Posted by Adam Gordon on Dec 21, 2011 in all, emerging markets, innovation, leadership, management
Stan Litow, Director, IBM Corporate Service Corps
Warren Buffett surprised pundits when he revealed last month that Berkshire Hathaway had acquired a $10bn, 5.5% stake in IBM. “They have laid out a road map and I should have paid more attention to it five years ago… They’ve done an incredible job,” Buffett said during an appearance on CNBC’s Squawk Box.
Many of the dimensions of this incredible job – transition to service orientation and renewal of company culture, initiated by Lou Gerstner and advanced by just-retired CEO Sam Palmisano – have been well chewed over.
But one subtle and no less important part of Palmisano’s legacy has yet to play out. This is the renewal in leadership development itself at IBM, specifically via the IBM Corporate Service Corps (CSC).
Once upon a not very long time ago, IBM, like other classic Western multinationals, structured executives into the field for ex-pat experience in the form of long-term postings: a 1-3 year tour of duty in some far-flung office before recall to the mother ship.
The CSC format, since 2008, forms teams of 6-10 young executives from IBM offices around the world and sends them to emerging market locations where they work intensively for a single month on a high-profile local assignment.
“It’s not a business trip” says CSC Director Stan Litow. “They rent a house, live together, focus 24/7 on the problem. They make an impact. They learn to deliver value on the ground as a team in a global situation.”
CSC programs have run in more than 25 emerging market countries, from BRICS goliaths to African minnows such as Kenya and Tanzania. In Kenya, for example, CSC provided advice on implementing a “Digital Village”; modernized the postal service; and establish a framework for e-government and electronic voting. In Tanzania, CSC helped develop an eco-tourism industry, and has put cutting edge technology into local universities.
About 200-500 IBM employees and executives are in the program at any one time. Teams are composed to represent all major skills in the company: information technology, marketing, consulting, finance. They spend about 2½ months in prep time, and the same afterwards in various forms of debriefing and handover to a new team.
Having this many people on a 6-month ‘sabbatical’ while delivering free consulting expertise and project implementation worth an average $250-400,000 per project, means IBM is footing a big upfront bill. But, aside from the venerable calling of doing good things with technology in the developing world, Litow maintains the costs are handsomely offset by benefits to IBM.
Cost-Benefit
First, the company builds relationships and goodwill on the ground, and so gains a foothold in growth markets, which becomes a platform for follow-on work. Around 30% of IBM revenue is international, a percentage expected to grow rapidly.
Second, program staffers – future IBM leaders – get skills enhanced and perspectives built, in globally sourced teams, via practical immersion, which all closely duplicates the demands of expected future paid assignments. Since inception, 1,400 executives and staff have been through the program; a reservoir of talent that has “been there.”
Third, the program attracts and rewards aspiring talent. IBM gets 8-10,000 internal applications for the few hundred spots on offer, evidence that CSC is popular and relevant in-company. According to Litow, CSC opportunities help retain executive staff and attract new talent to the company.
The positive cost-benefit of the program for IBM is perhaps most proved in requests from a half-dozen other companies – including FedEx, Deere, Dow Corning, Novartis, PepsiCo, and Best Buy – for help in putting together similar programs, or to piggy back on IBM’s program.
In mid-2011, IBM announced a partnership with USAID’s Center of Excellence for International Corporate Volunteerism to provide resources for companies that are interested in pursuing strategies based on IBM’s model.
Posted by Adam Gordon on Dec 6, 2011 in all, economy & finance, foresight tools & methods, scenario planning
Herman Kahn
Interesting times we live in, when most of the world’s business media has a front-page tab on their Web sites that says something like “Euro Crisis – Live – Follow Here” as if there was a hostage drama or bank heist on the go.
Perhaps it is a bank heist of sorts, in the frantic run up this week and next to the Brussels summit in on 8-9 December, where the 27 Eurozone leaders are expected to make some binding, if not bold, decisions.
There has been short-term market relief following the US and China’s undertakings to make dollars more easily available into the European banking system. But everyone knows that liquidity, while a problem in itself, is a symptom of the larger problem of sovereign debt. And sovereign debt is only a problem when lenders don’t see future growth such that loan capital looks safe at less than, say, 7%.
In the world of foresight we talk about the need to “think the unthinkable,” a phrase coined about Herman Kahn in the 1960s when he was making scenarios about the road to US-Soviet thermonuclear war. So I was curious to see this exact phrase pop up in various media analyses where implications of Euro-demise, such as redenomination risk, cross-border contract liability, and so on are getting a thinking through, at least in the media, for example here in the WSJ.
Adaptive Measures
This is scenario planning “lite”: thinking down the path to, and implications of, a plausible operating environment — even if it is highly unlikely — and determining best responses, necessary hedges, and other adaptive measures. (Non-lite would be to do the background work, not just the journalistic summary.)
As the unthinkable forces itself to be thought, even the Corporate Executive Board was motivated to put the injunction to their executive partners as follows: ”As the threat of a potential euro zone breakup looms, we strongly advise companies to enhance their scenario planning disciplines. Leading companies in our network begin by documenting project assumptions and building scenarios off of those variables to test profitability under a range of outcomes before committing capital.”
But to this they add the intelligent real-world rider, often missed by scenario-ists: ”Don’t make the mistake of assuming that entire projects, P&L’s, or budgets need to be reconfigured under volatile outcomes. Instead, build your contingency plans around critical, controllable line items.”
Posted by Adam Gordon on Nov 24, 2011 in all, decision-making, managing uncertainty, social change
The future will be full of surprises and reversals. Can leaders and decision-makers get better at seeing them before they happen? Or better at themselves instigating and managing such reversals, in pursuit of social or financial benefit?
A fun and instructive example is the ongoing developments in Exhibition Road, a kind of ‘museum mile’ in London, where the distinction between road and sidewalk is being abolished to make way for a car, bike, and pedestrian free-for-all.
Have the city’s planning wonks finally, truly, verifiably gone mad?
Since the automobile first reared its fearsome fender, road-management wisdom has always been that pedestrians are safest when kept separate from 5,000lb of moving metal.
Evangelists for livable urban areas usually clamor for pedestrian-only streets; or failing that, bigger, better-marked walking, running, and cycle lanes from which drivers are banned.
But pedestrian-car segregation has its own systemic effect. It means drivers are less likely to expect people in front of them, and so less likely to be vigilant and more likely to speed.
Exhibition Road planners say making the street a mixed area makes drivers anticipate something crossing their paths at all times.
Monderman
The mixed-use-street idea is not new: it was pioneered by town planner and traffic engineer Hans Monderman in the Netherlands in the 1980s and 1990s. According to a Guardian obituary, Monderman “succeeded in challenging many long-established assumptions about safety and the relationship between pedestrians and traffic…
“Monderman pioneered an approach that respected the driver’s common sense and intelligence instead of reliance on signs, road markings, traffic signals and physical barriers. He recognised that increasing control and regulation by the state reduced individual and collective responsibility.”
The jury is out on how effective mixed-use streets are; or exactly where they are most effective.
But the leadership lesson is clear: all decisions and resulting directives rest on foundational assumptions. The more robust these underlying assumptions, the better the decisions.
In this case, the assumption that greater safety is achieved by separation of vehicle and pedestrian is being challenged, and may turn out not to hold up at all for specific city areas.
Where assumptions are weak — or become weak over time due to changes in technology or values or market needs — poor decisions follow.
Leaders who don’t identify and regularly revisit the assumptions that underly their past decisions abdicate the ability to manage reversals and transitions when required. And will be surprised and blindsided when others initiate them.
Posted by Adam Gordon on Nov 17, 2011 in all, emerging markets, leadership, policy
Ted Turner
In 1950 world population was 2.5 billion. This week it passed 7 billion, an ominous occasion marked by various events across the globe, including a special CNN editorial penned by none other than former boss Ted Turner.
Turner has a right to opine on population growth and global poverty implication, seeing as he donated $1bn to set up the United Nations Foundation, but I wasn’t quite expecting the 1970s thinking that popped out.
Says Turner: “Researchers at the Guttmacher Institute found there are 215 million women worldwide who want the ability to time and space their pregnancies, but do not have access to effective methods of contraception…
“Universal access to voluntary family planning is a cross-cutting and cost-effective solution to achieving all of the Millennium Development Goals…
“There is no better value for the money than international family planning, which provides a higher return on investment than almost any other type of development assistance.”
Turner then rails against Congress’ recent foreign aid budget cuts in funding for international family planning and the U.N. Population Fund.
It is hard, and perhaps churlish, to disagree. Who in their right mind would counter the obvious social and economic benefits of family planning? Other than the Catholic Church, that is. Therein a tiny clue to the bigger nature of the problem and how thinking has moved on.
Since the 1970s when population growth first hit the radar as part of the Club of Rome’s “Limits to Growth” Studies, the provision of family planning has been part of the global population solutions mix. Perhaps not adequately — there can always be more — but supply side solutions to contraception provision and family planning clinics have consistently been funded.
The demand side
The problem is also in demand. Even where a safe and cheap contraceptive is available, there is little guarantee it gets used. This boils down to the social norms and mental models in developing world communities. Which is not to say that developing world families are not smart enough to perceive their own best interest. They are. In the absence of adequate affordable social services, health care, aged care, and disability insurance, the smartest thing a couple can do is have many children.
There’s never a golden bullet to a systemic problem such as this, but the closest thing that does exists is not contraception provision, it is girls’ education.
Educating girls enables them to see and enact opportunities outside of childraising, and once they have other options they become much more likely to reach for the birth control after 2.5 children, just like their Western counterparts (often in direct contravention of patriarchal and religious doctrine — which education empowers them to resist.)
Educating girls does not privilege girls unduly. It’s corrective of a skewed situation where traditional societies educate boys before girls. Figures that demonstrate this are provided by the Population Reference Bureau.
Whispered heresy
While girls’ education was a whispered heresy in the 1980-90s, partly because of patriarchal assumptions in both developed and emerging markets, it is now a clearly defined development platform. See for example the World Bank report: “Getting to Equal: How Educating Every Girl Can Help Break the Cycle of Poverty.” There are organizations such as Forum for African Women Educationalists (FAWE) and NGOs such as Educate Africa Girls. Even the GE Foundation sees girls education as a specific initiative.
There’s a chicken-and-egg here because contraception allows girls to stay in school longer. And of course the UN Foundation is hardly blind the girls education. It is very much part of their mix: see this release.
It’s just a question of where the emphasis is placed when an influential philanthropist such as Turner communicates over global population hitting the seven million mark. Once upon a time the problem looked like a supply side problem. It doesn’t anymore. It’s about inculcating demand. That means it’s about girls’ education and that what the call-to-arms should be for.
Posted by Adam Gordon on Oct 5, 2011 in all, decision-making, history, leadership, management, sense-making, strategic foresight
“The most vital, obvious, and underestimated lesson in the 100-year history of IBM is you must keep moving to the future,” said IBM President and CEO Sam Palmisano, opening the company’s recent ‘THINK: A Forum on the Future of Leadership‘ conference at the Lincoln Center in New York.
Further gratifyingly embracing the fundamental identity between leadership and successfully navigating the future, Palmisano continued: “It is so easy to stick with things that have made you a successful company or institution – a winning product, a profitable business model … but one of the core responsibilities of leadership is to understand when it’s time to change.”
And then, applying the mantra of respectable industry foresight analysts and practitioners (there are some): “It’s also particularly important to know what not to change, what must endure. To get that balance right is really, really hard.”
The full address is on Youtube.
The THINK conference is a key plank in IBM’s ongoing centennial year observance. It brought together 700 global leaders and IBM partners and employees, shining a light on leadership as a function that demands active, high-quality forward thinking.
Among the many insight nuggets was Carmen Medina, former Director of the CIA’s Center for the Study of Intelligence, commenting that “observing the present” is the only valid basis of future-exploration (correct); and that this sensemaking function is now being augmented by analytic and computational tools that make far better sense of all types of observed data and behavior, for example, social media behavior.
The old horizon scanning function really has become a much more complex, dynamic, and rewarding activity in the current era. Data visualization was also a key theme at the THINK exhibit.
Among the CEO delegates were Sir Howard Stringer (Sony); Jamie Dimon, (JP Morgan Chase & Co.); Jim McNerney (Boeing); Andrew Liveris (Dow Chemical); Peter Voser (Royal Dutch Shell); and Ellen Kullman, (DuPont.) Filling out Shell’s guest list were Abdullah II, King of Jordan; Felipe Calderón, President of Mexico; Laura Chinchilla-Miranda, President of Costa Rica; WTO Director-General Pascal Lamy; NY Mayor Michael Bloomberg; and media celebrities Charlie Rose and Tom Friedman. Selected video highlights are on the IMB100 site.
Posted by Adam Gordon on Aug 11, 2011 in all, decision-making, leadership, management
Jeff Bezos
When I was at INSEAD for my MBA, I noticed it was fashionable for young men on the move in their careers to wear genuinely expensive watches. We’re talking $5,000 a pop and more (and no doubt they would upgrade in time.)
Me, I’d rather invest in my wine cellar: each to his own. The point is, it’s nothing new for rich men to spend handsomely on their timepiece. And nothing new for even richer men to lavish a fortune on signature and-or vanity projects.
So it’s all to type that Amazon founder and CEO billionare,Jeff Bezos, is spending $42m on his timepiece. The clock the size of a building, which will still take a number of years to complete, is being constructed deep in the Sierra Diablo Mountain Range, Texas. It is designed to run for 10,000 years.
On the clock’s web site Bezos says: “It’s a special clock, designed to be a symbol, an icon for long-term thinking… As I see it, humans are now technologically advanced enough that we can create not only extraordinary wonders but also civilization-scale problems. We’re likely to need more long-term thinking.”
This is partly the standard, “world-going-to-hell-in-a-handcart unless we wake up and change our lifestyle” plea for a long-term, sustainable, perspective.
But, in fact, the general thrust of communications around the 10K Clock is refreshingly low on planetary doom. Long Now Foundation founder member Steward Brand says of the clock: “Ideally it would do for thinking about time what the photographs of Earth from space have done for thinking about the environment.”
Builders in clock tunnel. Image: http://www.10000yearclock.net/
So the clock is in fact about exactly what it says on the tin: just a symbol of long-term thinking, a monument to the value of a long-term perspective.
And while 10,000 years is no business horizon, it’s possible to interpret the clock as symbol not just socially, but also in terms of dollars and cents. In a short-term world, where most businesses are rated by the quarterly numbers, it is a living monument to making scaled-up and lasting investments, and not pulling the plug too soon.
Who better than Bezos to put up this monument? In his first report to Amazon.com shareholders in 1997 he said: “because of our emphasis on the long term, we may make decisions and weigh trade-offs differently than some companies.”
The company was founded in 1994, listed in 1997, and but didn’t post profit until 2001. But by the time it did, it was far bigger and more influential than imagined. It was on the road to becoming what it is today: the world’s biggest online retailer, period. Reflecting a final coming of age after 15 years, the share price (AMZN) has doubled and doubled again in the last two years.
Arguably Bezos’ true leadership genius at Amazon in the early days was not just seeing the long-term and scalable possibility (beyond book retailing) but also being able tactically to hold the short-termers at bay for long enough to do the building required.
As a business culture, we’re locked into annual reports and rapid product life cycles. We’re quick to say “fail-fast” and pull the plug on a fledgling project that’s in the red. Or we make a return, so good, let’s cash it in and do something else.
But Bezos was able to see and to say that a critical component of business leadership success is looking beyond your own or your competitors’ time horizons and scale horizons.
The leadership message in the clock is “Don’t think small. Forget short-term wins. Look beyond your time horizon. Give weight to the long-term possibilities. Build for tomorrow and allow the full potential of a project to evolve.”