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Jim Clark, Alvin Toffler

IBM

Thomas W. Malone

We are at the dawn of an age of networked intelligence - an age that is giving birth to a new economy, a new politics, and a new society. Businesses will be transformed, governments will be renewed, and individuals will be able to reinvent themselves - all with the help of information technology.

(Tapscott, Digital Economy, 1996)

Jim Clark & Alvin Toffler

http://en.wikipedia.org/wiki/James_H._Clark

http://en.wikipedia.org/wiki/Alvin_Toffler

James H. Clark

, , University of New Orleans , , (1974) University of California, Santa Cruz (1979), Stanford (1982) Geometry Engine , Sicon Graphics, Inc. (1980), production of Hollywood movie special effects , 1990 Clark and Marc Andreessen, the co-creator of the World Wide Web browser Mosaic, founded Netscape.(1994) Healtheon, with the original WebMD to form the current WebMD Corporation (1998) myCFO - a company to help wealthy individuals manage their fortunes (1999) and sold to Harris Bank in late 2002 Chairman and financial backer of network security startup company Neoteris, founded in 2000, which was acquired by NetScreen in 2003 and subsequently by Juniper Networks

James H. Clark Director and investor in biotechnology company DNA Sciences, founded in 1998, which went bankrupt and was acquired by Genaissance Pharmaceuticals Inc. in 2003, Donated $10 million to Stanford University for bio-science In the Fall of 2005 Clark, along with David Filo of Yahoo!, each donated $30 million to Tulane University for merit based scholarships to provide education to deserving students regardless of financial situation.

Global Innovation OutlookIBM

Global Innovation OutlookEarly in the 21st century, it's the very nature of innovation that has changed: it's happening faster, it's more open and collaborative, and outdated concepts around tightly controlled intellectual property are giving way to a more enlightened emphasis on sharing intellectual capital. You dont create innovation simply by increasing your R&D budget. You do it by creating an environment where innovation will flourish . Innovation isnt the same as invention. Innovation is a societal, not a technological combinations of technologies, expertise, business models and polices

Innovation -- DefinitionsThe act of introducing something new; something newly introducedarises from the intersection of invention and insight.The creation of a new idea/invention and application of it in a useful manner that becomes widely accepted

Innovation Now: Five Historical Cycles

Innovation is AcceleratingMeasured by Speed of Market Penetration

Innovation Rapidly

Wider Collaboration

Intellectual property is reexamined

Business Performance Transformation ServicesOptimizing business performance across the enterprise

Innovation in the 21st Century

Commodification of technologyIT Doesnt Matter, Harvard Business Review

Potential to transform business processes

Globalization of markets

Potential to drive substantial societal benefits

The Law of DisruptionSocial, political, and economic systems change incrementally, but technology changes exponentially.TIMECHANGE Political Change Business Change Social Change Technology ChangeSource: Unleashing the Killer AppBy: Larry Downes, Chunka MuiSlide Courtesy, Don Pearson, VP, Government Technology

Reinventing InnovationIt is occurring more rapidly- Barriers of geography and access have come down- Cycle from Invention to market saturation is shorteningIt requires wider collaboration across disciplines and specialties- Many challenges are now too complex to be solved by individual pockets of brilliant people- Combination of technology, expertise, business models, and policies will drive innovationThe concept of intellectual property is being reexamined- To reap return it will be treated more like capital something to be invested, spread, even shared- Less tightly controlled or hoarded

On Demand Innovation ServicesBringing real-world challenges back to the lab

Global Innovation Outlook Objectives

Begin a worldwide dialogue about innovation, business transformation and societal progress

Uncover new opportunities and insights that will shape business and society

Demonstrate the value of collaboration across a global ecosystem of experts

Global Innovation Outlook Focus Areas

Global Innovation Outlook Government & Its Citizens

GREATER TRANSPARENCY AND ACCESS a new bully pulpit

NATIONS VIRTUALIZE

A CRISIS OF TRUST

EVERY YEAR,THE CITY OF BANGALOREPRODUCES NEARLY AS MANYCOMPUTER SCIENCE ENGINEERSAS THE ENTIRE UNITED STATES

Call center in India

Call center in LA

HOW WILL KOREA RECRUIT TALENT?

WHAT ARE THE NEW RULES OF ITIZENSHIP FOR LABOUR?

HOW WILL KOREAN ECONOMIC INFRASTRUCTURES BE BUILT?

Global Innovation Outlook The Healthcare Ecosystem

THE UNDER-SERVED WILL LEAD THE WAY

INTEGRATING HEALTHCARE RECORDS

ITS ALL ABOUT YOU

Global Innovation Outlook The Business of Work & Life

CORPORATE CULTURE CATCHES UP TO THE KNOWLEDGE AGE

IN A KNOWLEDGE ECONOMY, WORK BECOMES ACADEMIC

FINDING THE OFF SWITCH IN AN ALWAYS ON WORLD

Global Innovation Outlook The Business of Work & Life

Role of the Academy

Role of companies and consortia skills development

Generalists versus specialists skills match

New academic disciplines and practitioners

Global Innovation Outlook Implications of Innovation

New business designs emerging that thrive on collaborative innovation

Standards must take hold in every industryBeyond IT standards

Intelligent IP Reform

The world revolves around the primacy of the individual

Global Innovation Outlook Implications for the CEO & CIO

Will studying older business models relevant to the Industrial Age prepare you for 21st century innovation?

What long-term strategy for innovation will your business set?

Are you cultivating an environment for innovation?

Should you hire specialists, or a generalists? With what new skills? Cultural literacy?

How will you apply innovation to make your company and the world a better place?

Industry and Government Actions to Drive Innovation

Expansion of Office of Innovation

Skills Development

Open Standards for Innovation

Innovation Taskforce Ind/Gov Partnership

e-government innovation

More on IBMs Global Innovation OutlookDownload it here: www.ibm.com/gioOrder a copy of the GIOGet involved with the GIO. by e-mailing GIO2004@us.ibm.com

The Complexity Crisis

How Can You Manage a Dynamic Enterprise?

Thomas W. MaloneMIT

What is a Dynamic Enterprise?

Continuous innovation to pursue cost reduction and differentiation

Real-time response to changing situations

Intelligent IT infrastructure to help make rapid, flexible decisionsAdapted from Entrue Consulting Partners

The bottom lineWe are in the early stages of an increase in human freedom in business . . .

. . . that may be as important as the change to democracies has been for governments.

Why is this happening? For the first time in history, we can now have the economic benefits of large organizationseconomies of scale and knowledge without giving up the human benefits of small onesfreedom, creativity, motivation, and flexibility This change is enabled by new technologies.Lower communication costs mean many people have enough information to make more decisions for themselves But the change is driven by human values.People use their freedom to get more of whatever they want.

Example: Wikipedia

An open content encyclopedia (www.wikipedia.org)

Anyone can add or change anything at any time

Frequent contributors watch recent changes to undo or correct errors

Started 2001. Already over 730,000 articles. Not perfect, but very good.

Example: eBay

On-line auctions for all kinds of productsToys, cars, antiques, real estate, computers,

$3.3B revenue in 2004

Over 65 million active buyers and sellers430,000 people make their living from selling on eBayIf they were all employees, eBay would be one of the 5 largest private employers in the US!

Businesses in the 20th century

How many people can fit at the center of an organization?

The decentralization continuum

Example: AES Corp. (1981 )

Worlds largest global electrical power producer2004 revenue $9.5B. 30,000 employees in 26 countries.a Fortune 300 company

Guiding principlesFairness, integrity, social responsibility, fun

Dennis Bakke (co-founder) says:We never set out to be the most efficient or most powerful or richest company in the world - only the most fun.

AES Corp. Extensive delegation

One of the best ways to have fun is to have responsibility for things that matter

Very new and low-level employees have huge responsibilitymaintenance workers manage investment fundplant technicians purchase major equipmententry level analysts and engineers manage billion dollar acquisitions

AES Corp. How does it work?

Very careful about hiring

You dont need approval, but you have to ask for adviceExtensive use of email

Managers role:Give advice, when askedSet up structure and pick who to make decisionsKey role in compensation

Other examples of loose hierarchies

GNU, Linux : A worldwide network of thousands of volunteer programmers developed a computer operating system with very little centralized control.

Google : Programmers coordinate directly with each other by writing blogs that describe what they are doing on a daily basis.

Example: Mondragon Cooperative Corp. The world's second largest worker cooperative (the largest is Indian Coffee House)a cooperative owned and operated by its "worker-owners".

150 worker-owned cooperatives in the Basque Country, Spain

2004: $13.2B revenue, 71,000 employees

Mostly manufacturing, but includes bank, supermarket chain, consulting firm

Mondragon organizational structure

Members of each cooperative elect Governing Council to hire and fire Managing Director, distribute profits, etc.

General Assemblies twice a year

Equivalent structures for 22 industry groups and whole corporation

Corporation doesnt own subsidiaries; individual cooperatives own the corporation.

Mondragon lessons

Most workers are owners

One person, one vote.

Complex multi-level democratic structure

Workers are motivated as owners and decision-makers

Scenario: The E-Lance Economy

1 - 10 people per firm

Temporary combinations for various projects

ExamplesMaking filmsConstruction

Example: Elance, Inc.

On-line auctions for professional servicesSoftware development, graphic design, research, translation, etc. Buyer posts project, selects winning bidder, evaluates completed work Over 200,000 businesses from over 140 countries registered For the past 7 years, with over 800,000 registered users Over 40% of transactions cross national borders

When should you decentralize?MotivationCreativityMany minds on same problemFlexibilityIndividualizationDifficulties inMaking decisions quicklyManaging risk and qualityExploiting economies of scaleSharing knowledge effectivelyPotential benefitsPotential costs

What does all this mean for Dynamic Enterprises?

Organizations can sometimes do things much faster than you might think.

In many cases, the best way to get continuous innovation and adaptation is by giving lots more people the freedom to make lots more choices for themselves.

Intelligent IT infrastructures can help make all this possible.

New ways of organizing work are often needed, too.

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60: ()70-80: (, ) Web1.090: , (, )2000 : , (Chaos, ) : 10 , , , )Yahoo, Google User Generated Contents and Web2.0 (Web2.0, Semantic Web,, Ubiquitous, Convergence)(youtube.com) 2 1 6

Characteristics of Valuable InformationAccurateCompleteEconomicalFlexibleReliableRelevantSimpleTimelyVerifiableAccessibleSecure

How would you rate your ability to use the Internet?(Year to Year)Q640 (P-1)

How much of the information on the World Wide Web overall do you think is reliable and accurate? (Year to Year)Q160 (M-1)

Information on the Internet: Is it Reliable and Accurate? (Users Age 18 and above)Stage 5 RELIA x Usenet (10-14-03)

Eventually I will probably make many more purchases onlineQ850C x YEAR (K-34)

Average Hours per Week Spent Watching Television:Users vs. Non-UsersHTV x Usenet 7 extra questions (10-22-03)

Long Tails

The Long Tail was first coined by Chris Anderson (2004)products that are in low demand or have low sales volume can collectively make up a market share that rivals or exceeds the relatively few current bestsellers and blockbusters, if the store or distribution channel is large enough.Amazon.com, Netflix, Artist, We sold more books today that didn't sell at all yesterday than we sold today of all the books that did sell yesterday The user-edited internet encyclopedia Wikipedia has many low popularity articles that, collectively, create a higher quantity of demand than a limited number of mainstream articles found in a conventional encyclopedia such as the Encyclopdia Britannica

Long Tails: Relationship with storage and distribution costs

The key factor that determines whether a sales distribution has a Long Tail is the cost of inventory storage and distribution. Where inventory storage and distribution costs are insignificant, it becomes economically viable to sell relatively unpopular products

Long Tails: Cultural and political impact Where the Long Tail works, minority tastes are catered to, and individuals are offered greater choice. In situations where popularity is currently determined by the lowest common denominator, a Long Tail model may lead to improvement in a society's level of culture Loyalty of costumersSome of the most successful Internet businesses have leveraged the Long Tail as part of their businesses. Examples include eBay (auctions), Yahoo! and Google (web search), and Amazon (retail) amongst the majors along with smaller Internet companies like Audible (audio books) and Netflix (video rental).

Blue ocean Red Ocean

User-generated content Come into the mainstream during 2005 in web publishing and new media content production circles Reflects the democratisation of media production through new technologies that are accessible and affordable digital video, blogging, podcasting, mobile phone photography, wikis Flickr, Friends Reunited, FourDocs, YouTube, Revver, Second Life and Wikipedia ,

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And of course management are looking for ways to do all of this, while at the same time making their company more responsive.How can the business allow staff to work anywhere, customers to gain access however the choose, give the CFO more control, connect faster across the supply chain and be more responsive? The traditional approach has been to deploy more. More applications, more systems and more connections.Beliefs about the reliability and accuracy of information on the Internet vary considerably among the countries in the World Internet Project.Users in Korea have the highest level of trust in online information, with 69.7% saying that most or all of the information on the Internet is reliable and accurate. The least-trusting Internet users are Swedes; 36% said that none or only some of the information online is reliable and accurate.In all of the countries surveyed in the World Internet Project, Internet users spend less time on average watching television compared to non-users.The largest gap in TV viewing between Internet users and non-users is in Chile and Hungary, where Internet users watch an average of 5.7 hours less television each week than non-users; following closely are Japan (5.3 hours less for users) and the United States (5.2 hours less for users).*****