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Helping Colleges and Universities Educate Tomorrow’s Knowledge Workers

Sunday, November 27th, 2011

My last blog reviewed some of the IBM Almaden Co-Evolution conference’s primary conclusions around the shape of the American job market, especially:

  • The state of today’s jobs market;
  • Where the new generation of jobs will come from; and
  • The types of skills these jobs will require.

This blog examines some of the conference’s follow-on conclusions, particularly around:

  • The capabilities and limitations of colleges and universities in helping students learn these skills;
  • How they will have to evolve to accomplish these goals; and
  • The type of cooperation—with primary and secondary schools, businesses, non-profits and governments—that will be required for colleges and universities to prepare knowledge workers for jobs that will be increasingly defined by the combination of globalization, technology and the growth of self-employment.

The Changing Role of Colleges and Universities

Colleges and universities are generally viewed as the primary, although certainly not exclusive source of many of the skills—both functional and foundational—that will be required for tomorrow’s jobs. True, the foundations for these skills must certainly be laid in secondary and even primary schools. Businesses, meanwhile, must help employees hone and refresh these skills. Most importantly, individuals will have to take primary responsibility for attending the schools, selecting the classes, choosing an employer and selecting the combination of extra-curricular activities that will help them develop these skills. For most, however, post-secondary institutions will remain as the single most important linchpin in the individual’s education-to-employment pipeline.

Many conference participants, including a number of university professors and administrators, concluded that few schools were currently fulfilling their missions. Their indictments and recommendations were generally in line with those of Clayton Christensen’s team’s February 2011 Disrupting College report.

Thousands of colleges, suffering from a type of “Harvard-envy”, short-change students by trying to simultaneously accomplish three primary missions: knowledge creation (research); knowledge proliferation (teaching); and helping prepare students for careers. While Harvard and perhaps one or two dozen other universities have the endowments and the cash flow to fund quality required for each, the vast majority of schools lack the resources and the skills to perform each of these tasks well.

Rather than trying to do all, most schools should focus on their core missions of knowledge proliferation (teaching) and preparing students for careers. They must also do so more cost-effectively, delivering quality education in a way that students and their families can afford without going deeply into debt. This will require the use of additional, more leverageable sources of learning, such as that from peers and tutors, and especially from learning technologies—including the potentially disruptive enabling technology of online learning. This will help free instructors from creating and even delivering lectures, provide them with insight into individual student needs and allow them to focus more time on addressing each student’s unique needs.

These schools, however, must also do much more—not only to prepare students for careers, but also to make them more “employment-ready” upon graduation. This requires deeper coordination with the private sector, not only in identifying the skills that are required for success in their companies, but also in providing more opportunities for “experiential learning” in which students have the opportunity to combine classroom, book and online education with experience in working on real-world problems, both in school (as in inter-disciplinary research centers) and in companies (as through apprenticeships and internships). Schools must determine how to give credit for these real-world experiences and also to apply (once they are developed and generally agreed upon) quantifiable metrics that assess educational outcomes. They should also, according to the Institute for the Future and my own research, specifically integrate the teaching—and especially the learning and reinforcement—of variants of the Institute for the Future’s ten foundational skills specifically into college curricula.

Cross Domain Educational Collaboration

Although colleges and universities are certainly critical links in the education to employment pipeline, they are not the only contributors. Primary and secondary schools must teach basic skills and provide a solid foundation for and passion for lifelong learning. They should also extend their current missions to provide solid groundings in the types of foundational skills that all employees—especially knowledge workers—will require in the new economy.

The private sector also plays a critical, but unfortunately diminishing role in educating their workforces. But although overall private sector investment in employee education rose slightly in 2010 to $52.8 billion, or $1,041 per learner, it has generally been falling since a high of more than $60 billion in 1999. Even so, a number of companies including Boeing and IBM (both of whom presented on their employee development efforts at the conference) continue to invest heavily (see, for example, my 2009 report in IBM’s Role in Creating the Workforce of the Future).

These and a number of other companies also work closely with schools, and invest in them—from primary to post-secondary—to help them develop curricula, fund teacher and instructor training, and develop workshops and internships to provide students with real-world learning experiences. Many companies, as discussed extensively in my blog, have partnered with secondary schools to improve IT education and train teachers on effective use of technology, with community colleges to prepare prospective employees for specific jobs and with universities to develop courses, curricula and entire degree programs.

Although such bilateral partnerships are certainly important, the conference concluded these are just the start. Corporations and schools must also partner with:

  • Foundations, such as Gates and Illuminata, to define desired course outcomes and develop metrics;
  • Non-profits, such as the Institute for Electrical and Electronics Engineers and the Council for Adult and Experiential Learning (both of which presented at the conference) to create pathways to help individuals create the educational experiences required to prepare for and advance their careers; and
  • State and local governments to identify the types of businesses they wish to attract, identify the resources and skills that will be required to attract employers, encourage and help local schools provide the required education and training and ideally, create online databases that help students and workers identify jobs and careers that will be available, the types of skills that will be required, and how these skills can best be learned and developed.

Although the Federal Government could, at least in theory, play an important role in identifying, mapping resources and coordinating efforts, the reality is that most economic development and education policy is done at a state and especially a local, rather than a national level. The most effective education-to-employment pipelines will probably require close cooperation by and deep commitments from mayors, university presidents, local business executives and local Chambers of Commerce.

 

Summary

U.S. colleges and universities must undergo huge changes if
they are to prepare graduate for tomorrow’s jobs—and do so at a cost that both
the students and the county can afford. For many, it will require a fundamental
rethink of their missions and their established practices. It will also require
much closer collaboration with the businesses that are likely to hire these
graduates.

 

 

Posted in Community/Other Colleges, Job and Career Opportunities, Other Schools, Skills Requirements, STEM Careers, Universities and Grad Schools | 1 Response »
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Tomorrow’s Jobs Require Tomorrow’s Skills

Monday, November 14th, 2011

 

At the end of September, IBM’s Almaden Research Center sponsored a conference on the future of jobs, the skills required for these jobs and how colleges, private sector companies and governments can individually, and in partnership, prepare people for these jobs.

The conference, titled Regional Upward Spirals: The Co-Elevation of Future Technologies, Skills, Jobs and Quality-of-Life, attracted participants from each of these sectors and from a number of think tanks. All focused on themes surrounding:

  • The growing shortage of educated workers;
  • How technology is transforming jobs;
  • Skills required for the jobs of today and tomorrow;
  • The role and challenges of colleges and universities in preparing a new generation of knowledge workers;
  • The role of the private sector in educating, training and helping employees refresh existing and develop new skills;
  • The need for partnerships among private and public sectors, academia and non-profits in closing the nation’s “skills gap;” and
  • The need to equip policymakers with better tools to model quality-of-life improvements generation over generation in regions, as infrastructure, skills, jobs change together.

The U.S.’s Growing Skills Gap

IBM’s Chief Economist, Martin Flemming, kicked off the conference by putting the current recession into historical perspective and aligning it with economist Carlotta Perez’s Waves of Technology Change, postulating that the economy is now in the transition between the installation and deployment phases of telecommunications and IT—between the initial implementation of these technologies, toward their use in fundamentally transforming business processes and societal institutions. Although such transitions typically result in slower investment and growth, this effect is now being compounded by our attempt to emerge from the financial recession.

A representative from McKinsey Global Institute then honed into our current employment problems by outlining some of the key findings of the group’s recently published report, An Economy that Works, explaining, for example, the unprecedented toll this recession has taken on jobs. This toll is particularly steep among those in low-skill/low-pay and mid-skill/mid-pay jobs. However, the unemployment rate among college graduates is still relatively low (4.2% according to the Bureau of Labor Statistics report) and the number of college graduates with jobs has actually grown by more than 1 million over the last two years.

In fact, many companies are unable to find all the educated workers they need—at least those with the skills they require. Forty percent of companies have had job openings for six months that they have been unable to fill due to lack of the proper skills. This is particularly true for specialized technical skills in science, engineering, computer programming and other areas of IT.

This skills mismatch, is likely to get worse before it gets better. McKinsey estimates that if the economy does improve, employers will face a shortage of about 1.5 million workers with college degrees (especially STEM degrees) by 2020. At the other end of the education spectrum, there will be a surplus of almost 6 million workers without high school degrees.

Skills Requirements

Just what skills are employers looking for? Clearly, as has been discussed endlessly over the last decade, employers have a deep, apparently endless need for STEM skills. Silicon Valley, as we always hear, has been continually ratcheting up the salaries (not to speak of the benefits) it provides the most promising computer science graduates.

Companies including Dow Chemical and IBM are spending hundreds of millions of dollars developing curricula, funding courses and sponsoring research projects and fellowships in areas including chemical engineering and business analysis, respectively. At the conference, McKinsey highlighted the need for math and analysis skills by projecting a need for almost 3 million people (including more than 150,000 highly-trained “data scientists”) to extract business insight from “big data”.

In its An Economy that Works report, McKinsey groups these and hundreds of other job opportunities into six primary segments of the U.S. economy that it claims, will account for 70-85 percent of the up to 22.5 million new jobs (assuming strong growth) the country will create over the rest of the decade: healthcare (by far the largest), business services, leisure and hospitality, construction, manufacturing and retail.

There is, however, a caveat to even these projections. As Irving Wladawsky-Berger discuses in his blog on the conference, University of California Berkeley professor John Zysman discussed the ways in which “the algorithmic revolution” (the ability to codify activities underlying services and embed them into software) is fundamentally transforming the nature of mid-skill services jobs. The componentization of continually higher-level services functions, for example, is already making it easier to automate and offshore these functions.

Meanwhile, new innovations, such as IBM’s “Watson” has the potential of bringing this algorithmic revolution up into specialized realms of qualitative research and even expert knowledge. One of its first uses, for example, is likely to be in medical diagnostics, such as where a doctor can input lists of symptoms, medical histories, and a broad range of other relevant information to identify possible illnesses and recommended treatments. This, as I discussed in a previous blog on Watson, is only the first step in transforming medicine and the nature of knowledge jobs across all domains, and in changing and upgrading the types of skills tomorrow’s knowledge workers will require to ensure long, engaging and rewarding careers.

Just what skills will be required? Although each industry, and each job within it will certainly require specific combinations of functional skills, another presenter, from the Institute for the Future, cited its report, Future Work Skills 2020 to posit ten more generalized, foundational skills that will be required of most knowledge workers:

  1. Sense-making: ability to determine the deeper meaning or significance of what is being expressed;
  2. Social intelligence: ability to connect to others in a deep and direct way, to sense and stimulate reactions and desired interactions;
  3. Novel and adaptive thinking: proficiency at thinking and coming up with solutions and responses beyond that which is rote or rule-based;
  4. Cross-cultural competency: ability to operate in different cultural settings;
  5. Computational thinking: ability to translate vast amounts of data into abstract concepts and to understand data-based reasoning;
  6. New media literacy: ability to critically assess and develop content that uses new media forms, and to leverage these media for persuasive communication;
  7. Transdisciplinarity: literacy in and ability to understand concepts across multiple disciplines.
  8. Design mindset: ability to represent and develop tasks and work processes for desired outcomes;
  9. Cognitive load management: ability to discriminate and filter information for importance, and to understand how to maximize cognitive functioning using a variety of tools and techniques; and
  10. Virtual collaboration: ability to work productively, drive engagement, and demonstrate presence.

Meanwhile, in another IBM conference on Leadership being held the same week in New York, Tom Friedman set the skills bar even higher, claiming that “Everyone has to bring something extra, being average is no longer enough. . . Everyone is looking for employees that can do critical thinking and problem solving . . . just to get an interview.  What they are really looking for are people who can invent, re-invent and re-engineer their jobs while doing them.”

This leads to yet another change in the job market that will require even more skills of tomorrow’s knowledge workers—companies’ growing reliance on part-time, contract and freelance employees as an alternative to hiring full-time employees. This means that more and more of tomorrow’s knowledge workers will, whether they want to or not, have to run their own companies or partner with others to create small business services companies. Not only will they need the skills required to manage a business, they must also have the skills required to work independently. Most importantly, they will need the sills to continually market and sell themselves, their ideas and their unique skill sets.

This is a very tall order. What must schools do to help students develop these skills—both functional and foundational? Are today’s schools really capable of doing so? How can other institutions, including companies, foundations, non-profits and governments help? These and a number of related issues will be discussed in my November 27th blog.

Posted in IBM, Job and Career Opportunities, Skills Requirements, STEM Careers, Workforce Trends | No Responses »
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Promoting Shared Value Creation Within and Across Companies

Sunday, October 16th, 2011

Many companies have donated to social causes for years. For the most part, however, these philanthropic activities were viewed as nice things to do or as ways of improving the company’s image as a member of a local community, rather than as an investment in the business. Recently, however, a growing number of companies have come to recognize that advancing social causes is not only good PR, it can also be good business. Well designed and executed social programs can provide “shared value”—delivering at least as much value to the donor corporation and its shareholders, as to the recipients.

This practice, which has been aptly dubbed “Creating Shared Value”, is already being adopted by a growing number of companies. Maximizing this value, however, is not easy. It is difficult to build commitment through all levels of the organization, develop a true Shared Value culture and, especially, maintain focus and commitment in good times—and even tougher in today’s challenging economy. Most companies, therefore, need help in making a convincing business case to their executives and their boards, getting buy-in, building commitment through all levels of their companies and in understanding the ways in which partnering with other organizations can multiply the value delivered to all parties.

The last week of September saw three separate forums in which leading Shared Value proponents have attempted to provide exactly this type of help by sharing their visions, their experiences and their best practices with other companies and institutions.

One example is a webinar sponsored by FSG, a non-profit social impact consulting firm whose Managing Director (Mark Kramer) joined with Harvard Business School professor Michael Porter to explain the concept of Creating Shared Value (CSV) in a January 2011 Harvard Business Review article. After FSG set the stage by briefly explaining the evolution of corporate philanthropy toward Shared Value Creation and by laying out its Ten Building Blocks, it introduced Corporate Social Responsibility executives from three companies, each of whom provided an overview of how they made the business case and built commitments for CSV within their own companies. For example:

  • Hewlett-Packard explained the need to align and continually reinforce vision, strategy, delivery and performance across all levels of the organization, from the board to branch executives and individual employees;
  • Intercontinental Hotels demonstrate how its four-pronged model for a Shared Value sustainability program gained commitment, not just from its own executives and employees, but also from its franchisees and its customers;
  • Houghton-Mifflin Harcourt showed how aligning its social commitment with its business objective (of “selling educational achievement”) and assisting its business leaders with the tactical requirements for managing such programs allowed it to maintain its program across the regimes of three CEOs in less than two years.

Although these and a number of other companies have certainly demonstrated commitments to Shared Value, as explained in previous blogs, I see two companies—IBM with its Smarter Planet initiative and General Electric with Ecomagination—as most embodying the ways in which companies can effectively integrate social value with their own business objectives.

IBM has been particularly active in both:

  • Explaining the metrics it uses to assess the benefits of its social and philanthropic activities and the need to continually demonstrate the strategic value these efforts deliver to IBM as a means of “ensuring sustained support for these programs within its own company”; and in
  • Evangelizing the importance of aligning business and social strategies and helping all types of for and not-for-profit organizations, academic institutions and governments work together to create mutual value.

In the last week of September, for example, IBM sponsored two forums to evangelize the value of and help other companies build their own programs—both individually and in concert with other organizations:

  • THINK: A Forum on the Future of Leadership brought panels of industry leaders together with up-and-coming leaders from government, business, academia and science to examine the structural changes that will affect all organizations in the coming decades and the ways in which these organizations can, jointly and independently, reinvent themselves to improve the world in which we will all live.
  • Regional Upward Spirals: The Co-Evolution of Future Technologies, Skills, Jobs and Quality of Life in which it convened leaders from leading institutions including think tanks (McKinsey Global Institute, Institute for the Future), universities (MIT, Berkeley and Michigan State), corporations (Boeing, IBM) non-profits (IEEE and CAEL) and regional technology clusters (Washington Economic Development Commission) to examine how technology will reshape the nature of learning and jobs, the skills that will be required in the new economy, the types of jobs that will be created (and those likely to face a shortage of qualified employees) and the opportunities for leaders in all segments to work together to create the jobs, the employees and the academic/industry clusters that will be capable of addressing the needs of tomorrow.

FSG and a couple of its clients, meanwhile, is already on the agenda for another webinar that will explain the ways in which numerous companies and organizations can work cooperatively to address societal needs—an approach they call Collective Impact (see FSG’s recent book, Do More than Give) and the Winter 2011 Stanford Social Innovation Review article). This approach, as it will discussed in a November 9 webinar, depends on each party applying a common set of measures to evaluate performance and track progress.

Forums, such as those recently sponsored by FSG and IBM, play critical roles in explaining the payoff—both corporate and social—and of providing guidelines for managing such initiatives. Hopefully, we will see many, many more by FSG, IBM and many other organizations, over the next couple years.

Posted in Corporate Social Responsibility, Hewlett-Packard, IBM | No Responses »
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The ACM Computer Programming Competition: Lessons for America and from IBM

Sunday, August 28th, 2011

My previous blog, The United States’ Clogged Technology Education-to-Employment Pipeline, provided a number of examples of how U.S. students, from K-12, to college to grad schools), are falling behind their counterparts in other countries across virtually all segments of STEM education. Although these deficiencies are troubling in their own right, they only begin to suggest a much bigger, much more troubling problem for the U.S. economy.

The educational system is, after all, the primary pipeline through which corporations receive the steady flow of talent they need to keep America competitive in a global economy. And since this competitiveness will be based on innovation, this talent must be fluent in the language of innovation. STEM is that language.

Although I have spoken with many people and have read and written much on the challenges facing U.S. STEM education, I never really had a chance to see the manifestation of these challenges for myself. Therefore, I was happy to travel to Orlando Florida to learn about and see the world finals round of the Association of Computing Machinery (ACM) International Collegiate Programming Contest (ICPC).

This blog briefly describes the contest and its outcome, and provides my view of the implications for the U.S. Its primary focus, however, is on corporate support of these competitions and on their role in supporting the recruitment activities of their sponsors—in this case, IBM:

  • Why, for example, has IBM sponsored and funded this competition for the last 15 years, and why it has committed to continuing to do so for at least the next 5 years;
  • What value does IBM get from this generosity and what is it doing to maximize the value it derives from it; and
  • What are the implications and opportunities for other tech vendors that hope to promote STEM education and improve their own chances of recruiting the most promising graduates?

The ACM International Collegiate Programming Contest

The contest is a multi-stage competition that started with more than 300,000 students. It begins with dozens of local competitions, and progresses through six geographically-aligned regional competitions (this year, with 24,915 contestants from 2,070 universities and 88 countries). It culminates in a final competition that, this year, consisted of 315 students on 105 teams.

These teams compete not only with each other, but also against tight time constraints and limited resources (one computer and three calculators per team) in an attempt to solve eleven real-world problems. They must often deal with ambiguity, exercise judgment to assess when to submit an answer (to avoid penalties for incorrect submissions) and continually reassess their strategies to determine on which problems to focus their energies. Success, therefore, depends not only on speed and accuracy, but also on teamwork, resource prioritization and allocation, quick thinking, and adaptability.

The questions are designed with varying levels of difficulty, from a couple that require relatively moderate skills to a couple that would challenge many of the best, most experienced programmers in the world. In the end, after five hours of intense work, ten teams answered seven questions correctly, and two teams managed to answer eight, an impressive feat for college students, especially under the constraints imposed by the rules.

As has been the case in most years since the competition went international, this year’s winner’s circle was led by teams from Russia (four of the top ten teams) and China (two of the top ten, including 1st place Zhejiang University and 3rd place Tsinghua University). In fact, combined, these two countries represented half of the top 26 teams (7 for China and 6 for Russia), with two other perennially strong countries, Poland and the U.S., taking two spots apiece and another, Ukraine, capturing three.

U.S. schools, who typically make quite respectable showings, qualified 18 teams for the finals. One, North American regional champion University of Michigan Ann Arbor, took 2nd place in the world finals and three others (Carnegie-Mellon took 13th, MIT 32nd and Princeton 48th) in the top 58 (all of whom had at least 4 correct answers). The remaining 14, each correctly answering fewer than four questions, received Honorable Mentions.

As would be expected, men overwhelmingly dominated the competition, with women accounting for fewer than 10 of the 315 contestants. This year, however, a woman was part of the Zhejiang University championship team. (As I discussed in my previous blog, U.S. women, while expanding their inroads in science and especially medicine, are poorly represented in math, engineering and IT.)

Challenges for the U.S.

Although one must not try to read too much into the results of one competition, Russian and Chinese (and more broadly, Eastern European and East Asian) schools are traditionally among the winners. U.S. teams, meanwhile, typically do make quite respectable showings. Approximately 20 U.S. schools typically make it to the finals, and in eight of the last 15 years at least two U.S. universities have won medals (i.e., placed among the top 12). In fact, at least three U.S. teams medaled in four of the last 15 years, with one winning the championship and five placing second.

Respectable: yes. But as the results of this competition (not to speak of the educational statistics cited in my July 31 blog) make clear, companies that need access to the best talent must look well beyond U.S. citizens and U.S. schools. After all, non-U.S. universities, as is clear from the competition, already contain much of the world’s best programming talent. (Meanwhile, some of U.S. teams, including the Number 2 University of Michigan team, included students from other countries.) These non-U.S. students and schools promise to become even more competitive as Asian schools, in particular, continue to improve, attract more world-class professors and become more attractive destinations for the world’s most promising students.

Meanwhile, as discussed in my July 31 blog, U.S. students (with the notable exception of Asian-Americans) are moving away from STEM disciplines and U.S. universities now count on non-U.S. citizens for rapidly growing percentages of their undergraduate science and engineering classes–259,000 new undergraduate students in 2009/10 alone (not to speak of an absolute majority of their PhD candidates).

That creates a problem: The U.S. is producing fewer of its own world-class programmers and IT engineers. Meanwhile, U.S. companies are finding it increasingly difficult to bring world-class talent from other countries into the U.S. Where then will these companies find the talent they need to grow?

This brings us full-circle back to the ACM competitions, and specifically to IBM, which sponsors the competitions.

Opportunities for IBM

IBM has been sponsoring the ACM competition for the last 15 years and has just committed to extending this sponsorship for at least the next five years. Why does it devote so much money and so many of its people to this work? It hopes to:

  1. Recognize and spotlight STEM skills;
  2. Inspire more students to study and develop their problem-solving skills in these fields;
  3. Encourage and facilitate cross-cultural exchange among schools and students; and
  4. Identify some of the best STEM talent in the world, expose them to IBM and the types of problems they would work on at IBM and improve IBM’s ability to recruit these people.

IBM, as exemplified by its rapidly expanded focus on donating money, products and expertise to educational institutions, and as demonstrated by programs such as its Academic Initiative and its newly announced P-Tech high school partnership with New York City, is deeply committed to encouraging students and helping all levels of schools to improve STEM education.

But for all of its philanthropic efforts, IBM is also intent on reaping its fair share of the rewards from such efforts. It wants the best and brightest of these graduates to join IBM. This is more of a challenge than it may appear. True, IBM is clearly one of the leading and most diversified IT companies in the world. It is also consistently rated as one of the world’s top brands and one of the best companies for which to work. Still, it is generally less visible to students than are more consumer-facing brands, such as Microsoft and Google and does not offer the type of pre-IPO lure of companies such as Facebook and Twitter.

The ACM competition provides IBM with a unique opportunity to meet and to present itself to many of the most promising college-age programmers in the world. It is, therefore, no surprise that IBM leverages the competition to introduce itself to these students. It provides demonstrations of some of the company’s cutting-edge technologies and research, and populates the conference with a number of IBM employees who are alumni of the ACM competition and of some of the schools represented in the contest.

It has also set up a separate recruiting process, separate from but coordinated with the company’s primary recruiting efforts, to learn what interested contestants are looking for in their careers and to help identify how they can accomplish their goals at IBM. This year, the company went a big step beyond recruiting. In addition to monetary rewards (of up to $12,000 per team) from ACM, IBM, this year, made open job offers to the top 12 placing students—three members from each of the Top Four teams in the competition. The company will offer them jobs or internships in whichever IBM group (IBM Research, Software Group, etc.) and whichever country (subject to IBM operations in and government permissions) they choose.

IBM’s partnership with ACM provides yet another example of how a company can do well by doing good.

Posted in Corporate Social Responsibility, IBM, IT Industry Role in Education, STEM Careers | No Responses »
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Is “What’s Good for IBM, Good for America”?

Sunday, August 14th, 2011

In 1953, General Motors’ president Charles Wilson said “what was good for the country was good for General Motors and vice versa.” As often the case, the somewhat misquoted version, “What’s good for General Motors is good for America” is the phrase that became part of corporate (or perhaps anti-corporate) mythology. One could debate then, as it certainly was during the 2008 automotive bail-out hearings, whether or not Wilson was correct.

The night of August 4, however, provided something of a déjà vu moment. That night, I had the privilege of attending IBM CEO Sam Palmisano’s Centennial Lecture, a reflection on some of the primary lessons that IBM has learned over its first 100 years.

The overarching lesson was that corporations are expendable—success in one era does not ensure success in another. IBM’s ability to maintain its success (and right itself during the period in which not only its success, but its future, was imperiled) has taught him three primary lessons:

Lessons for IBM

  1. The importance of the “and” in R and D. First, fundamental research is critical and cannot be cut during tough economic times since, “if you fall behind, it becomes very tough to catch up.” Research, however, is only the starting point. It must be complemented with development and the “conversion of discovery into profits.” Moreover, the formulas for successful “R” and “D” are both continually changing. Today, for example, collaboration is becoming as critical as proprietary research. You must, therefore, continually “innovate how you innovate.”
  2. An organization must survive not only its failures, but its successes. Companies must get beyond an emotional attachment to what made them successful in the past. Business models and organizational models, as well as products, must be continually rethought and adapted to the requirements of a new era.
  3. An organization must learn to outlive a charismatic leader. It must distinguish between charisma and leadership; as well as focus on and heavily invest in both helping its employees learn and on developing its future leaders.

In sum, while an organization must remain committed to a core set of beliefs, it must not confuse business and organizational models with beliefs. To be sustainable, an organization must continually rethink and adapt its objectives, its models and its approaches. In today’s world, this evolution must depend as much on collaboration as on competition:

“The Wild West of competition needs to be complemented with far more collaboration across old boundaries. Across academic disciplines… and industries… and nations…and even between competitors.”

Lessons for the Country?

Palmisano’s lessons were clearly drawn from IBM’s own past, and are intended to guide its own future. Although he and IBM would certainly deny any intent to shape today’s political debate, he did acknowledge that “many enterprises—indeed, many countries”—are struggling with “an inability to get beyond an emotional attachment to the past…to what [really] made you successful.”

It was hard for me and a friend, with whom I continually exchanged glances and smiles as he talked, not to view these lessons in the context of our countries’ current problems:

  • The need to look beyond current problems to invest, not only in R+D, but also in infrastructure and people, for the long-term;
  • The need to look beyond models and practices that created past success, and adapt them to continually changing circumstances;
  • The need to move beyond the personalities of past and current leaders and to invest in educating and developing new leaders; and especially the need to
  • Move beyond fight-to-the-death competition and to cooperate in solving common problems.

Okay, perhaps I am reading WAY too much into what Palmisano actually said. But it doesn’t stop me from fully buying into what I thought I heard.

Posted in Business Trends, Economic and Political Forces, IBM, Innovation/Entrepeneur, IT Industry Trends, Political Forces, Societal Forces | No Responses »
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Maximizing IBM’s Philanthropic ROI

Sunday, June 26th, 2011

My June 12 blog examined the changing objectives of IBM’s Corporate Philanthropy programs and how the company is redefining its priorities to better align with the company’s business strategies. This blog looks at some of the ways the company is attempting to maximize and measure the returns of its charitable investments.

The Business Value of Social Investments

IBM, as I discussed in the previous blog, is increasing its social spending and aligning this spending around new priorities. Now that it has come to view these expenditures more as investments than as gifts, it is focusing growing effort both on maximizing and measuring the returns they generate—the returns both to society and to IBM and its stakeholders.

It is, for example, increasingly channeling these investments into defined programs that can be applied, replicated, and scaled worldwide. For example, as I explained in detail in my 2010 reports on IBM’s Academic Initiative and its Corporate Service Corps initiatives, it has:

  • Developed a formal, global program to help universities more easily and effectively partner with IBM to address their needs in areas including technology access and implementation, curriculum development and course design as well as to share best practices with other universities (while simultaneously increasing IBM’s involvement in cutting-edge research projects and identifying and building relationships with promising students); and
  • Created a structured, rapidly expanding program, modeled loosely on the Peace Corps, to help emerging countries, cities and communities identify and implement solutions to critical development and other societal problems (while simultaneously contributing to and reducing the cost of IBM’s executive development efforts and demonstrating the value of, and sometimes creating demand for the company’s Smarter Planet solutions).

IBM is even programitizing programs as individualized as employee community volunteer activities. Although employees are certainly free to (and can qualify for IBM matching funds) select the type of causes to which they will contribute their time and money, IBM’s On Demand Community program is creating a line of proven, Web-based management solutions that volunteers can deploy in schools and other not-for-profit organization and agencies.

Increasing Social Leverage

This, however, is only one example of IBM’s use of in-kind contributions. Although the ratio of in-kind to cash contributions has increased relatively modestly over the last five years (from an already large 2.8:1 in 2005 to 3.6:1 in 2009), its contributions of IBM’s technologies has grown from $64 million to more than $102 million. These contributions range from entry-level servers used in classrooms and on-line delivery to supercomputers for research organizations and a broad range of hardware and software used to manage the day-to-day operations of all types of educational and non-profit organizations. There has been a particularly rapid growth in the software given for universities to use in post-secondary classroom education through IBM’s aforementioned Academic Initiative.

Although services represent only 23% of the company’s total contributions, they have the potential of delivering disproportionately high levels of value. After all, while IBM certainly produces products, its primary value is in its people. They embody not only IBM’s expertise (in technology, business, science, mathematics and dozens of other disciplines), but also the company’s commitment to innovation and excellence.

Although most of the services that IBM donates are in the form of technical services (as in helping organizations evaluate their IT needs and implement appropriate solutions), a growing percentage will come from Web-based on-demand services, such as the On Demand Community management solutions mentioned in my previous blog, and its Small Business Toolkit, which entrepreneurs can use to learn and implement effective business practices. The range of such online service offerings will certainly increase as IBM expands its cloud service offerings and its Lotus family of collaboration and social networking tools.

The greatest value, however, promises to come from a growing number of programs that contribute professional services. These include management consulting services from the company’s Global Business Services group and the broad-based services provided through the company’s Corporate Service Corps, and more recently created Executive Service Corps programs. Then, of course, there are the less programmatic contributions, such as the contributions of IBM scientists and medical doctors to organizations including the National Academy of Sciences and a rapidly growing number of partnerships with universities. Examples include partnerships with the University of Missouri on a cloud-based genomic research solution and the City University of New York on electronic textbooks and an Analytics Center of Excellence.

But while IBM certainly created and manages many of its own philanthropic endeavors, it also understands that many specialized Non-Governmental (NGO) and Community-Based Organizations (CBO) are better suited to delivering many specialized and on-going services than is IBM, can better service the needs of remote communities and can more effectively scale programs that IBM has created. It, for example, relies on partners including Digital Opportunity Trust and CDC Development Solutions to organize its Corporate Service Corps engagements and is now working with the U.S. Agency for International Development (USAID) to expand the CSC model to facilitate participation by many other companies, international organizations and foundations. The company also partnered with the World Bank to create the Small Business Toolkit, which can entrepreneurs use to learn and implement effective business practices.

Assessing the Benefits

As of now, there are no generally accepted principles for precisely measuring either the social or the business benefits of corporate philanthropy. Although business consulting firms like McKinsey and BSG, and social consulting firms like FSG and BSR are certainly working on such measures, corporations currently use their own measures. IBM, for example, cites benefits including improvements in:

  • IBM’s brand, including frequent write-ups in business periodicals and books by thought leaders, such as Rosabeth Moss Kantor (in her 2009 book, SuperCorp;
  • Talent recruitment, morale and retention attributable to the opportunity to contribute to society and pride in working for a company that encourages, enables and is known for these contributions;
  • Entry into new, and expansion into nascent markets, such as Vietnam and Nigeria, in which IBM has conducted philanthropic programs;
  • Tuning and demonstrating the capabilities of IBM technologies to new needs, such as its cloud-based World Community Grid and its work with the open source Sahana disaster planning and recovery application; and even improvements in IBM’s
  • Share price, by attracting investments from the growing number of social investment funds (SIFs).

Sound a bit squishy? Perhaps, but each of these improvements is being measured with varying degrees of specificity. Although IBM does not subject proposed social contributions to a strict ROI justification, the company’s Corporate Citizenship & Corporate Affairs organization does calculate estimated returns and reports them to the company’s Corporate Citizenship Steering Committee and Board of Directors.

IBM, for example, either directly collects or contracts for data across a range of areas. These include:

  • Brand: IBM collects information on all of the media coverage of its CSR programming and assesses the value of it from mainstream media coverage (i.e. Wall Street Journal feature on the Corporate Service Corps or Fast Company coverage of World Community Grid) It also collects data on other “free publicity” in social media and electronic media. This is extensive and easily measurable.
  • Talent: IBM uses its own metrics to gauge the value of its CSR programs in the retention of top talent and its impact on recruitment and retention of talent. One publicly available example is Harvard Business School professor Chris Marquis’s study of IBM’s Corporate Service Corps, which assessed the program’s impact on factors including employee skills development, employee commitment to IBM and impact on local partner organizations and communities.
  • Finance: IBM tracks the degree to which Socially Responsible Investment Funds increase or decrease their purchases of IBM’s stock based on its CSR performance and the degree to which independent rating entities, such as Ceres or Covalence (both of which rank IBM #1) rate IBM highly.
  • Technology: Since many of its programs involve the use of critical IBM technologies such as cloud, analytics, grid, voice, digital imaging, IBM can track both new patents and the ability to obtain intellectual property or value for its technology innovations in the marketplace.
  • Geography: Most companies contribute the lion’s share of their CSR investments in major markets and in areas where they have most of their employees or clients. IBM, on a percentage basis, is the largest contributor to so-called Growth Markets and is able to track the impact its investments on business opportunity and key relationships.

All combined, these 5 areas have relatively specific measurements that permit the company to assess the ROI of its CSR investments. The company, of course, continually modifies and improves these measures over time. Although IBM Vice President of Corporate Citizenship & Corporate Affairs, Stan Litow, certainly acknowledges the subjectivity of some of these assessments, he insists that the exercise is necessary. After all, philanthropic programs must be sustained if they are to deliver long-term value. The only way to ensure sustained support for such programs, in bad economic times as well as good, is to demonstrate that they deliver strategic value to the organization.

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IBM’s Evolving Corporate Philanthropy Objectives

Sunday, June 12th, 2011

In two recent blogs, I discussed the growing trends by which companies are:

  • Integrating corporate social responsibility (CSR) and Corporate Philanthropy initiatives into their business strategies; and
  • Migrating from passive philanthropic donations of cash, to active contributions of their products, and especially the expertise of their employees to the needs of their communities.

These companies increasingly recognize that reputations for social responsibility can burnish the company’s brand, attract new customers, aid in recruiting employees and improve employee commitment to the organization. Some companies use philanthropic activities to facilitate entry into new markets, improve economies in existing markets and even increase share prices. They also see this active involvement as delivering much greater and more sustainable benefits to the causes they support.

IBM is a case in point. This is the first in a series of two blogs that examine how IBM is rapidly evolving its corporate philanthropy program to align with the company’s business strategy. This blog assesses the company’s changing priorities and their linkages to some of its core business objectives. The second blog (scheduled for June 26), looks at how the company is expanding and measuring both the corporate and social returns of these programs.

Toward a Business-Aligned Philanthropy Strategy

IBM’s Smarter Planet initiative, in which the company works with communities to improve everything from their water supply to their traffic flow, facilitates what IBM views as a growing “fusion” between its business and citizenship strategies. Its efforts to address societal issues such as the environment, community economic development, education, health and literacy, increasingly rely on “IBM’s most valuable resources, our technology and talent, to create innovative programs” to assist these communities.

This has not always been the case. Although IBM has always been a major contributor to social causes, back in the mid-1980s, it often subjectively allocated contributions to causes in communities in which IBM operated and had employees. 95% of these contributions were in cash.

While struggling to get the lumbering giant back on its feet, Lou Gerstner hired a new executive to restructure the company’s social initiatives. This executive, Stanley Litow, was charged with applying the company’s philanthropic resources to address the needs of society in a way that would simultaneously:

  • Advance IBM’s own business objectives; and
  • Maximize the value of IBM’s “social investments” through donations of the company’s technology and expertise, in addition to its cash.

These focuses were further refined under current CEO Sam Palmisano, who insisted on methodically aligning IBM’s community service efforts around the company’s business expertise and on applying IBM technology and expertise, in areas including cloud, analytics and security, to societal needs. He also required quantification of the value of these investments (the value to IBM, as well as to beneficiaries) and on working more effectively with partners to better leverage and scale IBM’s efforts. As of 2009, for example:

  • 25% of IBM’s investments were in growth markets compared with an average of 1% for other companies;
  • Almost 75% of these investments were aligned around education and employee development, with most of the remainder being spread across human services, environment, health and culture; and
  • 55% of investments were in the form of technology and another 23.3% in services, with cash accounting for less than 22% .

IBM has steadily increased the resources it donates to charitable causes from less than $150 million in 2005 to more than $185 million in 2009. While this includes the company’s Matching Grants and Community Grants programs, it does not include the $36 million individual IBMers contribute through the company’s Employee Charitable Contribution campaign or the close to 1 million hours of their own time that current and retired IBMers dedicate to social causes of their own choosing under IBM’s On Demand Community program. Valuing these hours at a modest $25 per hour translates into an additional $24 million.

IBM is also expanding its commitments to its social programs, focusing on building longer-term, more sustainable relationships with its causes and its partners as a means of maintaining continuity, ensuring meaningful knowledge transfer, and of achieving long-term and sustainable results.

Educating the Workforce of the Future

While the increase in overall funds that IBM allocates to corporate contributions has been gradual, the change in the composition of these contributions has been dramatic. Education, for, example, grew from 67.5% to 73.4% over the last five years, while the percentage donated to cultural causes has fallen by half, from $11.2 million to 4.7 million.

The allocation of these educational contributions has shifted much more dramatically than the overall sums. While more than 55% of IBM’s 2005 educational contributions went the K-12 in 2005, 67.7% now goes to higher education.

As I discuss in detail in my 2010 report on IBM’s Academic Initiative, these educational resources are being applied much more programmatically and in a way that generates greater returns—to IBM, the schools with which it works and to students—than did the company’s previous efforts. It contributes hardware and software to computer science labs; funds scholarships, internships and interdisciplinary Smarter Planet research projects; and contributes IBM talent to help universities tune curricula and teach classes. Meanwhile, its Global Citizen’s Portfolio provides a range of tools to help fund employee’s lifetime learning, encourage them to mentor other IBMers and even prepare for new careers in teaching, government or non-profit service.

Why is IBM placing such a focus on education in general and higher education in particular? First, there is a huge need. Education is the Number One-rated corporate philanthropic priority of CEOs in general, and of IT companies in particular. It is also cited as the single greatest need by community managers. Second, IBM, like many tech companies, is already struggling to find adequate numbers of people with the skills required for today’s jobs. It sees even greater talent shortages in the future—particularly for the type of “T-shaped” people (those with a broad understanding of multiple disciplines and skills, combined with deep skills in a specific field) that will be required to develop, market, implement and manage the type of Smarter Planet solutions on which IBM is betting its future.

IBM is working, first and foremost, to help universities educate adequate numbers of people with the skills that it will require in the future, while simultaneously identifying and forming relationships with the most promising of these students while they are still in school. IBM’s need for T-shaped people, however, goes well beyond its own direct needs. It is also working to ensure that such people are available to IBM partners and customers and that these people are familiar with (and ideally have favorable impressions of) IBM and its technologies.

Improving Life in IBM’s New Growth Markets

As I mentioned, there been a big shift in the geographic destination of IBM’s charitable contributions. In 2005, for example, almost 70% of IBM’s donations went to the U.S, with Europe, Japan and Canada accounting for much of the remainder. By 2009, 25% of these funds went to emerging and developing countries, with contributions to Asia Pacific and Latin America both more than tripling over the last five years.

Why the big shift to emerging countries? Three primary reasons. First, as great the needs of the developed world, those of poorer countries are even greater. Second, IBM is becoming much more global, with about two-thirds of its revenues now coming from overseas, and three-quarters of its employees now based overseas—with particularly rapid growth in emerging countries, especially India and China.

This leads to a third, more pragmatic reason. IBM, like most other large corporations, sees much of its future growth coming from these countries. While it is already established in some of these countries, it has little presence in many of the smaller countries and, even in those in which it is well-represented, has little exposure in second- and third-tier cities.

Contributions to these countries generates exposure for IBM in preparation of marketing efforts, gives IBM employees a better understanding of the needs of these areas and helps to build IBM’s bona fides as a corporate citizen of these countries. Meanwhile, programs including Corporate Service Corps, Executive Services Corps and Smarter City Challenge provide emerging country communities with pro bono consulting to address critical Smarter Planet-related needs. These engagements deliver direct and immediate benefit to these countries while simultaneously providing them with an idea of the even greater benefits that may be achieved though broader, paid engagements. The consultants, meanwhile, provide a very human face to the giant corporation.

IBM is clearly channeling its philanthropic activities more strategically than in the past, insisting that they deliver value both to their beneficiaries, and to IBM itself. But as the company increasingly views these contributions more as investments than as gifts, it is also insisting that every given dollar worth of contribution produce the greatest possible return. My June 26 blog examines how IBM is both amplifying and measuring the returns—both social and corporate—of these programs.

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Elementary, My Dear Watson?

Sunday, February 20th, 2011

Don’t get me wrong. There was absolutely nothing elementary in IBM’s phenomenal work on Watson. The public debut of the machine (actually the real “magic” was in the software, rather than the hardware), was a triumph in a world that had been claiming, as far back as the 1980s, that “artificial intelligence” was just around the corner.

Still, there is indeed something about Watson that is clearly elementary: something that should give us great hope for the future—both Watson’s and ours.

The “Jeopardy Challenge” , in which IBM’s “Watson” computer handily defeated the two highest winning players in Jeopardy history, was only the latest in a series of Grand Challenges, in which IBM pushed the envelope of computer science to perform tasks that were previously considered beyond the realm of computers—the use of IBM’s Deep Blue in beating the world chess champion, Blue Gene’s role in decoding the human genome and even IBM’s role in enabling the U.S. the land a man on the moon.

Watson, however, went an order of magnitude beyond these previous triumphs of computer power. While the computer’s encyclopedic database and computational power certainly enabled its success, these capabilities were already available on off-the-shelf IBM hardware (2,800 cores and 15 TB of memory in 90 of its Power 750 servers and 20 TB of disk storage linked in a cluster).

Its real accomplishment was in its ability to interpret not just natural language, but the types of puns, metaphors and idioms that have come to characterize Jeopardy. This was enabled by a combination of off-the-shelf hardware and especially the secret sauce embedded in the Jeopardy-specific algorithms over which IBM researchers wrote, tested and tweaked over the last three years. And don’t forget the confidence rating and wagering algorithms which, while resulting in numbers that may have sounded strange to humans, were based on calculates of the odds for all types of contingencies.

Will the Real Watson Please Stand Up

Watson was certainly not perfect in its victory. In the first night’s contest, Watson modestly bested the score of one of its human competitors, and only tied that of the other. Night two, in the first round of Double Jeopardy, things got downright scary, with Watson being the first to buzz for, and correctly answer 24 of the 30 total questions. Watching the frustration of the helpless humans, one could be forgiven for thinking of 2001: A Space Odyssey’s HAL.

Then, with its blunder on its first round Final Jeopardy (Did Toronto recently secede from Canada and join the U.S.?) and its “merely human-level” performance (although it did reach a number of correct answers, but not in time to beat the other contestants) in round two, I got really scared. I began asking myself whether Watson consciously “backed off”, avoiding running up the score, either out of empathy for its flailing competitors, or out of fear that a machine that so dominated humans would be feared and shunned by society. While Watson did end up winning the three-night competition, the ultimate outcome wasn’t really determined until the last Daily Double, and the wager (that ensured it could not loose) that it made on the last Final Jeopardy question.

Why did I find this so frightening? Because I, who have been in the IT industry for more than 30 years, actually began to attribute human feelings to a hunk of silicon!

It is Indeed, Elementary

But I digress. As I discussed above, there was absolutely nothing in IBM or Watson’s Jeopardy performance that was “elementary.” It was, by any account, a stellar achievement.

So, what was so elementary about Watson’s triumph? The comparison of its success in winning a television game show, to:

  • The enormous challenges that civilization faces (and, not coincidentally, that IBM is attempting to address with its Smarter Planet initiatives); and
  • The contributions that Watson technology and learnings have the potential of making to addressing these challenges.

First, let’s recognize—Watson is a room size machine, residing in a specially designed and extensively cooled data center and that even its off-the-shelf components (without even accounting for the cost of developing the algorithms that were so fundamental to its success) cost hundreds of thousands of dollars. But, as Computer Intelligence guru Ray Kurzweil explained in his February 17 Wall Street Journal editorial, at the current rate of computer price-performance advances, Watson’s power is likely to fit within single server in about seven years and within a PC in a decade.

Just as importantly, a “real-life” system would not have to contain the sum total of world knowledge. These systems will be:

  • Tailored to the needs of a specific discipline (such as medicine or finance) or the needs of a specific company;
  • Will have access to the Internet, third-party search tools and external databases, rather than having to operate as a self-contained unit; and
  • Will not be required to devise answers that meet its minimum confidence levels within the three seconds that are required for Jeopardy.

Watson-like capabilities, will, in other words, be available to the public (or at least some segments of the public) within the next couple years. Meanwhile, IBM has already partnered with Nuance Communications to bring speech recognition capabilities to Watson (initially, specifically for healthcare).

Watson’s Next Careers

After Watson’s first (albeit brief) stint as a television star, it is ready to explore more “mundane” careers. But what are these careers likely to be?

While the Star Trek computer was a model for at least some of IBM’s researchers, most of Watson’s opportunities will be much more down-to-earth. Many are based on the coupling of Watson’s “Deep Question Answering” technology and deep analytics in decision support applications. Possibilities—or indeed, probabilities—may include:

  • Customer Service, which could improve service time and quality while simultaneously disrupting a business model in which so many call center jobs have moved to low-cost countries;
  • Financial Analysis, such as in the combing of huge quantities of structured data and unstructured information to identify likely acquisition targets;
  • Travel, such as in a new-generation navigation system in which drivers can ask for best ways of avoiding traffic, or more interestingly, to suggesting routes from X to Y that take one past attractions that best meet your profile, such as museums, restaurants or wineries that make 90+ point wines; and
  • C-suite assistant, to identify and assess business trends, evaluate a broad range of contingencies or running what-if analyses, such as the impact different product and advertising mixes may have on revenue and profitability.

This leads to what is probably the most important and imminent of applications for Watson Technology—its use in health care. Although the potential applications are numerous, the first and highest-impact application is likely to be in diagnostics, such as where a doctor can input lists of symptoms, medical histories, and a broad range of other relevant information to identify possible illnesses.

Better yet, it could be used to review individual electronic medical records to identify symptoms that a doctor may miss or large volumes of electronic records to identify linkages that have not previously been discovered. Longer term, it could even be used to bring first-line diagnostics to remote, emerging country villages that do not have access to doctors, such as by allowing nurses or technologists to input systems into a computer, to a remote Watson-based diagnostic system.

Many potential applications, as in health care or engineering, could face big legal questions. What if Watson made a mistake in diagnosing an illness or in calculating tolerances for a bridge? Or what if Watson correctly suggested an option, which was dismissed by the doctor or engineer? Or have we taken the first step into the science fiction era, where computers may obviate the need for humans in even some of the most demanding of professions?

While the answers to such questions will have to wait, the application of Watson technology to these challenges will not. The day after Watson’s Jeopardy victory, Columbia University Medical Center and the University of Maryland Medical School announced a plan to work with IBM on health care analytics research, with a goal of launching a commercial diagnostic and treatment offering over the next 18-24 months.

We will have to wait to see whether Watson will be as successful in its future careers as it was in its first. My guess, however, is that Watson’s descendants will have as great an impact on society, business and the nature of knowledge work, as the Internet.

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Shared Value Creation: The Next Evolution of Corporate Social Responsibility and of Capitalism

Sunday, February 6th, 2011

Corporate social responsibility (CSR) and corporate philanthropy (CP) used to be managed separately from the business. They consisted largely of cash contributions that companies viewed, at best, as an effort to give back to the communities in which they operated and their employees lived. At worst, they were seen as a subtle form as extortion that companies had to pay to appease and demonstrate their “commitments” to their communities.

This is changing. A growing number of companies now recognize that:

  • CSR and CP initiatives can deliver big business benefits to their organizations; and that
  • They can often deliver much greater value to society by contributing technology and expertise than they can by contributing just money.

Many companies, for example, now recognize that reputations for social responsibility can burnish the company’s brand, attract new customers, aid in recruiting employees and improve employee commitment to the organization. Some even claim that their CSR and CP activities have increased their share prices by attracting incremental new investments from the growing number of Social Investment Funds.

This, however, is only the tip of a value proposition that can go much deeper—a value proposition that can directly help the corporation enter new markets, improve economies in existing markets and create totally new business opportunities. In fact, Michael Porter and Mark Kramer, in their January 2011 Harvard Business Review article, argue that companies must recast narrowly defined CSR and CP programs around a proposition for creating shared value—an approach designed to deliver as much value to the company as to society. They insist that a structured approach to Shared Value Creation (the latest non-intuitive buzzword for efforts intended to deliver both business and societal value) can, for example, yield:

  • Big cost savings, as in the $250 million savings (a $2.71 return on every dollar it spent on these programs from 2002 through 2008) that Johnson & Johnson attributed to its employee wellness programs (not to speak of demonstrated improvements in employee attendance and productivity);
  • Big revenue gains, as in the $18 billion that General Electric derived from the sale of Ecomagination products in 2009, a category of offerings that is expected to grow at twice the rate of total company revenues over the next five years (an issue that I will discussed in my February 20th blog on GE’s Smart Grid strategy); and
  • Big improvements to employee leadership development and retention, as with IBM’s Corporate Service Corps (as I examined in my January 23 blog and accompanying report), which deploys teams of high-potential employees on 30-day projects to help emerging countries address some of their most pressing societal needs.

Porter and Kramer, in fact, go further, much further. Not only do they view Shared Value Creation as the next evolution of CSR and CP, they also view it as the next evolution of capitalism—a more sophisticated form of capitalism that “arises not out of charity but of a deeper understanding of competition and economic value creation.” It is a form of “self-interested behavior” that creates economic value to the company, by the very process of creating societal value. A form of behavior that will also help mend badly frayed corporate and capitalist reputations and facilitate a more productive relationship between business and governments.

This “Harvard School” view of Shared Value Creation appears diametrically opposed to the “Chicago School” view in which Milton Friedman famously equated the spending of shareholders’ money for any purpose other than to advance the interests of the business as a form of “theft.”

Perhaps, however, these views are not as philosophically opposed as they may appear. After all, even Friedman was not opposed to all corporate giving. He admitted that corporate philanthropy could be justified if it served a business objective, such as increasing customer loyalty, improving employee teamwork and motivation or strengthening the marketing of a company’s brand.

But whichever side of the supposed philosophical divide on which one may fall, the issue is becoming increasingly moot. A rapidly growing number of very large, and very influential corporations (including virtually all of the largest technology companies) have instituted large CSR and CP programs and most have conceived and are managing these programs in way that is intended to create shared value. And this does not include the hundreds of small companies that have built their entire business models around addressing societal needs or the growing number of social entrepreneurs who are creating hybrid organizations that blur the line between for-profit and non-profit organizations.

In other words, regardless of whether you consider social value creation to be a new generation of capitalism, or just a new generation of corporate social responsibility, one thing is clear. More and more companies—and especially technology companies—are becoming convinced that they can, do quote another well-known economic philosopher, Benjamin Franklin, “do well by doing good.”

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IBM Corporate Service Corps: Integrating Business Objectives and CSR

Sunday, January 23rd, 2011

This is a summary of my January 2011 report “IBM Corporate Service Corps: Integrating Business Objectives and CSR”. For more information on this report or to purchase it for $995, click here.

IBM has one of the strongest talent development programs and one of the strongest corporate social responsibility (CSR) programs in the technology industry. What do you get when you combine them? IBM’s Corporate Service Corps (CSC)—a great example of how companies can do well by doing good (see my May 2010 report for a view of another IBM initiative, this one or integrating its university CSR and internal talent development initiatives.)

IBM’s Corporate Service Corps is a leadership development program, inspired by the U.S. Peace Corps. It is intended to put IBM’s most valuable resource—its people—in places that can most benefit from their expertise, and provide these employees with experiences from which they can gain broad leadership and cross-cultural experience. It provides select, high-potential employees with intense experience in working with global teams on short-duration, high-intensity projects in emerging countries. It is also a big expansion of IBM’s CSR efforts that turns social volunteerism into a life learning experience.

CSC Objectives

The program, which was launched in 2008, deploys small, 8-12-person multi-disciplinary teams to provide pro bono consulting—helping emerging country government, nonprofit and non-governmental organizations develop specific plans for addressing some of their most pressing societal needs. These can range from upgrading a government agency’s IT environment and processes, to developing a supply-chain management process for getting agricultural products to market, to improving the quality of a community’s public water supply. While each project is different, each is intended to result in practical blueprints for solving problems that are limiting a country or a community’s growth and their peoples’ ability to contribute to that growth.

Although CSC is absolutely intended to deliver broad societal benefits to emerging countries, it is first and foremost a corporate leadership development program. Its goal, however, is not so much to teach specific business skills as it is to instill the qualities individuals require to become leaders in a globally integrated business. Participants are given deep, intensive exposure to emerging markets and diverse cultures and experience in forming and working in multi-cultural, multi-disciplinary teams. They are expected to return with improved cultural literacy, better appreciation for the strengths and limitations of different cultures and work styles, and especially greater adaptability and global teaming skills.

Although the program entails a lot of additional work (30-day in-country assignments plus extensive preparation and post-return requirements) in addition to the employee’s day job, participation is seen as both a privilege and a reward. It is a validation of one’s accomplishments in the company and as a steppingstone to advancement within the company. This makes the program extremely popular and selective—attracting about 10,000 applicants for the first 400 positions.

CSC Results

Although there is certainly plenty of anecdotal evidence to validate the program. IBM, being IBM, requires more formal evidence that its goals are being met. Harvard Business School assistant professor Christopher Marquis designed and conducted a formal survey of participants and recipients and evaluated the results as part of a case study on the program. His findings: CSC is “effective and executing on its goals and mission” (of providing a unique—and highly scalable and cost-effective—leadership development experience, societal benefits to emerging countries and improving employee’s perception of and commitment to IBM). IBM claims the program also delivers some additional side benefits, as in improving IBM’s brand in new and emerging markets and even in creating some new sales opportunities for the company.

In some ways, there is little that is really new in CSC. It combines two relatively common corporate practices—the use of overseas postings as an executive development tool, and encouraging and funding employees to perform volunteer work. The big difference is that IBM has integrated them into a fundamentally new form that delivers these experiences to far more executive candidates than would be previously possible, and does it in a cost-effective way that delivers additional benefits to the company.

CSC Futures

IBM will absolutely continue, and modestly extend the program. Its ultimate value, however, is likely to transcend IBM. Some of IBM’s customers, including Novartis, Federal Express and Dow Corning are already learning from and have begun to implement similar programs. Meanwhile, the U.S. Agency for International Development (USAID) recently signed a Memorandum of Understanding with IBM to create the Alliance for International Corporate Volunteerism (ICV). The alliance will expand upon the CSC model to facilitate participation by many other companies and create corporate responsibility networks that integrate activities of corporations, governments, international organizations, foundations and other participants. USAID will also serve as a delivery coordinator for some of these projects, thereby increasing the chances that CSC’s consulting recommendations will deliver their intended value.

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