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Innovation in theKnowledge Economy Some Key Grand Challenges
Irving Wladawsky-Berger
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“We will fight our battles not on the low road tocommoditization, but on the high road of innovation.” - Howard Stringer, Chairman and CEO, Sony Corporation
“Constant reinvention is the central necessity at GE... We'reall just a moment away from commodity hell.” - Jeffrey Immelt, Chairman and CEO, GE
“We’ve committed ourselves to a business model that relies
on continual innovation” - Sam Palmisano, IBM CEO
“Economic competition in the flat world will be more
equal and more intense... the most important
attribute you can have is creative imagination.”
- Thomas Friedman
Focus on Innovation
3
What Is Innovation?
Significant value created for society orbusiness:
-Creates new industries and markets
-Spurs productivity and economic growth
-Fuels wealth creation and profits
-Generates high-value, higher-paying jobs
-Raises standard of living
Innovation has to be useful as well asunique
Requires looking beyond today’sproblems
But why is this so important now?
4
Why is Innovation such a business imperative?
Our environment is constantly changing- Technologies: Internet, IT, bio-informatics, . . .- Market conditions: competition, commoditization . . .- Socio-economic: globalization, trade barriers . . .
5
Why is Innovation such a business imperative?
Our environment is constantly changing- Technologies: Internet, IT, bio-informatics. . .- Market conditions: competition, commoditization . . .- Socio-economic: globalization, trade barriers . . .
Innovation is indispensable to- adapt to changes- go after new opportunities- ward off competitors- preserve leadership position
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Source: Kurzweil 1999 – Moravec 1998
Accelerating Advances in Technology
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Accelerating Advances in TechnologyDriving Costs Steadily Downward
Source: Kurzweil 1999 – Moravec 1998
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The Internet: Industrial Knowledge Economy
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Global, integrated
Market facing, services oriented
Complex, unpredictable
Evolution of Systems
10
Evolution of IT Systems
11
Evolution of IT Systems1960s, ’70s and Early ’80s
Data Center Computers, Storage,Printers, Network, . . .
12
Evolution of IT Systems 1980s and Early ’90s
Data Center
IT infrastructure
Computers, Storage, Printers, Network,
Data Center, Business Unit,Departments, WANs, LANs . . .
13
Evolution of IT Systems Mid ’90s to Present
Data Center
IT Infrastructure
“End-to-End” Enterprise
Computers Storage, Printers, Network,
Data Center, Business Unit,Department, WANs, LANs . . .
IT Infrastructure,Applications, Data, . . .
14
Evolution of IT SystemsInto the Future . . .
Data Center
IT Infrastructure
“End-to-End” Enterprise
Industry Eco-SystemsGlobal Digital Economy
Marketplace Solutions
Computers, Storage, Printers, Network,
Data Center, Business Unit,Department, WANs, LANs . . .
IT Infrastructure,Applications, Data, . . .
People,Processes,Information
15
Evolution of Marketplace Systems
Technology
Products
Applications
Business
16
Market Facing Systems
Back Office Systems
17
People and Services
Machines and Products
18
Time / Complexity
Evolution of Emergent Systems: Accelerating Change
19
Global, Integrated, Rapidly Changing Digital EconomySystems of Coupled Systems
Systemic, Emergent Risks
20
Cloud Computing
Global Integrated Enterprises
Virtual Worlds
Some Key System Grand Challenges
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Cloud Metaphor Massive Scalability, Quality of Experience10X - 100X over the next decade25% - 55% CGR for selected workloads
Business andConsumer Services
Real-time Information
People, Devices, SensorsWeb N.0
22
Business and Consumer Services
23
Real-time Information
24
Devices, Sensors, etc
25
Continuing Web evolutionL
evel o
f In
tera
cti
on
Early Web
Access and Find
Visual, Immersive Web
Experience, Participateand Co-Create
Web 2.0
Share and Collaborate
Time
26
The Industrial Revolution
27
Evolution of Manufacturing
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Leadership in ManufacturingToyota Production System
Supply chainJust-in-time productionContinuous improvement
29
The emergence of Cloud-based services delivery data centersThe “industrialization” of the data center
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IT infrastructure growth
$0
$50
$100
$150
$200
$250
$300
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Installed Base(M Units)
Spending(US$B)
New server spending
Server mgmt and admin costs
Power and cooling costs
0
5
10
15
20
25
30
35
40
45
50
Source: IDC, Virtualization 2.0: The Next Phase in
Customer Adoption, Doc #204904, Dec 2006
31
0
100
200
300
2000 or earlier Current By 2011
Low
High
IT energy crisisDuring the next 5 years, most datacenters will spend as much on energy asthey do on hardware
Doesn’t include energy needed to remove heat…can increase overall power requirements by 80% to 120%
Data center watts/sq. ft.
Source: Gartner, “U.S. Data Centers: The Calm Before
the Storm,” ID #G00151687, September 25, 2007
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The IT Complexity CrisisClassic Complex Data Center
33
Data Center “Ensemble” Approach To IT Simplification
34
Virtualized, Federated Ensembles – SOA/Grid Protocols
Mainframe service Hybrid service
Virtual Client service
x86 service
SAP application service
WebSphere service
Unix service
Database service
File system service
Consolidation service
DMZ appliance service
Storage backup, archive… service
35
What does it take to be world-class in services delivery?Flexible, Adaptable Architectural Frameworks
Integration
Virtualization
Systems Management
Efficiency
Security, Identity Mgmt
36
Cloud Computing
Globally Integrated Enterprises
Virtual Worlds
Some Key System Grand Challenges
37
Globally Integrated Business and Organizational Systems
ProcessesInformation
People
Infrastructure
Employees
Supplie
rsC
usto
mers
38
Actual Application Architecture for Consumer Electronics Company
E01-EDI
Data Warehouse(Interfaces to and from theData Warehouse are not
displayed on this diagram)
G02 - GeneralLedger
A05 - AP
S01 - SalesCorrections
I01 POReceiving
I03 Return toVendor
I06 WarehouseManagement
Mainframe
PC/NT apps Unix apps
3rd Party Interface
S06 - Credit App
P15 EES EmployeeChange Notice
OTHER APPS - PC
AP - Collections/Credit
TM - Credit Card DB
ACCTS REC APPS - PC
990COR
Bad Debt
Beneficial Fees
Beneficial Reconcile
JEAXF
JEBFA
JEBKA
JEDVA
JESOA
JEVSA
JEVSF
NSF
TeleCredit Fees
INVENTORY CONTROL APPS - PC
Code Alarm
Debit Receivings
Devo Sales
Display Inventory
In Home
Junkouts
Merchandise Withdrawal
Promo Credits
RTV Accrual
Shrink
AP Research - Inv Cntrl
AP Research-Addl Rpts
Book to Perpetual Inventory
Close Out Reporting
Computer Intelligence Data
Count Corrections
Cross Ref for VCB Dnlds
Damage Write Off
Debit Receivings
DFI Vendor Database
Display Inventory Reconcile
Display Inventory Reporting
INVENTORY CONTROL APPS - PC
DPI/CPI
IC Batching
Inventory Adj/Count Correct
Inventory Control Reports
Inventory Levels
Inventory Roll
Merchandise Withdrawal
Open Receivings
PI Count Results
PI Time Results from Inv
Price Protection
Sales Flash Reporting
Shrink Reporting
SKU Gross Margin
SKU Shrink Level DetailUSM
VCB Downloads
Journal Entry Tool Kit
Scorecard - HR
L02-ResourceScheduling(Campbell)
P09 - P17Cyborg
M02 - Millennium
M03 - Millennium 3.0
Banks - ACH and Pos toPay
Cobra
B01 - StockStatus
S03-Polling
P14 On-line NewHire Entry
CTS
Plan Administrators(401K, PCS, Life,
Unicare, SolomonSmith Barney)
D01 Post LoadBilling
I04 HomeDeliveries
I02 -Transfers
Arthur Planning
I07 PurchaseOrder
I12 EntertainmentSoftware
I05Inventory Info
E13E3 Interface
S04 - Sales Posting
V01-Price ManagementSystem
I10 Cycle PhysicalInventory
I55 SKUInformation
K02Customer Repair
TrackingI35 Early Warning
System
B02 MerchandiseAnalysis
I13- AutoReplenishment
U18 - CTO
Intercept
I09 Cycle Counts
E02-EmployeePurchase
Texlon 3.5
ACH
Stock Options
I17 Customer PerceivedIn-Stock
U16-Texlon
SiteSeer
C02 - CapitalProjects
F06 - FixedAssets
US Bank ReconFile
Star Repair
EDICoordinator
Mesa Data
NEW Soundscan
NPD Group
AIG Warranty Guard
Resumix
Optika
Store BudgetReporting
P16 - Tally Sheet
Cash Receipts/Credit
S05 - HouseCharges
Ad Expense
L01-PromoAnalysis
V02-PriceMarketingSupport
BMP - Busperformance Mngt
StoreScorecard
I11 PriceTesting
Valley Media
P09Bonus/HR
I15 Hand ScanApps
Roadshow
POS
S08 - VertexSalesTax
A04 - CustRefund Chks
Equifax
ICMS Credit
CellularRollover
S09 - DigitalSatelliteSystem
NPD,SoundScan
Sterling VANMailbox (Value)
I18SKU Rep
X92-X96Host to AS400
Communication
S02 -Layaways
Washington,RGIS,
Ntl Bus Systems
V04-SignSystem
I14 Count CorrectionsNARM
P01-EmployeeMasterfile
I06 - CustomerOrder
FrickCo
UAR - Universal AccountReconciliation
DepositoryBanks
S07 - CellPhones
S11 - ISPTracking
AAS
Fringe PO
Cash Over/Short
L60 MDFCoop
SKU SelectionTool
SKUPerformance
SupplierCompliance
1
I35 - CEI
ASIS
Misc Accounting/Finance Apps - PC/NTCOBA (Corp office Budget Assistant)
PCBS(Profit Center Budget System)Merchandising Budget
AIMS
Merch Mngr ApprovalBatch ForcastingAd Measurement
AIMS Admin
AIMSReportingAd
Launcher
V03- MktReactions
SpecSource
CTO2.Bestbuy.com
RebateTransfer
SignSystem
CopyWriter'sWorkspace
ELTPowerSuite
StoreMonitor
AIS Calendar
Stores & Mrkts
Due Dates
Smart Plus
InsertionsOrders
BudgetAnalysis Tool
Print CostingInvoice App
AIS Reports
BroadcastFilter
Smart PlusLauncher
GeneralMaintenance
Printer PO
PrinterMaintenance
VendorMaintenance
Vendor Setup
Connect 3
Connect 3Reports
Connect 3PDF Transfe
Spec SourceSKU Tracking
S20-SalesPolling
Prodigy
PSP
In-HomeRepair
WarrantyBillingSystem
Process Servers(Imaging)
Prepared by Michelle Mills
Business Realities
39
Evolution of Engineering SystemsSome Key Lessons
40
Computer Assisted Engineering Systems
Manufacturing
Operation /Maintenance
StrategyCollaboration
Design / Simulation
41
Computer Assisted Business and Organizational SystemsArchitectures, tools, processes, modeling, simulation, analysis, . . .
42
Computer Assisted Business and Organizational Systems
StrategyCollaboration
Business Designsand Architectures
Str
ate
gy
Ta
cti
cs
Ex
ec
uti
on
Business
Administration
Finance
Administration
Supply Chain &
Distribution
Store/Channel
Operations
Manage
Customers Merchandising
Tra
ns
form
ati
on
Vie
w
Planning
LOB Planning
Procurement
Financial
Planning
Finance
Treasury
Back Office
Accounting
SCM
Transportation
Inventory
Store Services
Perf. Mgt.
MI
Process Design
Legal/ Reg
Alliances
Market Mgt.
Real Estate
IT
HR
Distribution
Logistics
DistributionOps.
Supply/
DemandCustomer Sat.
Space Mgt.
ProductDirectory
Vendor Mgt.
Item Mgt.
CustomerDirectory
Order Mgt.Store Mgt.
Inventory
Channels
CRM
Insights Vendors
CustomerAccts.
Store/Channel Strategy
Labor
Store Design
Promotions
IPTStr
ate
gy
Ta
cti
cs
Ex
ec
uti
on
Business
Administration
Finance
Administration
Supply Chain &
Distribution
Store/Channel
Operations
Manage
Customers Merchandising
Tra
ns
form
ati
on
Vie
wS
trate
gy
Ta
cti
cs
Ex
ec
uti
on
Business
Administration
Finance
Administration
Supply Chain &
Distribution
Store/Channel
Operations
Manage
Customers Merchandising
Str
ate
gy
Ta
cti
cs
Ex
ec
uti
on
Business
Administration
Finance
Administration
Supply Chain &
Distribution
Store/Channel
Operations
Manage
Customers Merchandising
Tra
ns
form
ati
on
Vie
w
Planning
LOB Planning
Procurement
Financial
Planning
Finance
Treasury
Back Office
Accounting
SCM
Transportation
Inventory
Store Services
Perf. Mgt.
MI
Process Design
Legal/ Reg
Alliances
Market Mgt.
Real Estate
IT
HR
Distribution
Logistics
DistributionOps.
Supply/
DemandCustomer Sat.
Space Mgt.
ProductDirectory
Vendor Mgt.
Item Mgt.
CustomerDirectory
Order Mgt.Store Mgt.
Inventory
Channels
CRM
Insights Vendors
CustomerAccts.
Store/Channel Strategy
Labor
Store Design
Promotions
IPT
Planning
LOB Planning
Procurement
Financial
Planning
Finance
Treasury
Back Office
Accounting
SCM
Transportation
Inventory
Store Services
Perf. Mgt.
MI
Process Design
Legal/ Reg
Alliances
Market Mgt.
Real Estate
IT
HR
Distribution
Logistics
DistributionOps.
Supply/
DemandCustomer Sat.
Space Mgt.
ProductDirectory
Vendor Mgt.
Item Mgt.
CustomerDirectory
Order Mgt.Store Mgt.
Inventory
Channels
CRM
Insights Vendors
CustomerAccts.
Store/Channel Strategy
Labor
Store Design
Promotions
IPT
Planning
LOB Planning
Procurement
Financial
Planning
Finance
Treasury
Back Office
Accounting
SCM
Transportation
Inventory
Store Services
Perf. Mgt.
MI
Process Design
Legal/ Reg
Alliances
Market Mgt.
Real Estate
IT
HR
Distribution
Logistics
DistributionOps.
Supply/
DemandCustomer Sat.
Space Mgt.
ProductDirectory
Vendor Mgt.
Item Mgt.
CustomerDirectory
Order Mgt.Store Mgt.
Inventory
Channels
CRM
Insights Vendors
CustomerAccts.
Store/Channel Strategy
Labor
Store Design
Promotions
IPT
Operation / Feedback-loop
Implementation(SOA)
43
The Spectrum of Complex Systems
BiologicalSystems
Human,OrganizationalSystems
PhysicallyEngineeredSystems
44
Cloud Computing
Globally Integrated Enterprises
Virtual Worlds
Some Key System Grand Challenges
45
Human – Machine InteractionsEarly Days – Machine Oriented Interfaces
ComputerHuman
46
Human – Machine InteractionsGraphical User Interfaces (GUI) – Xerox PARC (late 1970s)
Graphical ViewHuman
47
Human – Machine InteractionsWeb Browser – GUI based
The WebHuman
48
Highly Visual, Interactive, Immersive InterfacesIs this the future of Human – Machine interactions?
49
Human – Machine InteractionsHighly Visual, Real Time, Immersive
Virtual/Hybrid WorldHuman
50
IM
Web
voicemail
video
audio
voicemail
Broadband into the MindStruggling to Survive Information Overload
51
Early Adopters
Marketing & Sales Collaborationand Events
Education and Training
Process Management,Rehearsal, and Operations
52
Early Adopters – Education & Training
Connect with experts and teachersfrom around the world
Train, rehearse, role play, andcertify as individuals and teams invirtual world
Simulation of real worldenvironments for more effectivelearning and retention
53
Early Adopters – Collaboration & Events
Recreate real world destinations and events tostimulate awareness and sales
Provide a new perspective to immersespectators in action
Provide new collaboration capabilities toenhance and increase effectiveness
Provide forums to support innovation
54
Process Rehearsal, Management, and Operations
Use rehearsals to optimize business andtechnical processes - especially whereequipment is costly/complex and risk is great
Use virtual environment Product Life Cyclemanagement to speed time to market and toreduce cost and errors.
Manage real-world operations more effectivelywith 3D cues in virtual environment
55
Early Adopters – Marketing & Sales
Test market with low cost prototype –gain feedback
Support complex product sales –especially where 3D matters
Provide entertaining sales and brandexperiences – link virtual and real sales
Starfruit
56
Knowledge Economy
Industrial Economy
57
Transition to the Knowledge Economy
Business, Societal and Lifestyle Innovation
Deepening Integration of IT into all aspects of
Business and Society
Accelerating Advancesin Technology
58
Value of education increases duringtimes of change
Challenges and opportunities resideat the intersection of business andtechnology
Curricula must transform to reflectthe realities of today and tomorrow
Talent: Critical Requirement for Innovation LeadershipThe 21st Century Demands Uniquely-Skilled People
59
21st Century SkillsScience & Technology, Business & Management, Social & Communication Skills
“Classic” Skills
60
Overriding Educational ObjectiveDevelop or Enhance the Leadership Skills for Dealing With:
Technical Skills
Business Skills
People Skills
Complex Systems
Complex Markets
Complex Organizations
61
Web 2.0
Virtual Worlds
SOA
Mashups
iPodsGame players
Cloud Computing
Petaflop supercomputers
Offshoring
Software as a Service
Flat World
GIE
Services Sciences
A Stream of Disruptive Innovations
Into the Future . . .
Innovation in theKnowledge Economy Some Key Grand Challenges
Irving Wladawsky-Berger
