IBMer: ‘Social Selling’ Is a Sales Process in Itself

It’s no secret that the factors that motivate salespeople to change the way they work have to be pretty simple: Help them spend more time selling and less time scrounging for information and telling managers what they’re doing.

So when IBM began to introduce the concept of “social selling,” it chose a test base of a few hundred salespeople and their managers to build a set of integrated systems that improved productivity and reduced administrative overhead. In a presentation to the SugarCRM SugarCon conference in San Francisco earlier this week, Gary Burnette, vice president of sales transformation at IBM, told how the implementation team at IBM succeeded in making social selling a coveted goal rather than another set of rules and reports.

“We didn’t think of it as social selling; we thought of it as improving sales productivity,” Burnette said of the pilot. “It was about returning value and time to our sales teams for their time invested.”

Familiarity Breeds Intent

The program began with the assumption that nearly every salesperson was already familiar with the value provided by Facebook and LinkedIn in their personal lives. The tools made it easy to find information and expertise by consulting friends. Those same capabilities could be useful as a formal part of the business process.

Download Gary Burnette’s Social Selling Presentation here

A key goal was to simplify reporting, an already distasteful task that becomes more intrusive as the end of the quarter nears. Management has a constant need for information about the status of different sales opportunities, and as a result “We’ve had sales people called out of client meetings to answer questions from upline sales execs,” Burnette said. Much of this information was locked up in Excel spreadsheets owned by individual reps. The only person who could answer a question was the representative on the account.

IBM built a sales force automation system based on SugarCRM, Websphere and Lotus Connections to enable collaboration and streamline visibility into the sales cycle. Cognos and SPSS analytics were applied to better qualify opportunities and improve forecasting. As a result, salespeople now know more about their prospects and managers have better visibility into progress against goals.

Opportunity reports were replaced with an “activity stream” approach similar to the Facebook timeline that enables salespeople to document the status of each opportunity on an ongoing basis. Management can peek into the status of opportunities at any point in the process and get the latest information. As a result, lag times have been cut from five days to almost nothing and report preparation has been significantly reduced because everyone has access to the same information.

“I don’t think most senior sales executives have any idea how many people are behind the scenes creating reports and forecasts,” Burnette said. “If managers are in collaboration with their teams the information is more accurate and less filtered.”

All members of the team can now apply social tools like tagging and profiling to identify and recommend experts who can help solve customer problems and closed deals. “The management team is helping the seller sell instead of asking why they aren’t selling,” Burnette said.

Critical Success Factors

A project this ambitious can’t succeed without support at three levels:  top management, brand managers and the reps on the street. The fact that new IBM CEO Ginni Rometty had endorsed the project before she even became CEO was a godsend, Burnette said. Also critical was involving users in the development of the dashboard. Nearly 800 sales reps gave feedback at every step. Brand leaders helped in strategic direction so that the most important information would be the easiest to find.

Social selling is now being woven into the mainstream of IBM’s business process, but adoption was never a sure thing.

“Becoming a social business is a transformational journey,” Burnette said. “The onus has been on us to translate these systems into something that has clear business value.” As word-of-mouth has grown, the new social selling process has taken on a life of its own. “It started with us deliberately selecting the people to participate, but now it’s ballooned to the point where people are saying, ‘I want to be a part of this.’”

Read more coverage of Burnette’s session.

This is one in a series of posts sponsored by IBM Midsize Business that explore people and technologies that enable midsize companies to innovate. In some cases, the topics are requested by IBM; however, the words and opinions are entirely my own.

IDC: US Tech Firms Underestimate Emerging Market Opportunity

Outdated perceptions about emerging markets blind North American technology companies to the substantial IT investments being made there, according to a top International Data Corp. researcher.

Sandra NgLatin America, Central & Eastern Europe, Middle East, Africa (CEMA) and Asia Pacific economies are will spend nearly as much on IT as the US in 2012, said Sandra Ng, Group Vice President of the Information & Communications Technology Market Group at IDC in an address to the research company’s Directions 2012 conference this morning. By 2018, those countries will outstrip the US on IT spending by nearly $100 billion.

These “green field” markets are building IT infrastructures around mobile technologies, adopting social media for content distribution and investing in “smart cities” at a faster rate than mature markets, Ng said. However, most North American tech companies do less than one-third of their business in these growing economies, believing them to be less lucrative than their home markets.

Download Sandra Ng’s slides here

Many US vendors assume that success in emerging markets is a matter of selling their North American products at a lower price, but this ignores the different ways in which IT is evolving in these growing economies, Ng said. She listed five common misperceptions and realities.

Misperception: Emerging markets are extremely cost-sensitive.

Reality: A wide range of customer needs exist. For example, China’s wealthy class has made Louis Vuitton’s outlets in that country the most profitable in the world. There is a growing appreciation of value and the importance of high-quality service in Asia/Pacific in particular, Ng said.

Misperception: The principal appeal of emerging markets is growth.

Reality: Businesses should plan for “smart growth,” with some segments growing much more quickly than in North America and others lagging. Manging the business as a portfolio is important.

Misperception: Emerging markets have large and low-cost labor forces.

Reality: “We have a lot of people but we don’t have a lot of talent,” Ng said. There is demand for the expertise that western companies can bring.

Misperception: Customers want itemized prices and mix and match the cheapest offerings.

Reality: Increasingly sophisticated customers understand that packaged pricing is often a better deal.

Misperception: You need strong relationships to do business in emerging markets.

Reality: “There’s increasing appreciation for transactional as well as engagement models.”

With 20 of the world’s largest 27 cities and a growing population of young people, emerging markets present attractive growth possibilities, Ng said, but their technology needs aren’t the same as those of western economies.

Mobile services market

IDC Forecast

For example, mobile platforms are the dominant platform for consumer services. Chinese consumers, for example, will spend $160 million on online books this year, but they expect delivery in a format that fits on a mobile phone. Many people don’t have bank accounts and so expect to pay for services in advance. Cloud-based applications are more appealing than on-premise software for businesses that lack large IT infrastructures.

Governments in many of these countries are keen on pursuing the concept of “smart cities” and many have designated “innovation scouts” to look for cloud apps in that area. “There’s lots of opportunity in IPv6 and machine-to-machine communications,” Ng said.

North American vendors who tune their offerings to those characteristics can tap into a huge amount of pent-up investment, she said.

This is one in a series of posts sponsored by IBM Midsize Business that explore people and technologies that enable midsize companies to innovate. In some cases, the topics are requested by IBM; however, the words and opinions are entirely my own.

IDC Sees Massive Disruption From Industry’s Platform Shift

The global IT industry is in the middle of an epic platform shift and the rules for survival in a market built on mobility, big data analytics, social business and cloud computing will be very different than those that applied to the previous client/server generation.

Download Frank Gens’ slides here

That was the message from IDC Senior Vice President & Chief Analyst Frank Gens as he kicked off the research firm’s Directions 2012 conference in Boston this morning. Gens, who has tracked the computer industry since the days when mainframes ruled the earth, outlined a dramatically new economic structure that will emerge as economies of scale take hold.

Frank Gens, IDG
Frank Gens (photo by Jeff Ballard via Twitter @jballard)

“Volume is going way, way up and price is going way, way down,” he said of the new software market. “If [technology companies are] going to drive large-enough volumes to support the revenue levels they’re used to, they’re going to have to drive the number of customers way up. You’ll need millions of customers in order to compete.”

Gens outlined some striking changes in the platforms and architectures that underlie what he called the “third platform” of computing after mainframe and client/server. Among them:

  • Spending on mobile data services will surpass spending on fixed data services this year for the first time. “That’s a crossover that will never cross back,” he said.
  • The 700 million mobile devices shipped in 2012 will roughly double the number of fixed devices shipped during the same period. Spending on mobility will exceed spending on PCs and servers for the first time.
  • The volume of unstructured data in corporate data centers will exceed the volume of structured data for the first time.
  • China will surpass Japan to become the world’s second largest IT market at about $170 billion.

But the most startling changes Gens outlined concerned the software applications market, where downloadable free and low-cost apps are redefining the economics of the business. IDC forecasts a five-fold increase in annual apps downloads to 137 billion by 2016. Only about 18% of those apps will be paid for, and average prices will fall from $1.59 today to 82 cents. “That’s spooky stuff when you consider that PC apps average about $25” and that that market isn’t growing, Gens said.

Technology companies will need to overhaul their business models to accommodate these shifts. In order to attract the thousands of new customers they’dd need to recruit each day, vendors will have to become experts at cultivating communities and working with partners and even competitors. In other words, word of mouth marketing is the only viable promotional model.

Will Microsoft be a player in mobile platforms? It may be, but Redmond has a lot of work today, Gens said. A recent IDC survey asked developers which platforms they were “very interested” in targeting. Apple IOS for the iPhone came in first at 90%, followed closely by Google’s Android for smart phones. HTML 5 was a strong third. Microsoft’s Windows Phone 7 was a weak fourth at under 40%. Can Microsoft compete? “We should know in the next 12 to 18 months,” Gens said.

Tech firms will also need to serve a wider variety of vertical markets because price deflation won’t permit the luxury of focusing. Fortunately, IDC has identified more than 40 new specialty industries made possible by platform shift, including medical assistant online, social mobile commerce and smart buildings.

And if these pressures weren’t intense enough, don’t forget overseas competition. Gens said the business models that support high-volume, small-transaction markets are being honed right now by Indian, Chinese and Russian companies that have worked in that environment for years. US firms, with their high costs and margins, are going to struggle to adapt to a leaner and more competitive way of doing business.

This is one in a series of posts sponsored by IBM Midsize Business that explore people and technologies that enable midsize companies to innovate. In some cases, the topics are requested by IBM; however, the words and opinions are entirely my own.

CIO Challenges Educators to Stay Relevant

Wichita State University CIO Dr. Ravi Pendse last month issued a provocative challenge to educators to rethink their tools and tactics if they are to remain relevant a decade from now.

Addressing a regional edition of the popular TED conference in Wichita, KS, Dr. Pendse, who is both the CIO of Wichita State University and an award-winning professor, said he chose the term “relevant” deliberately. In his view, educators who continue to rely upon lectures and chalkboards as the tools of their profession are becoming dangerously out of step with the ways in which young people learn.  Educators must not only adopt the tools the students use but also adapt their curricula to the topics that interest those students.

“If the goal is to get people excited about history, shouldn’t we study the history of Google?” he asked. “Our young people are looking for complete convergence. If you can’t provide it to them, you have a problem of relevance.”

To illustrate how out-of-step some educational institutions have become with even everyday technology, Dr. Pendse asked audience members to exchange cell phones with each other. He noted the nervous rumbling the exercise created among the crowd. “It’s uncomfortable not to have those devices with you,” he said. “So why do we tell people in the schools to turn them off? We should be using them as educational tools instead.”

Facebook is ubiquitous among college students, but many higher education administrators don’t use any social networks at all. With the social network expected to surpass 1 billion members sometime this summer, “Wouldn’t a class be popular that studied the sociology of Facebook?” he asked.

Dr. Pendse acknowledged that his views aren’t universally shared, but he expressed little sympathy for educators who refuse to change. “I call them CAVE people,” he quipped. “That stands for Colleagues Against Virtually Everything.”

The analogy of the caveman may not be lost on an older generation that is falling further behind. By the age of 21, many young people today have played 10,000 hours of online games, Dr. Pendse noted. Educators may not approve of that fact, but they need to accept it and discover some of the virtues of video games, since they improve motor skills and concentration, that’s why so many people get the best hardware for their games, like processors from this amd fx 6300 review so they can play games as Overwatch using different OW Guides.

For example, “They require creativity. They even have built-in assessment tools; you can’t go to level 15 without completing level 14. And young people are collaborating across the world to figure out how to get to that next level.”

If educators are to get to the next level themselves, they need to put down the chalk and pick up the mouse. “Technology will never replace teachers,”’ he said, “but we can use technology to help a much greater number of students learn from each other.”

You can see Dr. Pendse’s 23-minute presentation below.

Live Blog: 3M Unites Global Workforce With Technology

Lotusphere 2012When it comes to innovation, everyone wants to know what the leaders are doing, and you won’t find many firms with a better innovation track record than Minnesota Mining & Manufacturing (3M). At Lotusphere today, two representatives to 3M outlined some ways the company is using collaboration platforms to improve access to expertise and information across the far-flung company, which has people in more than 60 countries.

Jeff Berg, 3M, at Lotusphere 20123M’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?”

Michael Lynch, 3M, at LotusphereThese 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 for 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.

This is one in a series of posts sponsored by IBM Midsize Business that explore people and technologies that enable midsize companies to innovate. In some cases, the topics are requested by IBM; however, the words and opinions are entirely my own.

Live Blog: Day 2 Kickoff Strikes Transformation Theme

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.

Wendy, Arnott, TD Bank Group

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.”

Bill Taylor, Fast Company at LotusphereTaylor 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.”

Common Area, Henry Ford Health CenterHenry 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.”

This is one in a series of posts sponsored by IBM Midsize Business that explore people and technologies that enable midsize companies to innovate. In some cases, the topics are requested by IBM; however, the words and opinions are entirely my own.

As Business Goes Social, CIOs Sit on Sidelines

CIOs scrutinize social mediaThe disconnect between CIOs and the emerging world of social business became clear to me at a conference I attended about two years ago. I entered the room late, but figured I could quickly catch up on the proceedings by checking the Twitter stream of attendees. With an estimated 300 senior IT executives in the room, I expected there would be plenty of chatter going on.

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

How Companies WinIn 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.

How Will Technology Affect Employment?

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: 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

The Next Big ThingThis is one in a series of posts that explore people and technologies that are enabling small companies to innovate. The series is underwritten by IBM Midsize Business, but the content is entirely my own.
David Autor

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.

Employment Polarization, 1979-2009

Changes in Employment Share by Job Skill Tercile, 1993-2006

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.

Irving Wladawsky-Berger

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

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

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.

How Will Computers Serve Us in 2020?

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
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.

The Next Big ThingThis is one in a series of posts that explore people and technologies that are enabling small companies to innovate. The series is underwritten by IBM Midsize Business, but the content is entirely my own.

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

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

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

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.

Know Thy Customer

Thornton MayIn his book, The New Know, Thornton May makes a case for data analysis becoming the next frontier of corporate evolution. Having spent the past 15 years getting their transaction systems in place, businesses will now turn their attention to making sense of the massive amounts of data they are collecting. The result will be a transformation of corporate productivity fueled by deep insights into customer needs. Business analysts will become the new rock stars of the organization.

This is one in a series of posts that explore people and technologies that are enabling small companies to innovate. The series is underwritten by IBM, but the content is entirely my own.

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 ReviewFinancial TimesThe 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.