Palmisano is disarmingly modest and candid in an interview with Wharton management professor Michael Useem as he discusses his “temporary stewardship” of the IBM legacy. Like many successful CEOs, he is guided by a few simple and logical principles: Always put the organization first, think long-term and leave the company better than you found it.

Palmisano speaks honestly about the mistakes IBM made that nearly capsized the company 20 years ago and how those lessons changed him as a leader. Among the topics he covers:

• The controversial decision to sell the PC division to a Chinese manufacturer and why the sale intuitively made sense;
• Why IBM has continued to invest $6 billion annually in research and development, even during tough economic times;
• The toughest decision he made a CEO: restructuring IBM’s pension plan.
• What he learned from his college football career and why he’s glad he turned down the opportunity to try out with the Oakland Raiders in 1973.

Palmisano has kept a low public profile during his tenure as CEO, so the opportunity to see him let down his guard a bit and talk about his personal style is a rare treat. I came away from it with greater respect for the man and even the impression that he’d be a good guy to have a couple of beers with.

Update: Harvard Business Review’s Joseph Bower posts a retrospective on Palmisano’s tenure. “They don’t give Nobel Prizes in management, but if they did, Sam Palmisano would deserve one,” he says.

3M’s track record of innovation is legendary, but globalization has presented new challenges. “We’re a century-old company founded on the principles of collaboration, but now we’re worldwide, said Jeff Berg (left), IT eBusiness Architecture and Development Manager.

Internet-based tools have been embraced across the company to compensate for the loss of physical proximity. 3M engineers have adopted a microblogging platform called Socialcast behind the firewall to tie together 800 members across 30 channels. The tool is enabling point questions to be answered quickly.

A sampling:

• “I need information on 3M Japan products (name withheld) and what are the Eurpean substitutes?”
• “Does somebody know whether (unnamed competitor’s product) is approved at (unnamed customer)?”
• “Anybody have a good print anchorage test for films or a test apparatus that performs a wiping motion repeatedly?”

These questions were all answered in minutes, said Michael Lynch (right), Manager of IT Advanced Personal & Workgroup Solutions. People have gravitated to Socialcast “because of the speed and light touch.”

Not all problems lend themselves to brief answers, though. 3M has also experimented with more ambitious projects involving live seminars, group brainstorms and even contests.

One division launched a contest seeking 50 unique prototypes that contained 3M technology. The deadline was six weeks. The group held live live webcasts and chats to explain the event and succeeded in getting 45 prototypes from across the U.S. 3M filed seven patents on the work that resulted.

The research & development organization has used IBM Connections to take a long-standing technical conference online. The Virtual Technical Information Exchange (VTIE) renders in cyberspace what used to be done with speeches, posters and conference calls.

Last year the event went virtual with IBM Connections, drawing 10,000 participants from around the world who contributed to 140 presentation threads with nearly 1,000 posts and comments. “This was supposed to be a two-week event when it started last summer,” Lynch said. “It’s still running.” The time-shifted conversation has drawn significantly more participation from overseas employees, he added. Presentations are recorded and posted as audio files, which participants can follow up in forums.

Time to Market

Online collaboration is also being used in non-technical functions. A private community of about 200 consumer-focused field sales reps and service engineers now post monthly blog-like summaries of field activity reports, customer wins and innovative marketing ideas. “Not only does this helps us understand what problems need solving in the field, but it helps the headquarters team feel more connected with customers,” Berg said.

For 3M’s largest customers, account managers can now connect with each other to seek innovative solutions. Berg cited one customer in the hospitality industry that needed a noise-mitigation solution that couldn’t be addressed by 3M’s Thinsulate or Bumpon products. A Connections search found just the thing in a completely unrelated industry.

From the Top

Collaboration tools aren’t just for peer connections. Executive managers recently found them useful when communicating with employees about disruptions that would stem from a major renovation of the company’s Minneapolis headquarters.

“Temperatures in Minneapolis can drop to 20 below in winter, so the need to force people outside during renovations was a concern,” Lynch said. “The decision to use social media to communicate the renovation plans to employees was controversial at first because news has always been top-down.” A wiki devoted to the project proved to be just the ticket, however. “It’s become the most popular internal social site in the company” with 340,000 page views and more than 200 comments, Lynch said. “We’ve been able to listen to discussions, manage objections and actually get great ideas.”

And when it’s 20 below, the creative juices really get flowing.

Day Two of Lotusphere kicked off with a celebration of business transformation enabled by collaboration technology. Representatives from TD Bank Group and the author of a hot new book told stories of businesses that are rethinking the way business is done.

TD has grown to become North America’s sixth largest bank through acquisitions and a focus on listening to customers. A new social media team listens and responds to blogs, Facebook posts and tweets, the process “learning to be a better bank,” said Wendy Arnott (right, @Wendy_Arnott), VP for Social Media and Digital Communications.

The company has also transformed its internal communications using social networking technologies anchored by IBM Connections. Arnott ticked off the three key imperatives as aligning with core values, delivering real value and facing risks head on. To that end, the bank is endeavoring to involve employees in critical decisions.

Acknowledging the technical orientation of the Lotusphere audience, IBM also brought out TD’s CIO, Glenda Crisp (left, @GlendaCrisp) to talk about the importance of the IT-business partnership. Crisp said traditional project management was complemented by a collaboration steering committee that addressed issues like adoption barriers as well as technical problems like SharePoint integration.

The committed deemed it critical to make the shift to a shared platform as transparent as possible Single sign-on simplified access to Connections and Google search appliances were brought in to make enterprise-wide search seamless. Interviews with users also surface the importance of supporting mobile users of the bank’s dominant BlackBerry platform. “We made that a key factor in our selection criteria,” Crisp said.

The result of this active employee involvement was an adoption rate that exceeded expectations by a factor of seven. More than 50,000 users in Canada are up and running, and US deployment is expected to grow from 3,000 to more than 25,000 in less than a month.

Arnott ticked off success criteria:

• Get executive leadership sponsorship.
• Put a dedicated organization in place to oversee deployment.
• Deal with resistance by “getting into weeds with business teams and helping them discover how social will help them address business challenges.”
• Get employees involved on a volunteer basis and make sure their ideas count.

IBM next brought out Fast Company editor Bill Taylor (@practicallyrad) to address the need for business transformation. Taylor, whose new book is Practically Radical, asserted that in this age of commoditization, “The only way to stand out from the crowd is to stand for something special. Winning organizations today stand for new ideas,” he said. “The middle of the road has become the road to nowhere.”

Taylor talked about the radical innovation embodied in the Henry Ford Health System in Detroit, which broke the mold when it built a new hospital in West Bloomfield, MI three years ago. Executives at the health care provider realized “they knew everything about surgery and pharmacology, but they knew nothing about what it took to make people feel right.”

Henry Ford Health recruited consultants from the hospitality and restaurant industries and conceived of a 160-acre facility that looks more like a resort (left) than a hospital. They created a file of more than 2,000 original healthy recipes that are in such demand that the hospital now books $1 million annually in catering revenues.

The result is “a business home run because the approach from day one was so unconventional,” Taylor said.

Taylor also sang the praises of USAA, an insurance company that solely serves military customers. The 10-week employee orientation process there is more like a boot camp than a training course, he said. New recruits wear 65-lb. backpacks to simulate the working conditions of a infantry soldier and eat military rations. “They want to immerse their people in are the lives and experiences of their customers, which creates bonds not only with customers but also between employees,” he said.

Bottom line: “As you think about making your business more memorable, also think about how you make it more social.”

IBM’s Alistair Rennie kicks off the core session.There’s nothing new about social business, he says. It’s about sharing ideas and trust, having those actions persist so we can learn from them. We finally have a way to deliver those insights in a ways that they can be used at that moment.

IBM’s internal think tank, the Institute on Business Value, discovered that collective intelligence delivers three major benefits:

• Discover new ideas
• Leverage skills and distribute workload
• Improve forecasting effectiveness

Alistair Rennie at Lotusphere 2012

There are many ways to apply these benefits, ranking from improved product design to global sales contests. “Ultimately, Social Business is a competitive differentiator.”

This is not new tools, it’s a complete reinvention of systems that form the core of how a business operates. Five years from now, the people who win will be talking about a completely new way of doing business, one with new platforms, cultures, skills and insights. “This is rethinking. It’s like Moneyball: analytics + baseball = new game.”

When you get serious about transformation, you stop thinking about tools and start thinking about platforms. It means a core platform for communications, botn internal and external, Rennie says. “I would shut off e-mail if I wasn’t running Lotus Notes.” Like many core technologies, e-mail has been abused.

The Social Business platform that IBM is building has these components:

• Social networking
• Content
• Analytics

We need deep analytics around everything in the organization. This is what drives business change, Rennie says.

Together, these create a platform for action that transforms process and innovation.
“Social Business cannot be an IT project,” but IT must be closely involved. “If you understand the potential of social business, grab a Red Bull and a nearby nerd and get going.”

The Demos Begin

It’s impossible to describe all the screen stuff going on during the fast-paced demo portion of the program, but here are some highlights.

IBM’s Jeff Schick introduces a demo of the new Lotus social business platform, which borrows liberally from Facebook, Hootsuite and paper.li. The user interface is a Facebook/Google+-like internal social network. The news feed is the core experience with e-mail and calendar available through pop-up windows. Interesting evolution from traditional e-mail in-box. Lotus is effectively replacing the inbox with the social network.

Documents can be edited directly from browser. Workflow is overlaid to enable tasks to be assigned to others on a team from within the document. Those assignments go directly into a user’s activity stream.

Statistics are available about activity in any community you manage. “Do you ever wonder who are the most active members of your communities or what content is most popular? Now you have those statistics instantly.”

There’s also a cool, quick demo of a coming group video feature (technology provided via Polycom). Looks just like Google Hangouts.

The demo also shows integration with back-end content management systems so that community managers can share content such as PDFs and Word docs from within the Enterprise Content Manger directly with the community. Content can be organized by various views, including a paper.li-like custom news page and topical filtering. “This is the destination for all your work actions.”

The next demo shows IBM Docs. This is collaborative Web-based editing performed in the cloud or on premise. Social content management can unlock the content stored in every repository and enable new business processes. The new release of Notes Connections (available now) will make it easier to share content.  Users can view a stream of user comments in a Twitter-like view. New Sametime integration intercepts messages and re-routes to the appropriate communication server,such as Apple messaging. Directory integration enables dial-back from a Sametime message for a voice/video call.

Business partners Polycom and Aruba Networks provided the platform integration for these features.

New mobile systems management features enable organizations to do a partial data wipe on a mobile device in order to maintain enterprise security without erasing user data.

Larry Bowden, VP, Web Experience Software, IBM shows the new IBM Customer Experience Suite. Noting that 30% of customers abandon Web pages within five seconds, he highlights the close-to-real-time analytics built on top of a scalable social network.

The IBM Customer Experience Suite is aimed at making it as easy as possible to reach mobile customers, deliver engaging experiences and apply analytics for informed decision-making. The beta of the suite is available now. This includes Portal & Community Pages, Web Content Manager and Web Experience Factory.

A demo show how a website manager can use a tablet to change a company website to deliver an optimized experience on any platform. The resulting site can resize and present content according to the capabilities of the device. This might be a click on a desktop or a swipe on a tablet. Integrated content management enables content elements such as text and video to be dragged, dropped and published. The content team can then be notified through an annotation feature that draws on the screen and shares those markups with others.

Surveys and user comments can be quickly added to content and made part of the published page. In-line analytics overlays visitor activity directly on the published page, making it simpler to identify trends. Survey/poll results can also be viewed instantly.

A social analytics demo shows data from SAP overlaid on sentiment analysis information from social monitoring tools (below). This helps a business to understand in near real-time how customers are reacting to news or a new product and how that’s reflected in sales from transaction systems.

User Presentations

Kurt De Ruwe, CIO Bayer MaterialScience

A division within the company wanted to take advantage of the knowledge and expertise distributed throughout the company’s worldwide operations. This division makes materials for the auto industry, where a 10% weight reduction yields a 5% energy consumption reduction. Bayer MaterialScience was looking for new lightweight materials.

IBM Connections was installed out of the box and made available without formal training. The first deployments were small but the software was so easy to use that it grew to several thousand users within 18 months. “By next month, over 125,000 internal users and business partners will have access to Connections.”

One of the most useful features is the tag-based user directory. Previously, employees had to find others within the organization by downloading and searching Excel spreadsheets. With the tagging function so, people can be found by expertise, location, title, division, etc. Bayer now has 54,000 profile tags in Connections, and the rapid and always-current directories is transforming the way people work together.

Collaboration in Medicine

The session features presentations from two users in medicine.

Denise Hatzidakis, CTO of Premier Healthcare Alliance said, “At Premier, being exceptional means doing what we need to do so members can remain among the top hospitals in the country. We use the power of collaboration to lead transformation to high-quality, cost-effective health care.”

“Kids are the new normal. They think nothing about connecting with people and sharing actionable information. Health care information is easy to find, but useful data is hard to find. People are treated episodically by providers who only hlave access to a limited amount of information in a short exam.”

Getting health care providers to interact social is a big challenge. Data doesn’t flow easily. Premier has to find the trigger points that stimulates action. The requires collaboration across the industry.

The U.S. is plagued by 80 million health care mistakes a year, causing $800 billion in waste. The biggest fault point is in data handoff. In our business, operating socially improves outcomes and saves lives. Connected care is becoming the new normal, enabling providers to easily share knowledge. This addresses the biggest challenge health care providers face today: improving quality while reducing cost.

Premier is building a new platform that will allow it so measure, gain insight and imnprove the health of our populations. Data and social tools will be embedded in daily work. Patients will have greater certainty they’re getting the most effective treatment possible and the platform integrates expertise from the best health care providers in the nation.

The wrap-up speech was by Dr. Jeffery Burns, Chief of the Division of Cricital Care Medicine at Children’s Hospital in Boston

“I’m convinced medicine can’t move forward without collaboration with you,” he told the audience. Dr. Burns (left) told the story of working with a team of 20 doctors and nurses to save the life of a girl stricken with a bloodstream infection. “It was shutting down her vital functions: I was anxious about whether she could survive this,” he said. After multiple interventions and many tense moments, the girl was saved. “Last Hune I spoke to her mother and she told us how the girl had just finished sixth grade,” he said. “That is the greatest reward of my work.”

Dr. Burns was able to apply the lessons he learned to helping physicians in Guatemala City save a girl there who suffered from a similar condition. The physicians used telemedicine to consult between their locations. When the doctor later met that little girl he marveled, “My God, we did this over the Internet.”

Collaboration is instinctive to today’s young people. Dr. Burns’ 15-year-old son plays video games with people in faraway locations whom he has never met. “He was doing the same thing I was doing: working in teams, breaking down tasks, forming hypotheses and testing hypotheses. These are scientific skills but in a game format,” he said. The potential exists to revolutionize medicine through these techniques.

“Ten million children die every year of preventable diseases,” he said. “There aren’t enough doctors and nurses trained to take care of a critically ill child. We need a solution that works as well in resource-constrained environments as in resource-advantaged ones.”

Childrens ia building a solution in partnership with several other hospitals. It enables health care providers to access the information they need ot provide care to critically ill children from anywhere in the world. Underlying the collaboration platform is a social network that enables experts to share their wisdom with those who might need it. Participants can then interact through avatars to transfer knowledge and discuss. Expertise gleaned from one intervention is thus available to everyone on the network. The underlying platform is IBM Connections.

Other User Presentations

Kurt De Ruwe, CIO Bayer MaterialScience

One division at the company was trying to take advantage of knowledge and expertise distributed throughout world. The division made materials for the auto industry, where a  10% weight reduction yields a 5% energy consumption reduction. Bayer MaterialScience was looking for new lightweight materials.

“From the start we were aware that the main challenge would be to change the culture” DeRuwe said. IBM Connections as installed out of the box and made available without formal training. The first deployments were small but the software was so easy to use that it grew to several thousand users within 18 months. “By next month, over 125,000 internal users and business partners will have access to Connections,” he said.

The deployment is opening up the culture at Bayer by making it easy for people to reach across organizational lines to find expertise. Rather than maintaining employee listings sers in Excel, Bayer now uses a tagging function so that people can search for others by expertise, location, title and other factors. Bayer has 54,000 profile tags in Connections, and the ability to find people in real-time by latest meta information without having to download and open spreadsheets is transforming the way people work together.

Joerg Dreinhoefer, GAD

GAD is a leading provider of secure processing capabilities to 430 banks in Germany. Dreinhoefer described how the company noticed consumers using iPhones, iPads and tablet PCs to conduct banking transactions. Banks needed to accommodate these changing preferences, so GAD created an initiative called Wave to not only address changes in consumer technology but also deal with cost pressures, core process refinements and regulatory and legal requirements in Germany.

The system basically ties together an assortment of systems that were built for different input/output devices into a single browser screen. “Bankers can now be independent from a local client-server environment and leverage mobile devices.” This has yielded a reduction of operational expenses and operational efficiencies, since offices can be set up with much less overhead.

The initiative also includes Bank21, a browser-based solution in a private banking cloud. It was developed to be indpendent of end-user devices and to use open standards to reduce complexity. “It’s the first end-to-end browser-based retail banking system that solved the connectivity problem between all banking devices,” Dreinhoefer said.

“We have had to reform our own processes to deliver this capability,” he added. New collaboration tools are now deployed internally via an app store metaphor in which bankers can order new products as if they were on Amazon. A Web-based office suite enables live documents to be exchanged between people with full audit tranils to show who worked on a document and when. All back-end integration is handled in the cloud.

1. Skype 

Video chatting is now a standard activity for most Internet users – in fact, earlier this year, Skype reported that their users log 300 million minutes of video calls daily. Skype has recently added a new multi-party platform that allows up to 10 people to video chat with each other, which is a great way to get the family together, even if you’re all far away from each other.

2. Google+ Hangouts

Yet another way to connect groups of people over video chat – but Hangouts also enable the chat participants to share and enjoy digital content like YouTube videos in real time.

3. Crackle

Sony has brought together two of its popular platforms by creating virtual movie theaters on Playstation 3 that stream content from Crackle - and it’s planning to add more digital hangouts later this year.

4. Turntable.fm

Turntable.fm brings together the social experience of the Web and music. Users can create or join listening rooms for friends – or strangers – and DJ their favorite songs for each other.

5. YapTV

A great app that brings people together around their favorite TV shows – it shows every program on television at any moment and lets you socialize with other viewers. It pulls in tweets about the show and has a built-in chat functionality so you can talk while you watch. This is especially useful for every “Elf” re-run on TBS or if you’re sucked into another “A Christmas Story” 24-hour-marathon.

6. ShopWithYourFriends.com

Through sites like this, shopping online is no longer an isolated event. Shopping online is now social. These sites allow you converse with friends (through Skype and chat), compile lookbooks for your friends and family’s seal of approval, and most importantly, buy online.

7. SocialVest

SocialVest is an online retail platform that allows customers to buy and give at the same time. With SocialVest, you can make purchases at your favorite stores - like Target, Walmart, Bloomingdales, and more – and a percentage of all your purchases will go to a charity of your choice.

8. GiftaStranger.net

Make someone’s day brighter with this site that allows you to send a lucky person a gift of your choosing. All you need to submit is your first name, general location, and a picture of the gift you’re sending, and the site will generate a random address.

9. Wantful.com

The site suggests an array of thoughtful gifts based on information you provide about the recipient – everything from age and relationship status to how often the cook and their level of neatness.

10. HipMunk.com

With a well-designed, streamlined interface and smart use of filters, Hipmunk makes it easy to find the right flight or the best hotel. The site also has an app available for your phone or tablet device.

11. Trippy.com 

It makes it easy for you to get recommendations and tips for what to do (whether you are heading home for the holidays or on a dream vacation) from your friends who already know you and your interests and needs, helping you travel better.

12. Amazon.com

Whether it’s a 6-hour flight home or over-the-river-and-through-the-woods, every trip is a little shorter with good book. Now, Amazon allows you to share your favorite books with your friends. Each loan lasts 14 days and are automatically returned to your library at the end.

To my surprise, not a single tweet had been logged during the past hour. A technology that was revolutionizing the way business people communicate was being completely unused by the executives who manage technology in America’s largest corporations. As I began prodding my network of CIO contacts, I learned that this was not unusual.

Most CIOs are taking an attitude of, at best, benign neglect toward social networks. A large percentage of them are still actively blocking employee access to sites like Facebook and YouTube. The most recent research by Robert Half Technology found that 31% of U.S. companies block social networks completely and 51% limit access to business purposes only. While those numbers have improved from two years ago, they still indicate an entrenched suspicion that social networks are at best time-wasting extravagances and at worst latent security threats.

Same Old Song and Dance

These fears are legitimate, but we’ve heard them before. The argument that employees will waste time on new technology goes back to the introduction of the personal computer. CIOs also closed ranks against Internet-based e-mail and the Web itself in the early days of those technologies, citing fears that employees would use their new toy computers for games or would subvert the central control of the IT organization.

In fact, that’s exactly what they did. And given access to social networks at work, people will use them to play and waste time. CIOs should not only accept this fact but embrace it.

Anyone who has children knows that playing is one of the most effective learning techniques humans have. Experimentation unearths ideas that have practical applications. On the early Web, people “surfed.” In the process, they learned the skills that have redefined office productivity. Today, the people who can quickly find, organize and interpret information are among the most valuable in the workforce. Playing pays off.

In its formative years, social media has been largely relegated to marketing departments under the assumption that it’s just another form of communications. BtoB magazine asked 375 marketers last year who was primarily responsible for social media within their companies. Only one person identified the IT department. My anecdotal observations pretty much echo that. CIOs just don’t see social as part of their charter.

What a shame, because social technologies has about as much to do with marketing as enterprise resource planning (ERP) does with accounting. This is about the finding new ways of doing business with a customer base that’s empowered with information. It’s the very center of where business is going.

Demand-Driven Economics

In their book, How Companies Win: Profiting from Demand-Driven Business Models, Rick Kash and David Calhoun argue that developed economies are in the process of transitioning from supply-constrained to demand-driven. We are awash in goods and services today, they point out, and prices are flat to declining in many markets. That means that there’s little incremental benefit to be had from making supply chains more efficient. In the future, value will come from generating demand that never existed, as the iPhone has done.

A decade ago, CIOs played a key role in implementing ERP and optimizing supply chains in many companies around the globe. While some of that was a byproduct of the Y2K problem, their willingness to lead such mission-critical projects was a feather in their cap.

Now the rules have changed and the new challenge is to drive demand. The information-empowered customer will impact every business at every level. We are in the first stages of the shift in market conditions from supplier push to customer pull. Understanding the dynamics of these new interactions and organizing businesses around them will be the major business challenge of the next five years.

Why would CIOs not want to be at the center of all that?

John Dodge agrees with me. Writing on the Enterprise CIO Forum, he suggests that one reason CIOs aren’t more active in social business is that they see themselves as analytical types, making their skills ill-suited to social interactions. That may be true, but I’d argue that analytical skills are sorely needed to help companies make sense of the cacophony of conversations going on around them and their markets. Social business isn’t just about engagement, but also about listening and understanding. CIOs have a lot to contribute by applying algorithmic discipline to that process.

Panel discussion: How Will Technology Affect Productivity and Employment?

Moderator: Erik Brynjolfsson – MIT Sloan, CDB

Panelists: David Autor – Economics, MIT; Irving Wladawsky-Berger, MIT, IBM Emeritus; Frank Levy, MIT

David Autor

Autor: The idea that machines eliminate jobs is a fallacy. A century ago, 38% of the US population worked on farms. Today it’s 2%. But we don’t have 36% unemployment. We’re in a period where the scope of what can be done by machinery is expanding rapidly. If we look at 10 categories of occupation (shows a chart), there are three categories: Low-paid positions like food service work; mid-level, relatively low-paid positions like clerical jobs; and relatively highly paid jobs like professional, technical and managerial.

What we see is a decline in operative production jobs and clerical/administrative support jobs. The middle third are the jobs that are declining most quickly. Should we be worried about that? Probably, because it can lead to policies that are intended to preserve these positions instead of moving toward the jobs that are growing.

Wladawsky-Berger: About 80% of the job growth is in information-intensive service jobs. We’re living in a time of sustained high unemployment and this is concerning. Who will pick up the challenge of providing these jobs? People are looking to large businesses, but they are shedding these jobs along with everybody else. Others look to government, but in my experience government won’t do that.

The top-down approaches aren’t going to work, but neither do I want to tell people that they’re on their own and that they have to take a more entrepreneurial approach. The world is becoming more entrepreneurial.

Levy: Everything we see here is colored by the recession, but this recession doesn’t have much to do with computers, it has to do with housing bubbles. The mid-skill decline is very real. Development is very uneven. Natural language processing has improved a lot, machine vision hasn’t and technologies like judgment and practical sense really haven’t gone anywhere.

People look at the Google truck and say it’s remarkable that it’s gone 2,000 miles without an accident. What really happened was that Google made detailed maps of the infrastructure it would be traveling. Without that infrastructure, this car doesn’t have the driving ability of a 16-year-old who just got a permit. So while this technology is promising, the Teamsters shouldn’t be protesting yet.

Brynjolfsson: Is there a future for the people who have those kinds of jobs?

Wladawsky-Berger: It has to be more entrepreneurial than top-down. The kinds of jobs that MIT and Stanford graduates have don’t scale very well. Small businesses don’t tend to create many jobs.

Can we apply technologies that have traditionally been available only at the high end and make them easier to use? Can there be new retail services, trades, sustainability-oriented businesses where these skills can be applied?

Frank Levy

Levy: I can give you an example of one of our graduates who is now running a business making high-end stationery. It’s a good living, but it’s a small piece of the market.

Autor: in a lot of countries there are businesses that we might call entrepreneurial but which are really people just getting by. Most people want to be employed. When the economy booms, people tend to stop working for themselves and go to work for other people. Asking people to create new jobs is asking a lot.

What are the advantages of humans? Common sense, judgment, physical flexibility, understanding. It’s solving novel problems. Positions like cleaning driving actually require  those capabilities.

Wladawsky-Berger: Will global enterprises create these jobs? they’re becoming more distributed and moving a lot of tasks to the supply chain. A lot of people in the supply chain could be these mid-skilled people.

Autor: Cleaning restrooms requires a lot of flexibility, but it’s not entrepeneurial.

Erik Brynjolfsson

Brynjolfsson: So what skills should we be training people for?

Levy: One of the problems is you’re problem-solving by analogy. In the old world, where you were problem-solving by algorithm, it was pretty simple. Now you need to understand how things are similar and how you would use analogies to make decisions.

Autor: Germany has done a good job by training for needed skills and by reducing wages and increasing flexibility. It was painful, but when the shock hit, they were able to handle it better.

The US has a very good system for elite education. We don’t have a particularly good way to handle the people who can’t go to college. The traditional feeders like unions and apprenticeships aren’t as available today. The jobs that are emerging are those that require some level of post-high-school education. We have an incredibly big for-profit post-high-school education sector, but the only guarantee you have is that you’ll come out with a lot of debt. We’re squandering a lot of mid-level talent.

Levy: When you’re talking about a lack of training for people oer 30, you also have to look at where we are in training people under 18. That’s a problem in the pipeline.

Wladawsky-Berger: For these mid-skill jobs you need post-high-school education. I’m not saying a BA in English – in fact, that might be a bad idea – and I’ve been hoping that government agencies would decide that this is better than paying welfare and unemployment.

Autor: Health care will grow and there will be opportunities. If I were asked what people should study for, I’d say a health care worker. I don’t think we’re over-investing in college, I think we’re under-investing in other areas. The high school graduation rate is falling for males in the U.S. We ought to think carefully about how we would use that talent for a set of opportunities that’s appropriate. They need skills beyond the generic skills they find in high school. They need vocational education.

Levy: In the case of medical care, the whole issue of judgment is very important. When you’re talking about eliminating unnecessary procedures, there’s quite a bit of judgment involved. These are not problems that machines can address.

Autor: Look at an example of something that’s been automated out of value: Horses used to be our main form of locomotion but now they’re hardly needed. The difference between people and horses is that horses don’t accrue wealth from the internal combustion engine and we do. We’re getting wealthier collectively but not individually.

Audience question: I’m concerned with how we communicate these changes who aren’t economists so we can avoid reactions like what happened with stem cell research?

Wladawsky-Berger: The consensus of everything I’ve read is that when we transitioned from the agriculture to the industrial age, literacy went way up. High school became the ticket to the mid-skill, mid-pay class. In today’s world you need the next level of education: information-based literacy. You need to be comfortable working with information and you need social skills. This prepares you to be much more flexible in the new working environment. People who learn to use these tools can make a good living.

Audience question: It seems that our society fails people who need to change careers. Our unemployment system doesn’t encourage people to try new things for fear that they may lose benefits. Our education system also doesn’t foster skills training.

Autor: We have very little of what other countries call activation systems for people who have lost their jobs. We have a trade-adjustment system that does a terrible job. The problem is that the Republicans hate trade adjustment and blame everything on trade, and the unions hate re-skilling. So we have trade adjustment, which does very little.

Audience question: What about the possibility of trading off standard of living for other benefits, such as fewer work hours?

Autor: There’s a societal choice to trades off work for standards of living. You can work two days a week and make less money and some people might choose that. But we want to work less and have higher standards of living. We have more and more, but the rewards are concentrated in fewer hands. Having more rewards doesn’t solve the skill problem.

Wladawsky-Berger: I think we need more collaboration between the private and public sector. So the government does more to help people while they’re training for jobs, but the jobs are provided by the private sector.

Live-blogging from the IBM Watson University Symposium at Harvard Business School and MIT Sloan School of Management. Additional coverage is on the Smarter Planet Blog. .

Panel discussion: What Can Technology Do Today, and in 2020?

Moderator: Andrew McAfee – MIT Sloan, CDB

Panelists: Alfred Spector, Google; Rodney Brooks, MIT, Heartland Robotics, David Ferrucci,IBM

Alfred Spector, Google

Spector: We focused in computer science for many years on solving problems where accuracy and repeatability was critical. You can’t charge a credit card with 98% probability. We’re now focusing on problems where precision is less important. Google search results don’t have to be 100% accurate, so it can focus on a bigger problem set.

When I started in computer science, It was either a mathematical or an engineering discipline. What has changed is that the field is now highly empirical because of all of that data and learning from it. We would never have thought in the early days of AI how to get 4 million chess players to train a computer. You can do that today.

Brooks: Here at MIT, all students take machine learning because it’s that important.

McAfee: Was there a turning point when you decided the time was right to take these empirical approaches?

Brooks: It was in the 90s. The Web gave us the data sets.

Ferrucci: Watson was learning over heuristic information. Plowing through all those possibilities through sheer trial and error was too big. You have to combine inductive and deductive reasoning.

Brooks: It’s easy to get a plane to fly from Boston to Los Angeles. What’s hard is to get a robot to reach into my pocket and retrieve my keys.

McAfee: Why does the physical world present such challenges?

Brooks: In engineering, you have to set up control loops and you can’t afford for them to be unstable. Once a plane is in the air, the boundaries of differential equations don’t change that much. But when reaching into my pocket, the boundaries are changing every few milliseconds.

McAfee: The things that 2-year-old humans can do machines find very difficult, and the things that computers can do humans find very difficult.

Rodney Brooks, MIT

Brooks: One thing we have to solve is the the object recognition capabilities of a two-year-old child. A child knows what a pen or a glass of water is. There is progress here, but it’s mainly in narrow sub-fields. Google cars are an example of that. They understand enough of road conditions that they can drive pretty well.

Spector: We’re looking to attack everything that breaks down barriers to communication. Example: With Google Translate, we eventually want to get to every language.

Another is how to infer descriptions from items that lack them. How do you infer a description from an image? We’re at the point where if you ask for pictures of the Eiffel Tower, we’re pretty good at delivering that.

A third thing is to make sure that information is available always from every corpus, whether it’s your personal information, information in books or information that’s on the Web. We want to break down those barriers while also preserving property rights. How many times have you searched for something and you can’t find it? I turns out it’s in a place where you weren’t looking. When you combine that with instantaneity of access, you can be on the street and communicate with someone standing next to you in the right language and the right context. You can go to a new city where you’ve never been before and enjoy that city no matter where it is.

McAfee: You think in five years I’ll be able to go to Croatia and interact comfortably with the locals?

Spector: Yes.

Brooks: We think manufacturing is disappearing from the US, but in reality there is still $2 trillion in manufacturing in the US. What we’ve done is go after the high end. We have to find things to manufacture that the Chinese can’t. What this has led to is manufacturing jobs getting higher tech. If we can build robotic tools that help people, we can get incredible productivity. The PC didn’t get rid of office workers did; it made them do things differently. We have to do that with robots.

We can take jobs back from China but they won’t be the same jobs. That doesn’t mean people have to be engineers to work. Instead of a factory worker doing a repetitive task, he can supervise a team of robots doing repetitive tasks.

My favorite example is automobiles. We’ve made them incredibly sophisticated but ordinary people can still drive.

Spector: It’s machines and humans working together to build things we couldn’t build separately. At Google, we learn how to spell from the spelling mistakes of our users.

Ferrucci: This notion that the collaboration between the health care team, the patient and the computer can result in a more effective diagnostic system as well as one that produces more options. Everyone is well informed about the problems, the possibilities and why. I think we’re capable of doing that today much better than we did in the past. This involves exploiting the knowledge that humans use to communicate with each other already. This gets you as a patient more involved in making better decisions faster. It’s collaborating better with the experts.

McAfee: Don’t we need to shrink the caregiver team to improve the productivity of the system?

Ferrucci: The way you make the system more productive is to make people healthier. Does that involve a smaller team? I don’t know, but I do know you get there by focusing on the right thing, which is the health of the patient.

Andrew McAfee, MIT Sloan

McAfee: If you could wave a wand and get either much faster computers, much bigger body of data or a bunch more Ph.D.’s on your team, which would you want?

Brooks: Robotics isn’t limited by the speed of computers. We’ve got plenty of data, although maybe not the right data. Smart Ph.D.’s are good, but you’ve got to orient them in the right direction. The IBM Watson team changed the culture to direct a group of Ph.D.s the right way. I think we’d be better off if universities were smaller and did more basic research that companies like IBM would never do.

Spector: When many of us in industry go to the universities, we’ve often surprised that the research isn’t bolder. Perhaps that has to do with faculty reward issues. We envision that there’s going to be need for vastly more computation. I’m sure Google data centers will continue to grow. If you stay anywhere near Moore’s law, these numbers will become gigantic. The issues will relate to efficiency: Using the minimum amount of power and delivering maximum sustainability.

With respect to people, there’s a tremendous amount of innovation that needs to be done. Deep learning is a way to iteratively learn more from the results of what you’ve already learned. Language processing is a way to do that. We learn from the results of what we do. Finally, data is going to continue to grow. We bought a company with a product called Freebase where people are creating data by putting semantic variables together. Just learning the road conditions in New York from what commuters and telling us is crowdsourced data, and that’s enormously useful.

David Ferrucci, IBM Research

Ferrucci: We need all three, but in order, it’s researchers, data, machines. Parallel is processing is important, but it’s less important than smart people.

McAfee: Do computers ultimately threaten us?

Brooks: The machines are going to get better, but for the foreseeable future we’ll evolve faster. There’s a lot of work going on in the area of putting machines into the bodies of people. I think we’re going to be merging and coupling machines to our bodies. A hundred years from now? Who the hell knows?

Spector: There will be more instantaneity, faster information. We can embrace that, like we did central heating, or reject it. I think we’re on a mostly positive track.

Audience question: What’s the next grand challenge?

Ferrucci: I think the more important thing is to continue to pursue projects that further the cause of human-computer cooperation. We tend to go off after new projects that require entirely different architectures, and that hurts us. I’d rather we focus on extending and generalizing architectures we’ve established and focus on applying it to new problems.

Brooks: I’d like to see us focus on the four big problems we need to solve.

• Visual object recognition of a 2-year-old
• The spoken language capabilities of a four-year-old
• The manual dexterity of a six-year-old. Tying shoelaces is a huge machine problem
• The social understanding of an eight-year-old child.

May is a futurist who is executive director and Dean of the IT Leadership Academy. A popular speaker, he is known for combining deep insights with a stand-up comic’s delivery and a gift for storytelling. His writing has appeared in the Harvard Business Review; Financial Times; The Wall Street Journal and many other academic and business journals.

I caught up with him to talk about The New Know. 

I was struck by how well researched your book was, with lots of real-life examples.

Not only am I talking about The New Know, the whole thing was a new know for me. It was ethnographic study of what people are doing in this space. Analytics is the business reengineering of the mid-90s. All of the major service firms are moving into this space in a big way, but not many people have a good definition of it.

I created a new acronym: FODDRS. That forecasting, operations research, data mining, data integration, reporting and statistics. Those have traditionally been six disparate disciplines, but you need the totality of them today.

Why did you set out to celebrate analysts?

We’ve come through the Bataan Death March, which is enterprise software. Everyone in the global 2000 has burned in through a painful process their enterprise transaction systems. So they have their systems of records in place and now and now people asking what do we do with all this data? Let’s analyze it. In 2010, the analyst is to the value creation dance what the CIO was in the 80s and 90s: unloved, misunderstood but poised to play a major role in the future.

Will new tools make analytics accessible to the common business person in the same way that spreadsheets made forecasting, accessible?

We are living in a much less tolerant society. You don’t need analytics if you’re always guessing right, but the minute you guess wrong, you’re going to be held accountable for how you made that decision and what you knew when you made that decision. We’ve created a whole class of people who are willing to forensically spank you if you’ve made decisions wrong.

Is this a generational issue?

I think the next generation of leaders is going to be not only aware of analytics but also masters of it. The next real social issue we deal with as a nation is executive compensation, and the only way you can justify the pay levels of these guys is to become more analytical. The people who simply guess are being found out.

Can you think of any recent examples where an executive has been pilloried for making bad examples based upon not analyzing data?

[Former BP CEO Tony Hayward] is a classic point. There is a presumption on the part of regulators and customers that senior executives understand what the key processes of the organization are and what their operational health is. At BP, that was not the case. We’re living in a complex society and the ticking bomb is not understanding how operations work.

But operations and organizations are getting more complex. Can one person know it all?

You can’t know it all but you can have processes for knowing. It’s OODA loops: observe, orient, decide and act. It’s not artificial intelligence but augmented intelligence. We’ll be delivering to the human actor the appropriate dashboard or operational reality at the right time.

We’re going to have to rethink and reinvest in our entire technology infrastructure. Our infrastructure was built to do transactions, not to manage information.

What will the new infrastructure look like?

For example, Partners Healthcare is looking at what outcomes they want to have happen at that point of care, then they design systems to deliver information to the front lines right when it’s needed.

We haven’t had to do this before. We used to be in the Soviet system where people were grateful for what we put on the shelf. It used to be product-centric vs. customer-centric. I will create this product and you will buy it.” Now the customer is saying “Here’s what I want and you build it for me.”

There are 360 million Americans today. Speaking analytically, that is a trivial database. You can actually know every one of those individuals.

At what point does this become creepy? Google CEO Eric Schmidt has said that Google has a lot more data than it ever uses because it would be creepy if they did use it.

Information management becomes a species survival trait. Where it doesn’t become creepy is where people extract utility and value from their information management ecosystem. Kaiser Permanente has shown that you will live longer if you have mastery of your health care data. It’s not creepy that way.

Historically, we’ve been living in California where nobody knows how to park a car, but they know how to do valet. We don’t know how to park our data and how to take care of it. In K-12 we’re going to be teaching kids how to manage their information. I see kids graduating from high school seven years from now getting the equivalent of the top information security credential of today.

Do you think hoarding information rather than sharing it is basic human trait?

I think that’s an acquired trait during the information age. Today, the more information you share, the more powerful you are. This is why Apple had trouble early on. They are a closed system and this is why RIM and Android are going to be able to catch up catch up. An open system will always outperform a closed system.

Another thing is that people now know who is hoarding information. It’s like being the Amish on steroids; If you’re not behaving appropriately in the group, you are shunned. And that is having some social consequences like teen suicides, because there aren’t a lot of places to hide. We are at the big bang of social, economic, political and evolutionary change.

The technology we now have in the portfolio today is so amazingly powerful and it works. People with technology imagination, who can dream of creating value with technology now have the tools to do that.

The old think was that information overload is a problem. We’ve got to change our thinking. Having all this information available to us is not a bug; it’s a feature. Speaking realistically, there is nothing we cannot know. So an organization can now say, “What do I want to know about my customer?” We can create that.

The other day [Intel CEO] Paul Otellini was being interviewed by Charlie Rose and was asked what is going to be obsolete next and he said “ignorance.” We have migrated to a point in our society where it is no longer socially acceptable to be ignorant.

At companies that do this well, how is the organization different?

One thing is they celebrate curiosity, they ask “What if?” and they tend to have more porous boundaries. And they realize there are different kinds of smart in the enterprise. They conduct experiments. We’re migrating into this scientific age of business where you can launch a product prototype and let people react to it and fix it almost instantaneously. Michael Schrage says we should all become the chief experiments officer.

But most companies don’t operate that way. The culture punishes failure.

We’re migrating away from that. Every company is trying to realize that it’s not really a failure; it’s learning. Even organizations that are traditionally viewed as hidebound, like the U.S. military, treat every mission As an analytical exercise. They analyze what they learned and what they have to change. And not only does a particular unit learn, but they all learn from that. Those learnings from the field work their ways into the curriculums at the service academies within two to three weeks. That’s unheard of in academia.

Doesn’t this challenge our hierarchies?

You’re coming closer to getting organizations and humans within them to almost be on the same metabolic rate. The industrial discipline of coming to work at a certain time is an unnatural act. We’re migrating to a world in which we can now learn together. The organizations that will succeed are those that have an unambiguous reason for being. Kaiser Permanente’s is to improve health, the U.S. military’s is to keep people alive. People who exist just to sell more in this quarter will be lost. People have to have a North Star to come back to. The criteria for experiments has to be to advance the mission.

You quote Clayton Christiansen at some length. He has demonstrated that companies that listen too closely to their customers and don’t realize that the business environment has changed can kill themselves. Is there a risk of listening too closely to your customers?

Tom Davenport has pointed out that airplanes today have amazing avionics, but the pilots will tell you it’s still a good idea to look out the window now and then.

The organizational question is: Can you create an organization that people are excited about engaging with? GM is a very switched-on organization now. They are very excited about analytics. If you look at the traditionally underperforming members of the New York Stock Exchange who are now bringing in the analytical firepower of an Accenture or a SAS, you should buy their stock because you’re going to see a material improvement in performance within six to nine months.

There is so much waste in the enterprise today.  People don’t know what’s going on in their enterprise. We reengineered in 1995 and then stopped. The whole term “process” has disappeared from the vocabulary.  You’re going to see process mining, where people are mining their processes and optimizing them. And you’re going to make some serious money.

Look at what Gary Loveman did at Harrah’s, what the Boston Red Sox did: data tied to real mission delivers value. This may be what really excites children to get sharper in math.

Will this bring us out of this economic malaise?

Oh, yes. We still have 90% employment. The economy is unbalanced, but there are parts of the economy that are red-hot. We have to redo the US infrastructure, migrate to clean fuels, improve the quality of healthcare; there will be enough work to go around, but people will have to be smart to do it. If I was a young individual coming out of school, I would be studying analytics right now. The Master of Statistical Analysis will be the new MBA. It will be the ticket to success over the next 20 years.

We’ve also got to change our approach to education. A lot of kids went to school to show how smart they were, so they stayed away from things that were hard. We may go back to the Greek concept of people becoming better and more well-rounded citizens.

People say we’re no longer manufacturing in America. We’re actually manufacturing more than you can believe, but we’re so good at it that there aren’t as many jobs anymore. Where we dropped the ball was not reinvesting in their human beings. Corporations used to have training and development programs and sadly, those disappeared. There’s a whole generation in corporate America who have never been to a corporate training program. Training not disappear in the U.S. military, which is why ex-military people make such great employees. People are now doing it themselves with online education courses. I believe that retraining will be a major part of our economy.

I actually think insurance is a fascinating business. It involves taking calculated risks about the unexpected. Insurance companies need to know a lot about the world around us, because their business deals with so many variables, from accidents to earthquakes to the chance of being hit by a meteor. This morning’s audience of about 100 social media practitioners truly believe in the value of new platforms to reach their customers, although they have understandable concerns about the many regulations that govern what they can say.

Here are some notes I took away from the three speakers on my panel.

Gregg Weiss (@greggweiss) of New York Life says the company’s social media content strategy is driven by constantly asking, “What can we do that isn’t about life insurance?” This was a theme that was borne out in every presentation: It’s not about the company but about what motivates customers.

A sampling of what New York Life has done:

• Partnered with the NFL on a “protection index” of pro football teams;
• Created the New York Life Game of Life in partnership with Hasbro. The goal was to get people talking about financial stability and have a chance to win the popular board game;
• Hosted a Twitter chat about Halloween safety.

New York Life has carefully cultivated more than 100,000 likes on Facebook. “We believe 60% of our Facebook fans are prospects,” Weiss said.

His best story actually had nothing to do with insurance but everything to do with using social marketing to build loyalty and word-of-mouth awareness.

He told of buying a coffee at Dunkin’ Donuts: milk, no sugar. But when he got to the office, he found the beverage was loaded with sugar. “I couldn’t drink it.” He tweeted his dissatisfaction. Within two minutes he had a reply tweet from the head of corporate communications at Dunkin’. She asked for a phone call, during which she apologized and offered a gift card, which arrived in the mail two days later. “I tweeted about Dunkin’ Donuts’ great response,” he said. “It was a huge win for them. “

His  advice to social media marketers: “Think big. Everyone in this room has the power to change things at your company. That’s incredibly empowering.”

Quotable: “The VP of Social Media at New York Life is the hundreds of thousands of people who have online relationships with us.”

And finally, “Seek a higher purpose. I hope someday to hear a story of a kid who got to go to college because a parent bought a life insurance policy from us.”

Kelly Thul (@kellythul), State Farm.

State Farm got started in social media when it set up a blog to find New Orleans-area employees and agents who couldn’t be located after Hurricane Katrina. “Within 24 hours, that blog was key to our locating ever agent and employee,” Thul said. Today, State Farm is all over Facebook, with pages for the corporation, careers, Latino customers, the Bayou Classic football event and an innovative youth-oriented forum called State Farm Nation (right), where people can “discuss life’s challenges and opportunities, connect with others facing life-shaping decisions [and] find helpful tips and information.” With 1.3 million likes, it’s doing pretty well.

The insurance company’s YouTube channel has had more than five million views, many for its TV commercials. The ads have spawned parodies, but Thul says the company is pretty sanguine about them. “If people care enough to have a bit of fun with you, that’s OK, as long as it isn’t brutal,” he said.

State Farm evaluates social media opportunities using four criteria:

• Relevance to business strategy;
• Role clarity: who is responsible for talking and responding;
• Measurement criteria;
• Activating platforms.

These four criteria provide a framework for making a rapid and relevant decision about new platforms and opportunities like Google Plus.

Words of wisdom: “People want to be heard. If they believe you’re listening to them, they’ll like you a little more.”

Theresa Kaskey (@TheresaKaskey), Director of Brand Management and Strategy at the John Hancock Financial Network, joined the company without any plans to get involved in social media. John Hancock had no social media strategy at time. Today, it’s 80% of what she does. There’s been a long education and adoption process, but company management is buying in, she said. John Hancock recently launched its first blog, Build4Success, and it’s posted nearly 40 videos on YouTube. Unlike the other two speakers on the panel, who speak primarily to consumers, John Hancock Financial Network’s audience is financial advisers.

YouTube has been one of its early successes. “We created more than 80% of our launch content in one day,” Kaskey said. “We had a meeting of our advisers and brought them into a room one by one to talk about how they delight their customers.” It’s been a low-cost, high-return recruiting success.

Words of widom: A key element of successful social media programs is “It’s not about us.”