Read or listen to any business news nowadays and it won’t be long before you encounter mention of digital transformation terms like AI (Artificial Intelligence), Cloud, IoT (Internet of Things), Open Source, cyber-security or mobility—and the global pandemic is only accelerating focus on these and related topics.
According to a recent unpublished IBV survey of 2,000 global executives, 65% of executives plan to accelerate their digital transformation efforts over the next two years. More than 70% of them will prioritize investment in Cloud, IoT and mobility.
One company at the forefront of the digital transformation curve is IBM, today, one of the world’s largest tech and consulting companies with more than $77 billion in revenue and about 350,000 employees. Tellingly, the company is shifting away from traditional software and into Cloud solutions, AI, and Open Source.
We recently sat down with Jesus Mantas, IBM’s Senior Managing Partner, who provided us with some powerful insights into how the company is approaching digital transformation while also humanizing technology.
For digital transformation strategy to succeed, companies need to be designed to excel at time-to-market and time-to-customer performance at scale. According to Forbes 45% of organizations believe faster speed to market is their primary goal in digitizing their efforts by adding in AI and machine learning-driven intelligence. I don’t think we need this paragraph.
“Faced with a constant onslaught of data, we needed a new type of system that learns and adapts, and we now have that with AI” IBM CEO - Arvind Krishna
Building, Buying and Borrowing Innovation
To spur true business innovation, IBM has developed a platform approach to balance their need to build, buy and borrow (partnering) growth and market leadership. They have made a number of acquisitions in cloud and cyber-security companies such as Cloudigo and Spanugo, as well as the record breaking $34 billion acquisition of open source provider Red Hat, and most recently the AI automation company WDG. IBM also continues to invest heavily in R&D through IBM Research. Here the company, with a $5 billion annual budget, has been able to tackle big challenges and become a center of innovation.
“We believe that not only acquisitions but relationships with ecosystems are going to be a fundamental element of what we aim for. In addition to continuing to boost our own research lab, we require a culture that would enable us to put all of these different elements together in a manner that drives innovation and adds value to our clients,” said Jesus.
In addition to acquisitions and internal R&D, IBM has also been focused on building relationships within ecosystems, specifically Open Source. It’s a little known fact, but IBM has been one of the biggest sponsors of the Linux Foundation (one of the largest open source ecosystem non-profits) for the past 20 years. This two decade long sponsorship shows just how committed the company is to nurturing its ecosystem relationships. This emphasis on relationships is important because it has allowed IBM to avoid fragmented, unfocused and unconnected products and acquisitions that many other companies struggle with.
Focus on Artificial Intelligence
A key area of importance for IBM has been Artificial Intelligence and there is no more well-known pinnacle of that achievement than IBM’s Watson. Watson was originally unveiled as the ultimate Jeopardy competitor but has long evolved to become a crucial data analysis, prediction modeling and decision making tool for a number of different companies across industries.
However, it’s not just IBM that has placed a focus on AI. According to Gartner and a recent unpublished IBV study, 40% of firms are using AI, and a higher percentage of CEOs and executives have AI as part of their strategic plan. Furthermore, over the next two years, 60% of executives plan to use AI to improve customer engagement and 43% plan to use it to improve cyber-security. However, understanding AI has often carried with it a degree of mystery. As Jesus describes it, “AI is non-numbers computing. AI allows computing with words, images, video, sounds – anything that is not a number that we humans deal with all the time.”
In truth, AI has been functionally around since the 1950s but only recent increases in computing power, prominence of smartphones, high fidelity cameras, haptics, internet, and most importantly the availability of data, have created the perfect environment for businesses to tap into its power. “AI is like a jet engine, but data is the fuel. The main blocker to adoption of that AI engine is having more ready fuel available.”
In the midst of a global pandemic IBM conducted a survey of 30,000 consumers to learn temporary and permanent changes in behavior and psychology. “It’s a big shift, as the psychology of not touching things and doing things virtually is driving people to change their behavior patterns.” For example, as Revieve has seen in their own data, 40% of consumers say they want to adopt contactless payment.
The rise of AI, however, presents a new set of challenges for IBM and other companies. Governments and organizations have been increasingly interested in AI’s ability to detect and monitor individuals, which opens the door to abusing AI to target individuals.
IBM has taken a firm stance on the matter and in regards to AI for facial recognition, CEO Krishna said in a letter to Congress that: "IBM no longer offers general purpose IBM facial recognition or analysis software. IBM firmly opposes and will not condone uses of any technology, including facial recognition technology offered by other vendors, for mass surveillance, racial profiling, violations of basic human rights and freedoms or any purpose which is not consistent with our values and Principles of Trust and Transparency."
In addition to targeting of individuals, AI presents challenges related to automation and job loss. Recent research indicates 47% of current jobs in the US contain tasks suitable for automation- maybe even one day yours and mine! However, to be fair, research also indicates automation will allow for new jobs and creating new growth areas.
With these challenges in mind, IBM’s core philosophy towards AI puts the focus on the purpose to arrive at the technology, rather than the technology to arrive at the purpose. As such, IBM and Jesus set the purpose on uniting technology and people through a sense of symbiosis where the technology works for the people, rather than the people working for the technology.
“If you cannot trust technology, you will not use it. The key to success with AI technology is to engineer algorithms that people can easily deploy and adapt, which then results in efficiency, performance, value proposition, etc.”
Watch it here https://youtu.be/dMYgfGT3Ao8 or tune in wherever you listen to podcasts.
About The Reboot Chronicles Podcast: Hosted by Dean DeBiase, The Reboot Chronicles is a popular no-holds-barred podcast on iHeart Radio, iTunes, Spotify, Google Podcasts and YouTube that has been bringing together CEOs, entrepreneurs, authors, and global leaders, for over a decade, to discuss how organizations are rebooting their leadership-competitiveness of everything from growth, innovation, and technology to talent, culture, and governance. Tune in wherever you listen to podcasts or at https://www.revieve.com/rebootchronicles
Named a “Growth Guru” by Inc. Magazine, Dean DeBiase is a Faculty Member at Kellogg School of Management and Silicon Valley serial CEO, where he has served in chief executive and chairman roles of more than a dozen emerging growth companies, CEO of Fortune 500 subsidiaries, and a director on public, private, family-enterprise, CVC, PE and VC boards. He is a Technology Fellow at Northwestern University, a Board Leadership Fellow at The National Association of Corporate Directors, and an Advisor to the National Science Foundation. A Forbes Contributor and co-author of the best-selling book The Big Moo, Dean is working on his next book, Dancing with Startups. Connect with Dean here: www.linkedin.com/in/FollowDean
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