WEBVTT 00:00:00.000 --> 00:00:02.560 align:middle line:84% NARRATOR: The following content is provided under a Creative 00:00:02.560 --> 00:00:03.920 align:middle line:90% Commons license. 00:00:03.920 --> 00:00:06.360 align:middle line:84% Your support will help MIT OpenCourseWare 00:00:06.360 --> 00:00:10.000 align:middle line:84% continue to offer high-quality educational resources for free. 00:00:10.000 --> 00:00:13.280 align:middle line:84% To make a donation or view additional materials 00:00:13.280 --> 00:00:17.240 align:middle line:84% from hundreds of MIT courses, visit MIT OpenCourseWare 00:00:17.240 --> 00:00:19.640 align:middle line:90% at ocw.mit.edu. 00:00:19.640 --> 00:00:23.940 align:middle line:84% IRVING WLADAWSKY-BERGER: OK, so in the last few classes, 00:00:23.940 --> 00:00:30.140 align:middle line:84% we have focused on executing a strategy in the marketplace. 00:00:30.140 --> 00:00:36.920 align:middle line:84% And as you know, we talked about, in the IBM case study, 00:00:36.920 --> 00:00:39.920 align:middle line:84% executing the e-business strategy, which 00:00:39.920 --> 00:00:47.620 align:middle line:84% is really the combination of the internet and the enterprise. 00:00:47.620 --> 00:00:52.300 align:middle line:84% How do you bring all the qualities of the internet-- 00:00:52.300 --> 00:00:54.680 align:middle line:84% remember, we're, going back 10 years-- 00:00:54.680 --> 00:00:59.340 align:middle line:90% to the enterprise? 00:00:59.340 --> 00:01:05.000 align:middle line:84% We looked at the problem from two points of view. 00:01:05.000 --> 00:01:08.140 align:middle line:84% One was the organizational factors, 00:01:08.140 --> 00:01:12.100 align:middle line:84% and we looked at balance between proprietary 00:01:12.100 --> 00:01:15.260 align:middle line:84% and open in formulating a strategy, 00:01:15.260 --> 00:01:19.460 align:middle line:84% building something in-house versus partnerships, 00:01:19.460 --> 00:01:23.220 align:middle line:84% picking the right offerings, and then 00:01:23.220 --> 00:01:25.620 align:middle line:84% we didn't spend too much time on financial and market 00:01:25.620 --> 00:01:29.220 align:middle line:84% measurements, but talked a little bit about it. 00:01:29.220 --> 00:01:34.460 align:middle line:84% And then we talked quite a bit about time 00:01:34.460 --> 00:01:36.540 align:middle line:90% to market and prototyping. 00:01:36.540 --> 00:01:43.860 align:middle line:84% And especially, I think that the presentations 00:01:43.860 --> 00:01:48.900 align:middle line:84% we had from Chris McCormick of L.L.Bean 00:01:48.900 --> 00:01:52.900 align:middle line:84% hopefully helped in these questions 00:01:52.900 --> 00:01:58.330 align:middle line:84% of end-user-based innovation partnering 00:01:58.330 --> 00:02:02.330 align:middle line:84% the importance of doing that because, as I told you, 00:02:02.330 --> 00:02:05.650 align:middle line:84% the reason I wanted Chris here is when he was 00:02:05.650 --> 00:02:10.889 align:middle line:84% the VP of Marketing at MLB, and he was really 00:02:10.889 --> 00:02:15.410 align:middle line:84% IBM's key partner in launching e-commerce. 00:02:15.410 --> 00:02:20.210 align:middle line:84% And it's interesting to hear from his point of view 00:02:20.210 --> 00:02:23.410 align:middle line:84% why the internet was so important to them, what they 00:02:23.410 --> 00:02:26.770 align:middle line:90% were looking from the internet. 00:02:26.770 --> 00:02:29.450 align:middle line:84% And we were looking for a launch customer 00:02:29.450 --> 00:02:33.350 align:middle line:84% because market-facing innovations, 00:02:33.350 --> 00:02:34.350 align:middle line:90% you need to experiment. 00:02:34.350 --> 00:02:35.550 align:middle line:90% In the marketplace. 00:02:35.550 --> 00:02:38.050 align:middle line:90% You can't just do it in the lab. 00:02:38.050 --> 00:02:42.450 align:middle line:84% And that was a very good mixture where we each got out 00:02:42.450 --> 00:02:45.050 align:middle line:90% of it what we wanted. 00:02:45.050 --> 00:02:50.450 align:middle line:84% And it's a relationship that has continued to be very good. 00:02:50.450 --> 00:03:00.310 align:middle line:84% And then we also talked about the huge importance of marketing 00:03:00.310 --> 00:03:03.130 align:middle line:90% and of clear messages. 00:03:03.130 --> 00:03:07.970 align:middle line:84% And I really wanted you to hear from an expert here. 00:03:07.970 --> 00:03:10.750 align:middle line:84% And that's why I hope you found Chris Wall's 00:03:10.750 --> 00:03:12.370 align:middle line:90% presentation interesting. 00:03:12.370 --> 00:03:15.850 align:middle line:84% I just got his slides in Windows form, 00:03:15.850 --> 00:03:22.230 align:middle line:84% so I'm going to post them in the next day or two. 00:03:22.230 --> 00:03:31.270 align:middle line:84% And I don't know how many vice chairs of advertising companies 00:03:31.270 --> 00:03:35.990 align:middle line:84% talk to engineering classes, but I honestly 00:03:35.990 --> 00:03:39.270 align:middle line:84% think it is a really important thing 00:03:39.270 --> 00:03:49.030 align:middle line:84% to do because when you're doing something, when you're taking 00:03:49.030 --> 00:03:52.510 align:middle line:84% something new to the marketplace, 00:03:52.510 --> 00:03:56.890 align:middle line:84% you need to explain to the marketplace what you're doing. 00:03:56.890 --> 00:04:00.050 align:middle line:84% And you need to get what I would call brand permission 00:04:00.050 --> 00:04:01.550 align:middle line:90% from the marketplace. 00:04:01.550 --> 00:04:04.770 align:middle line:84% The marketplace has to let you do that. 00:04:04.770 --> 00:04:08.050 align:middle line:84% And if you say, well, that's bullshit, 00:04:08.050 --> 00:04:11.610 align:middle line:84% you just tell them and they'll flock to your door, 00:04:11.610 --> 00:04:14.010 align:middle line:84% I guess you all have been around working 00:04:14.010 --> 00:04:19.130 align:middle line:84% to know that we all wish that were true. 00:04:19.130 --> 00:04:24.570 align:middle line:84% But in fact, this is really, really difficult 00:04:24.570 --> 00:04:31.490 align:middle line:84% to induce your brand and to infuse the new product that you 00:04:31.490 --> 00:04:35.770 align:middle line:84% want to bring to the marketplace with the kind of qualities that 00:04:35.770 --> 00:04:39.250 align:middle line:84% will cause people to want it, whether those people 00:04:39.250 --> 00:04:43.730 align:middle line:84% are other businesses or whether those people are consumers. 00:04:43.730 --> 00:04:49.610 align:middle line:84% And that's why the whole brand, branding, and developing 00:04:49.610 --> 00:04:54.430 align:middle line:84% a strategy, and communicating it, and doing it 00:04:54.430 --> 00:05:00.630 align:middle line:84% at an emotional level, and so on is so incredibly important. 00:05:00.630 --> 00:05:03.550 align:middle line:84% I know those are not words one normally 00:05:03.550 --> 00:05:08.750 align:middle line:84% uses associated with engineering, but especially 00:05:08.750 --> 00:05:11.410 align:middle line:84% with complex disruptive innovations, 00:05:11.410 --> 00:05:14.270 align:middle line:90% they are incredibly important. 00:05:14.270 --> 00:05:17.390 align:middle line:84% Remember, when people say, I don't know, 00:05:17.390 --> 00:05:21.550 align:middle line:84% the iPad or iPhone are must-have products, that's 00:05:21.550 --> 00:05:24.390 align:middle line:90% not a technical statement. 00:05:24.390 --> 00:05:30.030 align:middle line:84% Somehow, they've done a good job in convincing people that 00:05:30.030 --> 00:05:34.630 align:middle line:84% having them makes them really cool, 00:05:34.630 --> 00:05:38.710 align:middle line:84% and that's why they want to have it. 00:05:38.710 --> 00:05:41.890 align:middle line:84% And that convincing takes a lot of hard work, 00:05:41.890 --> 00:05:44.350 align:middle line:90% like, a lot of hard work. 00:05:44.350 --> 00:05:48.910 align:middle line:84% And now you could say, well, but, Irving, 00:05:48.910 --> 00:05:52.540 align:middle line:90% we're engineering executives. 00:05:52.540 --> 00:05:54.560 align:middle line:90% Why is that our job? 00:05:54.560 --> 00:05:56.700 align:middle line:84% Because the reason I think it's so 00:05:56.700 --> 00:06:04.740 align:middle line:84% important is that you all often have the best feeling for why 00:06:04.740 --> 00:06:06.360 align:middle line:90% this is important. 00:06:06.360 --> 00:06:12.100 align:middle line:84% The passion that motivates you to want to do that-- 00:06:12.100 --> 00:06:14.140 align:middle line:84% that's what you need to communicate 00:06:14.140 --> 00:06:15.900 align:middle line:84% to them, the professionals, who will 00:06:15.900 --> 00:06:21.020 align:middle line:84% try to translate that passion into how to communicate it 00:06:21.020 --> 00:06:23.860 align:middle line:90% to the marketplace. 00:06:23.860 --> 00:06:29.060 align:middle line:84% And you can say, well, I'll use an intermediary who's-- 00:06:29.060 --> 00:06:30.740 align:middle line:84% I know MBAs are wonderful, but I'll 00:06:30.740 --> 00:06:34.520 align:middle line:84% use an intermediary who doesn't understand at all this stuff, 00:06:34.520 --> 00:06:38.540 align:middle line:84% but they are really whiz with numbers. 00:06:38.540 --> 00:06:45.200 align:middle line:84% And passion by numbers is not as good as first-person passion, 00:06:45.200 --> 00:06:47.680 align:middle line:84% which, in the end, is what you need to communicate. 00:06:47.680 --> 00:06:51.940 align:middle line:84% So that's why I thought that was important. 00:06:51.940 --> 00:06:57.180 align:middle line:84% And I hope Chris Sharp's comments were useful. 00:06:57.180 --> 00:06:58.060 align:middle line:90% Please? 00:06:58.060 --> 00:07:00.560 align:middle line:84% AUDIENCE: So what we're talking about here is the marketing, 00:07:00.560 --> 00:07:01.980 align:middle line:90% and you have engineers. 00:07:01.980 --> 00:07:04.700 align:middle line:84% And it was a time where they were totally separated. 00:07:04.700 --> 00:07:07.480 align:middle line:84% But you're talking about the engineers 00:07:07.480 --> 00:07:10.360 align:middle line:84% stretching, if you will, to reach out to the marketing 00:07:10.360 --> 00:07:13.000 align:middle line:84% so that they can catch the inspiration 00:07:13.000 --> 00:07:15.560 align:middle line:84% and then be able to take that a little bit further 00:07:15.560 --> 00:07:18.400 align:middle line:90% and being a voice. 00:07:18.400 --> 00:07:22.000 align:middle line:84% In your relationship with the guy from L.L.Bean, 00:07:22.000 --> 00:07:24.475 align:middle line:84% I'm curious as to who did the more stretching, 00:07:24.475 --> 00:07:26.600 align:middle line:84% if it was you doing the stretching or if it was him 00:07:26.600 --> 00:07:30.400 align:middle line:84% doing the stretching as far as understanding the importance 00:07:30.400 --> 00:07:32.452 align:middle line:90% of the technology. 00:07:32.452 --> 00:07:34.660 align:middle line:84% IRVING WLADAWSKY-BERGER: Well, I think, in that case, 00:07:34.660 --> 00:07:38.720 align:middle line:84% in end-user innovation, you usually-- 00:07:38.720 --> 00:07:41.220 align:middle line:90% it's finding the right match. 00:07:41.220 --> 00:07:44.040 align:middle line:90% 00:07:44.040 --> 00:07:50.260 align:middle line:84% We needed somebody that we didn't even 00:07:50.260 --> 00:07:52.380 align:middle line:84% have to spend a year convincing them 00:07:52.380 --> 00:07:54.900 align:middle line:90% that e-commerce was important. 00:07:54.900 --> 00:07:59.220 align:middle line:84% We needed somebody who knew e-commerce was important, 00:07:59.220 --> 00:08:05.300 align:middle line:84% or who felt it, and who then put incredible pressure on us 00:08:05.300 --> 00:08:08.700 align:middle line:84% to get the damn thing done for them in time for the Christmas 00:08:08.700 --> 00:08:09.380 align:middle line:90% season. 00:08:09.380 --> 00:08:14.120 align:middle line:84% Don't underestimate the importance of having deadlines. 00:08:14.120 --> 00:08:18.020 align:middle line:84% I mean, having deadlines is really healthy, 00:08:18.020 --> 00:08:24.140 align:middle line:84% because, without deadlines, it's easy to keep going. 00:08:24.140 --> 00:08:29.780 align:middle line:84% And there was a natural affinity with e-commerce and catalog 00:08:29.780 --> 00:08:30.720 align:middle line:90% companies. 00:08:30.720 --> 00:08:33.260 align:middle line:90% 00:08:33.260 --> 00:08:36.179 align:middle line:84% And that's why it was a very good match. 00:08:36.179 --> 00:08:40.620 align:middle line:84% There were no big IBM clients before, almost nothing, I think. 00:08:40.620 --> 00:08:43.700 align:middle line:84% I don't know how we found them, but we found them, 00:08:43.700 --> 00:08:45.740 align:middle line:84% and that worked really, really well. 00:08:45.740 --> 00:08:50.600 align:middle line:84% But I think it's a very symbiotic relationship, where 00:08:50.600 --> 00:08:54.420 align:middle line:84% we each get from the other what we're interested in. 00:08:54.420 --> 00:08:57.960 align:middle line:84% And this symbiotic-- symbiotic, collaborative, it's 00:08:57.960 --> 00:09:00.320 align:middle line:84% a true collaborative relationship. 00:09:00.320 --> 00:09:03.080 align:middle line:90% They're very important. 00:09:03.080 --> 00:09:06.880 align:middle line:84% And of course, it also helps a lot-- 00:09:06.880 --> 00:09:09.320 align:middle line:84% by the way, part of picking a good partner 00:09:09.320 --> 00:09:11.680 align:middle line:84% with end-user innovation is you want 00:09:11.680 --> 00:09:14.160 align:middle line:84% to pick somebody you get along with 00:09:14.160 --> 00:09:18.640 align:middle line:84% or that you think you will get along with because, trust me, 00:09:18.640 --> 00:09:21.280 align:middle line:90% bad things will happen. 00:09:21.280 --> 00:09:22.500 align:middle line:90% You'll be late. 00:09:22.500 --> 00:09:25.560 align:middle line:90% The thing doesn't work. 00:09:25.560 --> 00:09:35.480 align:middle line:84% And if your partner is a mean bastard that will say, 00:09:35.480 --> 00:09:37.340 align:middle line:84% well, I'll sue you, whatever, well, 00:09:37.340 --> 00:09:41.040 align:middle line:84% that may be a fine person to be a client that you're 00:09:41.040 --> 00:09:43.590 align:middle line:84% selling an already mature product 00:09:43.590 --> 00:09:45.650 align:middle line:84% because you'll sell it to anybody. 00:09:45.650 --> 00:09:50.290 align:middle line:84% But that's not a good partner at the early stages, 00:09:50.290 --> 00:09:51.890 align:middle line:90% when you are very fragile. 00:09:51.890 --> 00:09:55.990 align:middle line:84% I mean, the reality is this stuff is really fragile. 00:09:55.990 --> 00:09:59.150 align:middle line:84% And often-- let's say we sell L.L.Bean. 00:09:59.150 --> 00:10:01.310 align:middle line:84% We had to send people from the lab 00:10:01.310 --> 00:10:04.250 align:middle line:84% to spend weekends with them because it didn't scale. 00:10:04.250 --> 00:10:04.923 align:middle line:90% They had bugs. 00:10:04.923 --> 00:10:06.090 align:middle line:90% They couldn't find the deal. 00:10:06.090 --> 00:10:06.590 align:middle line:90% Yes. 00:10:06.590 --> 00:10:10.830 align:middle line:84% All the usual stuff that you would expect was happening. 00:10:10.830 --> 00:10:14.470 align:middle line:84% And you need them to have faith in you and as long 00:10:14.470 --> 00:10:15.568 align:middle line:90% as you're responsive. 00:10:15.568 --> 00:10:17.610 align:middle line:84% I mean, if they call with a problem, and you say, 00:10:17.610 --> 00:10:21.570 align:middle line:84% well, we'll send somebody in a week, that's really bad. 00:10:21.570 --> 00:10:23.910 align:middle line:84% They have to believe that you're sending them 00:10:23.910 --> 00:10:26.790 align:middle line:90% really good people immediately. 00:10:26.790 --> 00:10:29.530 align:middle line:84% But you need to find that kind of chemistry. 00:10:29.530 --> 00:10:33.710 align:middle line:84% And that's not always easy to find. 00:10:33.710 --> 00:10:35.510 align:middle line:84% Also, they're are very serious people. 00:10:35.510 --> 00:10:41.890 align:middle line:84% Doing e-commerce with L.L.Bean was good. 00:10:41.890 --> 00:10:44.150 align:middle line:84% Also, there is a match with the brand. 00:10:44.150 --> 00:10:47.170 align:middle line:84% There may be other places we could have done e-commerce 00:10:47.170 --> 00:10:49.930 align:middle line:84% that, for somebody else, would have been a good match, 00:10:49.930 --> 00:10:51.490 align:middle line:90% but not for IBM. 00:10:51.490 --> 00:10:53.450 align:middle line:90% AUDIENCE: So IBM has marketers. 00:10:53.450 --> 00:10:57.110 align:middle line:84% But instead of marketers dealing with marketers, 00:10:57.110 --> 00:10:59.050 align:middle line:84% your engineers would deal with it. 00:10:59.050 --> 00:11:00.770 align:middle line:84% IRVING WLADAWSKY-BERGER: Well, remember, 00:11:00.770 --> 00:11:05.850 align:middle line:84% we're talking about disruptive innovations. 00:11:05.850 --> 00:11:09.890 align:middle line:84% Remember, most of what IBM and other companies do 00:11:09.890 --> 00:11:11.730 align:middle line:90% is more the next version. 00:11:11.730 --> 00:11:14.490 align:middle line:90% It's incremental innovation. 00:11:14.490 --> 00:11:17.290 align:middle line:84% And incremental innovation, you generally 00:11:17.290 --> 00:11:22.210 align:middle line:84% don't involve the senior people of the company. 00:11:22.210 --> 00:11:25.430 align:middle line:84% In incremental innovation, it's more business as usual, 00:11:25.430 --> 00:11:28.650 align:middle line:84% the next release of the product or whatever. 00:11:28.650 --> 00:11:34.290 align:middle line:84% So we're talking about something brand-new that doesn't exist. 00:11:34.290 --> 00:11:39.210 align:middle line:84% And when things are brand-new and don't exist, my opinion, 00:11:39.210 --> 00:11:43.110 align:middle line:84% the relationship has to be at a much higher level, 00:11:43.110 --> 00:11:46.570 align:middle line:84% with principles that will shake hands and will go-- 00:11:46.570 --> 00:11:49.070 align:middle line:84% and it doesn't have to be the CEOs. 00:11:49.070 --> 00:11:52.590 align:middle line:84% But it has to be people who are senior enough 00:11:52.590 --> 00:11:56.070 align:middle line:84% because, at some level, it's like looking in your eyes 00:11:56.070 --> 00:11:57.910 align:middle line:90% that you can do it. 00:11:57.910 --> 00:12:00.990 align:middle line:84% And they also know the higher up you are in the company, 00:12:00.990 --> 00:12:05.090 align:middle line:84% the more you can deliver versus somebody who is less high up. 00:12:05.090 --> 00:12:07.730 align:middle line:84% They may look in your eyes and say, yes, yes, yes, 00:12:07.730 --> 00:12:11.950 align:middle line:84% but they may not have the authority. 00:12:11.950 --> 00:12:15.390 align:middle line:84% So disruptive innovation, doing new things 00:12:15.390 --> 00:12:19.150 align:middle line:84% is different from the more incremental products 00:12:19.150 --> 00:12:21.870 align:middle line:84% and services, which, by the way, is the bulk of what 00:12:21.870 --> 00:12:23.470 align:middle line:90% any company does. 00:12:23.470 --> 00:12:25.530 align:middle line:84% Otherwise, it couldn't make money. 00:12:25.530 --> 00:12:29.850 align:middle line:84% Well, it's the bulk of what any mature company does. 00:12:29.850 --> 00:12:33.110 align:middle line:84% Obviously, if you're brand-new, whatever you're doing, 00:12:33.110 --> 00:12:37.900 align:middle line:90% by definition, is all you do. 00:12:37.900 --> 00:12:39.120 align:middle line:90% Any other comments? 00:12:39.120 --> 00:12:40.140 align:middle line:90% Please? 00:12:40.140 --> 00:12:43.620 align:middle line:84% AUDIENCE: Can you talk a little bit about the trade-offs 00:12:43.620 --> 00:12:45.920 align:middle line:84% and picking the right set of pilot customers? 00:12:45.920 --> 00:12:47.860 align:middle line:84% So L.L.Bean, for example, you could 00:12:47.860 --> 00:12:50.128 align:middle line:84% have gone with a much smaller vendor where 00:12:50.128 --> 00:12:52.420 align:middle line:84% you may have focused on the functionality first and not 00:12:52.420 --> 00:12:54.640 align:middle line:84% worried about the scale of the business much smaller. 00:12:54.640 --> 00:12:56.182 align:middle line:84% You could have gone the opposite way. 00:12:56.182 --> 00:12:58.700 align:middle line:84% You could have picked a much larger, one 00:12:58.700 --> 00:13:03.300 align:middle line:84% which would have maybe not achievable in the first. 00:13:03.300 --> 00:13:04.440 align:middle line:90% So do you find that? 00:13:04.440 --> 00:13:06.398 align:middle line:84% IRVING WLADAWSKY-BERGER: I honestly don't know. 00:13:06.398 --> 00:13:10.180 align:middle line:90% I think there's no science here. 00:13:10.180 --> 00:13:14.500 align:middle line:84% I think you more or less decide for this particular offering 00:13:14.500 --> 00:13:16.220 align:middle line:90% what's the right-- 00:13:16.220 --> 00:13:19.120 align:middle line:84% what kind of vendor are you comfortable with? 00:13:19.120 --> 00:13:20.820 align:middle line:90% What kind of partner? 00:13:20.820 --> 00:13:27.740 align:middle line:84% For example, in advanced supercomputing, 00:13:27.740 --> 00:13:33.260 align:middle line:84% the partners are always national labs and universities. 00:13:33.260 --> 00:13:37.200 align:middle line:84% IBM has two big petaflop project. 00:13:37.200 --> 00:13:40.960 align:middle line:84% That petaflop is 10 to the 15 operations 00:13:40.960 --> 00:13:42.900 align:middle line:90% per second, which is a lot. 00:13:42.900 --> 00:13:45.720 align:middle line:90% That's a big supercomputer. 00:13:45.720 --> 00:13:48.300 align:middle line:84% And one is Los Alamos National Lab, 00:13:48.300 --> 00:13:52.080 align:middle line:84% and the other one is a very large NSF 00:13:52.080 --> 00:13:56.840 align:middle line:84% center at the University of Illinois in Champaign, Urbana. 00:13:56.840 --> 00:14:04.540 align:middle line:84% And in those cases, both get money from Washington-- 00:14:04.540 --> 00:14:06.720 align:middle line:90% NSF and DOE. 00:14:06.720 --> 00:14:10.640 align:middle line:84% But in those cases, Los Alamos is 00:14:10.640 --> 00:14:14.100 align:middle line:84% different from most other places. 00:14:14.100 --> 00:14:19.680 align:middle line:84% So that's an example where you're stretching out there. 00:14:19.680 --> 00:14:21.060 align:middle line:90% It really depends. 00:14:21.060 --> 00:14:24.720 align:middle line:84% I don't know if there is a hard-and-fast rule. 00:14:24.720 --> 00:14:25.860 align:middle line:90% It really depends. 00:14:25.860 --> 00:14:31.880 align:middle line:84% Often, you will pick a pilot with a department of a larger 00:14:31.880 --> 00:14:33.860 align:middle line:90% company. 00:14:33.860 --> 00:14:37.460 align:middle line:84% And again, you correctly set expectations. 00:14:37.460 --> 00:14:38.900 align:middle line:90% It's a pilot. 00:14:38.900 --> 00:14:40.260 align:middle line:90% And everybody's comfortable. 00:14:40.260 --> 00:14:44.900 align:middle line:84% Versus somebody who says, well, when can it be in production? 00:14:44.900 --> 00:14:48.820 align:middle line:84% We don't even know if the damn thing works, let alone 00:14:48.820 --> 00:14:50.280 align:middle line:90% when can it be in production. 00:14:50.280 --> 00:14:54.840 align:middle line:84% So I think that's why you have senior people. 00:14:54.840 --> 00:14:58.580 align:middle line:84% You're having relationship negotiations 00:14:58.580 --> 00:15:02.020 align:middle line:84% until you find a match, and then you start executing. 00:15:02.020 --> 00:15:05.160 align:middle line:84% And I don't know if there is a hard-and-fast rule, 00:15:05.160 --> 00:15:06.220 align:middle line:90% or at least I'm not-- 00:15:06.220 --> 00:15:09.540 align:middle line:90% I don't know that. 00:15:09.540 --> 00:15:16.380 align:middle line:84% So let's switch in the last two classes 00:15:16.380 --> 00:15:19.460 align:middle line:84% before then we go to the presentations 00:15:19.460 --> 00:15:24.700 align:middle line:84% to talk about organizational and cultural issues. 00:15:24.700 --> 00:15:29.500 align:middle line:84% Now, sometimes people think of this organizational cultural 00:15:29.500 --> 00:15:34.260 align:middle line:84% issues as politics or things like that. 00:15:34.260 --> 00:15:38.240 align:middle line:90% 00:15:38.240 --> 00:15:43.080 align:middle line:84% These are the most dangerous aspects of any new project, 00:15:43.080 --> 00:15:47.900 align:middle line:84% is dealing with the people within your own organization. 00:15:47.900 --> 00:15:55.960 align:middle line:90% 00:15:55.960 --> 00:16:00.440 align:middle line:84% Anything new, the bulk of the organization 00:16:00.440 --> 00:16:02.880 align:middle line:84% is just not going to be comfortable with. 00:16:02.880 --> 00:16:06.880 align:middle line:84% One way or another, remember, it's 00:16:06.880 --> 00:16:09.320 align:middle line:84% almost like the same reasons you're 00:16:09.320 --> 00:16:13.280 align:middle line:84% doing it to be disruptive to competitors. 00:16:13.280 --> 00:16:17.160 align:middle line:84% It's also going to disrupt your own organizations. 00:16:17.160 --> 00:16:20.760 align:middle line:84% And organizations don't like to be disrupted. 00:16:20.760 --> 00:16:27.880 align:middle line:84% So these are really, really, really tough issues. 00:16:27.880 --> 00:16:32.150 align:middle line:90% And what is very important-- 00:16:32.150 --> 00:16:37.270 align:middle line:84% and if there is a key message that I would like you to have is 00:16:37.270 --> 00:16:43.430 align:middle line:84% that the same amount and the same energy you 00:16:43.430 --> 00:16:47.590 align:middle line:84% would put into developing the technology 00:16:47.590 --> 00:16:52.550 align:middle line:84% and the technical system, and later developing the marketing 00:16:52.550 --> 00:16:56.790 align:middle line:84% strategy and plans, needs to be applied 00:16:56.790 --> 00:16:59.850 align:middle line:90% to the organizational issues. 00:16:59.850 --> 00:17:05.109 align:middle line:84% And that's often a mistake that technical people make, 00:17:05.109 --> 00:17:09.790 align:middle line:84% because technical people often feel, well, Irving we're pure. 00:17:09.790 --> 00:17:14.210 align:middle line:90% And we're pure engineers. 00:17:14.210 --> 00:17:15.829 align:middle line:90% And this is politics. 00:17:15.829 --> 00:17:18.150 align:middle line:90% That's for-- I don't know. 00:17:18.150 --> 00:17:22.869 align:middle line:84% Everybody knows MBAs and people like that are heathen, 00:17:22.869 --> 00:17:27.369 align:middle line:84% and they'll do whatever they need to to get money. 00:17:27.369 --> 00:17:29.630 align:middle line:90% But we are pure people. 00:17:29.630 --> 00:17:31.730 align:middle line:84% And then they get creamed, and they 00:17:31.730 --> 00:17:35.930 align:middle line:84% get creamed by the very politics that they ignored. 00:17:35.930 --> 00:17:39.550 align:middle line:84% And let me tell you, you can go around and say, yeah, 00:17:39.550 --> 00:17:42.290 align:middle line:84% but I didn't play the political game. 00:17:42.290 --> 00:17:45.170 align:middle line:84% People may say, well, you're a schmuck. 00:17:45.170 --> 00:17:49.790 align:middle line:84% I mean, nobody's going to say, well, I know you work very hard. 00:17:49.790 --> 00:17:52.650 align:middle line:84% You spend millions and millions and millions, 00:17:52.650 --> 00:17:55.310 align:middle line:84% and then you couldn't sell it internally. 00:17:55.310 --> 00:17:56.070 align:middle line:90% Poor guy. 00:17:56.070 --> 00:17:57.390 align:middle line:90% That doesn't happen. 00:17:57.390 --> 00:17:59.430 align:middle line:90% They'll say, You're an idiot. 00:17:59.430 --> 00:18:03.210 align:middle line:84% And we picked the wrong person to be the leader of the-- 00:18:03.210 --> 00:18:05.010 align:middle line:90% I'm being dead serious. 00:18:05.010 --> 00:18:09.310 align:middle line:84% I cannot tell you how many times I have seen-- 00:18:09.310 --> 00:18:14.690 align:middle line:84% and this particularly applies to technical people from the R&D 00:18:14.690 --> 00:18:23.650 align:middle line:84% labs that are uncomfortable in the mixing it up that has 00:18:23.650 --> 00:18:26.970 align:middle line:90% to happen in organizations. 00:18:26.970 --> 00:18:35.510 align:middle line:84% And one way that I think I feel very strongly works 00:18:35.510 --> 00:18:37.810 align:middle line:84% is look at it as problem solving. 00:18:37.810 --> 00:18:42.790 align:middle line:84% Put a level of objectivity that just 00:18:42.790 --> 00:18:46.030 align:middle line:84% like you're solving a problem, when you're architecting 00:18:46.030 --> 00:18:50.310 align:middle line:84% the technical solution, you're solving a problem 00:18:50.310 --> 00:18:52.750 align:middle line:84% when you're not trying to architect 00:18:52.750 --> 00:18:55.070 align:middle line:90% the organizational solutions-- 00:18:55.070 --> 00:18:58.730 align:middle line:84% different kind of problem, different kinds of components, 00:18:58.730 --> 00:19:00.390 align:middle line:90% different elements. 00:19:00.390 --> 00:19:08.150 align:middle line:84% But the same herbs of energy that go here should go here. 00:19:08.150 --> 00:19:11.430 align:middle line:84% And that's a message I really would 00:19:11.430 --> 00:19:15.170 align:middle line:84% like you to take to heart, because, as I said, 00:19:15.170 --> 00:19:23.230 align:middle line:84% it's one that often Very technical people don't do. 00:19:23.230 --> 00:19:30.770 align:middle line:84% And we've discussed first the paper 00:19:30.770 --> 00:19:34.850 align:middle line:84% by David Nadler and Michael Tushman, which 00:19:34.850 --> 00:19:43.290 align:middle line:84% I think is a very good paper, that organizations 00:19:43.290 --> 00:19:44.750 align:middle line:90% don't like change. 00:19:44.750 --> 00:19:48.010 align:middle line:84% I don't know how else to say that. 00:19:48.010 --> 00:19:56.130 align:middle line:84% And having the ability to implement this continuous change 00:19:56.130 --> 00:20:02.890 align:middle line:84% is a huge, huge, huge importance to an organization. 00:20:02.890 --> 00:20:07.490 align:middle line:84% And those organizations that are not stable 00:20:07.490 --> 00:20:12.450 align:middle line:84% don't know how to implement disruptive change, discontinuous 00:20:12.450 --> 00:20:13.490 align:middle line:90% change. 00:20:13.490 --> 00:20:15.230 align:middle line:90% To be honest, they'll die. 00:20:15.230 --> 00:20:16.630 align:middle line:90% I don't know how else to say it. 00:20:16.630 --> 00:20:20.530 align:middle line:84% It's like having a biological organism that 00:20:20.530 --> 00:20:23.760 align:middle line:84% is not able to adapt to changing environment 00:20:23.760 --> 00:20:25.480 align:middle line:90% in a Darwinian sense. 00:20:25.480 --> 00:20:27.340 align:middle line:90% And they will eventually die. 00:20:27.340 --> 00:20:30.920 align:middle line:90% And the same thing is true here. 00:20:30.920 --> 00:20:37.680 align:middle line:84% Now, I'll keep saying Tushman because I 00:20:37.680 --> 00:20:39.580 align:middle line:90% know Mike Tushman fairly well. 00:20:39.580 --> 00:20:42.520 align:middle line:90% I don't know David Nadler. 00:20:42.520 --> 00:20:52.980 align:middle line:84% Tushman looks at organization changes in two key dimensions. 00:20:52.980 --> 00:20:55.560 align:middle line:84% And these are all things that we've discussed 00:20:55.560 --> 00:20:57.140 align:middle line:90% before in different contexts. 00:20:57.140 --> 00:21:00.840 align:middle line:84% But I think it's good to look at it from an organizational. 00:21:00.840 --> 00:21:05.280 align:middle line:84% The first is the strategic dimension, 00:21:05.280 --> 00:21:10.440 align:middle line:84% where the change you are making is organization-wide, 00:21:10.440 --> 00:21:15.040 align:middle line:84% as opposed to the change you are making only 00:21:15.040 --> 00:21:17.600 align:middle line:90% affects an incremental unit. 00:21:17.600 --> 00:21:21.970 align:middle line:84% Almost by definition, a disruptive technology, 00:21:21.970 --> 00:21:27.180 align:middle line:84% a disruptive innovation, is going to be organizational, 00:21:27.180 --> 00:21:30.020 align:middle line:84% is going to be strategic, is going 00:21:30.020 --> 00:21:34.460 align:middle line:84% to affect the whole organization almost by definition. 00:21:34.460 --> 00:21:40.300 align:middle line:84% Whereas almost by definition, a more sustained innovation, 00:21:40.300 --> 00:21:43.620 align:middle line:84% in Christensen's terminology, is one 00:21:43.620 --> 00:21:47.220 align:middle line:84% that affects a specific department in, 00:21:47.220 --> 00:21:50.740 align:middle line:90% and it's the incremental thing. 00:21:50.740 --> 00:21:59.780 align:middle line:84% And then they also look at the changes in the dimension of, 00:21:59.780 --> 00:22:02.400 align:middle line:90% are you reacting to the change? 00:22:02.400 --> 00:22:04.620 align:middle line:90% That is the change happened. 00:22:04.620 --> 00:22:08.140 align:middle line:84% Your competitors are doing, others are doing it. 00:22:08.140 --> 00:22:11.740 align:middle line:84% And now you have to figure out how you respond to it. 00:22:11.740 --> 00:22:16.620 align:middle line:84% Or are you anticipating the change? 00:22:16.620 --> 00:22:20.960 align:middle line:84% Is this something that you very much want to happen, 00:22:20.960 --> 00:22:23.800 align:middle line:90% so you are ahead of the game? 00:22:23.800 --> 00:22:27.020 align:middle line:90% And then they do in a matrix. 00:22:27.020 --> 00:22:28.200 align:middle line:90% And I didn't do. 00:22:28.200 --> 00:22:29.960 align:middle line:84% If I were better at PowerPoint, I 00:22:29.960 --> 00:22:32.140 align:middle line:90% would have shown you the matrix. 00:22:32.140 --> 00:22:36.720 align:middle line:84% But there's only so far that I want to become 00:22:36.720 --> 00:22:39.480 align:middle line:90% an expert in PowerPoint. 00:22:39.480 --> 00:22:45.600 align:middle line:84% And they mix this up, and they talk about organizations 00:22:45.600 --> 00:22:49.560 align:middle line:84% being adaptive when they are incrementally 00:22:49.560 --> 00:22:58.400 align:middle line:84% responding to changes or tuning when you are incrementally 00:22:58.400 --> 00:23:02.840 align:middle line:84% anticipating changes and getting ready for it. 00:23:02.840 --> 00:23:09.340 align:middle line:84% But on the strategic front, when you are reacting, 00:23:09.340 --> 00:23:12.400 align:middle line:84% you recreate the organization and when you anticipate. 00:23:12.400 --> 00:23:14.440 align:middle line:84% It doesn't matter what these terms are. 00:23:14.440 --> 00:23:17.090 align:middle line:84% I've never heard these terms outside of the paper. 00:23:17.090 --> 00:23:17.925 align:middle line:90% Yes? 00:23:17.925 --> 00:23:19.550 align:middle line:84% AUDIENCE: I would say, there's probably 00:23:19.550 --> 00:23:22.710 align:middle line:84% another dimension of change, which is whether it 00:23:22.710 --> 00:23:26.550 align:middle line:90% goes top-down or bottom-up. 00:23:26.550 --> 00:23:30.010 align:middle line:84% I mean, sometimes the founder and the CEOs, 00:23:30.010 --> 00:23:33.350 align:middle line:84% the top management, are flexible enough. 00:23:33.350 --> 00:23:37.910 align:middle line:84% And they instill that culture in everybody. 00:23:37.910 --> 00:23:40.380 align:middle line:84% And other times, they just empower everybody to-- 00:23:40.380 --> 00:23:41.630 align:middle line:90% IRVING WLADAWSKY-BERGER: Yeah. 00:23:41.630 --> 00:23:43.330 align:middle line:90% Well, we'll talk about that. 00:23:43.330 --> 00:23:48.910 align:middle line:84% But I would say, what you're saying, which is true, 00:23:48.910 --> 00:23:54.350 align:middle line:84% I think it's complementary to these dimensions because-- 00:23:54.350 --> 00:23:57.910 align:middle line:90% in fact, we will talk right now. 00:23:57.910 --> 00:24:02.150 align:middle line:84% And we're clearly going to focus on strategic changes. 00:24:02.150 --> 00:24:07.590 align:middle line:84% And now we're going to talk about, what kind of leadership 00:24:07.590 --> 00:24:11.350 align:middle line:84% do you bring to affect strategic changes? 00:24:11.350 --> 00:24:13.030 align:middle line:90% And I agree totally. 00:24:13.030 --> 00:24:15.850 align:middle line:84% This question of top-down and bottom-up 00:24:15.850 --> 00:24:18.490 align:middle line:84% are very, very important, especially 00:24:18.490 --> 00:24:21.910 align:middle line:84% because I am convinced-- and we should talk about this. 00:24:21.910 --> 00:24:25.850 align:middle line:84% It's not quite the point of the two papers we'll discuss. 00:24:25.850 --> 00:24:32.050 align:middle line:84% I think we are in a big shift in organizations, 00:24:32.050 --> 00:24:37.370 align:middle line:84% where traditionally, changes in organizations 00:24:37.370 --> 00:24:40.770 align:middle line:90% came top down for hierarchy. 00:24:40.770 --> 00:24:44.210 align:middle line:84% And for a variety of reasons, more and more, 00:24:44.210 --> 00:24:51.690 align:middle line:84% I view the changes as communities in the organization 00:24:51.690 --> 00:24:56.770 align:middle line:84% are getting empowered because of the internet and other tools. 00:24:56.770 --> 00:24:59.130 align:middle line:90% So they are causing change. 00:24:59.130 --> 00:25:04.370 align:middle line:84% And so whereas before, it was all top-down, now 00:25:04.370 --> 00:25:09.650 align:middle line:84% it's more a combination of bottom-up and top-down. 00:25:09.650 --> 00:25:14.630 align:middle line:84% In fact, the way I see it, for the most part, 00:25:14.630 --> 00:25:20.470 align:middle line:84% change starts organically for the most part 00:25:20.470 --> 00:25:25.830 align:middle line:84% and percolates in the organization for a while. 00:25:25.830 --> 00:25:27.910 align:middle line:84% And then eventually top management 00:25:27.910 --> 00:25:32.070 align:middle line:84% has to discover it because, remember, resource allocation. 00:25:32.070 --> 00:25:34.270 align:middle line:90% You can do a lot organically. 00:25:34.270 --> 00:25:36.750 align:middle line:84% But usually, most organizations aren't 00:25:36.750 --> 00:25:39.710 align:middle line:84% going to let you reallocate budgets organically and things 00:25:39.710 --> 00:25:40.670 align:middle line:90% like that. 00:25:40.670 --> 00:25:43.510 align:middle line:84% So eventually, it reaches the point 00:25:43.510 --> 00:25:46.530 align:middle line:84% where you start involving top management, 00:25:46.530 --> 00:25:49.390 align:middle line:84% and then you need the combination of the two. 00:25:49.390 --> 00:25:52.590 align:middle line:84% And I think that's a fairly new model 00:25:52.590 --> 00:25:56.270 align:middle line:84% that actually not too many businesses are 00:25:56.270 --> 00:25:57.850 align:middle line:90% comfortable with yet. 00:25:57.850 --> 00:26:03.510 align:middle line:90% 00:26:03.510 --> 00:26:13.330 align:middle line:84% And again, I don't think we need to spend and too much time 00:26:13.330 --> 00:26:15.010 align:middle line:90% discussing this. 00:26:15.010 --> 00:26:19.850 align:middle line:84% But it's another manifestation in the paper 00:26:19.850 --> 00:26:28.010 align:middle line:84% of why strategic change, either in response 00:26:28.010 --> 00:26:35.930 align:middle line:84% to a disruptive innovation or because you want to reframe 00:26:35.930 --> 00:26:41.690 align:middle line:84% the market and you want to cause a disruptive innovation, which 00:26:41.690 --> 00:26:48.690 align:middle line:84% is what the second point is, are so important. 00:26:48.690 --> 00:26:52.530 align:middle line:90% This point, by the way-- 00:26:52.530 --> 00:26:55.210 align:middle line:84% it's a very interesting difference. 00:26:55.210 --> 00:26:59.250 align:middle line:84% If something happens and your job is to catch up, 00:26:59.250 --> 00:27:02.750 align:middle line:84% usually you sometimes are in crisis. 00:27:02.750 --> 00:27:04.050 align:middle line:90% Something happen. 00:27:04.050 --> 00:27:05.350 align:middle line:90% It's a major thing. 00:27:05.350 --> 00:27:07.270 align:middle line:84% Your competitors are already doing. 00:27:07.270 --> 00:27:10.280 align:middle line:90% You have to move. 00:27:10.280 --> 00:27:14.000 align:middle line:90% The ideal way to cause change-- 00:27:14.000 --> 00:27:19.760 align:middle line:84% and I think now we get back to the importance of having 00:27:19.760 --> 00:27:24.160 align:middle line:90% a really good R&D community-- 00:27:24.160 --> 00:27:28.480 align:middle line:84% is continuing with the analogy I've 00:27:28.480 --> 00:27:33.360 align:middle line:84% been using of disruptive innovation as an asteroid. 00:27:33.360 --> 00:27:38.600 align:middle line:84% Here, the asteroid already hit, and you 00:27:38.600 --> 00:27:40.340 align:middle line:90% didn't know it was coming. 00:27:40.340 --> 00:27:44.280 align:middle line:90% And this environment changes. 00:27:44.280 --> 00:27:49.320 align:middle line:84% What's interesting here is you see it 00:27:49.320 --> 00:27:52.920 align:middle line:90% coming before everybody else. 00:27:52.920 --> 00:27:58.840 align:middle line:84% Now, usually, the people who see the damn asteroid usually 00:27:58.840 --> 00:28:00.540 align:middle line:90% would be your R&D people. 00:28:00.540 --> 00:28:04.000 align:middle line:84% Either that, or you need new R&D people. 00:28:04.000 --> 00:28:06.260 align:middle line:84% I mean, if you have labs, and you say, 00:28:06.260 --> 00:28:10.140 align:middle line:84% my people are wonderful, and the technology is changing around 00:28:10.140 --> 00:28:13.780 align:middle line:84% them and they don't notice it, you better 00:28:13.780 --> 00:28:16.580 align:middle line:90% fire them and get new ones. 00:28:16.580 --> 00:28:23.840 align:middle line:84% And the better the people here, the more they will anticipate. 00:28:23.840 --> 00:28:30.980 align:middle line:84% Now, what is so important in being able to anticipate is, 00:28:30.980 --> 00:28:38.660 align:middle line:84% as Tushman and Nadler say, you now have the luxury of time 00:28:38.660 --> 00:28:41.360 align:middle line:90% to frame the market. 00:28:41.360 --> 00:28:47.020 align:middle line:84% Now you're getting to talking to people with the skills of Chris 00:28:47.020 --> 00:28:49.020 align:middle line:84% Sharpe, whether they are outside people 00:28:49.020 --> 00:28:51.580 align:middle line:84% or inside people, where you can start 00:28:51.580 --> 00:28:54.560 align:middle line:90% discussing this is happening. 00:28:54.560 --> 00:29:00.860 align:middle line:84% So how should we frame to the world what's happening in a way 00:29:00.860 --> 00:29:02.640 align:middle line:90% that advantages us? 00:29:02.640 --> 00:29:08.400 align:middle line:84% And remember, when something is new, 00:29:08.400 --> 00:29:11.160 align:middle line:84% nobody knows what the hell it is. 00:29:11.160 --> 00:29:17.440 align:middle line:84% So framing the problem is a gigantic part 00:29:17.440 --> 00:29:19.960 align:middle line:90% of market strategy. 00:29:19.960 --> 00:29:27.160 align:middle line:84% And he who first frames a problem, if successful, has, 00:29:27.160 --> 00:29:34.840 align:middle line:84% I cannot tell you, the advantage over competitors who now have 00:29:34.840 --> 00:29:38.340 align:middle line:84% to follow your framing of the market. 00:29:38.340 --> 00:29:41.580 align:middle line:84% And if you framed it, and you did the right job, 00:29:41.580 --> 00:29:46.320 align:middle line:84% you framed it to advantage you, and you put your competition 00:29:46.320 --> 00:29:50.480 align:middle line:84% at a disadvantage because they are playing the game in the way 00:29:50.480 --> 00:29:51.860 align:middle line:90% that you framed it. 00:29:51.860 --> 00:29:55.660 align:middle line:84% And that's why, if at all possible, 00:29:55.660 --> 00:29:58.960 align:middle line:90% you want to be in this position. 00:29:58.960 --> 00:30:05.420 align:middle line:84% And you want to start planning for the reframing 00:30:05.420 --> 00:30:09.900 align:middle line:84% of the market in response to the new technologies 00:30:09.900 --> 00:30:11.440 align:middle line:90% as early as possible. 00:30:11.440 --> 00:30:13.740 align:middle line:90% Please? 00:30:13.740 --> 00:30:18.500 align:middle line:84% AUDIENCE: I was going to say that most organizations have 00:30:18.500 --> 00:30:24.020 align:middle line:84% junior people, people on the front end, who probably see 00:30:24.020 --> 00:30:29.380 align:middle line:84% the change probably sooner, and then the very senior people who 00:30:29.380 --> 00:30:31.780 align:middle line:84% are more likely to accept change, 00:30:31.780 --> 00:30:35.395 align:middle line:84% and then the middle group, who are, in general-- 00:30:35.395 --> 00:30:37.020 align:middle line:84% IRVING WLADAWSKY-BERGER: Change-averse. 00:30:37.020 --> 00:30:37.960 align:middle line:90% AUDIENCE: --change-averse. 00:30:37.960 --> 00:30:39.585 align:middle line:84% IRVING WLADAWSKY-BERGER: Yeah, I agree. 00:30:39.585 --> 00:30:40.800 align:middle line:90% That is a good way to say it. 00:30:40.800 --> 00:30:47.120 align:middle line:84% AUDIENCE: So how do you jump the middle group? 00:30:47.120 --> 00:30:50.020 align:middle line:90% 00:30:50.020 --> 00:30:52.277 align:middle line:84% Because everybody talks about you need overhead cover. 00:30:52.277 --> 00:30:52.860 align:middle line:90% You need this. 00:30:52.860 --> 00:30:53.720 align:middle line:90% You need that. 00:30:53.720 --> 00:30:55.160 align:middle line:90% I'd rather jump in the middle. 00:30:55.160 --> 00:30:56.743 align:middle line:84% IRVING WLADAWSKY-BERGER: Right, right. 00:30:56.743 --> 00:31:00.140 align:middle line:84% And remember, the middle group is change-averse 00:31:00.140 --> 00:31:03.610 align:middle line:84% because, generally, the middle group 00:31:03.610 --> 00:31:09.570 align:middle line:84% is who the top group looks to make the numbers. 00:31:09.570 --> 00:31:12.710 align:middle line:90% Don't underestimate that. 00:31:12.710 --> 00:31:15.930 align:middle line:84% It's not that the middle group is a bunch of idiots. 00:31:15.930 --> 00:31:20.650 align:middle line:84% It's that you told these people, make the goddamn quarter. 00:31:20.650 --> 00:31:22.890 align:middle line:90% That's their job. 00:31:22.890 --> 00:31:26.790 align:middle line:84% And if these people's job is to make the quarter 00:31:26.790 --> 00:31:31.250 align:middle line:84% and some kid from MIT comes up and says, great ideas, they get 00:31:31.250 --> 00:31:32.370 align:middle line:90% lost. 00:31:32.370 --> 00:31:33.550 align:middle line:90% I don't have the time. 00:31:33.550 --> 00:31:34.710 align:middle line:90% I don't have the money. 00:31:34.710 --> 00:31:37.930 align:middle line:90% 00:31:37.930 --> 00:31:42.810 align:middle line:84% That's an area that is changing rapidly in the following sense. 00:31:42.810 --> 00:31:44.730 align:middle line:84% I think in classic organizations, 00:31:44.730 --> 00:31:46.950 align:middle line:84% because of the more hierarchical structure, 00:31:46.950 --> 00:31:50.990 align:middle line:84% it was very difficult for some young kids to rise up. 00:31:50.990 --> 00:31:54.970 align:middle line:84% It's very, very difficult. The advice I 00:31:54.970 --> 00:32:00.670 align:middle line:84% give everybody is start working with your peers. 00:32:00.670 --> 00:32:03.230 align:middle line:90% Act like a guerrilla warfare. 00:32:03.230 --> 00:32:09.510 align:middle line:84% But I mean that in a very positive sense, which is start 00:32:09.510 --> 00:32:12.170 align:middle line:90% collaborating inside and out. 00:32:12.170 --> 00:32:15.390 align:middle line:84% Obviously, you have to be careful with confidentiality. 00:32:15.390 --> 00:32:18.950 align:middle line:84% But if you are advocating a new idea 00:32:18.950 --> 00:32:21.710 align:middle line:84% by yourself inside the firm, they'll 00:32:21.710 --> 00:32:23.790 align:middle line:90% say, well, what do you know? 00:32:23.790 --> 00:32:28.670 align:middle line:84% If you find kindred spirits at good schools, 00:32:28.670 --> 00:32:34.950 align:middle line:84% at other organizations, and when you are advocating your ideas, 00:32:34.950 --> 00:32:38.270 align:middle line:84% you say, these people at MIT, and Stanford, and Berkeley 00:32:38.270 --> 00:32:40.830 align:middle line:90% and whatever are doing that. 00:32:40.830 --> 00:32:45.830 align:middle line:84% And remember, also, in one of Christensen's chapters 00:32:45.830 --> 00:32:49.630 align:middle line:84% that we talked about, don't underestimate 00:32:49.630 --> 00:32:53.810 align:middle line:84% putting the fear of God in the organization by saying, 00:32:53.810 --> 00:32:56.510 align:middle line:84% and these competitors are already doing it. 00:32:56.510 --> 00:33:01.290 align:middle line:90% Oh, it has to be true. 00:33:01.290 --> 00:33:05.010 align:middle line:84% You're stating a fact that's true. 00:33:05.010 --> 00:33:08.550 align:middle line:84% And in the past, if you're a junior guy, 00:33:08.550 --> 00:33:11.410 align:middle line:84% you had no-- how do you get all that information? 00:33:11.410 --> 00:33:13.550 align:middle line:84% And how do you communicate with those people? 00:33:13.550 --> 00:33:18.830 align:middle line:84% Whereas now, with communities and organizations, 00:33:18.830 --> 00:33:20.810 align:middle line:90% that's happening a lot more. 00:33:20.810 --> 00:33:23.410 align:middle line:84% Now you get into a cultural thing. 00:33:23.410 --> 00:33:29.970 align:middle line:84% Will the middle managers tell their people, 00:33:29.970 --> 00:33:33.410 align:middle line:90% I don't allow you to do this? 00:33:33.410 --> 00:33:34.470 align:middle line:90% Some do. 00:33:34.470 --> 00:33:37.010 align:middle line:84% But that's an area top management can really 00:33:37.010 --> 00:33:39.250 align:middle line:84% crack down, which is that's not the culture we 00:33:39.250 --> 00:33:42.250 align:middle line:90% want in this place. 00:33:42.250 --> 00:33:44.550 align:middle line:84% And really, that that's very cultural. 00:33:44.550 --> 00:33:47.290 align:middle line:84% Do you want an isolated organization? 00:33:47.290 --> 00:33:49.650 align:middle line:84% Or do you want an organization that 00:33:49.650 --> 00:33:53.830 align:middle line:84% is in tune with what's going on out there with universities 00:33:53.830 --> 00:33:55.920 align:middle line:90% and so on? 00:33:55.920 --> 00:33:59.120 align:middle line:84% But a lot of organizations don't like that. 00:33:59.120 --> 00:34:06.080 align:middle line:84% I mean, I remember when the web first came out in the mid 00:34:06.080 --> 00:34:10.600 align:middle line:84% '90s, a lot of businesses wouldn't let their employees 00:34:10.600 --> 00:34:15.520 align:middle line:84% access the web from work because they assumed they'd be accessing 00:34:15.520 --> 00:34:19.239 align:middle line:84% X-rated sites and other things, and they thought they'd be 00:34:19.239 --> 00:34:21.880 align:middle line:90% wasting their time. 00:34:21.880 --> 00:34:25.840 align:middle line:84% I mean, that's really unenlightened. 00:34:25.840 --> 00:34:30.100 align:middle line:84% And with blogging sites and virtual world sites, 00:34:30.100 --> 00:34:34.639 align:middle line:84% a lot of companies don't let their employees 00:34:34.639 --> 00:34:37.000 align:middle line:84% access Second Life and other sites, 00:34:37.000 --> 00:34:41.480 align:middle line:84% again, because they think they are playing games. 00:34:41.480 --> 00:34:43.320 align:middle line:84% Well, if somebody is playing games when they 00:34:43.320 --> 00:34:46.080 align:middle line:90% should be working, fire them. 00:34:46.080 --> 00:34:54.620 align:middle line:84% But you want people, and especially you 00:34:54.620 --> 00:34:57.918 align:middle line:84% want your good people to be in touch. 00:34:57.918 --> 00:34:59.460 align:middle line:84% I mean, if somebody is supposed to be 00:34:59.460 --> 00:35:02.260 align:middle line:84% soldering wires in the manufacturing line 00:35:02.260 --> 00:35:07.440 align:middle line:84% and they are accessing blogs, we have a problem, 00:35:07.440 --> 00:35:11.180 align:middle line:84% or they are waiting tables and the customers 00:35:11.180 --> 00:35:14.860 align:middle line:84% can't be served because the waitress is accessing 00:35:14.860 --> 00:35:17.540 align:middle line:84% incredibly philosophical websites, that's 00:35:17.540 --> 00:35:19.740 align:middle line:90% not a good thing. 00:35:19.740 --> 00:35:24.340 align:middle line:84% But for a segment of your population-- 00:35:24.340 --> 00:35:27.740 align:middle line:84% knowledge workers, information workers, however you call it-- 00:35:27.740 --> 00:35:30.700 align:middle line:84% I think encouraging them to be out there 00:35:30.700 --> 00:35:34.340 align:middle line:84% is extremely healthy because that's 00:35:34.340 --> 00:35:36.940 align:middle line:90% how you find the asteroids. 00:35:36.940 --> 00:35:40.220 align:middle line:84% Really, more than anything else-- 00:35:40.220 --> 00:35:43.720 align:middle line:84% I mean, there is so much knowledge out there, 00:35:43.720 --> 00:35:47.780 align:middle line:84% you can't have all the experts in-house. 00:35:47.780 --> 00:35:53.160 align:middle line:84% But if you have people who are in touch with communities, 00:35:53.160 --> 00:35:57.280 align:middle line:84% they will learn from communities what's hot, what's not. 00:35:57.280 --> 00:35:59.220 align:middle line:90% And they will figure things out. 00:35:59.220 --> 00:36:00.760 align:middle line:84% And you want that because they are 00:36:00.760 --> 00:36:04.720 align:middle line:84% bringing the outside knowledge inside the firm. 00:36:04.720 --> 00:36:09.220 align:middle line:84% And that's why I think that cultural shift is so critical. 00:36:09.220 --> 00:36:15.080 align:middle line:84% And I wish it happened in more and more businesses. 00:36:15.080 --> 00:36:16.260 align:middle line:90% What do you all think? 00:36:16.260 --> 00:36:18.600 align:middle line:84% I mean, you've all been working out there. 00:36:18.600 --> 00:36:21.120 align:middle line:84% Has that been a problem at all in the companies 00:36:21.120 --> 00:36:23.760 align:middle line:90% you've worked on? 00:36:23.760 --> 00:36:24.880 align:middle line:90% Please? 00:36:24.880 --> 00:36:28.000 align:middle line:84% AUDIENCE: My company, I think, is so recent, 00:36:28.000 --> 00:36:31.800 align:middle line:84% we don't want people to be 100% loaded with work. 00:36:31.800 --> 00:36:35.400 align:middle line:84% We hope that the remaining 20% of their time, they can actually 00:36:35.400 --> 00:36:38.360 align:middle line:84% go and browse and do something very 00:36:38.360 --> 00:36:40.720 align:middle line:84% interesting that in the long term will pay off. 00:36:40.720 --> 00:36:44.000 align:middle line:90% 00:36:44.000 --> 00:36:49.480 align:middle line:84% And short term, the long term impact. 00:36:49.480 --> 00:36:56.300 align:middle line:90% 00:36:56.300 --> 00:36:58.220 align:middle line:84% IRVING WLADAWSKY-BERGER: Are they paying for-- 00:36:58.220 --> 00:36:59.387 align:middle line:90% AUDIENCE: I didn't ask them. 00:36:59.387 --> 00:37:02.380 align:middle line:84% If I asked them, they probably would say yes. 00:37:02.380 --> 00:37:04.980 align:middle line:84% IRVING WLADAWSKY-BERGER: Yeah, I understand. 00:37:04.980 --> 00:37:09.460 align:middle line:84% AUDIENCE: I've noticed people seem to self-select 00:37:09.460 --> 00:37:10.560 align:middle line:90% the entire staff. 00:37:10.560 --> 00:37:13.180 align:middle line:84% So in other words, if you're a more disruptive kind 00:37:13.180 --> 00:37:17.140 align:middle line:84% of younger-- maybe not younger, but lower-level employee, 00:37:17.140 --> 00:37:20.620 align:middle line:84% you try to self-select as a management team that's 00:37:20.620 --> 00:37:22.540 align:middle line:90% more receptive to that. 00:37:22.540 --> 00:37:25.780 align:middle line:90% So you end up with entire-- 00:37:25.780 --> 00:37:28.580 align:middle line:90% from you to the CEO. 00:37:28.580 --> 00:37:30.580 align:middle line:84% IRVING WLADAWSKY-BERGER: But you may select also 00:37:30.580 --> 00:37:31.622 align:middle line:90% companies that have that. 00:37:31.622 --> 00:37:33.080 align:middle line:84% AUDIENCE: You may select a company. 00:37:33.080 --> 00:37:33.980 align:middle line:90% But even within a-- 00:37:33.980 --> 00:37:37.260 align:middle line:84% I work for IBM, a really large company where you have-- 00:37:37.260 --> 00:37:39.140 align:middle line:84% that's what I've noticed is instead 00:37:39.140 --> 00:37:41.300 align:middle line:84% of having a middle management where 00:37:41.300 --> 00:37:44.880 align:middle line:84% the entire middle management is stuck with the status quo, 00:37:44.880 --> 00:37:46.720 align:middle line:84% it's where you have this disruption. 00:37:46.720 --> 00:37:49.610 align:middle line:84% You notice that people work for them or all also in. 00:37:49.610 --> 00:37:51.130 align:middle line:90% IRVING WLADAWSKY-BERGER: Yeah. 00:37:51.130 --> 00:37:53.730 align:middle line:90% Well, because it's cultural. 00:37:53.730 --> 00:37:58.050 align:middle line:84% At some level, you're selling the culture of the organization. 00:37:58.050 --> 00:38:00.890 align:middle line:84% And it's not just the CEO that sets culture, 00:38:00.890 --> 00:38:05.290 align:middle line:84% that we're talking now is different levels of management 00:38:05.290 --> 00:38:06.410 align:middle line:90% culture. 00:38:06.410 --> 00:38:11.570 align:middle line:84% And again, what really is a middle management 00:38:11.570 --> 00:38:15.110 align:middle line:84% is they are stuck between strategy and operations. 00:38:15.110 --> 00:38:20.130 align:middle line:90% 00:38:20.130 --> 00:38:22.890 align:middle line:84% That's the dilemma of middle management 00:38:22.890 --> 00:38:25.770 align:middle line:90% is you have to be ambidextrous. 00:38:25.770 --> 00:38:28.650 align:middle line:84% AUDIENCE: It seems like IBM software group 00:38:28.650 --> 00:38:32.550 align:middle line:84% is going through that now with the lean and agile transition, 00:38:32.550 --> 00:38:36.610 align:middle line:84% where it started as a wiki or a small group of people 00:38:36.610 --> 00:38:39.370 align:middle line:84% trying to get the word out there and then getting buy-in 00:38:39.370 --> 00:38:41.370 align:middle line:84% from some upper-level management. 00:38:41.370 --> 00:38:43.050 align:middle line:84% And while it's not mandated, it's 00:38:43.050 --> 00:38:45.890 align:middle line:84% starting to filter out through there as well. 00:38:45.890 --> 00:38:48.110 align:middle line:84% But you're seeing some groups that 00:38:48.110 --> 00:38:49.930 align:middle line:90% are more resistant than others. 00:38:49.930 --> 00:38:52.210 align:middle line:84% And from the slides that you showed, 00:38:52.210 --> 00:38:56.670 align:middle line:84% it looks like that's an in-between reorientation and-- 00:38:56.670 --> 00:38:59.300 align:middle line:84% IRVING WLADAWSKY-BERGER: Yeah, yeah. 00:38:59.300 --> 00:39:01.050 align:middle line:84% AUDIENCE: There's not an immediate threat. 00:39:01.050 --> 00:39:03.633 align:middle line:84% But it seems like there's an imminent threat at some point-- 00:39:03.633 --> 00:39:06.050 align:middle line:84% IRVING WLADAWSKY-BERGER: With blogs, and wikis, and so on, 00:39:06.050 --> 00:39:07.390 align:middle line:90% you mean? 00:39:07.390 --> 00:39:10.070 align:middle line:84% AUDIENCE: Just with the whole agile development approach 00:39:10.070 --> 00:39:11.350 align:middle line:90% as opposed to the traditional. 00:39:11.350 --> 00:39:15.270 align:middle line:84% IRVING WLADAWSKY-BERGER: Yeah, mashups and things like that. 00:39:15.270 --> 00:39:18.323 align:middle line:90% Oh, absolutely. 00:39:18.323 --> 00:39:23.390 align:middle line:84% I think what's going on with mashups, and widgets, 00:39:23.390 --> 00:39:26.610 align:middle line:84% and widgets, and stuff are part of that, 00:39:26.610 --> 00:39:28.470 align:middle line:90% I think that is phenomenal. 00:39:28.470 --> 00:39:33.590 align:middle line:84% And I mean, obviously, if the Federal Reserve Bank 00:39:33.590 --> 00:39:37.370 align:middle line:84% said, we will now do funds transfer using widgets, 00:39:37.370 --> 00:39:38.590 align:middle line:90% I'd be very worried. 00:39:38.590 --> 00:39:41.510 align:middle line:84% And I would advise them not to do that. 00:39:41.510 --> 00:39:44.970 align:middle line:84% So you have to pick your segments. 00:39:44.970 --> 00:39:52.930 align:middle line:84% But outside the absolute mission-critical segments, 00:39:52.930 --> 00:39:54.890 align:middle line:84% the amount of innovation that you 00:39:54.890 --> 00:39:58.650 align:middle line:84% can do with agile development, and also 00:39:58.650 --> 00:40:02.130 align:middle line:84% the whole notion of casual applications 00:40:02.130 --> 00:40:08.530 align:middle line:84% that, until you know more about it, throw it out and do it again 00:40:08.530 --> 00:40:09.690 align:middle line:90% is OK. 00:40:09.690 --> 00:40:12.310 align:middle line:90% And that's a whole movement. 00:40:12.310 --> 00:40:17.110 align:middle line:84% I view that as an outgrowth of Web 2.0. 00:40:17.110 --> 00:40:22.410 align:middle line:84% Wouldn't you say that it's all an evolution of that? 00:40:22.410 --> 00:40:26.770 align:middle line:84% So yeah, I think every company needs to pay attention. 00:40:26.770 --> 00:40:30.530 align:middle line:84% And what's difficult-- and this is why the cultural things is 00:40:30.530 --> 00:40:33.930 align:middle line:84% are so important-- is, remember, if you use it 00:40:33.930 --> 00:40:36.850 align:middle line:84% in the wrong place, it'd be disastrous. 00:40:36.850 --> 00:40:39.310 align:middle line:84% But if you don't use it in the right places, 00:40:39.310 --> 00:40:42.550 align:middle line:84% It's also going to be disastrous because you'll fall behind. 00:40:42.550 --> 00:40:44.790 align:middle line:84% I mean, you have long development cycles, 00:40:44.790 --> 00:40:47.190 align:middle line:84% and your competitors are killing you. 00:40:47.190 --> 00:40:50.050 align:middle line:84% So you need that dialogue to say, 00:40:50.050 --> 00:40:52.150 align:middle line:84% what's the right balance when you 00:40:52.150 --> 00:40:58.890 align:middle line:84% have to use the more rigid development cycles? 00:40:58.890 --> 00:41:02.110 align:middle line:84% And when can you use, the more open ones? 00:41:02.110 --> 00:41:03.930 align:middle line:84% AUDIENCE: It seems like there's a risk too. 00:41:03.930 --> 00:41:05.770 align:middle line:90% And this relates to L.L.Bean. 00:41:05.770 --> 00:41:08.270 align:middle line:84% If you choose the wrong projects that 00:41:08.270 --> 00:41:11.263 align:middle line:84% really have no chance of success and it's a pilot, 00:41:11.263 --> 00:41:13.430 align:middle line:84% then there's a good chance that that entire movement 00:41:13.430 --> 00:41:14.290 align:middle line:90% could be squashed. 00:41:14.290 --> 00:41:15.030 align:middle line:84% IRVING WLADAWSKY-BERGER: Absolutely. 00:41:15.030 --> 00:41:15.530 align:middle line:90% Yeah. 00:41:15.530 --> 00:41:18.190 align:middle line:90% 00:41:18.190 --> 00:41:21.310 align:middle line:90% In the early stages-- 00:41:21.310 --> 00:41:23.810 align:middle line:84% that's why, in the class project, 00:41:23.810 --> 00:41:27.590 align:middle line:84% I keep advocating do a first phase that 00:41:27.590 --> 00:41:35.790 align:middle line:84% can succeed because once you're in the marketplace, 00:41:35.790 --> 00:41:37.830 align:middle line:90% life is different. 00:41:37.830 --> 00:41:42.760 align:middle line:84% It's almost like getting on first is really difficult. 00:41:42.760 --> 00:41:46.000 align:middle line:84% Once you're in the bases, you're changing the game. 00:41:46.000 --> 00:41:47.960 align:middle line:90% You're messing with the picture. 00:41:47.960 --> 00:41:49.800 align:middle line:84% I know it's after baseball season, 00:41:49.800 --> 00:41:52.260 align:middle line:84% but I don't know the football equivalency. 00:41:52.260 --> 00:41:55.380 align:middle line:90% 00:41:55.380 --> 00:41:57.540 align:middle line:84% I guess you are close to the goal. 00:41:57.540 --> 00:41:59.540 align:middle line:90% But you-- 00:41:59.540 --> 00:42:01.160 align:middle line:84% AUDIENCE: Disruptive footholders. 00:42:01.160 --> 00:42:02.410 align:middle line:90% IRVING WLADAWSKY-BERGER: Yeah. 00:42:02.410 --> 00:42:04.860 align:middle line:84% You have a foothold in the marketplace, 00:42:04.860 --> 00:42:09.620 align:middle line:84% and you're beginning to get real marketplace feedback. 00:42:09.620 --> 00:42:11.400 align:middle line:84% Whereas before, you're in the lab. 00:42:11.400 --> 00:42:14.940 align:middle line:84% You're not in the field, playing the game. 00:42:14.940 --> 00:42:21.180 align:middle line:84% And that's why, for marketplace innovations, 00:42:21.180 --> 00:42:24.780 align:middle line:84% in particular, getting there quickly 00:42:24.780 --> 00:42:27.380 align:middle line:84% is so important, which is why so many-- 00:42:27.380 --> 00:42:29.300 align:middle line:90% you may not notice. 00:42:29.300 --> 00:42:33.900 align:middle line:84% It gets back to the casual thing because you may not 00:42:33.900 --> 00:42:36.760 align:middle line:84% be able to get that with the fully tested, 00:42:36.760 --> 00:42:38.560 align:middle line:90% scalable everything else. 00:42:38.560 --> 00:42:42.160 align:middle line:84% But as long as you tell your Users, This is a beta. 00:42:42.160 --> 00:42:43.420 align:middle line:90% It's a widget. 00:42:43.420 --> 00:42:44.800 align:middle line:90% It's something. 00:42:44.800 --> 00:42:46.060 align:middle line:90% It's experimental. 00:42:46.060 --> 00:42:47.607 align:middle line:90% They'll be very forgiving. 00:42:47.607 --> 00:42:48.940 align:middle line:90% They say, well, it doesn't work. 00:42:48.940 --> 00:42:51.040 align:middle line:90% Well, well then don't use it. 00:42:51.040 --> 00:42:52.820 align:middle line:90% Well, but I'm a smart person. 00:42:52.820 --> 00:42:54.560 align:middle line:90% Well, then use it. 00:42:54.560 --> 00:42:57.320 align:middle line:84% And you get a self-selection of people who 00:42:57.320 --> 00:43:00.640 align:middle line:90% are willing to use it or not. 00:43:00.640 --> 00:43:05.680 align:middle line:84% But that's very cultural, whether organizations feel 00:43:05.680 --> 00:43:07.720 align:middle line:90% comfortable doing that or not. 00:43:07.720 --> 00:43:10.980 align:middle line:84% And it's cultural, as you were saying, 00:43:10.980 --> 00:43:14.080 align:middle line:84% down to the middle management level, 00:43:14.080 --> 00:43:16.780 align:middle line:84% because even within a very open organization, 00:43:16.780 --> 00:43:21.360 align:middle line:84% you can have a very anal middle manager. 00:43:21.360 --> 00:43:23.400 align:middle line:84% And I would advise that person they 00:43:23.400 --> 00:43:26.480 align:middle line:84% should move to a more operational side of the house 00:43:26.480 --> 00:43:31.320 align:middle line:84% where what the finance, what they're doing 00:43:31.320 --> 00:43:34.940 align:middle line:84% makes sense, although they may not have any finance. 00:43:34.940 --> 00:43:37.340 align:middle line:84% So you have to find where you fit. 00:43:37.340 --> 00:43:42.660 align:middle line:84% Also, in a world like now, where there are so many companies, 00:43:42.660 --> 00:43:43.517 align:middle line:90% as you all-- 00:43:43.517 --> 00:43:44.600 align:middle line:90% I mean, you all have jobs. 00:43:44.600 --> 00:43:46.200 align:middle line:84% But as you all look at the market, 00:43:46.200 --> 00:43:50.140 align:middle line:84% these are all things you want to find a good fit between what you 00:43:50.140 --> 00:43:54.580 align:middle line:84% are comfortable and the culture of the place you work in, 00:43:54.580 --> 00:43:58.640 align:middle line:84% because the better the cultural fit, the happier you'll be, 00:43:58.640 --> 00:44:01.760 align:middle line:84% and the more they'll appreciate what you're good at. 00:44:01.760 --> 00:44:05.060 align:middle line:90% 00:44:05.060 --> 00:44:08.420 align:middle line:84% AUDIENCE: I took a class at Sloan 00:44:08.420 --> 00:44:11.860 align:middle line:84% by Professor Tom Allen called Organizing 00:44:11.860 --> 00:44:14.820 align:middle line:90% for Innovative Development. 00:44:14.820 --> 00:44:17.500 align:middle line:84% So in that, he says that there are 00:44:17.500 --> 00:44:20.060 align:middle line:84% three ways in which outside knowledge comes 00:44:20.060 --> 00:44:22.220 align:middle line:90% inside an organization. 00:44:22.220 --> 00:44:26.500 align:middle line:84% One is by the written word, if you look at journals 00:44:26.500 --> 00:44:27.620 align:middle line:90% and and all. 00:44:27.620 --> 00:44:31.400 align:middle line:84% The other is you have certain people, 00:44:31.400 --> 00:44:34.380 align:middle line:84% few people in the company who are like gatekeepers 00:44:34.380 --> 00:44:36.870 align:middle line:84% of all the information that comes from outside, 00:44:36.870 --> 00:44:40.130 align:middle line:84% because they are the real people who actually 00:44:40.130 --> 00:44:41.570 align:middle line:90% read all those journals. 00:44:41.570 --> 00:44:43.530 align:middle line:90% Not everybody does. 00:44:43.530 --> 00:44:45.530 align:middle line:84% And so it's really those gatekeepers 00:44:45.530 --> 00:44:49.970 align:middle line:84% who need to have access to internet 00:44:49.970 --> 00:44:54.422 align:middle line:84% and everything, anything that can be disruptive to everybody 00:44:54.422 --> 00:44:55.730 align:middle line:90% else. 00:44:55.730 --> 00:44:59.075 align:middle line:90% I don't know if that fits into-- 00:44:59.075 --> 00:45:00.950 align:middle line:84% IRVING WLADAWSKY-BERGER: No, it totally does. 00:45:00.950 --> 00:45:02.830 align:middle line:90% It gets into a question. 00:45:02.830 --> 00:45:12.330 align:middle line:84% Let's talk about leadership here because, remember, 00:45:12.330 --> 00:45:18.130 align:middle line:84% at some level, you want your organization 00:45:18.130 --> 00:45:21.970 align:middle line:84% to be as innovative as possible-- and let me repeat, 00:45:21.970 --> 00:45:25.630 align:middle line:84% asterisks-- while continuing to make the goddamn quarter. 00:45:25.630 --> 00:45:33.650 align:middle line:84% So make that assumption because if your organization says, 00:45:33.650 --> 00:45:37.030 align:middle line:90% oh, the CEO says be innovative. 00:45:37.030 --> 00:45:41.790 align:middle line:84% Screw shipping stuff to clients and so on. 00:45:41.790 --> 00:45:44.130 align:middle line:84% You have about a quarter and a half to do that. 00:45:44.130 --> 00:45:47.310 align:middle line:84% And then the CEO is gone and so are you, probably. 00:45:47.310 --> 00:45:52.070 align:middle line:84% So if you want to do that, one of the things that 00:45:52.070 --> 00:45:56.910 align:middle line:84% was interesting in the Tushman-Nadler paper 00:45:56.910 --> 00:46:01.190 align:middle line:84% is they were saying, what kind of leaders 00:46:01.190 --> 00:46:10.390 align:middle line:84% do you want to encourage that kind of innovative behavior? 00:46:10.390 --> 00:46:16.270 align:middle line:84% And they mentioned the notion of the charismatic leader. 00:46:16.270 --> 00:46:22.790 align:middle line:84% And they define these three key qualities 00:46:22.790 --> 00:46:24.610 align:middle line:90% that the leader should have. 00:46:24.610 --> 00:46:28.150 align:middle line:84% One is envisioning, which is really the ability 00:46:28.150 --> 00:46:32.130 align:middle line:84% to earn articulated very compelling future, 00:46:32.130 --> 00:46:40.450 align:middle line:84% Energizing, which is be so excited about it, so much energy 00:46:40.450 --> 00:46:46.110 align:middle line:84% that their energy transfers to you. 00:46:46.110 --> 00:46:48.710 align:middle line:84% Their excitement causes excitement in you. 00:46:48.710 --> 00:46:50.350 align:middle line:90% And you want to do that. 00:46:50.350 --> 00:46:55.610 align:middle line:84% And then enabling in that, and they will help you do that. 00:46:55.610 --> 00:46:59.050 align:middle line:84% When you say, great, you got me all excited, 00:46:59.050 --> 00:47:01.270 align:middle line:84% they will actually then sit down with you. 00:47:01.270 --> 00:47:05.470 align:middle line:84% Now, what's important to your question is that-- 00:47:05.470 --> 00:47:08.250 align:middle line:90% 00:47:08.250 --> 00:47:16.130 align:middle line:84% I mean, at some level, for whatever job people are doing, 00:47:16.130 --> 00:47:19.870 align:middle line:84% you want them energized, and you want to enable them. 00:47:19.870 --> 00:47:22.562 align:middle line:90% 00:47:22.562 --> 00:47:26.010 align:middle line:84% I would say, but so have a lot of other people, 00:47:26.010 --> 00:47:32.150 align:middle line:84% one of the critical differences between the Toyota way 00:47:32.150 --> 00:47:35.070 align:middle line:84% and what has been the classic Detroit 00:47:35.070 --> 00:47:41.230 align:middle line:84% approach is the way they treated the people on the manufacturing 00:47:41.230 --> 00:47:43.830 align:middle line:90% plant floor. 00:47:43.830 --> 00:47:51.550 align:middle line:84% And Detroit, because probably the history of union conflict, 00:47:51.550 --> 00:47:54.850 align:middle line:84% it was just a totally hostile relationship. 00:47:54.850 --> 00:47:59.950 align:middle line:84% In fact, I'm not sure to this day it's gotten much better. 00:47:59.950 --> 00:48:09.790 align:middle line:84% And the notion of the top of the company in a believable way, 00:48:09.790 --> 00:48:12.170 align:middle line:84% addressing things-- we want your help. 00:48:12.170 --> 00:48:16.430 align:middle line:84% We want this I mean, even 25 years 00:48:16.430 --> 00:48:21.650 align:middle line:84% after all this has started, even today, I don't think it's there. 00:48:21.650 --> 00:48:23.950 align:middle line:90% Would you agree with that? 00:48:23.950 --> 00:48:30.660 align:middle line:84% Whereas in the Toyota way, the quality circles. 00:48:30.660 --> 00:48:31.840 align:middle line:90% And this is real. 00:48:31.840 --> 00:48:35.540 align:middle line:84% I mean, I've heard the Toyota senior executives, including 00:48:35.540 --> 00:48:39.300 align:middle line:84% their present chairman speak, could see these people were 00:48:39.300 --> 00:48:40.840 align:middle line:90% really doing that. 00:48:40.840 --> 00:48:43.320 align:middle line:90% You're energizing the people. 00:48:43.320 --> 00:48:45.480 align:middle line:90% You say, our vision is-- 00:48:45.480 --> 00:48:48.380 align:middle line:84% I mean, you don't want them to design new cars 00:48:48.380 --> 00:48:50.400 align:middle line:84% in the manufacturing plant floor. 00:48:50.400 --> 00:48:58.480 align:middle line:84% So what you were envisioning is a Six Sigma, zero defects. 00:48:58.480 --> 00:49:02.540 align:middle line:84% Don't underestimate zero defects is a hell of a stretch goal. 00:49:02.540 --> 00:49:05.120 align:middle line:90% And you were energizing them. 00:49:05.120 --> 00:49:08.300 align:middle line:84% We need your help to do zero defects. 00:49:08.300 --> 00:49:11.920 align:middle line:84% And you were giving them tools like, when you see a defect, 00:49:11.920 --> 00:49:15.372 align:middle line:90% stop the manufacturing floor-- 00:49:15.372 --> 00:49:16.580 align:middle line:90% which I don't know what the-- 00:49:16.580 --> 00:49:18.943 align:middle line:84% I'm sure there is a Japanese name for. 00:49:18.943 --> 00:49:19.860 align:middle line:90% AUDIENCE: [? Andon. ?] 00:49:19.860 --> 00:49:21.140 align:middle line:84% IRVING WLADAWSKY-BERGER: I'm sorry? 00:49:21.140 --> 00:49:21.540 align:middle line:90% AUDIENCE: [? Andon. ?] 00:49:21.540 --> 00:49:23.582 align:middle line:84% IRVING WLADAWSKY-BERGER: That's what it's called? 00:49:23.582 --> 00:49:25.100 align:middle line:90% So they were doing that. 00:49:25.100 --> 00:49:29.800 align:middle line:84% And that was just such a different organizational 00:49:29.800 --> 00:49:32.720 align:middle line:90% behavior that came down. 00:49:32.720 --> 00:49:36.120 align:middle line:84% And to this day, Detroit just hasn't 00:49:36.120 --> 00:49:41.200 align:middle line:90% been able to catch up with it. 00:49:41.200 --> 00:49:46.800 align:middle line:84% On a different way, on a look at-- 00:49:46.800 --> 00:49:49.575 align:middle line:90% 00:49:49.575 --> 00:49:55.720 align:middle line:84% I think the innovation, the VC kind 00:49:55.720 --> 00:50:00.520 align:middle line:84% of innovation air in the US, Silicon Valley 00:50:00.520 --> 00:50:04.400 align:middle line:84% and especially is just incredible in the way 00:50:04.400 --> 00:50:09.520 align:middle line:84% it energizes people to want to do new things. 00:50:09.520 --> 00:50:13.940 align:middle line:84% And again, as you know, this has changed. 00:50:13.940 --> 00:50:18.160 align:middle line:84% But I in the '90s, everybody would say, boy, 00:50:18.160 --> 00:50:22.480 align:middle line:84% Indians are incredibly innovative. 00:50:22.480 --> 00:50:25.580 align:middle line:84% They just all had to come to Silicon Valley 00:50:25.580 --> 00:50:27.800 align:middle line:84% to do that because the environment, 00:50:27.800 --> 00:50:34.980 align:middle line:84% the overall leadership, everything was very encouraging 00:50:34.980 --> 00:50:36.200 align:middle line:90% of innovation. 00:50:36.200 --> 00:50:38.860 align:middle line:84% Whereas in India, the bureaucracy 00:50:38.860 --> 00:50:41.240 align:middle line:84% was just stifling that innovation. 00:50:41.240 --> 00:50:44.920 align:middle line:84% I think, obviously, there's been a number of changes, 00:50:44.920 --> 00:50:47.300 align:middle line:90% so that started to change. 00:50:47.300 --> 00:50:53.400 align:middle line:84% But leadership is absolutely critical. 00:50:53.400 --> 00:50:57.460 align:middle line:84% And in fact, without-- if a company 00:50:57.460 --> 00:51:02.540 align:middle line:84% has top leaders who think this is bullshit, 00:51:02.540 --> 00:51:04.240 align:middle line:90% it will get communicated. 00:51:04.240 --> 00:51:06.080 align:middle line:90% It will just get communicated. 00:51:06.080 --> 00:51:07.820 align:middle line:90% I don't know how else to say it. 00:51:07.820 --> 00:51:14.320 align:middle line:84% You can smell whether people really mean it or not. 00:51:14.320 --> 00:51:17.340 align:middle line:84% And if they don't mean it, you can say whatever you want to, 00:51:17.340 --> 00:51:19.160 align:middle line:90% and it's not going to happen. 00:51:19.160 --> 00:51:21.180 align:middle line:90% You really have to live it. 00:51:21.180 --> 00:51:23.280 align:middle line:90% And then it gets back to-- 00:51:23.280 --> 00:51:27.000 align:middle line:84% and if your middle managers are going to be the key vehicle 00:51:27.000 --> 00:51:29.960 align:middle line:84% to communicate the culture, you better 00:51:29.960 --> 00:51:33.000 align:middle line:84% pick middle managers very carefully 00:51:33.000 --> 00:51:35.220 align:middle line:84% so they can communicate the culture. 00:51:35.220 --> 00:51:36.080 align:middle line:90% Please? 00:51:36.080 --> 00:51:39.200 align:middle line:84% AUDIENCE: I think a lot of companies 00:51:39.200 --> 00:51:42.440 align:middle line:84% have two separate tracks in technology 00:51:42.440 --> 00:51:45.260 align:middle line:84% companies technical track and management track. 00:51:45.260 --> 00:51:49.840 align:middle line:84% And they seem to be giving this impression to-- 00:51:49.840 --> 00:51:52.840 align:middle line:84% it's very difficult for somebody who's a smart engineer, 00:51:52.840 --> 00:51:55.520 align:middle line:84% and they put them up almost on the technical track 00:51:55.520 --> 00:51:58.600 align:middle line:84% to switch and have this mindset that you have to have an MBA 00:51:58.600 --> 00:52:00.200 align:middle line:90% and do other things and other. 00:52:00.200 --> 00:52:04.640 align:middle line:84% You're not suitable for the business. 00:52:04.640 --> 00:52:08.800 align:middle line:84% Is that in our organizations doing the wrong thing there 00:52:08.800 --> 00:52:13.080 align:middle line:84% by not having this cross-pollination? 00:52:13.080 --> 00:52:17.320 align:middle line:90% Even IBM has this IBM Research. 00:52:17.320 --> 00:52:19.500 align:middle line:90% And there are divisions. 00:52:19.500 --> 00:52:22.790 align:middle line:84% For example, sales as everybody is 00:52:22.790 --> 00:52:24.870 align:middle line:84% very familiar with the business track 00:52:24.870 --> 00:52:29.150 align:middle line:90% R&D or operations might be. 00:52:29.150 --> 00:52:32.210 align:middle line:84% Everybody knows what you need to do for the technical track. 00:52:32.210 --> 00:52:35.670 align:middle line:84% But nobody has any clue how to guide you 00:52:35.670 --> 00:52:37.597 align:middle line:84% or do anything in the business track. 00:52:37.597 --> 00:52:38.430 align:middle line:90% You almost have to-- 00:52:38.430 --> 00:52:39.890 align:middle line:84% IRVING WLADAWSKY-BERGER: No, no, I understand. 00:52:39.890 --> 00:52:42.190 align:middle line:84% AUDIENCE: --and go back in again to go on with other things. 00:52:42.190 --> 00:52:43.440 align:middle line:90% IRVING WLADAWSKY-BERGER: Yeah. 00:52:43.440 --> 00:52:44.850 align:middle line:84% No, that's an excellent question. 00:52:44.850 --> 00:52:49.190 align:middle line:84% Let me tell you my feelings, my experience. 00:52:49.190 --> 00:52:57.270 align:middle line:84% And obviously, let me start with my experience with IBM. 00:52:57.270 --> 00:53:01.790 align:middle line:84% In the old days, executive resource planning 00:53:01.790 --> 00:53:04.550 align:middle line:90% was just management tracks. 00:53:04.550 --> 00:53:09.070 align:middle line:84% And there were you identify which people 00:53:09.070 --> 00:53:11.310 align:middle line:90% are likely to go up the line. 00:53:11.310 --> 00:53:15.950 align:middle line:84% And going up the line was equated 00:53:15.950 --> 00:53:19.950 align:middle line:84% with managing more responsibility, 00:53:19.950 --> 00:53:23.010 align:middle line:90% managing more people. 00:53:23.010 --> 00:53:28.370 align:middle line:84% And that was executive resource planning. 00:53:28.370 --> 00:53:34.810 align:middle line:84% Now, technical people could be part of executive resource 00:53:34.810 --> 00:53:35.470 align:middle line:90% planning. 00:53:35.470 --> 00:53:38.370 align:middle line:84% So it wasn't that only applies to salespeople, 00:53:38.370 --> 00:53:40.990 align:middle line:84% or you could have technical people there. 00:53:40.990 --> 00:53:46.230 align:middle line:84% But then what we started to notice is that-- first of all, 00:53:46.230 --> 00:53:49.930 align:middle line:84% there were quite a few technical people who were superb, 00:53:49.930 --> 00:53:56.330 align:middle line:84% but they just were not good at the nitty-gritty of management 00:53:56.330 --> 00:54:01.490 align:middle line:84% because the kind of attention to detail or the kind 00:54:01.490 --> 00:54:04.430 align:middle line:84% of-- remember, when you're a manager, 00:54:04.430 --> 00:54:10.290 align:middle line:84% especially if you're a general manager, and some job shows up, 00:54:10.290 --> 00:54:14.530 align:middle line:84% you cannot say, well, I don't like to do that. 00:54:14.530 --> 00:54:16.250 align:middle line:90% You don't have a choice. 00:54:16.250 --> 00:54:20.210 align:middle line:84% If you say, I want to pick the kinds of things 00:54:20.210 --> 00:54:23.870 align:middle line:84% I do, the answer should be, well, I hope you're really good, 00:54:23.870 --> 00:54:27.590 align:middle line:84% and you are on a technical track, because, there, 00:54:27.590 --> 00:54:29.810 align:middle line:84% if you're good and you're in a technical track, 00:54:29.810 --> 00:54:33.470 align:middle line:84% you have choice of picking what you do and what you don't do. 00:54:33.470 --> 00:54:37.070 align:middle line:84% If you're on a management track, general management 00:54:37.070 --> 00:54:42.950 align:middle line:84% means if there is crap to be done, you'll do it. 00:54:42.950 --> 00:54:44.050 align:middle line:90% And you do it. 00:54:44.050 --> 00:54:46.050 align:middle line:84% If you're a really good general manager, 00:54:46.050 --> 00:54:48.910 align:middle line:84% you'll find somebody else who will do it for you, whether they 00:54:48.910 --> 00:54:50.510 align:middle line:90% report to you or not. 00:54:50.510 --> 00:54:52.950 align:middle line:90% But you don't have a choice. 00:54:52.950 --> 00:54:56.150 align:middle line:84% Those are different personality types, 00:54:56.150 --> 00:55:00.410 align:middle line:84% let alone just the ability to be a good people manager. 00:55:00.410 --> 00:55:04.590 align:middle line:84% Often, people were superb technically, 00:55:04.590 --> 00:55:07.510 align:middle line:90% just lousy people managers. 00:55:07.510 --> 00:55:12.030 align:middle line:84% So that's how we invented the technical track, 00:55:12.030 --> 00:55:17.820 align:middle line:84% because it was a pity to not be able to promote technical people 00:55:17.820 --> 00:55:19.860 align:middle line:90% who were incredibly good. 00:55:19.860 --> 00:55:23.060 align:middle line:84% And we needed them more and more because they didn't 00:55:23.060 --> 00:55:25.260 align:middle line:90% have general management skills. 00:55:25.260 --> 00:55:28.680 align:middle line:84% And we had enough people with general management skills. 00:55:28.680 --> 00:55:31.860 align:middle line:84% So the technical track was born that way. 00:55:31.860 --> 00:55:35.620 align:middle line:84% And people were comfortable that they got promotions 00:55:35.620 --> 00:55:38.300 align:middle line:84% to senior technical staff member, 00:55:38.300 --> 00:55:41.460 align:middle line:84% to distinguished engineer, and then very few of them 00:55:41.460 --> 00:55:42.900 align:middle line:90% to fellows. 00:55:42.900 --> 00:55:45.780 align:middle line:90% So that's how they were born. 00:55:45.780 --> 00:55:55.500 align:middle line:84% And I think, in today's world, I think 00:55:55.500 --> 00:55:59.140 align:middle line:84% that there are more porous, partly 00:55:59.140 --> 00:56:04.580 align:middle line:84% because, at the same time that the organization is 00:56:04.580 --> 00:56:09.380 align:middle line:84% disaggregating and becoming more virtual, 00:56:09.380 --> 00:56:14.720 align:middle line:84% just pure management is less important. 00:56:14.720 --> 00:56:20.140 align:middle line:84% I mean, you need some people-- budgets, and sexual harassment. 00:56:20.140 --> 00:56:20.900 align:middle line:90% Don't forget. 00:56:20.900 --> 00:56:23.640 align:middle line:84% I mean, remember, most IBM fellas 00:56:23.640 --> 00:56:26.440 align:middle line:84% don't like to deal with sexual harassment issues that 00:56:26.440 --> 00:56:27.640 align:middle line:90% may have happened. 00:56:27.640 --> 00:56:31.520 align:middle line:84% But I don't need to tell you, if you are a manager and somebody 00:56:31.520 --> 00:56:35.440 align:middle line:84% who works for you did something they shouldn't have done, 00:56:35.440 --> 00:56:38.260 align:middle line:84% everything has to stop, and you have to take care of that. 00:56:38.260 --> 00:56:40.840 align:middle line:84% Or else, it will absolutely blow up 00:56:40.840 --> 00:56:44.100 align:middle line:84% in the organization, especially if it blows up externally. 00:56:44.100 --> 00:56:46.760 align:middle line:84% But if you're a general manager, you know that. 00:56:46.760 --> 00:56:48.700 align:middle line:84% And you know you have to do that. 00:56:48.700 --> 00:56:50.560 align:middle line:84% But if you don't want to do that, 00:56:50.560 --> 00:56:53.560 align:middle line:90% you have a different track. 00:56:53.560 --> 00:56:56.840 align:middle line:84% But with virtual organization, with more 00:56:56.840 --> 00:57:00.280 align:middle line:84% distributed organizations, I think 00:57:00.280 --> 00:57:02.300 align:middle line:90% leadership is more important. 00:57:02.300 --> 00:57:05.680 align:middle line:84% And you can be on a technical track 00:57:05.680 --> 00:57:13.440 align:middle line:84% and be a superb technical leader along these dimensions, 00:57:13.440 --> 00:57:15.820 align:middle line:90% just superb technical leader. 00:57:15.820 --> 00:57:19.780 align:middle line:84% And you can be a leader of a virtual community of people 00:57:19.780 --> 00:57:24.520 align:middle line:84% who worry about virtualization or collaborative networks, 00:57:24.520 --> 00:57:25.480 align:middle line:90% whatever. 00:57:25.480 --> 00:57:29.100 align:middle line:84% But you don't want any of them working for you. 00:57:29.100 --> 00:57:33.900 align:middle line:84% You don't want to, but you can be a superb leader of that. 00:57:33.900 --> 00:57:37.200 align:middle line:84% And in the hierarchy, it's a little bit less important. 00:57:37.200 --> 00:57:40.180 align:middle line:84% So I think it's changing and more porous. 00:57:40.180 --> 00:57:45.540 align:middle line:84% But the two tracks, I believe, was a response. 00:57:45.540 --> 00:57:51.240 align:middle line:84% If you look at, in the US, the classic organization men 00:57:51.240 --> 00:57:53.240 align:middle line:90% and so on was just one track. 00:57:53.240 --> 00:57:58.360 align:middle line:84% Your aspiration is to manage as many people as possible. 00:57:58.360 --> 00:58:00.000 align:middle line:90% That was your aspiration. 00:58:00.000 --> 00:58:02.900 align:middle line:90% 00:58:02.900 --> 00:58:07.540 align:middle line:84% And if you had to move from Boston 00:58:07.540 --> 00:58:14.760 align:middle line:84% to North Dakota to wherever to go open the organization, 00:58:14.760 --> 00:58:15.940 align:middle line:90% you just did it. 00:58:15.940 --> 00:58:20.120 align:middle line:84% And if your wife didn't like it, and your kids were in school, 00:58:20.120 --> 00:58:24.860 align:middle line:84% and pulling teenagers out of high school is not a good idea, 00:58:24.860 --> 00:58:27.780 align:middle line:84% it's like, hey, the organization needs you. 00:58:27.780 --> 00:58:32.280 align:middle line:84% And we live in a very different world and dual careers 00:58:32.280 --> 00:58:34.720 align:middle line:90% and everything else. 00:58:34.720 --> 00:58:40.320 align:middle line:84% So I think these are all things that are changing and causing 00:58:40.320 --> 00:58:42.620 align:middle line:84% a lot of agitation in many companies. 00:58:42.620 --> 00:58:48.300 align:middle line:84% How do you handle today's environment, 00:58:48.300 --> 00:58:53.560 align:middle line:84% where the classic hierarchy and the classic upward mobility 00:58:53.560 --> 00:58:57.040 align:middle line:90% are not what they used to be? 00:58:57.040 --> 00:58:59.040 align:middle line:84% Do you see that in the organizations 00:58:59.040 --> 00:59:04.060 align:middle line:84% you have all been working on, these similar tensions? 00:59:04.060 --> 00:59:10.750 align:middle line:90% 00:59:10.750 --> 00:59:16.070 align:middle line:84% So are there limitations to the charismatic leader? 00:59:16.070 --> 00:59:22.350 align:middle line:90% 00:59:22.350 --> 00:59:25.090 align:middle line:84% Tushman and Nadler make a very good case 00:59:25.090 --> 00:59:29.970 align:middle line:84% why the charismatic leader has limitations. 00:59:29.970 --> 00:59:34.990 align:middle line:84% And the key limitations is, often, 00:59:34.990 --> 00:59:43.030 align:middle line:84% being a great charismatic leader in these areas may-- 00:59:43.030 --> 00:59:46.430 align:middle line:84% you may not be very good at execution at all. 00:59:46.430 --> 00:59:48.810 align:middle line:84% So you may get everybody turned on. 00:59:48.810 --> 00:59:50.590 align:middle line:90% Let's do something. 00:59:50.590 --> 00:59:52.370 align:middle line:84% And when they show up and they say, 00:59:52.370 --> 00:59:55.870 align:middle line:84% great, I'm ready to go, they'll keep telling you 00:59:55.870 --> 00:59:58.130 align:middle line:84% how wonderful it is, what you're going to do. 00:59:58.130 --> 00:59:58.970 align:middle line:90% And you say, I know. 00:59:58.970 --> 00:59:59.650 align:middle line:90% It's wonderful. 00:59:59.650 --> 01:00:00.790 align:middle line:90% I'm signed up. 01:00:00.790 --> 01:00:02.470 align:middle line:90% That's ready to go. 01:00:02.470 --> 01:00:04.830 align:middle line:84% And they say, well, it's wonderful. 01:00:04.830 --> 01:00:05.490 align:middle line:90% Shut up. 01:00:05.490 --> 01:00:07.130 align:middle line:90% What should I do? 01:00:07.130 --> 01:00:12.850 align:middle line:84% And they may not be very good at these dimensions. 01:00:12.850 --> 01:00:21.090 align:middle line:84% And that's why they introduce a very, very important leadership 01:00:21.090 --> 01:00:28.050 align:middle line:84% element, which is people who are very good at organization-- 01:00:28.050 --> 01:00:33.770 align:middle line:84% that is, people who are very good at not just articulating 01:00:33.770 --> 01:00:35.970 align:middle line:84% a vision, but they may actually not 01:00:35.970 --> 01:00:38.270 align:middle line:84% be great at articulating a vision. 01:00:38.270 --> 01:00:40.770 align:middle line:84% They may be great at taking a vision 01:00:40.770 --> 01:00:44.210 align:middle line:84% that the charismatic leader has articulated it 01:00:44.210 --> 01:00:47.090 align:middle line:90% and organizing its execution-- 01:00:47.090 --> 01:00:51.530 align:middle line:84% how to put a structure, how to establish 01:00:51.530 --> 01:00:56.730 align:middle line:84% processes, how to manage people with rewards and punishments. 01:00:56.730 --> 01:00:59.650 align:middle line:84% And the bottom line is, especially 01:00:59.650 --> 01:01:02.290 align:middle line:84% in complex disruptive innovations, 01:01:02.290 --> 01:01:04.590 align:middle line:90% you need a mixture of the two. 01:01:04.590 --> 01:01:08.450 align:middle line:84% And they usually are not found in one person. 01:01:08.450 --> 01:01:10.110 align:middle line:90% They usually are not. 01:01:10.110 --> 01:01:15.790 align:middle line:84% Usually, you find that as people are going up the management 01:01:15.790 --> 01:01:24.230 align:middle line:84% ranks, they self-select whether they'll be more in one style 01:01:24.230 --> 01:01:27.350 align:middle line:84% and more superb operational executive, 01:01:27.350 --> 01:01:32.430 align:middle line:84% or whether they'll be more on the visionary, charismatic 01:01:32.430 --> 01:01:34.470 align:middle line:90% leader side. 01:01:34.470 --> 01:01:40.550 align:middle line:84% Now, what is critical is you have to know which you are 01:01:40.550 --> 01:01:42.710 align:middle line:84% and which you are not, because if you know 01:01:42.710 --> 01:01:45.370 align:middle line:84% and if you have a very good view of yourself, 01:01:45.370 --> 01:01:49.650 align:middle line:84% you will hire a COO or somebody else. 01:01:49.650 --> 01:01:52.070 align:middle line:84% Or if you're a general manager, you'll 01:01:52.070 --> 01:01:56.190 align:middle line:84% handle a VP or somebody to make up 01:01:56.190 --> 01:01:58.090 align:middle line:84% for those things you are not great at. 01:01:58.090 --> 01:01:59.250 align:middle line:90% And it's totally fine. 01:01:59.250 --> 01:02:04.610 align:middle line:84% You don't have to do all the things you don't enjoy doing, 01:02:04.610 --> 01:02:06.730 align:middle line:90% as long as they get done. 01:02:06.730 --> 01:02:10.010 align:middle line:84% I've given the example, I think, before 01:02:10.010 --> 01:02:15.050 align:middle line:84% that with Lou Gerstner, who he just-- especially when he first 01:02:15.050 --> 01:02:19.610 align:middle line:84% came to IBM, he had to spend a lot of time 01:02:19.610 --> 01:02:24.610 align:middle line:84% in being a very visionary leader because the company was almost 01:02:24.610 --> 01:02:25.450 align:middle line:90% dying. 01:02:25.450 --> 01:02:28.890 align:middle line:84% But at the same time, we had to take out $7 billion 01:02:28.890 --> 01:02:31.050 align:middle line:84% in cost and expense from the budget 01:02:31.050 --> 01:02:33.670 align:middle line:90% because cash was running out. 01:02:33.670 --> 01:02:41.610 align:middle line:84% And he hired the most anal son of a bitch CFO 01:02:41.610 --> 01:02:47.090 align:middle line:84% imaginable, Jerry York, who, as I told you, counted paperclips. 01:02:47.090 --> 01:02:51.870 align:middle line:84% And Jerry York has been working in the automotive. 01:02:51.870 --> 01:02:53.530 align:middle line:90% He came from Chrysler. 01:02:53.530 --> 01:02:54.930 align:middle line:90% And he went back. 01:02:54.930 --> 01:02:57.310 align:middle line:84% And he's been one of the Raiders. 01:02:57.310 --> 01:02:59.330 align:middle line:90% I forget. 01:02:59.330 --> 01:03:01.080 align:middle line:90% He's been very active. 01:03:01.080 --> 01:03:02.460 align:middle line:90% No, no, but that's perfect. 01:03:02.460 --> 01:03:06.120 align:middle line:84% So you need to balance with somebody 01:03:06.120 --> 01:03:09.520 align:middle line:84% who is doing the operational work while you're 01:03:09.520 --> 01:03:11.100 align:middle line:90% doing the visionary work. 01:03:11.100 --> 01:03:16.100 align:middle line:84% And sometimes the CEO is more operational, 01:03:16.100 --> 01:03:18.840 align:middle line:84% and then they have other people who are more 01:03:18.840 --> 01:03:20.420 align:middle line:90% the organizational leaders. 01:03:20.420 --> 01:03:22.520 align:middle line:90% It can go in any way. 01:03:22.520 --> 01:03:26.280 align:middle line:84% But it's very important at all levels-- 01:03:26.280 --> 01:03:28.720 align:middle line:84% let me say, middle management, where you start 01:03:28.720 --> 01:03:31.000 align:middle line:90% managing more and more people. 01:03:31.000 --> 01:03:37.320 align:middle line:84% And to do this well, one of the things that's very important 01:03:37.320 --> 01:03:40.600 align:middle line:84% is your self-knowledge of what you're good at. 01:03:40.600 --> 01:03:42.140 align:middle line:90% This is really important. 01:03:42.140 --> 01:03:45.540 align:middle line:84% You have to look inside yourself. 01:03:45.540 --> 01:03:48.120 align:middle line:84% And this comes from experience because you 01:03:48.120 --> 01:03:51.880 align:middle line:84% don't know until you start doing this stuff what you like doing 01:03:51.880 --> 01:03:53.720 align:middle line:90% and what you're good at. 01:03:53.720 --> 01:04:00.180 align:middle line:84% And you have to decide more or less which kinds of jobs 01:04:00.180 --> 01:04:01.960 align:middle line:84% you're going to take on for yourself, 01:04:01.960 --> 01:04:09.820 align:middle line:84% and then hire people who complement your weaknesses. 01:04:09.820 --> 01:04:12.260 align:middle line:84% And then, as long as the whole organization 01:04:12.260 --> 01:04:17.340 align:middle line:84% is very strong in these multiple dimensions, you're totally fine. 01:04:17.340 --> 01:04:21.300 align:middle line:84% But you really need to know that. 01:04:21.300 --> 01:04:24.060 align:middle line:90% And it's not that easy to be-- 01:04:24.060 --> 01:04:27.140 align:middle line:84% especially, as you rise up in the organization, sometimes 01:04:27.140 --> 01:04:29.000 align:middle line:84% people lose their head and think, 01:04:29.000 --> 01:04:30.660 align:middle line:90% well, I'm good at everything. 01:04:30.660 --> 01:04:35.100 align:middle line:84% And that's where you say, well, not usually. 01:04:35.100 --> 01:04:39.400 align:middle line:90% And then there are these things. 01:04:39.400 --> 01:04:43.420 align:middle line:84% And let me move on to the next paper. 01:04:43.420 --> 01:04:48.480 align:middle line:84% Any questions on what we've been talking about on leadership? 01:04:48.480 --> 01:04:49.073 align:middle line:90% Yes? 01:04:49.073 --> 01:04:51.740 align:middle line:84% AUDIENCE: It's funny that those two descriptions are that that's 01:04:51.740 --> 01:04:53.490 align:middle line:84% the job description for commanding officer 01:04:53.490 --> 01:04:54.900 align:middle line:90% and executive officer. 01:04:54.900 --> 01:04:57.880 align:middle line:84% The commanding officer does huge his responsibilities 01:04:57.880 --> 01:04:58.480 align:middle line:90% in any unit. 01:04:58.480 --> 01:05:00.480 align:middle line:84% And then the executive officer has the elements, 01:05:00.480 --> 01:05:02.177 align:middle line:90% the structure, the discipline. 01:05:02.177 --> 01:05:04.760 align:middle line:84% IRVING WLADAWSKY-BERGER: So the commanding officer is supposed 01:05:04.760 --> 01:05:05.480 align:middle line:90% to-- 01:05:05.480 --> 01:05:08.040 align:middle line:84% AUDIENCE: Establish the vision, empower everybody, 01:05:08.040 --> 01:05:11.292 align:middle line:90% and get resources. 01:05:11.292 --> 01:05:13.500 align:middle line:84% IRVING WLADAWSKY-BERGER: How big is a unit typically? 01:05:13.500 --> 01:05:14.740 align:middle line:90% AUDIENCE: So the units grow. 01:05:14.740 --> 01:05:17.800 align:middle line:84% So you start out, if you're a junior guy, a unit 01:05:17.800 --> 01:05:20.180 align:middle line:84% maybe 17 people, and you're on XO. 01:05:20.180 --> 01:05:22.820 align:middle line:84% And then a CO is slightly senior. 01:05:22.820 --> 01:05:24.400 align:middle line:90% But it's only 17 people. 01:05:24.400 --> 01:05:27.907 align:middle line:84% But as you get more senior, then the size of the units grow. 01:05:27.907 --> 01:05:30.240 align:middle line:84% IRVING WLADAWSKY-BERGER: And do people go back and forth 01:05:30.240 --> 01:05:31.800 align:middle line:90% between being CO and XO? 01:05:31.800 --> 01:05:34.025 align:middle line:84% Or is there a personality affinity? 01:05:34.025 --> 01:05:34.900 align:middle line:90% AUDIENCE: It depends. 01:05:34.900 --> 01:05:37.320 align:middle line:90% Some people never get to CO. 01:05:37.320 --> 01:05:40.640 align:middle line:84% They make it up to XO, but they never get to CO. 01:05:40.640 --> 01:05:43.360 align:middle line:84% Usually, if they get the CO and they're really good, 01:05:43.360 --> 01:05:44.660 align:middle line:90% they never get XO again. 01:05:44.660 --> 01:05:47.680 align:middle line:84% They always are COs or something. 01:05:47.680 --> 01:05:49.380 align:middle line:90% But some XOs grow to be COs. 01:05:49.380 --> 01:05:51.320 align:middle line:90% Some of them don't. 01:05:51.320 --> 01:05:53.560 align:middle line:84% IRVING WLADAWSKY-BERGER: Very interesting. 01:05:53.560 --> 01:05:59.030 align:middle line:90% And any other? 01:05:59.030 --> 01:06:01.070 align:middle line:84% AUDIENCE: So I was going to mention 01:06:01.070 --> 01:06:05.310 align:middle line:84% that Stone follows a leadership model, which 01:06:05.310 --> 01:06:07.230 align:middle line:90% includes four things. 01:06:07.230 --> 01:06:08.370 align:middle line:90% There's visioning. 01:06:08.370 --> 01:06:14.550 align:middle line:84% There's inventing, sense making, and relating. 01:06:14.550 --> 01:06:17.990 align:middle line:84% So what you're covering here is probably 01:06:17.990 --> 01:06:24.950 align:middle line:84% visioning and relating, not much of sense making and inventing. 01:06:24.950 --> 01:06:29.710 align:middle line:84% So at the highest level, so what you're proposing 01:06:29.710 --> 01:06:30.970 align:middle line:90% is that inventing happens. 01:06:30.970 --> 01:06:33.012 align:middle line:84% IRVING WLADAWSKY-BERGER: Well, I'm not proposing. 01:06:33.012 --> 01:06:36.990 align:middle line:84% Remember, we're discussing Tushman and Nadler's paper, 01:06:36.990 --> 01:06:37.670 align:middle line:90% which-- 01:06:37.670 --> 01:06:40.630 align:middle line:84% and remember, these are different models 01:06:40.630 --> 01:06:43.910 align:middle line:90% of how to look at organizations. 01:06:43.910 --> 01:06:45.350 align:middle line:90% I don't know. 01:06:45.350 --> 01:06:46.990 align:middle line:90% So here, you have a comment? 01:06:46.990 --> 01:06:48.830 align:middle line:84% AUDIENCE: I think your question is 01:06:48.830 --> 01:06:52.690 align:middle line:84% geared towards that inventing, and engineering, 01:06:52.690 --> 01:06:56.110 align:middle line:90% and sense making, et cetera. 01:06:56.110 --> 01:06:59.810 align:middle line:84% I think what you mentioned before about the difference, 01:06:59.810 --> 01:07:04.650 align:middle line:84% I think, because now you're talking about the engineering 01:07:04.650 --> 01:07:08.250 align:middle line:84% side, whereas Irving's talking about 01:07:08.250 --> 01:07:12.690 align:middle line:84% more of a leadership of how to manage the change 01:07:12.690 --> 01:07:15.770 align:middle line:90% and how to encourage change. 01:07:15.770 --> 01:07:23.370 align:middle line:84% But my point is that so when you talk about gatekeeper 01:07:23.370 --> 01:07:29.490 align:middle line:84% and research, I think that was focused on the communication 01:07:29.490 --> 01:07:31.970 align:middle line:90% aspect of the R&D organization. 01:07:31.970 --> 01:07:34.250 align:middle line:84% Whereas I think always talking about 01:07:34.250 --> 01:07:36.850 align:middle line:90% more of a company-level change. 01:07:36.850 --> 01:07:39.330 align:middle line:84% And my comment and question maybe 01:07:39.330 --> 01:07:45.050 align:middle line:84% is I see that more and more companies, at least in Korea, 01:07:45.050 --> 01:07:48.650 align:middle line:84% in Samsung, and LG, and all these high-tech companies, 01:07:48.650 --> 01:07:51.890 align:middle line:84% and some biotech companies in Korea, they are hiring. 01:07:51.890 --> 01:07:55.230 align:middle line:84% And they are pushing these people 01:07:55.230 --> 01:07:58.470 align:middle line:84% from more engineering and science, 01:07:58.470 --> 01:08:01.180 align:middle line:84% and they push them to become a senior management. 01:08:01.180 --> 01:08:02.430 align:middle line:90% IRVING WLADAWSKY-BERGER: Yeah. 01:08:02.430 --> 01:08:06.250 align:middle line:84% Well, as you know, I'm a very strong advocate for that. 01:08:06.250 --> 01:08:10.350 align:middle line:84% I hope I've said it in this course once or twice. 01:08:10.350 --> 01:08:14.710 align:middle line:84% AUDIENCE: But my point is that the leaders who actually 01:08:14.710 --> 01:08:17.229 align:middle line:84% are supposed to be in this kind of situation 01:08:17.229 --> 01:08:21.149 align:middle line:84% where they have to not only sense and detect 01:08:21.149 --> 01:08:29.189 align:middle line:84% the change in technological market and changes 01:08:29.189 --> 01:08:33.810 align:middle line:84% also have to execute and embrace that change. 01:08:33.810 --> 01:08:36.010 align:middle line:84% So these but these are two different kinds of-- 01:08:36.010 --> 01:08:38.093 align:middle line:84% IRVING WLADAWSKY-BERGER: No, no, no, I understand. 01:08:38.093 --> 01:08:38.790 align:middle line:90% I agree totally. 01:08:38.790 --> 01:08:42.890 align:middle line:90% Yeah, yeah, yeah, yeah, yeah. 01:08:42.890 --> 01:08:45.750 align:middle line:90% 01:08:45.750 --> 01:08:52.770 align:middle line:84% I view this as consistent with my view of this, which 01:08:52.770 --> 01:08:58.810 align:middle line:84% is you need to step back and look at organizational problems 01:08:58.810 --> 01:09:02.890 align:middle line:84% as complex systems problem to be solved. 01:09:02.890 --> 01:09:06.510 align:middle line:84% And the fact that they involve people and tasks, that's OK. 01:09:06.510 --> 01:09:09.850 align:middle line:90% It's a problem to be solved. 01:09:09.850 --> 01:09:15.609 align:middle line:84% And the reason you often want people with good engineering 01:09:15.609 --> 01:09:19.850 align:middle line:84% backgrounds is because what you hope you learn in engineering 01:09:19.850 --> 01:09:22.970 align:middle line:84% backgrounds is the disciplines of, 01:09:22.970 --> 01:09:25.270 align:middle line:84% how do you approach a complex problem? 01:09:25.270 --> 01:09:30.930 align:middle line:84% How do you structure it, take it apart, put it back together? 01:09:30.930 --> 01:09:39.330 align:middle line:84% And my view of an engineer is it would be a really bad engineer 01:09:39.330 --> 01:09:42.649 align:middle line:90% who said, here is the answer. 01:09:42.649 --> 01:09:43.510 align:middle line:90% And I look at it. 01:09:43.510 --> 01:09:47.300 align:middle line:84% And I say, but this building will fall. 01:09:47.300 --> 01:09:50.399 align:middle line:84% And they say, well, you didn't tell me 01:09:50.399 --> 01:09:53.920 align:middle line:84% you wanted a building that can actually be built. 01:09:53.920 --> 01:09:58.800 align:middle line:84% So my view is when you give me an organizational design, 01:09:58.800 --> 01:10:00.960 align:middle line:84% it's got to be one that you yourself 01:10:00.960 --> 01:10:03.680 align:middle line:90% are very comfortable executing. 01:10:03.680 --> 01:10:07.680 align:middle line:84% So this linkage between design and execution, 01:10:07.680 --> 01:10:12.320 align:middle line:84% between strategy formulation and strategy execution, 01:10:12.320 --> 01:10:15.000 align:middle line:90% I consider that critical. 01:10:15.000 --> 01:10:21.600 align:middle line:84% And often, I think in classic business worlds, those two-- 01:10:21.600 --> 01:10:27.360 align:middle line:84% consultants often give advice that they don't have to execute. 01:10:27.360 --> 01:10:30.380 align:middle line:90% And I just find that suspect. 01:10:30.380 --> 01:10:33.240 align:middle line:84% I don't say there is no role for that. 01:10:33.240 --> 01:10:39.520 align:middle line:84% I just find that suspect compared to, here is a problem. 01:10:39.520 --> 01:10:41.060 align:middle line:90% Let me know what to do. 01:10:41.060 --> 01:10:45.120 align:middle line:84% And when you come back with a great answer, I say, thank you. 01:10:45.120 --> 01:10:48.900 align:middle line:84% You're now general manager of that unit. . 01:10:48.900 --> 01:10:51.900 align:middle line:90% Go make it happen. 01:10:51.900 --> 01:10:56.280 align:middle line:84% And I think that's what my feeling is. 01:10:56.280 --> 01:11:01.240 align:middle line:84% That's why people are looking for those skills more. 01:11:01.240 --> 01:11:06.380 align:middle line:84% Whereas in the US and I'm not sure about the UK, 01:11:06.380 --> 01:11:09.940 align:middle line:84% there's still been too much of a viewing of, well, at the top, 01:11:09.940 --> 01:11:12.520 align:middle line:84% you want financial people who can count money. 01:11:12.520 --> 01:11:15.100 align:middle line:84% But you can always hire those people. 01:11:15.100 --> 01:11:19.580 align:middle line:84% And computers are really good at counting. 01:11:19.580 --> 01:11:24.260 align:middle line:90% So that's a big cultural thing. 01:11:24.260 --> 01:11:27.700 align:middle line:84% Whereas no question, Japan, I think, also has a lot 01:11:27.700 --> 01:11:31.080 align:middle line:84% more people who come up through technical ranks. 01:11:31.080 --> 01:11:33.800 align:middle line:84% The continent in Europe has a lot more. 01:11:33.800 --> 01:11:37.520 align:middle line:84% The US has always been the one that's been most-- 01:11:37.520 --> 01:11:39.920 align:middle line:84% I don't know if it's criticized or praise, 01:11:39.920 --> 01:11:45.240 align:middle line:84% depending on whether you are an MBA from Harvard or an engineer 01:11:45.240 --> 01:11:52.520 align:middle line:84% from MIT or Stanford for promoting 01:11:52.520 --> 01:11:56.840 align:middle line:84% primarily people with pure MBA skills, not enough 01:11:56.840 --> 01:11:57.900 align:middle line:90% technical skills. 01:11:57.900 --> 01:12:00.598 align:middle line:84% I mean, take that, and then I'll come back to you. 01:12:00.598 --> 01:12:02.640 align:middle line:84% AUDIENCE: I was just going to say that I recently 01:12:02.640 --> 01:12:07.853 align:middle line:90% read an article about Parsons-- 01:12:07.853 --> 01:12:09.520 align:middle line:84% IRVING WLADAWSKY-BERGER: At Time Warner. 01:12:09.520 --> 01:12:10.280 align:middle line:90% Yeah. 01:12:10.280 --> 01:12:11.780 align:middle line:84% He announced his retirement, right? 01:12:11.780 --> 01:12:13.320 align:middle line:90% He'll retire. 01:12:13.320 --> 01:12:14.020 align:middle line:90% I'm sorry? 01:12:14.020 --> 01:12:14.937 align:middle line:90% AUDIENCE: In December. 01:12:14.937 --> 01:12:16.645 align:middle line:84% IRVING WLADAWSKY-BERGER: Oh, in December. 01:12:16.645 --> 01:12:18.440 align:middle line:84% I thought it was early next year. 01:12:18.440 --> 01:12:20.620 align:middle line:84% AUDIENCE: So he claimed that he would go. 01:12:20.620 --> 01:12:23.000 align:middle line:84% He stated that his form of leadership 01:12:23.000 --> 01:12:26.120 align:middle line:84% is actually getting down in the trenches with the troops. 01:12:26.120 --> 01:12:30.160 align:middle line:84% So by getting to know who he's dealing with, whereas he's not 01:12:30.160 --> 01:12:32.200 align:middle line:90% divorced from that level. 01:12:32.200 --> 01:12:39.080 align:middle line:84% And so I think that's an interesting model for you 01:12:39.080 --> 01:12:45.980 align:middle line:84% because you need to understand how to actually empower them 01:12:45.980 --> 01:12:46.930 align:middle line:90% to the next level. 01:12:46.930 --> 01:12:48.180 align:middle line:90% IRVING WLADAWSKY-BERGER: Yeah. 01:12:48.180 --> 01:12:53.000 align:middle line:84% He's supposed to be a really good people manager. 01:12:53.000 --> 01:12:54.500 align:middle line:84% And my feeling is one of the reasons 01:12:54.500 --> 01:13:00.260 align:middle line:84% he was made CEO is, remember, at the time when Levine was forced 01:13:00.260 --> 01:13:05.940 align:middle line:84% out, there were huge battles between the Time Warner and AOL 01:13:05.940 --> 01:13:08.040 align:middle line:90% side of Time Warner, but huge. 01:13:08.040 --> 01:13:10.780 align:middle line:84% I mean, the Time Warner people were 01:13:10.780 --> 01:13:17.340 align:middle line:84% really upset at what happened to them when they acquired AOL. 01:13:17.340 --> 01:13:25.380 align:middle line:84% And I think Parsons was very good at calming everybody 01:13:25.380 --> 01:13:28.000 align:middle line:90% down and doing the job. 01:13:28.000 --> 01:13:30.660 align:middle line:90% And he was very good at that. 01:13:30.660 --> 01:13:34.580 align:middle line:84% Prince from Citibank is an example. 01:13:34.580 --> 01:13:36.260 align:middle line:90% He's a lawyer. 01:13:36.260 --> 01:13:38.560 align:middle line:84% And I think when he was named CEO, 01:13:38.560 --> 01:13:44.390 align:middle line:84% the key thing they were worried about was corporate malfeasance. 01:13:44.390 --> 01:13:48.070 align:middle line:84% There were all these scandals having a lawyer at the top. 01:13:48.070 --> 01:13:50.930 align:middle line:90% 01:13:50.930 --> 01:13:55.250 align:middle line:84% And sometimes a great lawyer is also a great business strategist 01:13:55.250 --> 01:13:55.750 align:middle line:90% and so on. 01:13:55.750 --> 01:13:58.810 align:middle line:84% And sometimes a great lawyer is not a great business strategist. 01:13:58.810 --> 01:14:03.470 align:middle line:84% So often, it happens that an organization picks a leader. 01:14:03.470 --> 01:14:06.290 align:middle line:84% And remember, this is fractal in the sense 01:14:06.290 --> 01:14:09.150 align:middle line:84% that we're not just talking at the CEO level, 01:14:09.150 --> 01:14:10.670 align:middle line:90% but throughout the organization. 01:14:10.670 --> 01:14:13.250 align:middle line:84% You pick a leader who is the right leader 01:14:13.250 --> 01:14:14.750 align:middle line:90% for this environment. 01:14:14.750 --> 01:14:16.970 align:middle line:90% And the environment changes. 01:14:16.970 --> 01:14:21.090 align:middle line:84% And if you keep that leader there longer than you should, 01:14:21.090 --> 01:14:24.850 align:middle line:84% they may just start screwing up because they are not 01:14:24.850 --> 01:14:26.910 align:middle line:90% good at this new environment. 01:14:26.910 --> 01:14:31.330 align:middle line:84% And now, if you're a really, really good leader 01:14:31.330 --> 01:14:33.890 align:middle line:84% and you really understand yourself, 01:14:33.890 --> 01:14:35.730 align:middle line:84% you will be also good at that environment 01:14:35.730 --> 01:14:38.350 align:middle line:84% because you'll change people under you. 01:14:38.350 --> 01:14:40.502 align:middle line:84% But that's when you get into, well, they are loyal. 01:14:40.502 --> 01:14:41.710 align:middle line:90% They want to keep the people. 01:14:41.710 --> 01:14:48.270 align:middle line:84% Well, you're a loyal leader and whatever, loyalty is OK. 01:14:48.270 --> 01:14:52.430 align:middle line:84% But you don't want to kill the business with loyalty. 01:14:52.430 --> 01:14:53.492 align:middle line:90% Yes? 01:14:53.492 --> 01:14:54.950 align:middle line:84% AUDIENCE: Oh, yeah, just a comment. 01:14:54.950 --> 01:14:57.990 align:middle line:84% For most senior management in China, 01:14:57.990 --> 01:15:01.390 align:middle line:84% they are from engineering schools, from Tsinghua. 01:15:01.390 --> 01:15:04.650 align:middle line:84% And even under the previous Chinese President 01:15:04.650 --> 01:15:06.950 align:middle line:90% also from engineering school. 01:15:06.950 --> 01:15:09.910 align:middle line:84% So far, there are no governors of wherever 01:15:09.910 --> 01:15:16.728 align:middle line:84% the top level in China is from no school or MBA. 01:15:16.728 --> 01:15:18.270 align:middle line:84% And actually, I read article in China 01:15:18.270 --> 01:15:19.930 align:middle line:84% talking about this kind of situation. 01:15:19.930 --> 01:15:20.770 align:middle line:84% IRVING WLADAWSKY-BERGER: And what do they say? 01:15:20.770 --> 01:15:22.030 align:middle line:90% What's the view? 01:15:22.030 --> 01:15:22.776 align:middle line:90% AUDIENCE: Right. 01:15:22.776 --> 01:15:26.870 align:middle line:84% Their comments is like, in China, in countries are still 01:15:26.870 --> 01:15:29.010 align:middle line:90% under development like China. 01:15:29.010 --> 01:15:32.950 align:middle line:84% So perhaps like people with engineering background, 01:15:32.950 --> 01:15:33.930 align:middle line:90% it's more popular. 01:15:33.930 --> 01:15:37.330 align:middle line:84% But once the countries get more mature and more developed 01:15:37.330 --> 01:15:39.770 align:middle line:84% than the lawyers or MBAs, these kind of people 01:15:39.770 --> 01:15:43.850 align:middle line:84% were kicking their point of view. 01:15:43.850 --> 01:15:46.530 align:middle line:84% IRVING WLADAWSKY-BERGER: And the question is, why? 01:15:46.530 --> 01:15:50.110 align:middle line:84% Why, when things become a certain point, 01:15:50.110 --> 01:15:54.950 align:middle line:90% engineers are no longer as good? 01:15:54.950 --> 01:15:56.930 align:middle line:84% And the answer often is, well, I don't know, 01:15:56.930 --> 01:15:58.670 align:middle line:90% because they're not articulate. 01:15:58.670 --> 01:16:02.290 align:middle line:84% They don't lead with the right fork and knife. 01:16:02.290 --> 01:16:05.130 align:middle line:84% But now the question is, can you have engineers 01:16:05.130 --> 01:16:08.710 align:middle line:90% who are incredibly charming? 01:16:08.710 --> 01:16:09.890 align:middle line:90% Of course, you can. 01:16:09.890 --> 01:16:12.490 align:middle line:90% That hasn't been the culture. 01:16:12.490 --> 01:16:14.050 align:middle line:90% Yes, please? 01:16:14.050 --> 01:16:15.890 align:middle line:84% AUDIENCE: A lot of the leadership discussion 01:16:15.890 --> 01:16:19.390 align:middle line:84% we've had last few minutes has assumed that to deliver value, 01:16:19.390 --> 01:16:21.050 align:middle line:84% you need an organization, and you 01:16:21.050 --> 01:16:25.450 align:middle line:84% need a formal structure with selection happening 01:16:25.450 --> 01:16:26.230 align:middle line:90% from the top. 01:16:26.230 --> 01:16:29.790 align:middle line:84% So as you pick who your leaders are, it's not a democracy. 01:16:29.790 --> 01:16:34.728 align:middle line:84% It's not that the employees get to pick who the next year. 01:16:34.728 --> 01:16:36.520 align:middle line:84% Do you think there's any difference if you. 01:16:36.520 --> 01:16:39.740 align:middle line:84% If the world moves more towards open-source foundations 01:16:39.740 --> 01:16:41.490 align:middle line:90% or partnerships? 01:16:41.490 --> 01:16:43.740 align:middle line:84% IRVING WLADAWSKY-BERGER: Let me tell you what I think. 01:16:43.740 --> 01:16:49.840 align:middle line:84% I think that we are moving from it's all top-down to you 01:16:49.840 --> 01:16:54.960 align:middle line:84% meet in the middle, because, remember, 01:16:54.960 --> 01:16:57.060 align:middle line:90% you meet in the middle. 01:16:57.060 --> 01:17:01.840 align:middle line:84% My model is-- and we talked about a little bit before-- 01:17:01.840 --> 01:17:07.920 align:middle line:84% that the way a lot of new ideas first get shaped up-- 01:17:07.920 --> 01:17:11.080 align:middle line:84% and this is very important to why they often come from more 01:17:11.080 --> 01:17:14.400 align:middle line:84% junior people or whatever-- is in this organic way-- 01:17:14.400 --> 01:17:16.900 align:middle line:84% through communities, within the business, 01:17:16.900 --> 01:17:18.560 align:middle line:90% from outside the business. 01:17:18.560 --> 01:17:20.940 align:middle line:84% And they rise up, and they get shaped up. 01:17:20.940 --> 01:17:23.920 align:middle line:84% But remember, at some point, if you 01:17:23.920 --> 01:17:28.380 align:middle line:84% want to bring them to market, you need to organize. 01:17:28.380 --> 01:17:29.380 align:middle line:90% You need finance. 01:17:29.380 --> 01:17:31.320 align:middle line:90% You need all this stuff. 01:17:31.320 --> 01:17:36.080 align:middle line:84% And no business is going to say, well, 01:17:36.080 --> 01:17:38.700 align:middle line:84% let your community pick their leader 01:17:38.700 --> 01:17:40.700 align:middle line:90% to be the general manager. 01:17:40.700 --> 01:17:43.540 align:middle line:90% That's not how things work. 01:17:43.540 --> 01:17:47.220 align:middle line:84% I mean, people may do that at an experiment. 01:17:47.220 --> 01:17:54.700 align:middle line:84% But at some point, the organic group 01:17:54.700 --> 01:17:58.380 align:middle line:84% has to meet the organization, which gives them 01:17:58.380 --> 01:18:00.680 align:middle line:90% money, and power, and so on. 01:18:00.680 --> 01:18:04.762 align:middle line:84% And that's why the organization is really important. 01:18:04.762 --> 01:18:06.220 align:middle line:84% And in fact, one question I've been 01:18:06.220 --> 01:18:11.260 align:middle line:84% asking myself is, what's almost the minimum amount that you 01:18:11.260 --> 01:18:15.660 align:middle line:90% need at the hierarchical level? 01:18:15.660 --> 01:18:17.860 align:middle line:84% I think you, for sure, need finance. 01:18:17.860 --> 01:18:20.840 align:middle line:84% You need HR. Remember, you can say, 01:18:20.840 --> 01:18:22.920 align:middle line:84% well, we don't like all this HR stuff. 01:18:22.920 --> 01:18:24.900 align:middle line:90% You don't have a choice. 01:18:24.900 --> 01:18:26.440 align:middle line:90% You just don't have a choice. 01:18:26.440 --> 01:18:28.180 align:middle line:90% Otherwise, you get in trouble. 01:18:28.180 --> 01:18:32.943 align:middle line:84% So I find finding a balance to be very important. 01:18:32.943 --> 01:18:34.360 align:middle line:84% AUDIENCE: How would that translate 01:18:34.360 --> 01:18:36.520 align:middle line:90% to open-source community? 01:18:36.520 --> 01:18:38.770 align:middle line:84% IRVING WLADAWSKY-BERGER: Well, because the open-source 01:18:38.770 --> 01:18:43.760 align:middle line:84% is the organic, and it's self-organizing within itself. 01:18:43.760 --> 01:18:46.320 align:middle line:84% But let's say, when IBM said we'll have Linux 01:18:46.320 --> 01:18:50.920 align:middle line:84% and we'll do that, we put a general manager in place 01:18:50.920 --> 01:18:55.680 align:middle line:84% to go bring Linux to market and get money and do marketing. 01:18:55.680 --> 01:19:00.760 align:middle line:84% Remember, the ads that you saw the Linux ad 01:19:00.760 --> 01:19:04.920 align:middle line:84% Griswold showed us cost a lot of money to do those. 01:19:04.920 --> 01:19:05.920 align:middle line:90% Trust me. 01:19:05.920 --> 01:19:08.200 align:middle line:90% Those were really expensive ads. 01:19:08.200 --> 01:19:12.080 align:middle line:84% So that's when the organization comes in. 01:19:12.080 --> 01:19:16.600 align:middle line:84% But the ideas, the development, and a lot of this stuff 01:19:16.600 --> 01:19:19.080 align:middle line:90% continued in open source. 01:19:19.080 --> 01:19:22.360 align:middle line:84% The bringing to market and supporting 01:19:22.360 --> 01:19:27.000 align:middle line:90% continued more hierarchical. 01:19:27.000 --> 01:19:28.980 align:middle line:90% Yes, please? 01:19:28.980 --> 01:19:32.900 align:middle line:84% AUDIENCE: So one question was, in the US, most of the CEOs 01:19:32.900 --> 01:19:35.380 align:middle line:84% are moved from industry to industry, 01:19:35.380 --> 01:19:37.120 align:middle line:84% and they run the company by the numbers. 01:19:37.120 --> 01:19:43.180 align:middle line:84% For example, Nardelli started from GE and now Chrysler. 01:19:43.180 --> 01:19:46.060 align:middle line:84% So how important is it for the CEO 01:19:46.060 --> 01:19:49.202 align:middle line:84% to know the well business of the company? 01:19:49.202 --> 01:19:50.660 align:middle line:84% IRVING WLADAWSKY-BERGER: I can only 01:19:50.660 --> 01:19:53.980 align:middle line:84% give you my personal opinion, which 01:19:53.980 --> 01:19:56.040 align:middle line:90% is I think it's very important. 01:19:56.040 --> 01:19:59.180 align:middle line:90% 01:19:59.180 --> 01:20:04.660 align:middle line:84% But then you have Lou Gerstner, a very good example of somebody 01:20:04.660 --> 01:20:09.800 align:middle line:84% who I think was a superb CEO and not a computer expert. 01:20:09.800 --> 01:20:12.540 align:middle line:90% 01:20:12.540 --> 01:20:16.860 align:middle line:84% I could be dead wrong here, so I don't think there is one view. 01:20:16.860 --> 01:20:20.540 align:middle line:84% By the way, even when somebody said this Sloan view, 01:20:20.540 --> 01:20:24.580 align:middle line:84% I don't think there is-- to be honest, I suspect it's that. 01:20:24.580 --> 01:20:31.290 align:middle line:84% Places like MIT, still, it's like organizing cats. 01:20:31.290 --> 01:20:34.770 align:middle line:84% Every faculty member will have their own view 01:20:34.770 --> 01:20:35.910 align:middle line:90% of what's important. 01:20:35.910 --> 01:20:41.490 align:middle line:84% There is no MIT view of anything. 01:20:41.490 --> 01:20:44.370 align:middle line:90% So that was more a view. 01:20:44.370 --> 01:20:52.530 align:middle line:84% And maybe it depends, and it depends on the cycle. 01:20:52.530 --> 01:20:57.950 align:middle line:84% Maybe, at the time, let's say, Lou was needed, 01:20:57.950 --> 01:21:02.250 align:middle line:90% you had a broken company. 01:21:02.250 --> 01:21:06.950 align:middle line:84% So you needed somebody that whose number-one quality was, 01:21:06.950 --> 01:21:11.220 align:middle line:90% how do you fix a broken company? 01:21:11.220 --> 01:21:13.910 align:middle line:84% And it's not that he had a great skill in broken companies, 01:21:13.910 --> 01:21:16.930 align:middle line:84% but he turned out to be excellent at that. 01:21:16.930 --> 01:21:20.770 align:middle line:84% Whereas if you have a healthier company 01:21:20.770 --> 01:21:25.470 align:middle line:84% and you're trying to move it into the next levels, 01:21:25.470 --> 01:21:27.550 align:middle line:84% you probably want people who have 01:21:27.550 --> 01:21:30.110 align:middle line:84% more in-depth expertise of the markets 01:21:30.110 --> 01:21:32.010 align:middle line:90% and the product to move it. 01:21:32.010 --> 01:21:36.830 align:middle line:84% So maybe it depends on what's the environment in which 01:21:36.830 --> 01:21:39.090 align:middle line:90% the company finds itself today. 01:21:39.090 --> 01:21:40.150 align:middle line:90% Maybe that's what it is. 01:21:40.150 --> 01:21:41.530 align:middle line:84% AUDIENCE: Is it the US phenomena, 01:21:41.530 --> 01:21:44.510 align:middle line:84% because in India and Japan, mostly the leaders 01:21:44.510 --> 01:21:46.642 align:middle line:84% come from within the organization. 01:21:46.642 --> 01:21:48.350 align:middle line:84% IRVING WLADAWSKY-BERGER: Well, in the US, 01:21:48.350 --> 01:21:50.010 align:middle line:90% they used to a lot more. 01:21:50.010 --> 01:21:51.290 align:middle line:90% That's a change here. 01:21:51.290 --> 01:21:53.910 align:middle line:84% And I wouldn't be surprised if you saw that change. 01:21:53.910 --> 01:21:57.270 align:middle line:84% How about in China, the leaders of companies, 01:21:57.270 --> 01:22:00.430 align:middle line:84% do they come from the organizations or-- 01:22:00.430 --> 01:22:02.965 align:middle line:84% they often come from the party or-- 01:22:02.965 --> 01:22:04.090 align:middle line:90% AUDIENCE: Yeah, it depends. 01:22:04.090 --> 01:22:08.350 align:middle line:84% If a state owned companies like Chinese government owned 01:22:08.350 --> 01:22:10.390 align:middle line:84% companies, most of them are promoted 01:22:10.390 --> 01:22:11.897 align:middle line:90% inside the organization. 01:22:11.897 --> 01:22:13.230 align:middle line:90% IRVING WLADAWSKY-BERGER: Inside? 01:22:13.230 --> 01:22:13.610 align:middle line:90% AUDIENCE: Right. 01:22:13.610 --> 01:22:15.402 align:middle line:84% IRVING WLADAWSKY-BERGER: People don't often 01:22:15.402 --> 01:22:17.190 align:middle line:84% take somebody who is from the party 01:22:17.190 --> 01:22:20.232 align:middle line:84% and put them in charge of the organization of state owned? 01:22:20.232 --> 01:22:22.190 align:middle line:84% AUDIENCE: That happens too, but not that often. 01:22:22.190 --> 01:22:27.770 align:middle line:84% But compared to the US company in China the people-- 01:22:27.770 --> 01:22:31.555 align:middle line:84% I mean, I would say, most of them are, from outside. 01:22:31.555 --> 01:22:32.930 align:middle line:84% IRVING WLADAWSKY-BERGER: Outside? 01:22:32.930 --> 01:22:33.597 align:middle line:90% AUDIENCE: Right. 01:22:33.597 --> 01:22:34.930 align:middle line:90% IRVING WLADAWSKY-BERGER: Yeah. 01:22:34.930 --> 01:22:39.670 align:middle line:84% Obviously, there is no agreement as to what is right. 01:22:39.670 --> 01:22:41.970 align:middle line:84% I think people keep experimenting, 01:22:41.970 --> 01:22:44.030 align:middle line:90% and the cycles keep changing. 01:22:44.030 --> 01:22:45.430 align:middle line:90% And you try this. 01:22:45.430 --> 01:22:51.290 align:middle line:84% And the reality is there is no well-established view. 01:22:51.290 --> 01:22:52.950 align:middle line:90% So it all depends. 01:22:52.950 --> 01:22:54.390 align:middle line:90% And that's totally reasonable. 01:22:54.390 --> 01:22:56.190 align:middle line:90% It's a very complex subject. 01:22:56.190 --> 01:22:58.690 align:middle line:90% And it all depends. 01:22:58.690 --> 01:23:01.210 align:middle line:84% Why don't we take 10 minutes, and then 01:23:01.210 --> 01:23:05.030 align:middle line:84% we'll quickly go over Rebecca Henderson's paper? 01:23:05.030 --> 01:23:10.170 align:middle line:84% And then we'll talk about IBM and organization. 01:23:10.170 --> 01:23:14.780 align:middle line:90% Let me show the-- 01:23:14.780 --> 01:23:16.450 align:middle line:84% AUDIENCE: It's in the Student Center. 01:23:16.450 --> 01:23:17.908 align:middle line:84% IRVING WLADAWSKY-BERGER: --quickly. 01:23:17.908 --> 01:23:21.240 align:middle line:90% 01:23:21.240 --> 01:23:28.640 align:middle line:84% She was asking the question whether having good management 01:23:28.640 --> 01:23:31.320 align:middle line:84% is really important for a company. 01:23:31.320 --> 01:23:36.640 align:middle line:84% Or is it just one of those myths that you 01:23:36.640 --> 01:23:42.880 align:middle line:84% don't need good management, but anything works? 01:23:42.880 --> 01:23:53.680 align:middle line:84% And her conclusion was that having really good managers 01:23:53.680 --> 01:23:56.000 align:middle line:84% really made a difference in the company. 01:23:56.000 --> 01:24:04.000 align:middle line:84% That was part of her study and, in particular, 01:24:04.000 --> 01:24:11.960 align:middle line:84% because really good managers can handle the really complex parts 01:24:11.960 --> 01:24:15.040 align:middle line:90% of an organization. 01:24:15.040 --> 01:24:18.340 align:middle line:84% And in this example, in the pharmaceutical company, 01:24:18.340 --> 01:24:24.860 align:middle line:84% the complex parts is, how can you simultaneously become 01:24:24.860 --> 01:24:28.180 align:middle line:84% very deep with the knowledge you need to do 01:24:28.180 --> 01:24:30.400 align:middle line:90% new pharmaceuticals or whatever? 01:24:30.400 --> 01:24:35.060 align:middle line:84% And if you don't have depth, you just won't be world class. 01:24:35.060 --> 01:24:38.220 align:middle line:84% But of course, as we've discussed several times, 01:24:38.220 --> 01:24:42.980 align:middle line:84% often that same depth can become an anchor 01:24:42.980 --> 01:24:45.820 align:middle line:84% that makes it difficult to move into the future 01:24:45.820 --> 01:24:48.180 align:middle line:90% because you have to do that. 01:24:48.180 --> 01:24:52.780 align:middle line:84% So then how can you, on the other hand, 01:24:52.780 --> 01:24:59.620 align:middle line:84% have the skills to embrace change and move with change? 01:24:59.620 --> 01:25:09.180 align:middle line:84% And handling these contradictory goals 01:25:09.180 --> 01:25:13.940 align:middle line:84% is what differentiates good management 01:25:13.940 --> 01:25:16.540 align:middle line:90% from not-such-good management. 01:25:16.540 --> 01:25:19.720 align:middle line:84% In fact, as we were talking, was giving me 01:25:19.720 --> 01:25:24.360 align:middle line:84% another example of this whole principle of handling 01:25:24.360 --> 01:25:28.400 align:middle line:90% contradictory goals. 01:25:28.400 --> 01:25:33.200 align:middle line:84% If you are an organization and your expenses 01:25:33.200 --> 01:25:36.900 align:middle line:84% are too high compared to your revenues, 01:25:36.900 --> 01:25:39.280 align:middle line:90% you have to lay off people. 01:25:39.280 --> 01:25:44.320 align:middle line:84% But if you lay off people, you may get rid of skills 01:25:44.320 --> 01:25:47.920 align:middle line:84% that you want later, or it may make it 01:25:47.920 --> 01:25:52.960 align:middle line:84% harder for you to attract good people later 01:25:52.960 --> 01:25:55.140 align:middle line:84% when you need the good people, because they'll say, 01:25:55.140 --> 01:25:57.160 align:middle line:84% well, I don't want to work for you. 01:25:57.160 --> 01:26:00.720 align:middle line:84% You will keep me and then get rid of me. 01:26:00.720 --> 01:26:04.840 align:middle line:84% But if you don't lay them off, you can meet payroll. 01:26:04.840 --> 01:26:07.480 align:middle line:84% So that's another example of, how 01:26:07.480 --> 01:26:12.040 align:middle line:84% do you balance what looks like contradictory objectives 01:26:12.040 --> 01:26:14.800 align:middle line:90% of an organization? 01:26:14.800 --> 01:26:20.380 align:middle line:84% And we've talked about quite a few. 01:26:20.380 --> 01:26:24.500 align:middle line:84% Do you pick CEOs or do you pick leaders 01:26:24.500 --> 01:26:28.460 align:middle line:84% of an organization with really good financial skills 01:26:28.460 --> 01:26:31.060 align:middle line:90% versus engineering skills? 01:26:31.060 --> 01:26:40.100 align:middle line:84% And the higher up that you rise in an organization-- 01:26:40.100 --> 01:26:42.380 align:middle line:84% and this is true, by the way, whether we're 01:26:42.380 --> 01:26:45.720 align:middle line:84% talking management track or technical track, 01:26:45.720 --> 01:26:50.020 align:middle line:84% because technical decisions require the same ambidextrous 01:26:50.020 --> 01:26:54.980 align:middle line:84% ability or multi-dimensional optimization ability. 01:26:54.980 --> 01:27:01.340 align:middle line:84% The more your key jobs are to handle these really difficult 01:27:01.340 --> 01:27:06.220 align:middle line:84% problems for which there is no one answer, 01:27:06.220 --> 01:27:11.580 align:middle line:84% that's where really good management comes to the fore. 01:27:11.580 --> 01:27:20.530 align:middle line:84% And then Henderson had listed a set of very important qualities 01:27:20.530 --> 01:27:24.490 align:middle line:84% of good management in the pharmaceutical industry, which 01:27:24.490 --> 01:27:27.270 align:middle line:84% you can comment since you come from that industry 01:27:27.270 --> 01:27:29.630 align:middle line:90% whether they are correct or not. 01:27:29.630 --> 01:27:34.330 align:middle line:84% But number one, I agree absolutely, 01:27:34.330 --> 01:27:38.290 align:middle line:84% is higher the best possible people. 01:27:38.290 --> 01:27:43.650 align:middle line:84% And I mean, it's been said, and it's true. 01:27:43.650 --> 01:27:47.450 align:middle line:84% People who are not good managers, good leaders, 01:27:47.450 --> 01:27:50.850 align:middle line:84% surround themselves with less good people 01:27:50.850 --> 01:27:54.890 align:middle line:84% because, often, part of not being a good manager is you 01:27:54.890 --> 01:27:58.690 align:middle line:84% don't feel confident enough in your own skills. 01:27:58.690 --> 01:28:01.730 align:middle line:84% And you can surround yourself with people 01:28:01.730 --> 01:28:06.310 align:middle line:84% who will say, oh, God, you are beautiful and brilliant. 01:28:06.310 --> 01:28:08.810 align:middle line:90% And there's nobody better. 01:28:08.810 --> 01:28:11.350 align:middle line:90% And you don't want that. 01:28:11.350 --> 01:28:14.850 align:middle line:84% Whereas good people tend to be very tough. 01:28:14.850 --> 01:28:20.830 align:middle line:84% So hiring the best possible people 01:28:20.830 --> 01:28:23.170 align:middle line:84% in the pharmaceutical industries, 01:28:23.170 --> 01:28:26.710 align:middle line:84% she cites statistics that the research efforts 01:28:26.710 --> 01:28:29.910 align:middle line:84% of the most successful pharmaceutical companies 01:28:29.910 --> 01:28:33.950 align:middle line:84% can be as much as 40% more productive, 01:28:33.950 --> 01:28:36.370 align:middle line:84% which means they do-- and, remember, 01:28:36.370 --> 01:28:39.950 align:middle line:84% research is a critical part of the pharmaceutical company, 01:28:39.950 --> 01:28:44.430 align:middle line:84% which means that the really good companies do a much better job. 01:28:44.430 --> 01:28:49.110 align:middle line:84% And a way that they do a very good job 01:28:49.110 --> 01:28:54.430 align:middle line:84% is that the really good managers keep challenging and asking 01:28:54.430 --> 01:28:55.410 align:middle line:90% questions. 01:28:55.410 --> 01:28:59.070 align:middle line:84% They just keep always finding out 01:28:59.070 --> 01:29:03.790 align:middle line:84% why is it being done that way, et cetera. 01:29:03.790 --> 01:29:09.070 align:middle line:84% And the really good managers of the successful companies 01:29:09.070 --> 01:29:12.170 align:middle line:90% are very comfortable-- 01:29:12.170 --> 01:29:17.410 align:middle line:84% this gets back to organic assimilation of knowledge-- 01:29:17.410 --> 01:29:21.930 align:middle line:84% getting great ideas from wherever they are out there 01:29:21.930 --> 01:29:25.410 align:middle line:84% and integrating back into their organization. 01:29:25.410 --> 01:29:30.450 align:middle line:84% So I couldn't agree more with Rebecca Henderson 01:29:30.450 --> 01:29:31.830 align:middle line:90% on these points. 01:29:31.830 --> 01:29:35.010 align:middle line:90% 01:29:35.010 --> 01:29:38.890 align:middle line:84% And here are also some very good points 01:29:38.890 --> 01:29:42.330 align:middle line:84% about successful pharmaceutical companies. 01:29:42.330 --> 01:29:44.010 align:middle line:84% And I think we've talked quite a bit 01:29:44.010 --> 01:29:49.650 align:middle line:84% about this, keeping abreast of changes, allocating resources, 01:29:49.650 --> 01:29:55.970 align:middle line:84% and then, extremely important, managing 01:29:55.970 --> 01:29:58.350 align:middle line:90% tensions in the organization. 01:29:58.350 --> 01:30:01.970 align:middle line:90% 01:30:01.970 --> 01:30:07.010 align:middle line:84% And again, to the comments I was making before about, 01:30:07.010 --> 01:30:11.010 align:middle line:84% quote/unquote, "politics" and the fact that in my experience, 01:30:11.010 --> 01:30:15.630 align:middle line:84% a lot of times, very good technical people don't like 01:30:15.630 --> 01:30:22.150 align:middle line:84% to get involved in politics, you cannot have an organization that 01:30:22.150 --> 01:30:26.230 align:middle line:84% is making tough decisions without tension. 01:30:26.230 --> 01:30:29.270 align:middle line:84% And in fact, one of the most important jobs 01:30:29.270 --> 01:30:34.870 align:middle line:84% of really good managers is, how do you manage those tensions? 01:30:34.870 --> 01:30:41.070 align:middle line:84% And when do you have to decide, Irving, 01:30:41.070 --> 01:30:45.310 align:middle line:84% you used to be really great, but you're a pain in the ass now? 01:30:45.310 --> 01:30:47.230 align:middle line:90% So goodbye. 01:30:47.230 --> 01:30:51.270 align:middle line:84% And when do you need to get three people together that 01:30:51.270 --> 01:30:53.030 align:middle line:90% cannot get along? 01:30:53.030 --> 01:30:55.290 align:middle line:84% And you have to knock heads and say, 01:30:55.290 --> 01:30:56.910 align:middle line:90% I'm going to close the door. 01:30:56.910 --> 01:30:58.450 align:middle line:90% You guys work it out. 01:30:58.450 --> 01:31:01.850 align:middle line:84% And then I want to see the white smoke. 01:31:01.850 --> 01:31:05.750 align:middle line:84% And then I'll come in, and we'll go ahead and do that. 01:31:05.750 --> 01:31:12.300 align:middle line:84% And really good managers do this well. 01:31:12.300 --> 01:31:16.460 align:middle line:84% By the way, Parsons is supposed to have 01:31:16.460 --> 01:31:18.540 align:middle line:84% been really excellent at that, how 01:31:18.540 --> 01:31:22.740 align:middle line:84% to get people and get them to work together well 01:31:22.740 --> 01:31:25.640 align:middle line:90% and get into to facilitate. 01:31:25.640 --> 01:31:28.440 align:middle line:84% And different people have different styles. 01:31:28.440 --> 01:31:31.880 align:middle line:84% Some people do it because of fear of God. 01:31:31.880 --> 01:31:37.540 align:middle line:84% And their dominant personalities make it very difficult 01:31:37.540 --> 01:31:38.840 align:middle line:90% to disagree with them. 01:31:38.840 --> 01:31:41.640 align:middle line:84% And other people do it very, very differently. 01:31:41.640 --> 01:31:46.580 align:middle line:84% But I cannot just say enough about the importance of knowing 01:31:46.580 --> 01:31:51.500 align:middle line:84% how to manage tension in an organization because they are 01:31:51.500 --> 01:31:53.220 align:middle line:90% going to come up. 01:31:53.220 --> 01:31:57.980 align:middle line:84% And the more you're trying to do disruptive things, 01:31:57.980 --> 01:32:02.240 align:middle line:84% the more tensions are going to be there. 01:32:02.240 --> 01:32:02.740 align:middle line:90% Yes? 01:32:02.740 --> 01:32:07.560 align:middle line:90% 01:32:07.560 --> 01:32:08.960 align:middle line:90% Please? 01:32:08.960 --> 01:32:11.160 align:middle line:84% AUDIENCE: Some tensions that I've seen 01:32:11.160 --> 01:32:15.200 align:middle line:84% happens because of different personality types and, also, 01:32:15.200 --> 01:32:16.800 align:middle line:90% situational class. 01:32:16.800 --> 01:32:20.720 align:middle line:84% And as leaders and managers, you can 01:32:20.720 --> 01:32:23.360 align:middle line:84% deal with the first aspect, which is 01:32:23.360 --> 01:32:27.560 align:middle line:90% very difficult to understand. 01:32:27.560 --> 01:32:33.080 align:middle line:84% And I think this couple people from this class, they use. 01:32:33.080 --> 01:32:39.680 align:middle line:84% In ISDS and professors from Harvard. 01:32:39.680 --> 01:32:43.200 align:middle line:84% So what he's teaching is how to understand yourself 01:32:43.200 --> 01:32:45.983 align:middle line:84% as a leader, what qualities you have. 01:32:45.983 --> 01:32:47.400 align:middle line:84% What are the things that you don't 01:32:47.400 --> 01:32:49.640 align:middle line:90% have with your orientation? 01:32:49.640 --> 01:32:51.560 align:middle line:84% And then also try to understand your team 01:32:51.560 --> 01:32:54.500 align:middle line:84% or try to understand other personalities. 01:32:54.500 --> 01:32:56.080 align:middle line:90% And then try to bridge the gap. 01:32:56.080 --> 01:32:58.400 align:middle line:90% Here's this situation gap. 01:32:58.400 --> 01:33:00.440 align:middle line:90% Bridge the personality. 01:33:00.440 --> 01:33:03.160 align:middle line:84% If you don't know the other person, it's very what it is. 01:33:03.160 --> 01:33:07.870 align:middle line:90% 01:33:07.870 --> 01:33:09.620 align:middle line:84% IRVING WLADAWSKY-BERGER: No, that's right. 01:33:09.620 --> 01:33:10.440 align:middle line:90% That's right. 01:33:10.440 --> 01:33:16.900 align:middle line:84% Well, again, really good managers-- 01:33:16.900 --> 01:33:18.980 align:middle line:90% let me say it a different way. 01:33:18.980 --> 01:33:22.140 align:middle line:84% People with good leadership qualities-- 01:33:22.140 --> 01:33:27.980 align:middle line:84% often, they are very good at reading people 01:33:27.980 --> 01:33:32.940 align:middle line:84% and at understanding what makes you tick. 01:33:32.940 --> 01:33:38.360 align:middle line:84% And then if you're good at reading people, 01:33:38.360 --> 01:33:40.920 align:middle line:84% it's just easier to work with them. 01:33:40.920 --> 01:33:43.520 align:middle line:84% You'll understand what makes them happy. 01:33:43.520 --> 01:33:46.100 align:middle line:84% You'll understand what makes them unhappy. 01:33:46.100 --> 01:33:48.480 align:middle line:90% And you'll make those decisions. 01:33:48.480 --> 01:33:51.180 align:middle line:84% So I agree totally that the ability 01:33:51.180 --> 01:33:56.140 align:middle line:90% to understand personalities-- 01:33:56.140 --> 01:34:05.390 align:middle line:84% and again, those are skills that you can only learn by doing. 01:34:05.390 --> 01:34:08.610 align:middle line:84% I don't know what I can tell anybody 01:34:08.610 --> 01:34:15.050 align:middle line:84% on how to do that, other than encourage you all to do that. 01:34:15.050 --> 01:34:19.770 align:middle line:84% Jack Welch-- I think in the GE, as you know, 01:34:19.770 --> 01:34:25.970 align:middle line:84% is famous for their management executive schools. 01:34:25.970 --> 01:34:28.210 align:middle line:90% And GE used to-- 01:34:28.210 --> 01:34:29.710 align:middle line:90% I don't know if they still do. 01:34:29.710 --> 01:34:33.290 align:middle line:84% But I remember, years ago, they had 01:34:33.290 --> 01:34:38.670 align:middle line:84% a way of looking at their managers across two dimensions. 01:34:38.670 --> 01:34:47.410 align:middle line:84% One dimension is, is this person a good manager 01:34:47.410 --> 01:34:49.890 align:middle line:90% in making their numbers? 01:34:49.890 --> 01:34:53.410 align:middle line:84% Or are they a bad manager in making those numbers? 01:34:53.410 --> 01:34:58.090 align:middle line:84% And the other dimension is, is this person a good team 01:34:58.090 --> 01:35:01.070 align:middle line:90% player or a bad team player? 01:35:01.070 --> 01:35:02.790 align:middle line:84% Well, if you're a bad team player 01:35:02.790 --> 01:35:07.390 align:middle line:84% and you don't make your numbers, that's a trivial case 01:35:07.390 --> 01:35:09.070 align:middle line:90% that you get rid of that. 01:35:09.070 --> 01:35:14.870 align:middle line:84% And at the same time, if you are a great team player 01:35:14.870 --> 01:35:19.350 align:middle line:84% and you are a good operational manager making your numbers, 01:35:19.350 --> 01:35:22.410 align:middle line:84% of course, you want that very much. 01:35:22.410 --> 01:35:27.270 align:middle line:84% The extremes here are the obvious ones. 01:35:27.270 --> 01:35:38.630 align:middle line:84% But Welch used to say that if you didn't make your numbers, 01:35:38.630 --> 01:35:41.370 align:middle line:84% but you were a very good team player, 01:35:41.370 --> 01:35:45.790 align:middle line:84% he usually gave people a second or third chance 01:35:45.790 --> 01:35:49.010 align:middle line:84% to see if they can learn how to do things, 01:35:49.010 --> 01:35:53.750 align:middle line:90% because he liked that very much. 01:35:53.750 --> 01:35:57.490 align:middle line:84% And if they still didn't do it, you have to get rid of them 01:35:57.490 --> 01:36:00.290 align:middle line:90% or move them to a different job. 01:36:00.290 --> 01:36:05.270 align:middle line:84% And if you're a very good person who keeps making their numbers, 01:36:05.270 --> 01:36:08.730 align:middle line:84% but you are a bad team player, he said, 01:36:08.730 --> 01:36:11.130 align:middle line:84% you really should get rid of those people 01:36:11.130 --> 01:36:13.730 align:middle line:84% and replace them because they will 01:36:13.730 --> 01:36:15.670 align:middle line:90% be bad for the organization. 01:36:15.670 --> 01:36:20.290 align:middle line:84% They can have such a disruptive effect on the organization 01:36:20.290 --> 01:36:28.290 align:middle line:84% that you just spend a lot of energy cleaning up after them. 01:36:28.290 --> 01:36:29.930 align:middle line:90% Is it right? 01:36:29.930 --> 01:36:30.590 align:middle line:90% Is it wrong? 01:36:30.590 --> 01:36:31.850 align:middle line:90% I don't know. 01:36:31.850 --> 01:36:36.090 align:middle line:84% And I don't know any of you who are familiar with GE management 01:36:36.090 --> 01:36:39.830 align:middle line:84% principles, whether they continue to practice this. 01:36:39.830 --> 01:36:44.050 align:middle line:90% But that's something that-- 01:36:44.050 --> 01:36:46.788 align:middle line:84% I think it sounds quite reasonable. 01:36:46.788 --> 01:36:48.330 align:middle line:84% AUDIENCE: So you were just mentioning 01:36:48.330 --> 01:36:56.870 align:middle line:84% how to survive a secret operation more generally. 01:36:56.870 --> 01:36:58.990 align:middle line:84% I've heard it said that nurses are, 01:36:58.990 --> 01:37:03.070 align:middle line:84% let's say, particularly during the downturn. 01:37:03.070 --> 01:37:05.170 align:middle line:84% The closer you are to the revenue stream, 01:37:05.170 --> 01:37:09.570 align:middle line:84% it seems, the safer your job can be, and more likely, therefore, 01:37:09.570 --> 01:37:11.630 align:middle line:90% that you would survive. 01:37:11.630 --> 01:37:16.370 align:middle line:84% In your experience, can you generalize something like that? 01:37:16.370 --> 01:37:19.350 align:middle line:90% 01:37:19.350 --> 01:37:23.890 align:middle line:84% IRVING WLADAWSKY-BERGER: Well, I mean, 01:37:23.890 --> 01:37:30.710 align:middle line:84% there is no question that when things are bad, 01:37:30.710 --> 01:37:38.550 align:middle line:84% you often cut staffs because, I mean, at some level, 01:37:38.550 --> 01:37:42.430 align:middle line:84% the people who build products, manufacture products, 01:37:42.430 --> 01:37:44.510 align:middle line:84% are selling and supporting them, you 01:37:44.510 --> 01:37:47.550 align:middle line:90% need them to make the revenue. 01:37:47.550 --> 01:37:53.660 align:middle line:84% And the staffs are the people that 01:37:53.660 --> 01:37:57.980 align:middle line:84% are one level removed from that line of defense. 01:37:57.980 --> 01:38:00.200 align:middle line:90% So in that sense, that's true. 01:38:00.200 --> 01:38:04.420 align:middle line:90% 01:38:04.420 --> 01:38:06.200 align:middle line:90% You obviously need some. 01:38:06.200 --> 01:38:11.180 align:middle line:90% They just have to be very good. 01:38:11.180 --> 01:38:15.100 align:middle line:84% So I would say that staff jobs are often 01:38:15.100 --> 01:38:18.360 align:middle line:90% more vulnerable in bad times. 01:38:18.360 --> 01:38:20.500 align:middle line:90% There is no question. 01:38:20.500 --> 01:38:21.920 align:middle line:90% There's no question. 01:38:21.920 --> 01:38:24.460 align:middle line:90% 01:38:24.460 --> 01:38:29.620 align:middle line:84% And the reasons, I think, are obvious that you 01:38:29.620 --> 01:38:33.140 align:middle line:84% need the people who are actually bringing in the revenue more 01:38:33.140 --> 01:38:35.060 align:middle line:90% than anything else. 01:38:35.060 --> 01:38:36.580 align:middle line:84% AUDIENCE: So there's a distinction 01:38:36.580 --> 01:38:40.250 align:middle line:84% that those are really supporting the revenue stream. 01:38:40.250 --> 01:38:41.500 align:middle line:90% IRVING WLADAWSKY-BERGER: Yeah. 01:38:41.500 --> 01:38:44.440 align:middle line:84% But let me assume, if you are supporting the revenue stream, 01:38:44.440 --> 01:38:47.720 align:middle line:90% maybe you are semi-staff. 01:38:47.720 --> 01:38:51.760 align:middle line:84% You're closer to the line of business. 01:38:51.760 --> 01:38:59.340 align:middle line:84% And that's what I would say that, in general, so-- 01:38:59.340 --> 01:39:01.645 align:middle line:84% AUDIENCE: So just for clarity, I want 01:39:01.645 --> 01:39:03.020 align:middle line:84% to say, when you say team player, 01:39:03.020 --> 01:39:07.400 align:middle line:84% you mean gets along with peers and higher up, 01:39:07.400 --> 01:39:09.493 align:middle line:84% or follows policy to the letter of the law? 01:39:09.493 --> 01:39:10.660 align:middle line:90% IRVING WLADAWSKY-BERGER: No. 01:39:10.660 --> 01:39:17.240 align:middle line:84% I think it is somebody who is effective in the organization as 01:39:17.240 --> 01:39:19.660 align:middle line:84% opposed to disruptive in the organization. 01:39:19.660 --> 01:39:20.960 align:middle line:90% That's what I would say. 01:39:20.960 --> 01:39:23.100 align:middle line:84% And I'm sure you've all met people. 01:39:23.100 --> 01:39:29.360 align:middle line:84% Some people just have trouble working with other people. 01:39:29.360 --> 01:39:32.680 align:middle line:84% And in fact, I've worked with people 01:39:32.680 --> 01:39:36.320 align:middle line:90% that are very good up and down. 01:39:36.320 --> 01:39:39.700 align:middle line:84% So they are really good hierarchically, 01:39:39.700 --> 01:39:43.920 align:middle line:84% and they are very supportive of the people who work for them. 01:39:43.920 --> 01:39:48.440 align:middle line:84% But they are real fighters with peers. 01:39:48.440 --> 01:39:52.140 align:middle line:84% And generally, those people are horrendous to work with-- 01:39:52.140 --> 01:39:55.020 align:middle line:84% I mean, just horrendous because it's almost 01:39:55.020 --> 01:39:59.140 align:middle line:84% like every discussion is a battle. 01:39:59.140 --> 01:40:02.860 align:middle line:84% And the reason those people are bad, especially 01:40:02.860 --> 01:40:06.220 align:middle line:84% in today's world, where you want to emphasize 01:40:06.220 --> 01:40:12.460 align:middle line:84% collaborative innovation, is if you have a great idea, 01:40:12.460 --> 01:40:15.540 align:middle line:84% this is the last person you'll bring a great idea 01:40:15.540 --> 01:40:19.480 align:middle line:84% to because the first thing they'll say is, you're an idiot. 01:40:19.480 --> 01:40:20.000 align:middle line:90% Why is that? 01:40:20.000 --> 01:40:22.920 align:middle line:84% Well, because if this had been really a great idea, 01:40:22.920 --> 01:40:24.340 align:middle line:90% I would have had it. 01:40:24.340 --> 01:40:26.900 align:middle line:84% I mean, they wouldn't say it that way, 01:40:26.900 --> 01:40:28.340 align:middle line:90% but they'll think that way. 01:40:28.340 --> 01:40:31.440 align:middle line:90% And those people are not good. 01:40:31.440 --> 01:40:35.200 align:middle line:84% But often, those people are superb at something. 01:40:35.200 --> 01:40:39.460 align:middle line:90% So you have to manage the decks. 01:40:39.460 --> 01:40:42.020 align:middle line:90% There's no perfect way. 01:40:42.020 --> 01:40:46.500 align:middle line:84% You're doing a dynamic system optimization problem. 01:40:46.500 --> 01:40:48.980 align:middle line:84% At some level, that's what you're doing. 01:40:48.980 --> 01:40:53.080 align:middle line:90% 01:40:53.080 --> 01:41:01.800 align:middle line:84% So let me talk about, then, for the remaining 45 minutes 01:41:01.800 --> 01:41:07.400 align:middle line:84% the national and cultural issues to what we actually 01:41:07.400 --> 01:41:11.160 align:middle line:84% did with IBM's internet organization 01:41:11.160 --> 01:41:16.880 align:middle line:84% to make it come to life with this specific example. 01:41:16.880 --> 01:41:22.040 align:middle line:84% And let me talk about these five aspects that I thought 01:41:22.040 --> 01:41:27.140 align:middle line:84% were critical in building the internet organization. 01:41:27.140 --> 01:41:29.760 align:middle line:90% 01:41:29.760 --> 01:41:42.200 align:middle line:84% First of all, we built a small virtual organization. 01:41:42.200 --> 01:41:43.220 align:middle line:90% Why is that? 01:41:43.220 --> 01:41:51.990 align:middle line:84% Well, the internet, as any strategic change, 01:41:51.990 --> 01:41:57.310 align:middle line:84% is usually going to affect the whole company. 01:41:57.310 --> 01:41:59.190 align:middle line:84% So if you said, well, we're going 01:41:59.190 --> 01:42:05.790 align:middle line:84% to put everybody who is affected under the same general manager, 01:42:05.790 --> 01:42:08.670 align:middle line:84% you're just turning around the whole organization, 01:42:08.670 --> 01:42:15.230 align:middle line:84% or only the CEO is the person you can do that to. 01:42:15.230 --> 01:42:20.230 align:middle line:84% So instead, what we did is to set up 01:42:20.230 --> 01:42:23.630 align:middle line:90% a small virtual organization. 01:42:23.630 --> 01:42:25.910 align:middle line:84% We had in the internet organization 01:42:25.910 --> 01:42:28.050 align:middle line:84% a few hundred people at its peak. 01:42:28.050 --> 01:42:30.230 align:middle line:90% It was never bigger than that. 01:42:30.230 --> 01:42:35.870 align:middle line:84% And its job was to coordinate with everybody 01:42:35.870 --> 01:42:37.370 align:middle line:90% else in the company. 01:42:37.370 --> 01:42:39.070 align:middle line:90% That's what its job. 01:42:39.070 --> 01:42:42.230 align:middle line:84% There were certain functions that it 01:42:42.230 --> 01:42:45.210 align:middle line:84% had to do full-time-- for example, 01:42:45.210 --> 01:42:47.450 align:middle line:90% articulate the market strategy. 01:42:47.450 --> 01:42:48.550 align:middle line:90% That was critical. 01:42:48.550 --> 01:42:52.970 align:middle line:84% You couldn't have everybody in the company saying, OK, 01:42:52.970 --> 01:42:54.950 align:middle line:84% this is what e-business means to me. 01:42:54.950 --> 01:42:57.370 align:middle line:84% This is what-- you couldn't do that. 01:42:57.370 --> 01:43:01.410 align:middle line:84% You needed to have at the level of working with people 01:43:01.410 --> 01:43:05.570 align:middle line:84% like Chris Wall and doing those kinds of IBM-wide ads 01:43:05.570 --> 01:43:08.130 align:middle line:84% and establishing the brand, it was 01:43:08.130 --> 01:43:15.410 align:middle line:84% done at the level of the virtual organization. 01:43:15.410 --> 01:43:20.710 align:middle line:84% We also had experimental offerings, not too many. 01:43:20.710 --> 01:43:25.250 align:middle line:84% But things that were brand-new, where nobody had any idea where 01:43:25.250 --> 01:43:29.570 align:middle line:84% to put them, we did them in the internet organization. 01:43:29.570 --> 01:43:31.390 align:middle line:90% E-commerce was an example. 01:43:31.390 --> 01:43:33.610 align:middle line:84% So we had a small group doing e-commerce 01:43:33.610 --> 01:43:38.850 align:middle line:84% because in 1996, nobody knew what the hell e-commerce was. 01:43:38.850 --> 01:43:44.110 align:middle line:84% As soon as we figured it out a little more, 01:43:44.110 --> 01:43:49.990 align:middle line:84% e-commerce became essentially WebSphere commerce server. 01:43:49.990 --> 01:43:55.550 align:middle line:84% So it became a layer on top of the web application server 01:43:55.550 --> 01:43:56.450 align:middle line:90% platform. 01:43:56.450 --> 01:43:59.870 align:middle line:84% But that took a year or two before we figure out 01:43:59.870 --> 01:44:02.870 align:middle line:90% where e-commerce belonged. 01:44:02.870 --> 01:44:07.790 align:middle line:84% Some of the early major events, like the stuff 01:44:07.790 --> 01:44:12.310 align:middle line:84% John Patrick talked about with the website for the '96 01:44:12.310 --> 01:44:14.710 align:middle line:84% Olympics, we did in this organization 01:44:14.710 --> 01:44:18.770 align:middle line:84% because, again, there was nobody else that you could go to. 01:44:18.770 --> 01:44:22.350 align:middle line:84% So by being a small organization, 01:44:22.350 --> 01:44:26.790 align:middle line:84% you had to pick very, very carefully what 01:44:26.790 --> 01:44:30.790 align:middle line:84% were the things you were going to focus on. 01:44:30.790 --> 01:44:32.550 align:middle line:90% And those are the ones you did. 01:44:32.550 --> 01:44:36.310 align:middle line:84% And everything else, you had to rely 01:44:36.310 --> 01:44:39.270 align:middle line:84% on the rest of the organization to go do. 01:44:39.270 --> 01:44:45.140 align:middle line:90% 01:44:45.140 --> 01:44:50.700 align:middle line:84% We also are very much told people 01:44:50.700 --> 01:44:56.860 align:middle line:84% up front that success for such a virtual organization 01:44:56.860 --> 01:45:00.020 align:middle line:90% was going out of business. 01:45:00.020 --> 01:45:03.838 align:middle line:84% Well, going out of business after what you did was done. 01:45:03.838 --> 01:45:06.380 align:middle line:84% Obviously, if you went out of business three months after you 01:45:06.380 --> 01:45:09.660 align:middle line:84% started, that would have been very bad 01:45:09.660 --> 01:45:13.380 align:middle line:84% because you needed the virtual organization 01:45:13.380 --> 01:45:18.300 align:middle line:84% to kick start the initiative to get all the parts moving. 01:45:18.300 --> 01:45:24.860 align:middle line:84% But if you were successful, it meant all the units had already 01:45:24.860 --> 01:45:26.340 align:middle line:90% started to move. 01:45:26.340 --> 01:45:31.540 align:middle line:84% All the units were already doing their job. 01:45:31.540 --> 01:45:35.580 align:middle line:84% And at that point, you became more of a bureaucratic hindrance 01:45:35.580 --> 01:45:36.980 align:middle line:90% than a help. 01:45:36.980 --> 01:45:40.620 align:middle line:84% And usually, you overstay your welcome by, 01:45:40.620 --> 01:45:43.020 align:middle line:84% I don't know, six months to a year. 01:45:43.020 --> 01:45:44.540 align:middle line:90% I think that's what happened. 01:45:44.540 --> 01:45:47.520 align:middle line:84% But eventually, we just disbanded and went out 01:45:47.520 --> 01:45:48.120 align:middle line:90% of business. 01:45:48.120 --> 01:45:52.880 align:middle line:84% And you could see this was really effective the first two 01:45:52.880 --> 01:45:54.040 align:middle line:90% years. 01:45:54.040 --> 01:45:57.500 align:middle line:84% And then we were in business four years. 01:45:57.500 --> 01:45:59.400 align:middle line:84% The first year was really effective. 01:45:59.400 --> 01:46:02.400 align:middle line:84% And the last two years, you saw the effectiveness 01:46:02.400 --> 01:46:06.000 align:middle line:84% begin to pale because it wasn't needed. 01:46:06.000 --> 01:46:12.440 align:middle line:84% You could do this elsewhere with the other parts 01:46:12.440 --> 01:46:14.400 align:middle line:90% of the organization. 01:46:14.400 --> 01:46:20.560 align:middle line:84% In IBM, we have retained the notion of an EBO, 01:46:20.560 --> 01:46:24.000 align:middle line:84% or Emerging Business Opportunities, which 01:46:24.000 --> 01:46:26.300 align:middle line:90% is very much a similar model. 01:46:26.300 --> 01:46:28.960 align:middle line:90% When something new comes out-- 01:46:28.960 --> 01:46:31.140 align:middle line:90% life sciences was one of them. 01:46:31.140 --> 01:46:37.140 align:middle line:84% In 2000, nobody knew what the hell was life sciences. 01:46:37.140 --> 01:46:39.500 align:middle line:84% You knew something was happening. 01:46:39.500 --> 01:46:43.020 align:middle line:84% You didn't understand its implications, what was involved. 01:46:43.020 --> 01:46:46.700 align:middle line:84% So we formed what's called an emerging business organization 01:46:46.700 --> 01:46:49.020 align:middle line:90% to do life sciences. 01:46:49.020 --> 01:46:52.080 align:middle line:90% And they did offerings. 01:46:52.080 --> 01:46:53.000 align:middle line:90% They had sales. 01:46:53.000 --> 01:46:54.930 align:middle line:90% They had marketing and so on. 01:46:54.930 --> 01:46:56.940 align:middle line:90% It eventually became clear. 01:46:56.940 --> 01:47:03.420 align:middle line:84% And life sciences became part of the health sector in IBM and so 01:47:03.420 --> 01:47:03.920 align:middle line:90% on. 01:47:03.920 --> 01:47:05.060 align:middle line:90% Please? 01:47:05.060 --> 01:47:08.260 align:middle line:84% AUDIENCE: How do you specifically 01:47:08.260 --> 01:47:09.980 align:middle line:90% come up with these concepts? 01:47:09.980 --> 01:47:13.260 align:middle line:90% 01:47:13.260 --> 01:47:17.682 align:middle line:84% For example, the emerging business of life sciences. 01:47:17.682 --> 01:47:19.140 align:middle line:84% IRVING WLADAWSKY-BERGER: How do you 01:47:19.140 --> 01:47:23.500 align:middle line:84% come up with the organizational concepts or with the units 01:47:23.500 --> 01:47:25.780 align:middle line:90% that you start doing EBO? 01:47:25.780 --> 01:47:29.600 align:middle line:84% AUDIENCE: How do you incentivize your employees 01:47:29.600 --> 01:47:33.300 align:middle line:90% so that they will come to you? 01:47:33.300 --> 01:47:36.900 align:middle line:90% 01:47:36.900 --> 01:47:39.400 align:middle line:84% IRVING WLADAWSKY-BERGER: Well, this gets back to the culture 01:47:39.400 --> 01:47:43.120 align:middle line:84% of innovation that you want people-- 01:47:43.120 --> 01:47:46.060 align:middle line:84% remember, life sciences was going out there. 01:47:46.060 --> 01:47:48.880 align:middle line:90% 01:47:48.880 --> 01:47:56.440 align:middle line:84% And you encourage people to watch the marketplace, 01:47:56.440 --> 01:48:00.300 align:middle line:84% to know that there is something called life sciences. 01:48:00.300 --> 01:48:03.440 align:middle line:84% And they are buying computers, and they're not 01:48:03.440 --> 01:48:05.360 align:middle line:90% buying our computers. 01:48:05.360 --> 01:48:06.500 align:middle line:90% Why the hell is that? 01:48:06.500 --> 01:48:09.140 align:middle line:90% This gets back to ask questions. 01:48:09.140 --> 01:48:11.860 align:middle line:90% So I hear life sciences. 01:48:11.860 --> 01:48:12.840 align:middle line:90% Well, yeah. 01:48:12.840 --> 01:48:15.060 align:middle line:84% Well, they're buying Compaq computers. 01:48:15.060 --> 01:48:19.380 align:middle line:84% Compaq, in fact, was one of the early leaders in life sciences. 01:48:19.380 --> 01:48:21.560 align:middle line:90% HP acquired Compaq. 01:48:21.560 --> 01:48:23.980 align:middle line:84% Well, so how come they're not buying our computers? 01:48:23.980 --> 01:48:24.540 align:middle line:90% I don't know. 01:48:24.540 --> 01:48:27.940 align:middle line:84% Well, have we ever caught on somebody doing life sciences? 01:48:27.940 --> 01:48:28.440 align:middle line:90% No. 01:48:28.440 --> 01:48:29.940 align:middle line:90% Well, should we call? 01:48:29.940 --> 01:48:33.190 align:middle line:90% You just keep asking questions. 01:48:33.190 --> 01:48:36.550 align:middle line:84% And usually, remember, initially, EBOs 01:48:36.550 --> 01:48:39.470 align:middle line:84% are small and a small number of people. 01:48:39.470 --> 01:48:41.830 align:middle line:84% So you'll usually find a small number of people 01:48:41.830 --> 01:48:44.190 align:middle line:90% who are turned on by this. 01:48:44.190 --> 01:48:47.630 align:middle line:84% Often, the people who are really good 01:48:47.630 --> 01:48:50.750 align:middle line:84% EBO leaders, Emerging Business Opportunities, 01:48:50.750 --> 01:48:52.990 align:middle line:84% come from the research environment, 01:48:52.990 --> 01:48:55.630 align:middle line:84% because people from the research environment 01:48:55.630 --> 01:48:58.070 align:middle line:90% love to do new things. 01:48:58.070 --> 01:49:02.190 align:middle line:84% And actually, it's a very good opportunity 01:49:02.190 --> 01:49:05.790 align:middle line:84% for people from the research environment 01:49:05.790 --> 01:49:12.070 align:middle line:84% to get into business management, because this is totally 01:49:12.070 --> 01:49:13.350 align:middle line:90% in the startup phase. 01:49:13.350 --> 01:49:16.390 align:middle line:84% It's identical in Silicon Valley that often 01:49:16.390 --> 01:49:20.550 align:middle line:84% the founders of companies are really good technical people. 01:49:20.550 --> 01:49:22.810 align:middle line:84% And when it reaches a certain size, 01:49:22.810 --> 01:49:25.430 align:middle line:84% and now you have to do Sarbanes-Oxley 01:49:25.430 --> 01:49:30.750 align:middle line:84% and all this crap, the founders don't like to do that. 01:49:30.750 --> 01:49:34.450 align:middle line:84% And then you have to switch to more professional management. 01:49:34.450 --> 01:49:37.330 align:middle line:84% And the same happens here, that then you 01:49:37.330 --> 01:49:43.790 align:middle line:84% have to switch to more classic general managers to go scale. 01:49:43.790 --> 01:49:47.227 align:middle line:84% But in this very initial phases, you need-- 01:49:47.227 --> 01:49:48.810 align:middle line:84% and by the way, in the initial phases, 01:49:48.810 --> 01:49:52.850 align:middle line:84% you absolutely need people who are really deep into, 01:49:52.850 --> 01:49:54.350 align:middle line:90% what is life sciences? 01:49:54.350 --> 01:49:56.170 align:middle line:90% What is the internet? 01:49:56.170 --> 01:49:57.590 align:middle line:90% What is Linux? 01:49:57.590 --> 01:50:00.930 align:middle line:90% What is whatever the hell else? 01:50:00.930 --> 01:50:03.490 align:middle line:84% Because they also, especially if it's 01:50:03.490 --> 01:50:07.210 align:middle line:84% something that's going out in the world that you want to join, 01:50:07.210 --> 01:50:11.790 align:middle line:84% the world has to accept you, that community in the world. 01:50:11.790 --> 01:50:14.750 align:middle line:84% And if you show up and say, I'm from IBM, 01:50:14.750 --> 01:50:20.070 align:middle line:84% I want to do life sciences, and they say, well, what's biology? 01:50:20.070 --> 01:50:22.970 align:middle line:84% You say, well, I took a course in high school. 01:50:22.970 --> 01:50:24.510 align:middle line:90% That's not a good answer. 01:50:24.510 --> 01:50:29.110 align:middle line:84% So you have to really sound like you know what the hell life 01:50:29.110 --> 01:50:29.970 align:middle line:90% sciences was. 01:50:29.970 --> 01:50:35.990 align:middle line:84% And the person we appointed was a very good executive 01:50:35.990 --> 01:50:37.410 align:middle line:90% from our research labs. 01:50:37.410 --> 01:50:45.670 align:middle line:84% And she had a PhD in computational chemistry, 01:50:45.670 --> 01:50:50.710 align:middle line:84% or biology, or something like that that was relevant. 01:50:50.710 --> 01:50:54.150 align:middle line:84% But it's part of creating the culture of innovation. 01:50:54.150 --> 01:50:57.590 align:middle line:90% 01:50:57.590 --> 01:50:58.950 align:middle line:90% It's the same thing. 01:50:58.950 --> 01:51:03.390 align:middle line:84% If you ask me, why do people contribute things 01:51:03.390 --> 01:51:05.210 align:middle line:90% to open-source communities? 01:51:05.210 --> 01:51:09.270 align:middle line:84% Because you don't get paid anything. 01:51:09.270 --> 01:51:13.550 align:middle line:84% That's as if I ask you, why do you submit papers to a journal? 01:51:13.550 --> 01:51:16.570 align:middle line:84% Because when a journal publishes your paper, 01:51:16.570 --> 01:51:18.990 align:middle line:90% they don't pay you anything. 01:51:18.990 --> 01:51:23.910 align:middle line:84% But the answer is, this is incredible prestige when 01:51:23.910 --> 01:51:29.710 align:middle line:84% an idea that you submitted, let's say, 01:51:29.710 --> 01:51:32.730 align:middle line:84% to the Linux community gets accepted and becomes part 01:51:32.730 --> 01:51:34.650 align:middle line:90% of the next version of Linux. 01:51:34.650 --> 01:51:38.870 align:middle line:84% Your peers will find out, the people you're working with. 01:51:38.870 --> 01:51:41.810 align:middle line:84% And by having your ideas become part 01:51:41.810 --> 01:51:45.730 align:middle line:84% of the next version of Linux, that's 01:51:45.730 --> 01:51:48.530 align:middle line:84% how you go up in the eyes of the community. 01:51:48.530 --> 01:51:51.330 align:middle line:84% And similarly, if you had an idea 01:51:51.330 --> 01:51:57.170 align:middle line:84% and you were able to create an EBO out of the idea, 01:51:57.170 --> 01:52:03.090 align:middle line:84% your respect within the community will go way up. 01:52:03.090 --> 01:52:09.450 align:middle line:84% And I honestly think this whole ego and respect are just 01:52:09.450 --> 01:52:14.010 align:middle line:84% huge drivers for the kind of people we're talking 01:52:14.010 --> 01:52:15.790 align:middle line:90% about who come up with ideas. 01:52:15.790 --> 01:52:20.250 align:middle line:84% I don't think I need to say too much to you all about that. 01:52:20.250 --> 01:52:23.590 align:middle line:84% And what's then important is that within your company, 01:52:23.590 --> 01:52:28.880 align:middle line:84% you create a culture where everybody knows that, where you 01:52:28.880 --> 01:52:33.380 align:middle line:84% give them awards, and you have corporate recognition awards, 01:52:33.380 --> 01:52:37.520 align:middle line:84% and you give out a lot of money, and you 01:52:37.520 --> 01:52:42.240 align:middle line:84% become a distinguished engineer or whatever. 01:52:42.240 --> 01:52:44.580 align:middle line:84% You have to work at this, is what I'm saying, 01:52:44.580 --> 01:52:51.560 align:middle line:84% to create a culture in which people feel such pride that they 01:52:51.560 --> 01:52:54.800 align:middle line:90% will very much want to do that. 01:52:54.800 --> 01:52:58.520 align:middle line:84% I'm assuming the same is true in the armed forces, isn't it, 01:52:58.520 --> 01:53:03.160 align:middle line:84% that the respect of the peers, when you do something, 01:53:03.160 --> 01:53:06.120 align:middle line:90% you get medals or-- 01:53:06.120 --> 01:53:07.780 align:middle line:84% I don't remember what it's called. 01:53:07.780 --> 01:53:10.460 align:middle line:84% I've been in a few places where people, out of respect 01:53:10.460 --> 01:53:14.200 align:middle line:90% gave me a coin. 01:53:14.200 --> 01:53:19.460 align:middle line:84% So there's a whole set of things that are really positive to get. 01:53:19.460 --> 01:53:22.760 align:middle line:84% And I'm assuming that drives a lot of behavior, correct? 01:53:22.760 --> 01:53:25.500 align:middle line:90% 01:53:25.500 --> 01:53:27.500 align:middle line:84% AUDIENCE: Yeah, because you don't get money. 01:53:27.500 --> 01:53:28.750 align:middle line:90% IRVING WLADAWSKY-BERGER: Yeah. 01:53:28.750 --> 01:53:29.780 align:middle line:90% Right. 01:53:29.780 --> 01:53:30.460 align:middle line:90% OK. 01:53:30.460 --> 01:53:32.260 align:middle line:90% Please? 01:53:32.260 --> 01:53:34.100 align:middle line:84% AUDIENCE: Bring a new product development, 01:53:34.100 --> 01:53:37.880 align:middle line:84% it's probably easier to incentivize your employees. 01:53:37.880 --> 01:53:43.400 align:middle line:84% But if you are outsourcing the manufacturing plant to China, 01:53:43.400 --> 01:53:45.640 align:middle line:84% it might be good for the organization. 01:53:45.640 --> 01:53:50.180 align:middle line:84% But how do you incentivize your employees? 01:53:50.180 --> 01:53:53.380 align:middle line:84% IRVING WLADAWSKY-BERGER: Well, because usually what happens 01:53:53.380 --> 01:54:02.380 align:middle line:84% is the manager who is leading the charge to outsource is told, 01:54:02.380 --> 01:54:04.160 align:middle line:90% we're not competitive. 01:54:04.160 --> 01:54:06.660 align:middle line:84% How do we become more competitive? 01:54:06.660 --> 01:54:11.420 align:middle line:84% And one of their choices is to outsource. 01:54:11.420 --> 01:54:16.780 align:middle line:84% So the manager of the unit that has made the decision 01:54:16.780 --> 01:54:21.220 align:middle line:84% to outsource and is establishing the organization that 01:54:21.220 --> 01:54:23.520 align:middle line:90% is doing the outsourcing-- 01:54:23.520 --> 01:54:27.160 align:middle line:84% it's part of his or her job to make that decision 01:54:27.160 --> 01:54:30.920 align:middle line:84% because, otherwise, they'll get fired. 01:54:30.920 --> 01:54:33.140 align:middle line:84% They're just not making the numbers. 01:54:33.140 --> 01:54:35.920 align:middle line:84% That would be the reason you outsource. 01:54:35.920 --> 01:54:40.640 align:middle line:84% Now, obviously, you go down into the organization. 01:54:40.640 --> 01:54:42.365 align:middle line:84% People whose jobs are getting outsourced, 01:54:42.365 --> 01:54:44.240 align:middle line:84% I don't know if there is any way you're going 01:54:44.240 --> 01:54:47.120 align:middle line:90% to make them happy with that. 01:54:47.120 --> 01:54:50.220 align:middle line:84% Hopefully you can have other jobs for them. 01:54:50.220 --> 01:54:54.240 align:middle line:90% And if you can, they'll be fine. 01:54:54.240 --> 01:54:56.540 align:middle line:84% AUDIENCE: A lot of times, the jobs don't blow in, 01:54:56.540 --> 01:54:59.280 align:middle line:84% but you probably work with a partner 01:54:59.280 --> 01:55:00.893 align:middle line:90% from outside the company. 01:55:00.893 --> 01:55:03.060 align:middle line:84% IRVING WLADAWSKY-BERGER: That often works very well. 01:55:03.060 --> 01:55:06.020 align:middle line:84% But often, different people have those skills. 01:55:06.020 --> 01:55:11.520 align:middle line:84% Often, being very good at more partner relations, business 01:55:11.520 --> 01:55:14.320 align:middle line:84% development relations, is a different skill 01:55:14.320 --> 01:55:15.960 align:middle line:90% than doing it yourself. 01:55:15.960 --> 01:55:18.020 align:middle line:84% Some people can make the transition. 01:55:18.020 --> 01:55:20.290 align:middle line:84% Other people cannot make the transition. 01:55:20.290 --> 01:55:23.950 align:middle line:84% So it depends whether you can make the transition or not. 01:55:23.950 --> 01:55:26.550 align:middle line:84% AUDIENCE: And the virtual organization probably also 01:55:26.550 --> 01:55:29.550 align:middle line:84% extends to your partner organization. 01:55:29.550 --> 01:55:31.590 align:middle line:84% IRVING WLADAWSKY-BERGER: Totally. 01:55:31.590 --> 01:55:32.830 align:middle line:90% Yes. 01:55:32.830 --> 01:55:37.710 align:middle line:84% And I would say, in today's world of increasingly 01:55:37.710 --> 01:55:43.470 align:middle line:84% distributed organizations, the skills to-- 01:55:43.470 --> 01:55:48.130 align:middle line:84% remember, before, I said, being a good team player, 01:55:48.130 --> 01:55:52.470 align:middle line:84% and then we clarified, it means that you 01:55:52.470 --> 01:55:56.550 align:middle line:84% are very good at working with an organization. 01:55:56.550 --> 01:55:59.910 align:middle line:84% That is even more critical today because, often, 01:55:59.910 --> 01:56:03.190 align:middle line:84% the people that you have to be very good at working with 01:56:03.190 --> 01:56:05.410 align:middle line:90% are not working in the business. 01:56:05.410 --> 01:56:07.430 align:middle line:84% Not only don't they work with you, 01:56:07.430 --> 01:56:09.850 align:middle line:84% they don't even work for the organization. 01:56:09.850 --> 01:56:14.150 align:middle line:90% They are partners, suppliers. 01:56:14.150 --> 01:56:19.690 align:middle line:84% And really good leaders of this more virtual 01:56:19.690 --> 01:56:23.130 align:middle line:90% organizational world-- 01:56:23.130 --> 01:56:28.930 align:middle line:84% they are very comfortable working with things, no matter 01:56:28.930 --> 01:56:32.890 align:middle line:84% whether you work for them or not. 01:56:32.890 --> 01:56:35.350 align:middle line:84% And you see, it becomes very interesting. 01:56:35.350 --> 01:56:38.790 align:middle line:84% For example, in an EBO-- let's take the internet division-- 01:56:38.790 --> 01:56:42.370 align:middle line:84% I was held totally accountable for the success 01:56:42.370 --> 01:56:43.790 align:middle line:90% of the internet division. 01:56:43.790 --> 01:56:49.010 align:middle line:84% I had measurements, and how many new clients we were getting. 01:56:49.010 --> 01:56:52.630 align:middle line:84% Now, if I came back and said, well, look, I mean, 01:56:52.630 --> 01:56:55.990 align:middle line:84% this is unfair what you're asking me to do. 01:56:55.990 --> 01:56:58.090 align:middle line:90% These people don't report to me. 01:56:58.090 --> 01:57:00.830 align:middle line:84% First of all, that would be a stupid comment. 01:57:00.830 --> 01:57:03.230 align:middle line:84% I mean, that's a very good way of saying, 01:57:03.230 --> 01:57:05.170 align:middle line:90% and, therefore, I'm leaving. 01:57:05.170 --> 01:57:05.730 align:middle line:90% [LAUGHTER] 01:57:05.730 --> 01:57:08.410 align:middle line:84% That should be your next phrase if you come out 01:57:08.410 --> 01:57:10.410 align:middle line:90% with a phrase like that. 01:57:10.410 --> 01:57:14.250 align:middle line:84% But it's very important-- and this 01:57:14.250 --> 01:57:16.390 align:middle line:84% becomes part of the organization-- 01:57:16.390 --> 01:57:19.870 align:middle line:84% to remind people that when you hold someone 01:57:19.870 --> 01:57:24.670 align:middle line:84% accountable for something, you hold them accountable 01:57:24.670 --> 01:57:28.170 align:middle line:84% not because the people who are going to execute report to them. 01:57:28.170 --> 01:57:29.210 align:middle line:90% That's their job. 01:57:29.210 --> 01:57:31.110 align:middle line:90% They are accountable. 01:57:31.110 --> 01:57:32.910 align:middle line:84% And if they are very good, they'll 01:57:32.910 --> 01:57:35.010 align:middle line:90% work across the organization. 01:57:35.010 --> 01:57:37.870 align:middle line:84% But as I'm talking, I suspect you're all 01:57:37.870 --> 01:57:41.570 align:middle line:84% familiar with the notion of P&G brand managers. 01:57:41.570 --> 01:57:44.430 align:middle line:90% 01:57:44.430 --> 01:57:47.910 align:middle line:84% And am I not correct that in P&G, the brand manager 01:57:47.910 --> 01:57:51.630 align:middle line:84% is a virtual organization of very few people, 01:57:51.630 --> 01:57:56.990 align:middle line:84% but they really manage Tide, or Crest, or whatever, 01:57:56.990 --> 01:58:01.350 align:middle line:84% and they have to be very good at working with manufacturing, 01:58:01.350 --> 01:58:03.670 align:middle line:84% and marketing, and everything else. 01:58:03.670 --> 01:58:06.910 align:middle line:84% So this is almost like this extension 01:58:06.910 --> 01:58:12.430 align:middle line:84% of the notion of brand management for new innovations. 01:58:12.430 --> 01:58:14.610 align:middle line:84% That's really what this concept-- 01:58:14.610 --> 01:58:19.930 align:middle line:84% does P&G still have brand management in the same way? 01:58:19.930 --> 01:58:21.970 align:middle line:90% Yes? 01:58:21.970 --> 01:58:24.025 align:middle line:84% And it's still considered a great thing? 01:58:24.025 --> 01:58:24.650 align:middle line:90% AUDIENCE: Yeah. 01:58:24.650 --> 01:58:28.250 align:middle line:90% 01:58:28.250 --> 01:58:32.570 align:middle line:84% IRVING WLADAWSKY-BERGER: Now, another critical part 01:58:32.570 --> 01:58:39.090 align:middle line:84% is if you're going to manage a virtual organization, 01:58:39.090 --> 01:58:40.610 align:middle line:90% don't make enemies. 01:58:40.610 --> 01:58:44.890 align:middle line:84% Don't go out of your way antagonizing people 01:58:44.890 --> 01:58:48.490 align:middle line:84% because, remember, they don't work for you. 01:58:48.490 --> 01:58:54.390 align:middle line:84% And if you're a jerk, well, you just won't survive. 01:58:54.390 --> 01:58:58.930 align:middle line:84% And the people that you may antagonize, 01:58:58.930 --> 01:59:00.650 align:middle line:84% the people you need to do something 01:59:00.650 --> 01:59:06.490 align:middle line:84% are people who are bringing billions in revenue. 01:59:06.490 --> 01:59:12.170 align:middle line:84% And you have to remember you may have a great job, 01:59:12.170 --> 01:59:15.360 align:middle line:84% and you're talking to the chairman and all that. 01:59:15.360 --> 01:59:17.940 align:middle line:84% These people are bringing billions in revenue. 01:59:17.940 --> 01:59:21.280 align:middle line:90% 01:59:21.280 --> 01:59:26.840 align:middle line:84% At some point, there is a choice of whom to throw out the window. 01:59:26.840 --> 01:59:31.160 align:middle line:90% 01:59:31.160 --> 01:59:32.500 align:middle line:90% I don't need to continue. 01:59:32.500 --> 01:59:41.360 align:middle line:84% So one of the things that is very important if you are going 01:59:41.360 --> 01:59:46.160 align:middle line:84% to manage virtually is to be able to be 01:59:46.160 --> 01:59:53.720 align:middle line:84% as inclusive about as much of the organization as possible. 01:59:53.720 --> 01:59:56.920 align:middle line:84% And that means that even as you are putting-- 01:59:56.920 --> 02:00:02.840 align:middle line:84% this is the part where you have to think like a problem solver. 02:00:02.840 --> 02:00:08.140 align:middle line:84% So if I want anchor to be part of the field, 02:00:08.140 --> 02:00:10.940 align:middle line:84% this is part of the unit, whatever 02:00:10.940 --> 02:00:15.040 align:middle line:84% and anchor is doing God knows what else is, think hard. 02:00:15.040 --> 02:00:18.680 align:middle line:84% How can this be part of the strategy? 02:00:18.680 --> 02:00:22.720 align:middle line:84% How can I do something so that all of a sudden, 02:00:22.720 --> 02:00:27.540 align:middle line:84% instead of anchor thinking what I'm doing is competitive, 02:00:27.540 --> 02:00:31.020 align:middle line:84% he'll think, oh, my God, what Irving is doing 02:00:31.020 --> 02:00:34.900 align:middle line:84% could be putting pixie dust on my product 02:00:34.900 --> 02:00:38.880 align:middle line:84% and rejuvenating it and making me work forward? 02:00:38.880 --> 02:00:43.078 align:middle line:84% Now, you can say, well, you're being political. 02:00:43.078 --> 02:00:43.620 align:middle line:90% I don't know. 02:00:43.620 --> 02:00:46.900 align:middle line:84% We can call it whatever we want to call it. 02:00:46.900 --> 02:00:53.460 align:middle line:84% But if you need as much of the organization 02:00:53.460 --> 02:00:57.820 align:middle line:84% to feel ownership in this initiative 02:00:57.820 --> 02:01:02.980 align:middle line:84% and to do things for you because they have the money, 02:01:02.980 --> 02:01:05.640 align:middle line:84% they have the people, they have the talent, 02:01:05.640 --> 02:01:11.000 align:middle line:84% they have the skills, if what you are doing 02:01:11.000 --> 02:01:16.160 align:middle line:84% is constantly going to the CEO or some other senior executives 02:01:16.160 --> 02:01:22.200 align:middle line:84% and complaining that your peers are horrendous to you, 02:01:22.200 --> 02:01:24.840 align:middle line:84% let me tell you, you'll be gone very quickly. 02:01:24.840 --> 02:01:28.040 align:middle line:90% I mean, whining is not a-- 02:01:28.040 --> 02:01:29.380 align:middle line:90% whining is whining. 02:01:29.380 --> 02:01:31.600 align:middle line:90% I don't know how else to say it. 02:01:31.600 --> 02:01:35.220 align:middle line:84% And the higher up you go in the organization, 02:01:35.220 --> 02:01:41.920 align:middle line:84% the less cute whining gets, because the view, correctly so, 02:01:41.920 --> 02:01:45.280 align:middle line:84% is I thought that's your goddamn job. 02:01:45.280 --> 02:01:49.080 align:middle line:90% And let me give an example. 02:01:49.080 --> 02:01:53.330 align:middle line:90% One of the things that-- 02:01:53.330 --> 02:01:59.480 align:middle line:84% as you know, mainframes, once they got through the transition, 02:01:59.480 --> 02:02:06.320 align:middle line:84% have continued to be a huge source of revenue for IBM. 02:02:06.320 --> 02:02:09.220 align:middle line:90% It's not the gross product. 02:02:09.220 --> 02:02:11.660 align:middle line:90% It's more the legacy product. 02:02:11.660 --> 02:02:16.260 align:middle line:90% Legacy often means cash. 02:02:16.260 --> 02:02:21.460 align:middle line:84% And cash is not bad because you need cash 02:02:21.460 --> 02:02:23.420 align:middle line:90% to fund new initiatives. 02:02:23.420 --> 02:02:26.820 align:middle line:84% I mean, you also need cash to do payroll and things like that. 02:02:26.820 --> 02:02:30.580 align:middle line:84% But it's cash that funds new initiatives. 02:02:30.580 --> 02:02:36.580 align:middle line:84% And every quarter, if you read a lot about IBM's fortunes, 02:02:36.580 --> 02:02:41.200 align:middle line:84% people look a lot about how the mainframes-- how are they doing? 02:02:41.200 --> 02:02:44.840 align:middle line:84% Because when mainframes have good quarters, 02:02:44.840 --> 02:02:46.980 align:middle line:90% IBM generally does well. 02:02:46.980 --> 02:02:50.020 align:middle line:84% When mainframes do not, sometimes other things 02:02:50.020 --> 02:02:54.900 align:middle line:84% can come in and make up for it, but it becomes tougher. 02:02:54.900 --> 02:03:02.180 align:middle line:84% Well, one of the things that became clear with the internet 02:03:02.180 --> 02:03:06.210 align:middle line:84% is that the internet was incredibly 02:03:06.210 --> 02:03:11.570 align:middle line:84% positive for mainframes because the backend systems that 02:03:11.570 --> 02:03:15.730 align:middle line:84% were providing information and applications to people 02:03:15.730 --> 02:03:18.270 align:middle line:84% with browsers were usually mainframes. 02:03:18.270 --> 02:03:25.370 align:middle line:84% That is, FedEx runs their package tracking applications 02:03:25.370 --> 02:03:26.850 align:middle line:90% on mainframes. 02:03:26.850 --> 02:03:29.470 align:middle line:84% I think they still do, but they did them, for sure. 02:03:29.470 --> 02:03:31.070 align:middle line:90% And UPS does, for sure. 02:03:31.070 --> 02:03:33.730 align:middle line:90% 02:03:33.730 --> 02:03:37.970 align:middle line:84% When the internet came in, one of the most wonderful 02:03:37.970 --> 02:03:43.210 align:middle line:84% applications was the ability to track your package online. 02:03:43.210 --> 02:03:48.130 align:middle line:84% And you put a small web server in front of the mainframe. 02:03:48.130 --> 02:03:54.570 align:middle line:84% And so that generated a lot more traffic to the mainframes 02:03:54.570 --> 02:03:57.290 align:middle line:84% because now people, through their browsers, 02:03:57.290 --> 02:04:00.330 align:middle line:90% were generating transactions. 02:04:00.330 --> 02:04:03.510 align:middle line:84% That had the very healthy effect that 02:04:03.510 --> 02:04:08.110 align:middle line:84% here were all these units in IBM that 02:04:08.110 --> 02:04:12.390 align:middle line:84% were so responsible for revenue, loving the business 02:04:12.390 --> 02:04:14.730 align:middle line:90% and feeling very included. 02:04:14.730 --> 02:04:19.350 align:middle line:90% 02:04:19.350 --> 02:04:22.830 align:middle line:84% I cannot tell you how much easier it is to do a new 02:04:22.830 --> 02:04:27.870 align:middle line:84% initiative if you have the units that are very operational with 02:04:27.870 --> 02:04:30.430 align:middle line:90% you than if you don't have them. 02:04:30.430 --> 02:04:34.290 align:middle line:84% There are times when you have a competitive situation. 02:04:34.290 --> 02:04:39.310 align:middle line:84% Your new unit could hurt an existing unit. 02:04:39.310 --> 02:04:42.210 align:middle line:84% And you just have to think very hard. 02:04:42.210 --> 02:04:44.910 align:middle line:84% I mean, these organizational issues 02:04:44.910 --> 02:04:48.550 align:middle line:90% are just part of managing. 02:04:48.550 --> 02:04:50.030 align:middle line:90% You have to think about it. 02:04:50.030 --> 02:04:52.150 align:middle line:84% And thinking about it doesn't mean 02:04:52.150 --> 02:04:54.890 align:middle line:84% if you have to fight if you need the resource. 02:04:54.890 --> 02:04:56.690 align:middle line:90% You do what you need to do. 02:04:56.690 --> 02:04:59.670 align:middle line:90% 02:04:59.670 --> 02:05:02.350 align:middle line:90% But you're solving a problem. 02:05:02.350 --> 02:05:05.530 align:middle line:84% You have to do it in a very careful way, as opposed 02:05:05.530 --> 02:05:09.610 align:middle line:84% to say, look, Lou said, that's what I'm doing. 02:05:09.610 --> 02:05:11.210 align:middle line:90% You never do that. 02:05:11.210 --> 02:05:17.070 align:middle line:84% That is such a sign of weakness that you just never do that. 02:05:17.070 --> 02:05:20.010 align:middle line:90% 02:05:20.010 --> 02:05:28.730 align:middle line:84% Now, one of the ways to convince people 02:05:28.730 --> 02:05:36.170 align:middle line:84% that your strategy is real is when they read it in the papers 02:05:36.170 --> 02:05:46.530 align:middle line:84% or when they see ads about it in NFL games or whatever. 02:05:46.530 --> 02:05:49.210 align:middle line:84% And obviously, to do that, you need 02:05:49.210 --> 02:05:51.270 align:middle line:90% the support of top management. 02:05:51.270 --> 02:05:55.490 align:middle line:84% It's not very good for top management 02:05:55.490 --> 02:05:59.600 align:middle line:84% to hear a new thing that's in the papers, very prominent. 02:05:59.600 --> 02:06:00.900 align:middle line:90% Hey, what the hell is that? 02:06:00.900 --> 02:06:04.460 align:middle line:84% Well, Irving had lunch with some reporter. 02:06:04.460 --> 02:06:05.460 align:middle line:90% Doesn't sound very good. 02:06:05.460 --> 02:06:11.860 align:middle line:84% But assuming, as we discussed before, things are easier. 02:06:11.860 --> 02:06:14.120 align:middle line:84% It's a small number of people at the top 02:06:14.120 --> 02:06:17.440 align:middle line:84% usually get into trouble at the next levels 02:06:17.440 --> 02:06:20.240 align:middle line:90% down in middle management. 02:06:20.240 --> 02:06:25.480 align:middle line:84% And if you try to go sell what you're 02:06:25.480 --> 02:06:30.560 align:middle line:84% doing one middle management at a time, you'll get eaten up alive. 02:06:30.560 --> 02:06:32.460 align:middle line:84% First, that's how you're wasting your time. 02:06:32.460 --> 02:06:34.280 align:middle line:90% You're spending your time. 02:06:34.280 --> 02:06:36.960 align:middle line:84% There are lots of reasons they won't like it. 02:06:36.960 --> 02:06:42.560 align:middle line:84% So once you secure support at the top, 02:06:42.560 --> 02:06:45.900 align:middle line:84% it's very important to be out in the marketplace, 02:06:45.900 --> 02:06:49.280 align:middle line:84% give interviews, talk to the press, 02:06:49.280 --> 02:06:53.400 align:middle line:84% encourage your CEO to talk to the press about the things 02:06:53.400 --> 02:06:56.380 align:middle line:84% you're doing because when people read it, 02:06:56.380 --> 02:06:59.700 align:middle line:84% you can go give-- you can go have an internal meeting 02:06:59.700 --> 02:07:01.260 align:middle line:90% and give a talk. 02:07:01.260 --> 02:07:04.380 align:middle line:84% People will say, that Irving is a jerk. 02:07:04.380 --> 02:07:08.652 align:middle line:84% They read the same thing in The New York Times. 02:07:08.652 --> 02:07:10.360 align:middle line:84% And all of a sudden, they say, holy shit, 02:07:10.360 --> 02:07:11.500 align:middle line:90% look what's in The Times. 02:07:11.500 --> 02:07:14.020 align:middle line:90% They're talking about Linux. 02:07:14.020 --> 02:07:17.420 align:middle line:84% That IBM is a big force in Linux. 02:07:17.420 --> 02:07:26.540 align:middle line:84% And it tells the world you're out there. 02:07:26.540 --> 02:07:30.380 align:middle line:84% It tells the world you are for real 02:07:30.380 --> 02:07:34.200 align:middle line:90% and that this is very important. 02:07:34.200 --> 02:07:37.940 align:middle line:84% And of course, given that this becomes part 02:07:37.940 --> 02:07:40.700 align:middle line:84% of your organizational plan-- remember, 02:07:40.700 --> 02:07:46.860 align:middle line:84% we're managing organization, and we're being-- 02:07:46.860 --> 02:07:50.120 align:middle line:84% the term "Machiavellian" could be used, 02:07:50.120 --> 02:07:52.160 align:middle line:84% but you're being a good problem solver. 02:07:52.160 --> 02:07:54.780 align:middle line:84% You're trying to get the whole organization 02:07:54.780 --> 02:07:57.040 align:middle line:90% to know this stuff is for real. 02:07:57.040 --> 02:07:59.300 align:middle line:84% So when you get The New York Times article, 02:07:59.300 --> 02:08:03.240 align:middle line:84% make sure every goddamn person sees it. 02:08:03.240 --> 02:08:06.680 align:middle line:84% Make sure everybody knows it's there. 02:08:06.680 --> 02:08:11.460 align:middle line:84% And if you can get the CEO quoted in the article, 02:08:11.460 --> 02:08:15.560 align:middle line:84% and if you can get top executives to give interviews, 02:08:15.560 --> 02:08:21.720 align:middle line:90% it's very hard for people-- 02:08:21.720 --> 02:08:26.940 align:middle line:84% I mean, if, at the top, people don't like what you're doing, 02:08:26.940 --> 02:08:29.480 align:middle line:84% they will not want to do the interview. 02:08:29.480 --> 02:08:31.680 align:middle line:84% But if they do the interview, it would 02:08:31.680 --> 02:08:37.280 align:middle line:84% be considered really bad manners to say, Irving, oh, God. 02:08:37.280 --> 02:08:40.500 align:middle line:90% He's an idiot. 02:08:40.500 --> 02:08:42.480 align:middle line:90% People just don't do that. 02:08:42.480 --> 02:08:46.240 align:middle line:84% So you're almost forcing them to say good things 02:08:46.240 --> 02:08:50.320 align:middle line:90% about your initiative by-- 02:08:50.320 --> 02:08:53.360 align:middle line:84% I'm being very serious-- by including them 02:08:53.360 --> 02:08:57.240 align:middle line:84% in your interviews or in your external events. 02:08:57.240 --> 02:08:59.740 align:middle line:84% Sometimes this is almost the principle 02:08:59.740 --> 02:09:04.420 align:middle line:84% invite your enemies into your tent, 02:09:04.420 --> 02:09:11.660 align:middle line:84% for all crass reasons you want them in your tent. 02:09:11.660 --> 02:09:13.480 align:middle line:84% And you're keeping an eye on them. 02:09:13.480 --> 02:09:17.540 align:middle line:84% Feed them good lamb and rice, and feed them well 02:09:17.540 --> 02:09:19.080 align:middle line:90% inside your tent. 02:09:19.080 --> 02:09:22.780 align:middle line:90% 02:09:22.780 --> 02:09:29.400 align:middle line:84% This is all a very sophisticated game and playing it outside-in. 02:09:29.400 --> 02:09:32.240 align:middle line:84% Remember, we're talking about disruptive innovation. 02:09:32.240 --> 02:09:34.260 align:middle line:84% If it's just an incremental thing, 02:09:34.260 --> 02:09:36.500 align:middle line:84% if a product announcement, that's 02:09:36.500 --> 02:09:38.120 align:middle line:90% not what we're talking about. 02:09:38.120 --> 02:09:42.580 align:middle line:90% 02:09:42.580 --> 02:09:50.100 align:middle line:84% Now, in every disruptive initiative 02:09:50.100 --> 02:09:55.890 align:middle line:84% that I have been involved in at IBM, 02:09:55.890 --> 02:10:02.090 align:middle line:84% The hardest people to convince were our own people internally. 02:10:02.090 --> 02:10:04.810 align:middle line:90% And I'm being very serious. 02:10:04.810 --> 02:10:13.650 align:middle line:84% The depressed financial analyst, IT analysts, the customers-- 02:10:13.650 --> 02:10:19.450 align:middle line:84% they are much more willing to give you an audience 02:10:19.450 --> 02:10:21.350 align:middle line:90% to listen to new ideas. 02:10:21.350 --> 02:10:24.250 align:middle line:84% They may or may not like what you have. 02:10:24.250 --> 02:10:33.290 align:middle line:84% But they have nothing to lose if you come up with a new idea. 02:10:33.290 --> 02:10:41.850 align:middle line:84% Your people within the company are often the most cynical 02:10:41.850 --> 02:10:45.770 align:middle line:84% about something new within the company. 02:10:45.770 --> 02:10:48.210 align:middle line:84% And often, it's because they don't even 02:10:48.210 --> 02:10:51.550 align:middle line:84% know what the hell you're doing because they 02:10:51.550 --> 02:10:54.510 align:middle line:90% are busy doing their jobs. 02:10:54.510 --> 02:11:00.430 align:middle line:84% And in the meantime, you have circus and all this stuff. 02:11:00.430 --> 02:11:03.250 align:middle line:84% And they say, well, I'm working my ass off. 02:11:03.250 --> 02:11:07.130 align:middle line:84% He's wasting all this money that if only I got it, 02:11:07.130 --> 02:11:09.010 align:middle line:90% it would make my job easier. 02:11:09.010 --> 02:11:09.630 align:middle line:90% Yes, please? 02:11:09.630 --> 02:11:11.745 align:middle line:84% AUDIENCE: Is what you're saying true even 02:11:11.745 --> 02:11:13.370 align:middle line:84% in the context of what you said before, 02:11:13.370 --> 02:11:14.790 align:middle line:84% around being inclusive of the org 02:11:14.790 --> 02:11:17.030 align:middle line:90% and tying other people's goals? 02:11:17.030 --> 02:11:24.750 align:middle line:84% IRVING WLADAWSKY-BERGER: Well, because the two go together, 02:11:24.750 --> 02:11:30.470 align:middle line:84% you want to be working outside without asking for permission, 02:11:30.470 --> 02:11:34.030 align:middle line:84% but you don't want to ignore the people inside. 02:11:34.030 --> 02:11:35.390 align:middle line:90% AUDIENCE: What I meant was-- 02:11:35.390 --> 02:11:37.348 align:middle line:84% IRVING WLADAWSKY-BERGER: No, no, the inclusive. 02:11:37.348 --> 02:11:38.130 align:middle line:90% AUDIENCE: Right. 02:11:38.130 --> 02:11:38.710 align:middle line:84% IRVING WLADAWSKY-BERGER: Yeah, well-- 02:11:38.710 --> 02:11:40.430 align:middle line:84% AUDIENCE: So even having done this, 02:11:40.430 --> 02:11:43.310 align:middle line:84% were the people inside still the hardest to convince? 02:11:43.310 --> 02:11:44.910 align:middle line:84% IRVING WLADAWSKY-BERGER: Yes, because, 02:11:44.910 --> 02:11:50.530 align:middle line:84% often, when you're being inclusive at this level, 02:11:50.530 --> 02:11:52.930 align:middle line:84% you're talking about a certain level 02:11:52.930 --> 02:11:58.970 align:middle line:84% of senior and middle managers that you need to support you. 02:11:58.970 --> 02:12:01.810 align:middle line:84% Whereas I would say, when I'm talking 02:12:01.810 --> 02:12:04.870 align:middle line:84% about internal communications, I mean everybody. 02:12:04.870 --> 02:12:08.530 align:middle line:84% That would be the difference I would make. 02:12:08.530 --> 02:12:14.670 align:middle line:84% You really need the management at that level with senior. 02:12:14.670 --> 02:12:21.050 align:middle line:84% And most of the people at the senior and middle manager-- 02:12:21.050 --> 02:12:24.010 align:middle line:84% by the time they got there, they know 02:12:24.010 --> 02:12:28.490 align:middle line:84% be very careful about being openly against something 02:12:28.490 --> 02:12:31.030 align:middle line:90% that has obviously top support. 02:12:31.030 --> 02:12:33.850 align:middle line:90% 02:12:33.850 --> 02:12:42.490 align:middle line:84% they may not help you too much until you convince them 02:12:42.490 --> 02:12:44.650 align:middle line:84% that there is a lot in it for them. 02:12:44.650 --> 02:12:47.730 align:middle line:84% But they'll be careful not to hurt you, 02:12:47.730 --> 02:12:50.670 align:middle line:84% because then they get a reputation 02:12:50.670 --> 02:12:52.830 align:middle line:90% for being bad team players. 02:12:52.830 --> 02:12:56.950 align:middle line:84% And that's not a good reputation to have in many companies. 02:12:56.950 --> 02:13:01.550 align:middle line:84% In the old IBM, that was almost a team sport to be-- 02:13:01.550 --> 02:13:05.030 align:middle line:84% which was part of the dysfunctional-- 02:13:05.030 --> 02:13:08.390 align:middle line:84% partly why the company got into such trouble. 02:13:08.390 --> 02:13:13.310 align:middle line:90% But here, I mean that you need-- 02:13:13.310 --> 02:13:19.110 align:middle line:84% if you have a saleswoman selling to banks in Thailand, 02:13:19.110 --> 02:13:22.590 align:middle line:84% you want them to know what the business is about. 02:13:22.590 --> 02:13:24.050 align:middle line:90% That's really what I mean. 02:13:24.050 --> 02:13:29.390 align:middle line:84% You want to get to all the reaches of the company, 02:13:29.390 --> 02:13:34.170 align:middle line:84% and make sure that they are educated in however way you can. 02:13:34.170 --> 02:13:38.490 align:middle line:84% You want to reach them and say, well, Thailand? 02:13:38.490 --> 02:13:40.650 align:middle line:90% I mean, trust me. 02:13:40.650 --> 02:13:45.260 align:middle line:84% You need them because you need them to start 02:13:45.260 --> 02:13:46.800 align:middle line:90% getting on the learning curve. 02:13:46.800 --> 02:13:49.220 align:middle line:84% If you really want to be successful, 02:13:49.220 --> 02:13:51.140 align:middle line:84% you need to start getting everybody 02:13:51.140 --> 02:13:53.040 align:middle line:84% to know what it is you're talking about. 02:13:53.040 --> 02:13:56.640 align:middle line:84% Remember, again, we're talking about disruptive innovations. 02:13:56.640 --> 02:14:01.080 align:middle line:84% You're trying to create a new initiative, a new order, 02:14:01.080 --> 02:14:03.180 align:middle line:90% a new way of doing things. 02:14:03.180 --> 02:14:06.800 align:middle line:84% And so you need them to understand this. 02:14:06.800 --> 02:14:09.860 align:middle line:84% And there are many ways of doing that. 02:14:09.860 --> 02:14:13.060 align:middle line:90% Most companies used to-- 02:14:13.060 --> 02:14:15.740 align:middle line:84% I don't know if they still do that-- have kick-off sales 02:14:15.740 --> 02:14:18.300 align:middle line:84% meetings at the beginning of the year. 02:14:18.300 --> 02:14:22.700 align:middle line:84% I don't know if that still happens in IBM. 02:14:22.700 --> 02:14:24.520 align:middle line:84% There's so much being done virtually. 02:14:24.520 --> 02:14:27.580 align:middle line:90% 02:14:27.580 --> 02:14:30.620 align:middle line:84% Somehow you want your ideas everywhere. 02:14:30.620 --> 02:14:40.500 align:middle line:84% So when you are starting off, two of your most important teams 02:14:40.500 --> 02:14:43.440 align:middle line:84% are external marketing and communications 02:14:43.440 --> 02:14:46.600 align:middle line:84% and internal marketing and communications 02:14:46.600 --> 02:14:51.120 align:middle line:84% because they are the ones that spread the word 02:14:51.120 --> 02:14:55.080 align:middle line:84% externally and internally, respectively, of what 02:14:55.080 --> 02:14:57.360 align:middle line:90% it is that you're doing. 02:14:57.360 --> 02:15:05.080 align:middle line:84% Also, don't underestimate that by trying 02:15:05.080 --> 02:15:10.020 align:middle line:84% to convince people of what you're doing and explain it, 02:15:10.020 --> 02:15:12.280 align:middle line:90% you're showing them respect. 02:15:12.280 --> 02:15:15.160 align:middle line:84% And when you're showing people respect, they respond 02:15:15.160 --> 02:15:18.540 align:middle line:84% far more positively than when you say, 02:15:18.540 --> 02:15:21.260 align:middle line:84% well, I don't need you right now. 02:15:21.260 --> 02:15:27.520 align:middle line:84% I only need the managing director of JPMorgan and Morgan 02:15:27.520 --> 02:15:29.880 align:middle line:84% Stanley, the people who sell to them. 02:15:29.880 --> 02:15:31.580 align:middle line:90% That is not a good idea. 02:15:31.580 --> 02:15:36.880 align:middle line:84% You really want to embrace and get down because you never know 02:15:36.880 --> 02:15:40.360 align:middle line:90% when you're going to need them. 02:15:40.360 --> 02:15:49.060 align:middle line:84% And then the final thing I would say is, at the beginning, 02:15:49.060 --> 02:15:52.000 align:middle line:84% you need a legion of core supporters-- 02:15:52.000 --> 02:15:54.780 align:middle line:84% and people often call them evangelists-- 02:15:54.780 --> 02:16:00.580 align:middle line:84% of people who've drunk the Kool-Aid who not only do 02:16:00.580 --> 02:16:03.520 align:middle line:84% they believe this new thing you're doing, 02:16:03.520 --> 02:16:06.940 align:middle line:84% but they are passionate about it. 02:16:06.940 --> 02:16:09.460 align:middle line:84% And remember, these are the people that you say, 02:16:09.460 --> 02:16:13.580 align:middle line:84% there is a sales meeting in Thailand, 02:16:13.580 --> 02:16:17.020 align:middle line:84% and I need you to go there and explain to them the business. 02:16:17.020 --> 02:16:18.400 align:middle line:90% And they'll say, perfect. 02:16:18.400 --> 02:16:19.860 align:middle line:90% I'll get on a plane. 02:16:19.860 --> 02:16:22.680 align:middle line:90% I'm off to Thailand. 02:16:22.680 --> 02:16:25.800 align:middle line:84% And you want to nurture those people. 02:16:25.800 --> 02:16:31.060 align:middle line:84% And usually, when you're doing a new initiative, 02:16:31.060 --> 02:16:33.160 align:middle line:84% hopefully something that's exciting-- 02:16:33.160 --> 02:16:35.660 align:middle line:84% and this is true whether we're talking about Web 02:16:35.660 --> 02:16:40.250 align:middle line:90% 2.0, virtual world, Linux. 02:16:40.250 --> 02:16:44.889 align:middle line:84% There's going to be just a small number of people 02:16:44.889 --> 02:16:48.370 align:middle line:90% that are just love this stuff. 02:16:48.370 --> 02:16:56.010 align:middle line:84% And somehow, you want to make them special and very much 02:16:56.010 --> 02:17:01.370 align:middle line:84% part of your team and use them to spread the word because, 02:17:01.370 --> 02:17:07.570 align:middle line:84% remember, in the early days of a new initiative-- 02:17:07.570 --> 02:17:10.610 align:middle line:84% Chris Wall mentioned this last week-- 02:17:10.610 --> 02:17:17.610 align:middle line:84% you're selling faith because you don't have anything else. 02:17:17.610 --> 02:17:20.469 align:middle line:84% You're working on other things, but they don't exist. 02:17:20.469 --> 02:17:25.370 align:middle line:84% So what you're really selling is faith 02:17:25.370 --> 02:17:30.650 align:middle line:84% that if people come along with you, 02:17:30.650 --> 02:17:34.969 align:middle line:84% if it's the clients, if they do prototypes and stuff with you, 02:17:34.969 --> 02:17:38.270 align:middle line:84% if it's inside the organization, if they start embracing this 02:17:38.270 --> 02:17:43.950 align:middle line:84% in their products, it's going to be much better for everybody. 02:17:43.950 --> 02:17:48.290 align:middle line:84% And I guess you can try to sell faith by numbers. 02:17:48.290 --> 02:17:53.549 align:middle line:84% But again, as Chris said, that just doesn't work very well. 02:17:53.549 --> 02:17:57.030 align:middle line:84% So that's probably why the term "evangelist" 02:17:57.030 --> 02:18:01.830 align:middle line:84% came into being for the people who go around convincing you 02:18:01.830 --> 02:18:07.430 align:middle line:84% of new initiatives, because you're trying to sell faith that 02:18:07.430 --> 02:18:11.790 align:middle line:84% something profoundly important is happening. 02:18:11.790 --> 02:18:15.990 align:middle line:84% And they want to be a part of it. 02:18:15.990 --> 02:18:19.950 align:middle line:84% And it's really great for them, and join the party, 02:18:19.950 --> 02:18:21.990 align:middle line:90% and on, and on, and on, and on. 02:18:21.990 --> 02:18:28.030 align:middle line:84% So these are some of the things that we 02:18:28.030 --> 02:18:32.230 align:middle line:84% did in this organization, cultural issues 02:18:32.230 --> 02:18:36.090 align:middle line:90% for the internet organization. 02:18:36.090 --> 02:18:41.209 align:middle line:84% And notice this is very different from running a line 02:18:41.209 --> 02:18:42.690 align:middle line:90% operations. 02:18:42.690 --> 02:18:43.910 align:middle line:90% Really different. 02:18:43.910 --> 02:18:49.110 align:middle line:84% Line operations, you have things to sell. 02:18:49.110 --> 02:18:51.290 align:middle line:90% You have sales quotas. 02:18:51.290 --> 02:18:53.809 align:middle line:84% You have manufacturing or development, 02:18:53.809 --> 02:18:55.930 align:middle line:84% depending on hardware or software. 02:18:55.930 --> 02:18:59.450 align:middle line:84% So you just have a more almost classic structure. 02:18:59.450 --> 02:19:04.250 align:middle line:84% Whereas at the start of phase, the objectives 02:19:04.250 --> 02:19:06.010 align:middle line:90% are just very different. 02:19:06.010 --> 02:19:08.170 align:middle line:90% How do you get going? 02:19:08.170 --> 02:19:09.629 align:middle line:90% Questions, comments? 02:19:09.629 --> 02:19:10.610 align:middle line:90% Please? 02:19:10.610 --> 02:19:18.770 align:middle line:84% AUDIENCE: So I guess it is possible to get buy-in 02:19:18.770 --> 02:19:20.313 align:middle line:90% from top management. 02:19:20.313 --> 02:19:21.730 align:middle line:84% IRVING WLADAWSKY-BERGER: For sure. 02:19:21.730 --> 02:19:24.150 align:middle line:84% AUDIENCE: When you actually physically say it or not, 02:19:24.150 --> 02:19:26.709 align:middle line:84% you can walk into someone's office. 02:19:26.709 --> 02:19:27.334 align:middle line:90% They knew that. 02:19:27.334 --> 02:19:29.084 align:middle line:84% IRVING WLADAWSKY-BERGER: No, that's right. 02:19:29.084 --> 02:19:32.070 align:middle line:84% In fact, I think I may have said it in other meetings. 02:19:32.070 --> 02:19:37.110 align:middle line:84% If you're doing a strategic, disruptive innovation, 02:19:37.110 --> 02:19:40.870 align:middle line:84% I don't think you can do it if the top management against it. 02:19:40.870 --> 02:19:42.389 align:middle line:84% I just don't think you can do it. 02:19:42.389 --> 02:19:43.889 align:middle line:84% AUDIENCE: Well, not even against it. 02:19:43.889 --> 02:19:46.750 align:middle line:84% It's just they've empowered you to do it. 02:19:46.750 --> 02:19:48.630 align:middle line:90% IRVING WLADAWSKY-BERGER: Yeah. 02:19:48.630 --> 02:19:49.170 align:middle line:90% Yeah. 02:19:49.170 --> 02:19:55.350 align:middle line:90% 02:19:55.350 --> 02:19:57.170 align:middle line:90% They empower you to do it. 02:19:57.170 --> 02:20:01.223 align:middle line:90% 02:20:01.223 --> 02:20:02.390 align:middle line:90% What's the right way to say? 02:20:02.390 --> 02:20:07.150 align:middle line:84% You want to help that empowerment. 02:20:07.150 --> 02:20:08.330 align:middle line:90% What do I mean by that? 02:20:08.330 --> 02:20:14.730 align:middle line:84% Well, it just so happens in December of '96, 02:20:14.730 --> 02:20:19.170 align:middle line:84% there was something called Internet World in New York City. 02:20:19.170 --> 02:20:21.310 align:middle line:90% Lou was the guest speaker. 02:20:21.310 --> 02:20:24.630 align:middle line:84% And with Linux, similarly, sometime-- 02:20:24.630 --> 02:20:28.410 align:middle line:90% I think it was in early 2001-- 02:20:28.410 --> 02:20:31.210 align:middle line:84% Sam Palmisano was the guest speaker. 02:20:31.210 --> 02:20:38.380 align:middle line:84% So you are going out of your way to include 02:20:38.380 --> 02:20:42.580 align:middle line:84% the CEO, the top management, and show them 02:20:42.580 --> 02:20:47.020 align:middle line:90% as visible early supporters. 02:20:47.020 --> 02:20:50.500 align:middle line:84% And that's almost more important internally and externally 02:20:50.500 --> 02:20:51.360 align:middle line:90% at the beginning. 02:20:51.360 --> 02:20:54.660 align:middle line:84% But externally, you don't have a lot to sell yet. 02:20:54.660 --> 02:20:56.560 align:middle line:90% You don't have a lot of people. 02:20:56.560 --> 02:20:58.780 align:middle line:84% You're out there, and you want people 02:20:58.780 --> 02:21:00.080 align:middle line:90% to know that you're out there. 02:21:00.080 --> 02:21:02.420 align:middle line:84% But more than anything, you're buying time 02:21:02.420 --> 02:21:04.900 align:middle line:90% because you're building stuff. 02:21:04.900 --> 02:21:09.540 align:middle line:84% And the strongest signal is the internal signal 02:21:09.540 --> 02:21:11.360 align:middle line:84% so that when you show up and say, 02:21:11.360 --> 02:21:14.940 align:middle line:84% hey, this is really a jerky thing to do, 02:21:14.940 --> 02:21:19.340 align:middle line:90% well, I guess Sammy's a jerk. 02:21:19.340 --> 02:21:23.500 align:middle line:90% You want to work that very hard. 02:21:23.500 --> 02:21:26.000 align:middle line:84% And without that management support, 02:21:26.000 --> 02:21:30.520 align:middle line:84% it's almost impossible to do this work. 02:21:30.520 --> 02:21:31.980 align:middle line:90% I would think it was possible. 02:21:31.980 --> 02:21:37.200 align:middle line:84% I don't know if we have any counterexamples where 02:21:37.200 --> 02:21:40.385 align:middle line:84% top management didn't support an initiative and people. 02:21:40.385 --> 02:21:41.760 align:middle line:84% I mean, at that point, you almost 02:21:41.760 --> 02:21:44.120 align:middle line:84% have to get rid of the top managers. 02:21:44.120 --> 02:21:45.960 align:middle line:84% I mean, there's a lot of internal politics 02:21:45.960 --> 02:21:49.840 align:middle line:84% in the company, but we're not talking about that. 02:21:49.840 --> 02:21:56.000 align:middle line:84% We're talking about a situation where top management is-- 02:21:56.000 --> 02:21:58.000 align:middle line:84% hopefully, by the time you are out there, 02:21:58.000 --> 02:22:00.720 align:middle line:84% you have already convinced that management is not 02:22:00.720 --> 02:22:01.753 align:middle line:90% going to do it. 02:22:01.753 --> 02:22:02.920 align:middle line:90% Otherwise, they won't make-- 02:22:02.920 --> 02:22:07.760 align:middle line:84% I mean, otherwise, they won't let you do it. 02:22:07.760 --> 02:22:13.380 align:middle line:84% Most companies don't give interviews access to the press. 02:22:13.380 --> 02:22:16.280 align:middle line:84% Representing the company is something 02:22:16.280 --> 02:22:21.280 align:middle line:84% that's controlled very, very, very, very, very carefully. 02:22:21.280 --> 02:22:24.832 align:middle line:90% You cannot do that. 02:22:24.832 --> 02:22:27.800 align:middle line:84% AUDIENCE: I like to reinforce what 02:22:27.800 --> 02:22:32.260 align:middle line:84% you said about when you the fact that Lou Gerstner supported 02:22:32.260 --> 02:22:35.960 align:middle line:84% you got you in the door with the middle managers. 02:22:35.960 --> 02:22:40.340 align:middle line:84% But you had to really sell the issue because-- 02:22:40.340 --> 02:22:41.640 align:middle line:90% on your own two feet. 02:22:41.640 --> 02:22:43.442 align:middle line:84% And I would say, that's very, very true. 02:22:43.442 --> 02:22:45.900 align:middle line:84% If you always come in and say, well, Lee Gordon says this-- 02:22:45.900 --> 02:22:46.400 align:middle line:84% IRVING WLADAWSKY-BERGER: No, no, no. 02:22:46.400 --> 02:22:47.480 align:middle line:84% AUDIENCE: --that's not going to work. 02:22:47.480 --> 02:22:48.240 align:middle line:90% You have to go in. 02:22:48.240 --> 02:22:49.940 align:middle line:84% That'll get you in the door, at least. 02:22:49.940 --> 02:22:51.190 align:middle line:90% IRVING WLADAWSKY-BERGER: Yeah. 02:22:51.190 --> 02:22:53.820 align:middle line:84% In fact, my view is it would be considered 02:22:53.820 --> 02:23:00.760 align:middle line:84% bad form to start talking about Lou because it's on the table. 02:23:00.760 --> 02:23:02.380 align:middle line:90% Everybody knows it. 02:23:02.380 --> 02:23:04.280 align:middle line:90% So don't mention it. 02:23:04.280 --> 02:23:06.980 align:middle line:90% Just talk about what you want. 02:23:06.980 --> 02:23:09.320 align:middle line:84% Just talk about what you want them to do and so on. 02:23:09.320 --> 02:23:15.540 align:middle line:84% And alternatively, if you don't pound the pavement, 02:23:15.540 --> 02:23:19.420 align:middle line:84% and go visit all these people, and do these activities, 02:23:19.420 --> 02:23:23.940 align:middle line:84% and send people to Thailand, and Europe, and all that, 02:23:23.940 --> 02:23:28.600 align:middle line:84% the fact that Lou supports is not worth anything. 02:23:28.600 --> 02:23:34.300 align:middle line:84% So that's necessary, but far from sufficient. 02:23:34.300 --> 02:23:36.080 align:middle line:90% We have to now build. 02:23:36.080 --> 02:23:40.840 align:middle line:84% At some level, I suspect it's no different than if you're 02:23:40.840 --> 02:23:42.100 align:middle line:90% starting a new company. 02:23:42.100 --> 02:23:44.180 align:middle line:84% The fact that some VCs gave you money, 02:23:44.180 --> 02:23:49.380 align:middle line:84% well, this is I'm giving you money, you wouldn't be there. 02:23:49.380 --> 02:23:56.640 align:middle line:84% But because Kleiner Perkins gave you money, you can still fail. 02:23:56.640 --> 02:23:59.620 align:middle line:84% I think that's the way to look at all this. 02:23:59.620 --> 02:24:03.280 align:middle line:90% 02:24:03.280 --> 02:24:08.280 align:middle line:90% Any final comments? 02:24:08.280 --> 02:24:13.200 align:middle line:84% So then next week, we'll continue our discussions 02:24:13.200 --> 02:24:16.060 align:middle line:90% of the organization. 02:24:16.060 --> 02:24:16.840 align:middle line:90% Any comments? 02:24:16.840 --> 02:24:19.760 align:middle line:84% By the way, let me just put up this slide. 02:24:19.760 --> 02:24:25.170 align:middle line:84% I think some of you got here later on the class project. 02:24:25.170 --> 02:24:31.950 align:middle line:90% 02:24:31.950 --> 02:24:36.990 align:middle line:90% I showed this slide before. 02:24:36.990 --> 02:24:42.070 align:middle line:84% Any questions from people who weren't here? 02:24:42.070 --> 02:24:43.690 align:middle line:90% You all got this in the email. 02:24:43.690 --> 02:24:46.790 align:middle line:84% This is the same thing as in the email. 02:24:46.790 --> 02:24:51.830 align:middle line:84% Everybody is clear what we need and so on? 02:24:51.830 --> 02:24:56.630 align:middle line:84% And then everybody's clear on your batting order of the 11 02:24:56.630 --> 02:24:58.230 align:middle line:90% projects? 02:24:58.230 --> 02:24:58.970 align:middle line:90% I'm sorry? 02:24:58.970 --> 02:25:00.350 align:middle line:84% AUDIENCE: I said, this headed to colleague. 02:25:00.350 --> 02:25:01.892 align:middle line:84% IRVING WLADAWSKY-BERGER: Yes, It was. 02:25:01.892 --> 02:25:06.110 align:middle line:90% 02:25:06.110 --> 02:25:12.670 align:middle line:84% If he could see that, more power to him. 02:25:12.670 --> 02:25:18.870 align:middle line:84% And as I said, I'll post it also in Stellar. 02:25:18.870 --> 02:25:21.340 align:middle line:90% OK, thank you very much. 02:25:21.340 --> 02:25:23.000 align:middle line:90%