Copyrighted Material makIng The World Work Better The Ideas ThaT shaped a CenTury and a Company Kevin Maney • Steve Hamm • Jeffrey M. O’Brien Foreword by Samuel J. Palmisano Copyrighted Material Copyrighted Material The authors and publisher have taken care in the The following terms are trademarks of contents Foreword: Of Change and Progress 6 preparation of this book, but make no expressed International Business Machines Corporation or implied warranty of any kind and assume no in many jurisdictions worldwide: IBM, IBM Press, responsibility for errors or omissions. No liability is THINK, Blue Gene, CICS, Deep Blue, Lotus, assumed for incidental or consequential damages PROFS, InnovationJam, Cognos, ILOG, Maximo, pioneering the science in connection with or arising out of the use of the Smarter Planet, Global Business Services, World information or programs contained herein. Community Grid, On Demand Community, Many of Information 14 Eyes, DB2 and Blue Gene/L. A current list of IBM © Copyright 2011 trademarks is available on the web at “Copyright Sensing 20 by International Business Machines Corporation. and trademark information” at www.ibm.com/ Memory 36 Cover and interior design: legal/copytrade.shtml. Processing 52 VSA Partners, Inc. Intel and Pentium are trademarks or registered Logic 68 Editor: trademarks of Intel Corporation or its subsidiaries Connecting 88 Mike Wing in the United States and other countries. Architecture 102 Copy editor: UNIX is a registered trademark of The Open Group Pennie Rossini in the United States and other countries. Fact checker: Linux is a registered trademark of Linus Torvalds Janet Byrne in the United States, other countries, or both. reinventing the Indexer: Other company, product or service names may modern Corporation 134 Robert Swanson be trademarks or service marks of others. The Intentional Creation of Culture Library of Congress Cataloging-in-Publication 142 Data is on file. Creating Economic Value from Knowledge 168 All rights reserved. This publication is protected by Becoming Global 198 copyright, and permission must be obtained from How Organizations Engage with Society 222 the publisher prior to any prohibited reproduction, storage in a retrieval system or transmission in any form or by any means, electronic, mechanical, photocopying, recording or likewise. making the World ISBN-10: 0-13-275510-6 244 ISBN-13: 978-0-13-275510-8 Work Better Text printed in the United States on recycled paper Seeing 258 at R.R. Donnelley in Crawfordsville, Indiana. Mapping 268 First printing June 2011 Understanding 278 Believing 296 Acting 310 Acknowledgments 328 Notes 329 Photography Credits 339 Index 340 About the Authors 352 Copyrighted Material Copyrighted Material 6 making the world work better Foreword 7 ne simple way to assess the impact of any organization is to answer the question: how is o the world different because it existed? The date of this volume’s publication, June 16, 2011, is a meaningful one for IBM. On it, we celebrate our centennial as a corporation. For IBMers today — ​women and men who have lived through an eventful part of that history — that means reconnecting to a storied past, and of Change understanding its implications for a still-unfolding story. and progress But we believe the lessons of our history apply more broadly. Whether you seek to understand the trajectory samuel of technology or to build and sustain a successful enter- prise or to make the world work better, there is much to J. palmisano learn from IBM’s experience. And because these lessons chairman, president and chief executive officer ibm corporation have significance that goes far beyond our company — ​ and because we wish to understand them better our- selves — ​we decided to do something different from a typical commemorative publication. Rather than simply chronicle the company’s long list of achievements, we reached out to three journalists who have covered our industry for years. In fact, all of them have interviewed me at one time or another. They have a wealth of knowledge about technology, business and history, and each one offers a distinct perspective on what it all means. Plus, they’re all crack reporters. We Copyrighted Material Copyrighted Material 8 making the world work better Foreword 9 asked them to take a deep dive into three aspects of But he does even more. As Kevin argues, the core how the world has changed and to explore IBM’s role elements of computing mirror key dimensions of the in that change. human brain. The story of their evolution shows how our I have been fascinated by the results of their research — ​ thinking changes the tools we create, and how the tools in particular, the underlying beliefs they discovered. Our we create then change the way we think. And this deeper company, of course, became famous for Thomas Watson understanding makes it clear that scientific truth isn’t Sr.’s Basic Beliefs, the principles that were intended to either/or, and discovery isn’t simply before-and-after. At guide IBMers’ behavior. And in recent years, we have the start of the twenty-first century, we find ourselves at come together as a workforce to reexamine and redefine an inflection point in both scientific thought and tech- our core values. Interestingly, what the research for this nological capability — ​a moment whose implications lead- book uncovered was another set of ideas that were never ers and citizens must study if they wish to ride the waves written down, but that nonetheless have pervaded IBM of our planet’s information-shaped future. from its birth up to the present day. Similarly, Steve Hamm’s look at IBM’s growth into One of those has to do with the nature of computa- a new kind of business institution doesn’t just chronicle tion and information science. Kevin Maney’s explora- the triumphs, mistakes and repeated reinvention of one tion of the history of this technology and the industry company. Steve offers intriguing new perspectives on it spawned reminds us that it is a lot richer and more some well-worn truisms. For one: the emergence of an nuanced than most people today realize. If your knowl- information-based economy. We are all familiar with the edge comes from the media, you might think that the shift from atoms to bits as the source of economic value. story of IT is divided into two phases — ​hardware and But it has further implications. Because information software. Or that it all falls into pre-Internet and post- knows no borders, it also leads inevitably toward a global Internet eras. Kevin’s longer lens does much to clarify economy — and toward the increasing convergence of the far more multidimensional history of computation, business and society. We learn how becoming global IBM’s role in shaping it and how its foundational com- is about a lot more than geography, a lot more than ponents are advancing and recombining today. simply having a presence all around the world. Finally, Copyrighted Material Copyrighted Material 10 making the world work better Foreword 11 this narrative underscores how an enduring organiza- others have done decade after decade — work that is tional culture isn’t just a fact of nature but a deliberate accelerating today — a certain pattern of activity and act of its people — one that involves a lot more than dress mode of thought emerge. Technology alone, no matter codes and team-building exercises. how powerful, cannot bring about systemic change. It Neither Thomas Watson nor his son had available turns out that deliberately changing the way the world to him the sophisticated language we use today to works requires a broader, longer-term approach, with the describe this complex system — much less the scientific mastery of a few basic steps. and business disciplines that have arisen over the past Looking at advances over the past century, Jeff half century to study it. What they did have was the uncovers a simple, intuitive and powerful model of intention to build a particular kind of enterprise — a set progress. Today, that model is being renewed by our of gut impulses, if you will, about what a business should technology-powered capacity to see, map and under- be. As a result of those impulses, IBM’s experience stand vast amounts of new data about every dimension through the twentieth century did much to shape the of both nature and society, opening up ways to make our modern corporation. And as Steve’s essay persuasively world literally work better. And yet, these stories argue argues, what IBM is still becoming offers interesting per- that acting — actually changing the complex systems of spectives on the new ways any organization — in business, our planet in lasting ways—relies most fundamentally not government, education or beyond — can answer basic on data but on belief. Our learning depends on a prior questions like: How does it create value? How does it faith in our capacity to learn — as Thomas Watson Sr. attract, develop and retain people? How does it organize often said, to think. and manage itself? What role does it play in society at The lead actor through these narratives is a collective large? What makes it unique? enterprise based on the power of ideas — their economic Finally, Jeff O’Brien’s research reveals compelling power, their galvanizing and structuring power, their examples of what is required to accomplish the hard transformational power. These are the ideas that drive work of progress in an increasingly complex and inter- progress — and by progress, I mean building a world connected world. When you look at the work IBM and that is not only more prosperous, more sustainable and Copyrighted Material Copyrighted Material 12 making the world work better Foreword 13 fairer, but also better able to continually transform which seems appropriate on the occasion of our 100th itself; a world that learns.