloud computing, especially in existing data centers.

So, what exactly are we talking about?

A Kind of Cambrian Explosion

Over the last few years, the complex engineering systems community has been turning to biology as a source of new ideas for dealing with the kinds of systems that we are now increasingly able to develop.  As digital components continue to become ever more powerful, inexpensive and standardized, these complex systems are growing in breadth and capabilities at a dramatic rate.  Moreover, the kinds of problems we are now able to address are significantly different from what they were in the past.

IT systems are "going up the stack."  They are increasingly being used for businesses and societal applications that need to be able to change and adapt to whatever is going on in the marketplace, and those changes are coming at a very rapid pace.  These market-facing, people-oriented complex systems need to be flexible and adaptable.  Biological systems clearly exhibit these kinds of properties - flexible, adaptable, highly complex and continuously evolving, - which is why biology has become such a source of inspiration for the study of dynamic, complex engineered systems.

Looking at biology as a metaphor, - and begging forgiveness for any poetic license I might have taken in a subject that I am far from an expert - one can very roughly speaking identify an era where the cell was perfected and single cell organisms made their appearance several billion years ago.  This was followed by  multi-cell organisms a billion years ago or so.  Then, around half a billion years ago another dramatic change took place, which is known as the Cambrian Explosion.  Evolution essentially took off, accelerating by an order of magnitude, ushering in a highly diverse set of organisms that were far larger and more complicated than anything that existed before.

The IT industry has been going through a similar process.  If we think of digital components as playing the role of cells in biology, for the first several decades of the industry our focus was to improve and perfect these components - microprocessors, memory chips, disks and so on.  We were building computer systems that were mostly based on a relatively small number of processors.  The lack of standards made it difficult to cluster or network large numbers of such processors into an integrated system.