http://www.informationweek.comInformationWeeken-usCopyright 2012, UBM LLC.2013-06-17T09:06:00ZWatson's early, $5 billion bet on computers made IBM an institution and moved him out of the shadow of his iconic father.http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-tom-watson-jr/240156537?cid=RSSfeed_IWK_Authors<!-- Image Aligning Right --><div class="inlineStoryImage inlineStoryImageRight"><img src="http://twimgs.com/informationweek/globalcio/great-minds/Thomas_Watson_Jr_175.jpg" alt="Thomas Watson Jr" title="Thomas Watson Jr" class="img175" /></div><!-- / Image Aligning Right --><em>"There is a market for perhaps five computers in the world." -- Tom Watson Jr.</em> <P> How many sons of outstanding men exceed their fathers? Succeeding his legendary father, David, Robert Sarnoff ran RCA &#8230; right into the ground. Henry Ford's son, Edsel, turned out to be &#8230; an Edsel. Even George Steinbrenner, the Yankees owner, couldn't live up to the expectations of his father, Henry, who berated his son for not having the right stuff to get into MIT and for being too chubby to be a jock. Henry was the NCAA 220-yard low hurdles champion at MIT in 1927. <P> But Tom Watson Jr. was the exception. <P> His father, Thomas Watson Sr., created IBM as we know it in 1911, taking a hodgepodge of nearly bankrupt little companies -- in businesses as undramatic as butcher scales and time recorders -- and turning it into a colossus. The father ran IBM for 40 years until 1952. Tom Jr. was a jet pilot who came reluctantly to IBM, but once there and in charge, made a $5 billion bet that took IBM to heights almost no other company achieved. <P> <strong>[ Meet IBM's "Engagement Advisor," a computer that can take customer complaints. Read <a href="http://www.informationweek.com/software/enterprise-applications/ibm-watson-gets-call-center-job/240155321?itc=edit_in_body_cross">Watson Gets Call Center Job</a>. ]</strong> <P> That $5 billion was three times IBM's revenue at the time! If that gamble had failed, IBM would be of little significance. But it didn't fail. IBM became the No. 1 company in the No. 1 industry in the world. <P> That bet was on the System/360, the first computer family that covered the waterfront. Customers could start small, then continually upgrade to larger and larger computers without having to rewrite their software or applications. Up to that point, when a company outgrew its computer, it had to start all over. <P> <div style="float:right; padding-left:10px;"> <a href="http://www.informationweek.com/20-people-who-changed-tech"><img src="http://twimgs.com/informationweek/globalcio/great-minds/great-minds-bug4.jpg" width="200" height="109" alt="20 People Who Changed Tech" title="20 People Who Changed Tech" hspace="0" vspace="0" border="0" /></a> </div> <P> Customers flocked to the S/360, and IBM became so dominant that it awoke the antitrust division of the Department of Justice. It won the suit eventually, but that suit stifled IBM in a way that wasn't recognized for a decade. It made IBM timid where once it was bold. <P> <strong>The Right Stuff</strong> <P> As a boy Tom Jr. tearfully told his mother: "I can't do it. I can't go to work for IBM." But he did. Against all odds he did. The student who took six years to get through high school and the playboy who partied through Brown became the most unlikely CEO and one of the most successful. Maybe it was his experience during World War II, where he was decorated for his bravery and planning skills in flying aircraft. But in any case, back from the war, he decided that the future lay not in flying for United Airlines but in running IBM. <P> And he wasn't going to be just a gatekeeper, genuflecting to his father's achievements. He saw very clearly that IBM's future lay not in last decade's tabulating machines, scales and time clocks but in the next four decades of computers. <!-- Image Aligning Right --> <div style="margin:0; padding: 0 0 10px 10px; width:126px; float:right; text-align:center;"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/slotmachine.jpg" alt="slot machine" title="slot machine" width="116" height="114" hspace="0" vspace="0" border="0" /> </div> <!-- / Image Aligning Right --> <P> His father was aghast. All those great products were no longer supported. <P> But Tom Jr. pressed on, hiring some of the brightest minds, like Johnny von Neumann, the guy who invented game theory. He fought with his father about finances. He pitted his managers against each other and saw that the best steel came from hot forgings. <P> IBM became a fierce competitor wrapped in a blue suit. It mastered understanding the customer. It used fear, uncertainty and doubt to make sure that competitors never gained a foothold. "No one ever got fired for buying IBM." <P> But we're getting a little ahead of ourselves. Those days would come (and go), but not yet. In the late 1960s the System/360 was not a slam dunk. It was beset with software problems, and Tom's brother, Dick, was the man in charge. Tom fired his brother. (DEC founder Ken Olsen also fired his brother, Stanley. Nothing like a little sibling rivalry to stir the old juices.) So beneath that whimpering, unsure kid was a tough-as-nails executive. He was his father's son. <P> Tom Jr. was not to be denied. Those pesky S/360 software problems got solved. IBM's installed base grew from 11,000 computers in 1964 to 35,000 in 1970. IBM salespeople wore white shirts, blue suits &#8230; and hats! IBM developed the Universal Product Code and the SABRE reservation system for American Airlines. It was one of the first paternalistic companies, providing group life insurance, paid vacations and $1-a-year country club memberships (no drinking, thank you). <P> So after wrestling dominance of computing from Univac, crushing NCR and forcing it back into cash registers, outflanking Control Data (once king of the supercomputers), banging Honeywell/GE out of the industry, outflanking ICL in England, Bull in France, Nixdorf in Germany and Olivetti in Italy, who was left for IBM's executives to battle? <P> Each other. <P> <!-- Image Aligning Right --><div class="inlineStoryImage inlineStoryImageRight"><img src="http://twimgs.com/informationweek/globalcio/great-minds/desktop.jpg" alt="desktop" title="desktop" class="img175" /></div><!-- / Image Aligning Right --> <P> In 1973, Bill Gates went to Harvard, and that small step was the beginning of the end of IBM's greatness. IBM wanted into PCs. It wanted the "IBM environment" everywhere, but in 1973 IBM owned 70% of the computer market while everyone else fought for the remaining 30%. The company knew that "the enemy is us," that it was vulnerable to the internal backbiting and politicking that made any movement doomed. By the 1980s IBM was the most profitable, admired and maybe the best-run company in the world. But cultural gridlock kicked in. <P> Tom Watson Jr. had long retired and IBM's senior executive management committee ran the place. Those execs were spending $7 billion a year on R&D -- 10% of all the R&D spending in the U.S. They had 100,000 salespeople. Their profits were greater than the sales of IBM's major competitors combined. They were hiring more college graduates than the top five Fortune companies combined. <P> There's a great line from a song in "Evita" that goes: "She had all the disadvantages you need to succeed." Sometimes advantages -- wealth, power, position -- become disadvantages when trying to create your own legacy. Most sons fail to live up to the legacy of their successful fathers, but not Tom Watson Jr. Still, after he retired in 1957 because of a heart attack, he would often think back to his beginnings and mark the anniversary of his father's death by saying to his wife: "That's another year I've made it in his absence."2013-06-10T10:46:00ZAOL's CEO built a compelling case for the true Internet that followed.http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-steve-case/240156235?cid=RSSfeed_IWK_Authors<!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/Steve-Case.jpg" alt="Steve Case" title="Steve Case" class="img175" /> <div class="storyImageCaption">Steve Case</div> </div> <!-- / Image Aligning Right -->The book <a href="http://www.amazon.com/dp/0812931912"><i>AOL.com</i></a> by Kara Swisher starts with the funeral of Bill von Meister, the man who understood what an online world was before there was an online world. <P> When a new industry emerges, sometimes it's the charlatans and sneaky guys who come before the visionaries. Think how pornography helped jumpstart the video industry and then the Internet. And let's not forget the key role "sex chat" had in getting America Online off the ground, with its private rooms and closed user groups. (You've got porn!) <P> Such a lovable curmudgeon was von Meister. He had the unique ability to see around corners. <P> I met von Meister when he ran a company called TDX, which promised cheap phone calls. He then started one of the first electronic mail companies, and sold it to Western Union. Then he started a company called The Source, which gave customers access to <i>The New York Times'</i> database, and he later sold it to Readers Digest. His co-investor, Jack Taub, wound up getting rid of von Meister and suing him for mismanagement. Then von Meister started a funny company called the Home Music Store, which delivered new music tapes over the FM sub-channel, avoiding the record store. (This idea cratered because Warner Music refused to play.) <P> Von Meister's ideas were great, but just a little bit ahead of their time. He started companies about as often as people change their socks, and he usually left behind a series of burned out investors and piles of bills as he either began another new company or pivoted the old company into a new direction. Von Meister's investors would too often forgive him his transgressions and double down on his next great idea. I know. I was one of them. <!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/santa.jpg" alt="Santa game console" title="Santa game console" class="img175" /> </div> <!-- / Image Aligning Right --> <P> One of these companies was Control Video, which provided the GameLine modem technology for the Atari 2600, which itself was a pivot from Control Video's initial business plan to offer music on-demand. In the backroom of that company was a clever young guy named Steve Case, who was known to some of us as "lower case" because his older brother, Dan, was the supposedly brighter one, a crack investment banker who ran Hambrecht & Quist, an early San Francisco firm that bankrolled a number of hot tech companies. (Hambrecht & Quist would handle the IPO for Netscape, viewed as the starting gun for the Internet Age.) <P> Control Video morphed into Quantum Computer Services, and Case jumped to VP of marketing. He had experience at Pizza Hut developing pineapple pizza, which was about all the experience you needed in the pre-Internet era. <P> Case is the most unlikely of geniuses in our "<a href="http://www.informationweek.com/20-people-who-changed-tech">20 People Who Changed Tech</a>" series. When Control Video was going down for the count, seemingly unable to raise funds, it fired all but 12 employees. Steve Case was one of the 12 saved, maybe because his brother had provided $100,000 in seed capital and maybe because the CEO at the time, James Kimsey, saw something in Case. <P> In 1985, the new company, Quantum, launched a service called Q-Link, which let Commodore home computer users chat as well as access news, sports and games for $10 a month and $0.06 a minute. Oh, it was available only from 6 p.m. to 10 p.m. The first night, 24 users signed on. A few days later, the service crashed because ... 60 users had logged on. Truly an inauspicious start. <P> <div style="float:right; padding-left:10px;"> <a href="http://www.informationweek.com/20-people-who-changed-tech"><img src="http://twimgs.com/informationweek/globalcio/great-minds/great-minds-bug4.jpg" width="200" height="109" alt="20 People Who Changed Tech" title="20 People Who Changed Tech" hspace="0" vspace="0" border="0" /></a> </div> Quantum realized that hitching its star to just Commodore computers was too risky, so it cut a deal with Apple to sell its AppleLink online service and one with Radio Shack. Apple wanted control of its name back, so with only 75,000 subscribers, in 1991 Quantum changed its name to America Online. IBM agreed to ship the AOL service with its PCs. <P> The real issue for all the personal computer makers: There just wasn't much you could do with those devices. You couldn't talk to the world, you couldn't get information, you couldn't play interactive games. The best you could do was contemplate your navel. Enter AOL. <P> Even at its beginning, AOL was fun, fun, fun. It was easy to install, had great graphics and every day offered something new. Paul Allen bought 25% of the company at its public offering, and Bill Gates made its management a Godfather offer: Either let me buy you or I will go do this myself and bury you. <P> By now, Case was running the show. He turned down Gates' "offer" and went for the gold. His genius was in programming. Case had a "golden gut" and knew what customers wanted before they did. Chat and email built a walled garden around people. You would get an email account just because you wanted to talk with your new friends. America Online built communities, and no one complained about the slow speed because no one knew any better. By 1993, Case had flooded the world with a quarter of a billion (!) free-trial disks. If you had stacked up all of those free-trial disks, they would have reached 500 miles into space. <!-- Image Aligning Left --> <div class="inlineStoryImage inlineStoryImageLeft"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/surfing_monitors.jpg" alt="surfing monitors" title="surfing monitors" class="img175" /> </div> <!-- / Image Aligning Left --> <P> And amazingly, that strategy worked. AOL crossed the threshold of 1 million subscribers in 1994 and never looked back. <P> Well, yes it did. AOL's growth so outpaced its capacity that its "service" suffered. I use that word advisedly. Availability cratered to a point that the company was called "America On Hold," but its customers put up with it. AOL's publicly traded stock reached the stratosphere, and so it bought a gaggle of companies for stock and made some of the sellers billionaires (for awhile, and if they were able to sell). <P> Why was the stock so high? For one reason: AOL was seen as the stand-in for the Internet. There really weren't very many pure Internet plays, so those who believed in the Internet could back their insight only by buying stock in ... AOL. Microsoft Network had come onto the market, as Gates had promised, but by this time AOL was lapping the field, adding a quarter of a million users per month, almost as many as Microsoft Network had in total. <P> Steve Case built AOL as the online service company for computer owners who were afraid of computers. He took its online gaming heritage and built an online community around its walled garden, which at one time had 30 million members. AOL charged for its service, retreated from online gaming and by 1996 was fetching a flat $20 a month. Its free-trial discs were distributed in everything from airline seatbacks to monstrous direct mail campaigns. Most people's first email account was probably an AOL one; a whole generation of teenagers lived on Instant Messenger. AOL offered private rooms, conference rooms and a variety of information, games and connections. In the end, AOL was just fun -- exciting, interactive and very sticky. <P> AOL's competitors at the time were the likes of CompuServe, which was by techies for techies, and which died a slow death. AOL was different. It was a service for <i>people</i> interacting with other people. <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <P> By 2000, AOL was on fire, and Time Warner absolutely, positively had to have it -- so much so that the guppy swallowed the whale. AOL, with a fraction of Time Warner's revenue and profit, became the dominant partner, though Time Warner CEO Gerald Levin was named CEO. <P> But AOL was dial-up, which meant it was slow. How slow? s...l...o...w. It was training wheels for those who would one day demand faster and true Internet. <P> In March 2001, the Internet bubble burst, but Case had achieved something remarkable: He had built a case for the true Internet that followed. Without that early exposure to an easy-to-use Online Universe, we wouldn't have had Facebook and LinkedIn, and we wouldn't have had this interconnected world. <P> So I have made an executive decision: It's not steve case, it's STEVE CASE.2013-06-03T09:06:00ZBy bringing the world of content to the world of technology, they transformed media and entertainment.http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-ted-turner-an/240155897?cid=RSSfeed_IWK_Authors<!-- Image Aligning Right --><div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/Ted-Turner_Jerry-Levin.jpg" width="175" height="175" alt="Ted Turner Jerry Levin" title="Ted Turner Jerry Levin" class="img175" /></div><!-- / Image Aligning Right -->Ya gotta love Ted Turner. He gets points for: <P> -- Getting kicked out of Brown University for having a woman in his room. (Go, Ted!) <P> -- Realizing that by buying transponders on a geosynchronous satellite, he could create a Superstation. The cable industry would carry his signal of old movies, baseball games &#8230; and advertising &#8230; for free -- and in doing so would upset the balance of power in television from the Big Three networks into a free-for-all. <i>Time</i> magazine named Turner its Man of the Year in 1991. <P> -- Starting Cable News Network and the idea of news anytime, anywhere, around the world. And then starting CNN Europe, Japan, Russia, Africa and about a dozen others I can't name. <P> -- Giving Jane Fonda a fifth career: from actress, activist, fitness guru, media mogul wife back to actress. I'm eagerly awaiting "Barbarella Returns." <P> -- Offering a refund to ticket holders when his Atlanta Braves played poorly one day. The baseball empire was appalled: "Apologize? Apologize? We are the owners! We never apologize." Turner was Mark Cuban before Mark Cuban was Mark Cuban. Once, Turner got so upset with the Braves manager that he sent him on a "scouting" trip and managed the team himself. The Baseball Powers That Be weren't amused, so Turner promised to behave. (P.S.: He didn't mean it.) <P> <center><img src="http://twimgs.com/informationweek/globalcio/great-minds/satellite-dish.jpg" width="590" height="421" alt="Satellite Dish" title="Satellite Dish" hspace="0" vspace="0" border="0" style="margin-bottom:7px;" /><br /></center></p> <P> -- Founding the Good Will Games in an attempt to build his own programming while politicking for world peace. Turner realized that "sponsoring" the Olympics would mean paying higher and higher fees every four years, but by <i>owning</i> the Good Will Games, he could cap his costs and have the world's attention every two years when America and Russia duked it out for bragging rights as the most vigorous nation. And so he created first-rate programming, on his station and available only through your local cable company. While the Olympic Committee held the Big Networks hostage every four years, Turner figured a creative alternative. Take that, CBS, ABC, NBC! <P> -- Giving a $1 billion gift to the United Nations Foundation &#8230; and then keeping his pledge when his own financial stockpile went straight down. Man of his word. <P> <!-- Image Aligning left --><div class="inlineStoryImage inlineStoryImageLeft"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/yachts.jpg" width="175" height="225" alt="Yachts" title="Yachts" class="img175" /></div><!-- / Image Aligning left --> <P> -- Winning the America's Cup, even though he often got seasick. Turner made the cover of <i>Sports Illustrated</i> on July 4, 1974. Along the way, Turner and Rupert Murdoch picked classic fight after classic fight with each other over everything from politics to whose boat was bigger, faster and more expensive. They had a hate/hate relationship. Turner once compared Murdoch to Adolph Hitler, and not favorably. <P> -- Being probably the No. 1 environmentalist in America. With more than 2 million acres, almost three times the size of Rhode Island, Turner is one of the biggest private landowners in the U.S. John Malone is No. 1, which I guess shows that size does matter. <P> -- Trying -- and failing -- to buy his own TV network, CBS. Turner then bought MGM's film library, then sold it, etc. <P> I could go on. We hear that God protects children, drunks and sailors, and Turner has been all three. But his greatest single strength is <i>action</i> and a slight case of dyslexia, which allowed him to see opportunity where others didn't. (Ever hear about the agnostic dyslexic insomniac? Man stayed up all night wondering if there was a Dog.) <P> <!-- Image Aligning Right --><div class="inlineStoryImage inlineStoryImageRight"><img src="http://twimgs.com/informationweek/globalcio/great-minds/tvplug.jpg" alt="TV Plug" title="TV Plug" class="img175" /></div><!-- / Image Aligning Right --> <P> Turner was cable before cable was cool. The cable industry needed Ted Turner and Ted Turner needed the cable industry. In a world starved for programming, Turner was programming: CNN, WTCG-TV Superstation, Turner Entertainment, TNT, Turner Classic Movies, Cartoon Network. <P> If Turner had a flaw, it was his attention disorder. He often put his company at risk by piling debt onto debt to fund idea after idea, to the point that the cable industry had to bail him out and put him on an "allowance." John Malone's company acquired 21% of Turner's media companies and Time Warner another 19%, so Turner, for the first time, couldn't make decisions unilaterally; his new "minders" could veto the wildest of his ideas. It's not that he didn't have good ideas -- he had great ones. But before one new idea was fully operationalized, Turner was on to the next one or flying off to Cuba to plant the CNN flag next to Castro's front door. <P> Turner's genius was that he could pull together programming, package it, sell it, pull it apart, sell it again, fight with the FCC, win and trade some assets for an even better hand of assets. He not only looked like Rhett Butler; he was Rhett Butler. And while he was doing all this work, he would fly off every weekend and race his yachts. (Hey, Larry Ellison, want to go two out of three?) And he had the most amazing fun doing it, flying so very close to the sun. <P> <div style="float:right; padding-left:10px;"><a href="http://www.informationweek.com/20-people-who-changed-tech"><img src="http://twimgs.com/informationweek/globalcio/great-minds/great-minds-bug4.jpg" width="200" height="109" alt="20 People Who Changed Tech" title="20 People Who Changed Tech" hspace="0" vspace="0" border="0" /></a></div> <P> At a certain point, Turner tacked to leeward (a nautical term, you landlubbers) and sold his companies to Time Warner, in 1995. He didn't want to sell, but better Time Warner than Rupert Murdoch. He had lots of money, but he lost the things he loved most: the action, the excitement, the leading every parade. Turner was the biggest shareholder of Time Warner, so when the stock spiked he was wealthy beyond wealth, but when it cratered, he was The Biggest Loser, seeing his stake lose $7 billion. My father used to ask me if a man with $10 billion is happier than a man with $5 billion. Remind me to ask Ted sometime. <P> Meantime, the other man who led the media and entertainment parade, Jerry Levin, was the man who took Turner out of his operating role at Turner Broadcasting. Turner got even when he helped Steve Case dethrone Levin, but that was in the future. <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <P> Turner was an idea guy, but was not so good at operations. Levin, who succeeded the legendary Steve Ross at Time Warner, had two loves: technology and strategy. <P> Levin was more than a gearhead in love with every advancement. He conceived of a plan five years before to turn Time Inc. into a media conglomerate, first by acquiring Warner (music and movies) and then by acquiring Turner. With Time's interest in cable systems and Home Box Office, he had two parts of the puzzle, and now he had two more. Levin made one serious mistake and one minor one.He believed that the media and entertainment revolution was going to come through your TV set, not your computer. Levin began a big cable-based two-way broadband experiment called Full Service Network in 1994. <i>Time</i> magazine, interactive games, movies on demand, home shopping, access to an AOL competitor called Pathfinder and more would all come through your cable connection and a very powerful set-top box. It would be superfast and leave competitors in the dust. <P> Six months after it started, FSN was DOA. It was too expensive, too early and impossible to roll out nationwide. Big, big miss. Pathfinder hadn't found its way, either. <P> <!-- Image Aligning Right --><div class="inlineStoryImage inlineStoryImageRight"><img src="http://twimgs.com/informationweek/globalcio/great-minds/satellite-tv.jpg" width="175" height="177" alt="Satellite TV" title="Satellite TV" class="img175" /></div><!-- / Image Aligning Right --> <P> As loud and as over the top as Ted Turner was, Jerry Levin was the opposite: quiet, cerebral, erudite, Levin was the son of a rabbi and a University of Pennsylvania lawyer, who earned fame as the programming director of HBO and eventually CEO of Time Warner. But he will go down in history for engineering probably the worst merger in the history of mergers: Time Warner with AOL. It's <i>hard</i> to lose $100 billion in market cap, but Levin did it. <P> Think back to 2000. The world is going crazy for the Internet and AOL looks like the go-to company. There are very few true Internet companies, and AOL has 30 million Americans subscribing to its service. Its stock is in the stratosphere and it's everyone's darling. <P> Levin looks at his assets at Time Warner -- the finest portfolio of magazines in the country, cable franchises in terrific locations, a crackerjack movie empire and HBO, which is making money hand over fist. But Levin can't get no respect; his company is "old school." He realizes that the future isn't going to come through the television; it's going to come through that squeaky little home computer, and the biggest asset around is &#8230; AOL. So he decides to merge with The Cool Kid on the Block. So he leads the merger, but the majority partner isn't the bigger company, the better-run company, the more profitable company. Oh, no, the control goes to AOL! In the classic photo at the close of the deal, AOL CEO Steve Case is wearing a tie, which he probably rented, and Levin has shaved off his moustache for the first time in memory, and he's open collar, probably the first time he got caught without a tie. <P> Levin manages to anoint himself CEO, but Case manages to outstrategize the strategist, trading his overpriced stock for the security of merging with real stock, with real earnings and assets. Later it would be shown that too much of AOL's advertising revenue was from startups that would vanish when the Internet bubble burst. <P> But give Levin credit: He shepherded a major corporation, one that defined itself around the printed word and advertising, into an age based more on electrons than atoms. What he didn't foresee was that the princes of the empire wouldn't play together, and that "synergy" was just another word for "lose money." <P> Along the way, the AOL stock went from $90 to $10, and all those precious stock options went up in smoke. Jerry Levin was the fall guy. <P> Still, what Turner and Levine did was bring the world of content to the world of technology. There's always a debate between the content and infrastructure guys as to who is king. Both Turner and Levin figured out that without one, the other is less valuable. If you could <i>own</i> content and could co-opt distribution, you would be unstoppable. <P> Both men were the first to understand that a geostationary satellite signal beamed to cable head ends would upset the traditional powers. Having their own content along with their own access would give them a supposedly unbeatable hand. Levin later decided that he needed another set of weapons, via AOL, and he and his company would pay dearly for them. <P> Levin just assumed that Steve Case would eventually blow up and he would be The Last Man Standing, continuing to build The World's Greatest Media Company. He who the gods would destroy they first make angry -- and arrogant.2013-05-28T09:06:00ZThe father of cable television was a visionary and a promoter extraordinaire, but never a candidate for sainthood.http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-irving-kahn/240155546?cid=RSSfeed_IWK_Authors<!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/Irving-Kahn.jpg" alt="Irving Kahn" title="Irving Kahn" class="img175" /> <div class="storyImageCaption">Irving Kahn</div> </div> <!-- / Image Aligning Right -->Without Irving Berlin Kahn, the Internet might still be a cute scientific curiosity. You wouldn't be streaming movies, accessing YouTube or watching adorable kittens frolic with balls of wool. <P> Let me explain. <P> Irving Kahn was a friend of mine. And Irving Kahn was a corrupt SOB. But we're talking about people who changed tech, not people who are destined for sainthood. To understand Irving Kahn you must understand the heart of a true promoter, and there were few promoters as good as Irving. <P> Irving was the namesake of Irving Berlin, the popular composer and Kahn's uncle. There must have been something in their DNA, because both were showmen extraordinaire. <P> Kahn was the lead drum major for the University of Alabama, and that also tells you something about him. What was a Jewish boy from Newark, N.J., doing in the Deep South in the 1930s, and why was he twirling a baton for the Crimson Tide in front of the marching band at those enormous Southeast Conference football clashes? Kahn always wanted to be leading the band, wherever it was. If there wasn't a band, he'd start one -- and then jump in front of it, which is exactly what he did as the Father of Cable Television. <P> He started as a PR flack for 20th Century Fox and by 1950 was co-founder of TelePrompTer Corp., which invented scrolling text for on-camera talent. By the 1960s TelePrompTer had sold that business, and Kahn pivoted the company to invest in cable and satellite broadcasting. <P> <center><img src="http://twimgs.com/informationweek/globalcio/great-minds/penn.jpg" width="512" height="343" alt="Pennsylvania" title="Pennsylvania" hspace="0" vspace="0" border="0" style="margin-bottom:7px;" /><br /></center></p> <P> Cable television got its start in eastern Pennsylvania because TV reception there was just god-awful. The towns were nestled in valleys, so the signals from the big city stations couldn't penetrate that far. Kahn's insight: Put an antenna on the surrounding mountains and run a wire down into the villages. Result: interference-free, picture-perfect TV for $7 a month to media-starved homeowners. <P> Kahn preached the cable gospel far and wide, and America responded. The broadcast networks were happy because they had farther reach; they could sell more advertising by extending their signals to the hallows, and even better, it didn't cost them a dime. No network operators actually got paid for their programming (yet). And homeowners were thrilled; they suddenly had a better alternative to watching their radios. <P> The problem was the upfront cost: It was very expensive to build the tower, and even more so to dig up the streets and lay cable past every home. Assume that the cost per home was about $250 back then, and providers would get only about $84 a year in revenue ... and just keeping the system up and running would cost $30 a year. So it would take <i>five years</i> to recapture the cost of wiring a home before the cable company could even begin to show a profit. <P> <div style="float:right; padding-left:10px;"> <a href="http://www.informationweek.com/20-people-who-changed-tech"><img src="http://twimgs.com/informationweek/globalcio/great-minds/great-minds-bug4.jpg" width="200" height="109" alt="20 People Who Changed Tech" title="20 People Who Changed Tech" hspace="0" vspace="0" border="0" /></a> </div> <P> So like <a href=" http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-thomas-edison/240150862">Thomas Edison</a> and his electricity service, cable companies wanted an exclusive or a "legal" monopoly. Because cable TV was essentially unregulated, it was up to every city and town to make its own decision as to who got that monopoly. See any problem here? Of course you do. City fathers aren't high on the list of those eligible for sainthood either. <P> Kahn's problem was that any company could copy the idea of cable, so an enormous land grab ensued. Graft, bribery and corruption were the order of the day, but Irving Kahn, the Father of Cable Television, got caught. In 1971, he was convicted of attempting to bribe the Johnstown, Penn., city council, and of perjury. <P> Ever been to Johnstown? I have. That's where they filmed the blue-collar hockey movie <a href=" http://www.imdb.com/title/tt0076723/">"Slap Shot"</a>, with Paul Newman, so you can imagine what the town was like -- an aging Bethlehem Steel plant and lots of coal. Kahn did 20 months in the slammer. He always maintained that the issue was extortion by the city officials and not bribery. You say potato and I say potahto. <P> Two curious points. When Kahn got out of prison, he went right back into the cable TV business, building a 55-city system in southern New Jersey, which he later sold to <i>The New York Times</i>. So those 55 cities and the saint-like <i>New York Times</i> had no problem with an ex-con, nor did the institutions that lent him the money to build the systems. Kahn knew how to build and market cable systems, and that expertise was in short supply. In the land of the visually impaired, the one-eyed crooked poker dealer could be king. <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <P> The cable industry had to find a new way to "win" franchises. A terrific guy named Gus Hauser, CEO of Warner Amex Cable, figured out that if he made the cable systems "two-way," he could differentiate his systems. He called his system Qube, letting subscribers do things like vote on whether the quarterback should pass or run on the next play. <P> This capability was ahead of its time and presaged what the Internet would do. Cities could award franchises to the most technically advanced system instead of the most technically crooked. Warner Amex won a few big cities, but the industry discovered an even better way to differentiate. <P> The second cute cable industry trick was the "rent a citizen" program. If a city was in the process of awarding a cable TV franchise, the big cable company would form a subsidiary for that city. The company would own 90% and "local citizens" (the mayor's brother-in-law, etc.) would own 10%. The city would then usually favor the proposal where there was "local ownership," and then the big cable company would buy out its minority partners at a very big premium on their very modest investment. Perfectly legal. Sometimes innovation is in technology, and sometimes it's in new and creative ways to stay out of prison.Two things happened next. Time Inc. took an idea for satellite to cable head-ends and named Gerry Levin to build out Home Box Office, which got the rights to first-run movies from the studios and then blasted them to the head-ends of their new partners, the cable companies, which resold them to consumers for another $7 a month. Now the cable industry had an important second revenue stream. And a guy named Ted Turner rented space on a satellite and started transmitting old movies to the satellite dishes of the cable companies, thus creating the first cable superstation and then doubling down to create the first 24-hour news station, CNN. <P> These new services became critically important. The cable companies couldn't make it by just forwarding signals to the jerkwater towns. Now they had these two revenue streams, and they had a way to make cable attractive in cities where there wasn't much of a problem with reception but there was demand for more channels and bandwidth. The cable companies started to upgrade their 12-channel systems to take advantage of more programming such as QVC, Nickelodeon and The Playboy Channel. Systems went to 24, then 36 then &#8230; 96 channels and more. <P> The cable companies were cranking along, trying to impress the stock analysts that they should be measured on cash flow, not profit, because their capital depreciation was so great it offset any real profits -- all those upgrades cost money. <P> Then came cable modems. You have to understand that the cable companies had no blessed idea of what the Internet was and how they could tweak their broadband systems for higher-speed, two-way communications when the telephone industry had two way but very narrow bandwidth. The cable companies had to be taken kicking and screaming into offering Internet service, but once they got it, they got it. By sheer dumb luck, they were at the right place with the right technology at the right time. <P> <!-- Image Aligning left --> <div class="inlineStoryImage inlineStoryImageLeft"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/internet_speed.jpg" alt="Internet Speed" title="Internet Speed"> </div> <!-- / Image Aligning left --> <P> (I remember when <i>The New York Times</i> quoted me as saying: "I would give up my first born rather than give up my high-speed cable modem." So I got a call from my eldest, who was a little miffed: "Dad, you would give me up for a modem?" Not if it was just a slow-speed modem, but this was <i>high-speed.</i>) <P> Kahn was a visionary. He would say that someday 85% of all television would be over cable; it happened, just 30 years after he guessed. He claimed that he would be able to "narrowcast" and sell advertising just to a special group, like doctors, because he could address those ads just to doctors' houses. <P> About that time, I was doing research on the Home of The Future (Someday, you will step on the scale and it will say: "210, fatty!" and your home will lock your refrigerator and start your coffee) and I would invite Kahn to our conferences. One day he called me for a favor. He had a new technology and asked me and one of my key people to fly to San Diego to help him analyze the opportunity, which we did. When I wasn't looking, he hired my expert. "Irving," I said, "you asked for a favor and I was happy to help. You can't just steal my expert!" <P> "I need him more than you do," was his answer. That was Irving, that was cable and that's why your cable system today has 500 channels and why your cable company brings you high speed and why you're hooked on moving pictures and videos -- all brought to you by a man who was both brilliant and a little crooked. <P> <i>Our 2013 Unified Communications Survey shows projects stalled. Here's why, and how to whip up more enthusiasm. Also in the new, all-digital <a href="http://www.informationweek.com/gogreen/032813s?k=axxe&cid=article_axxt_os">UC Doldrums</a> special issue of InformationWeek: The WebRTC open source project promises to make real-time communications easier, but it faces an uncertain future. (Free registration required.)</i>2013-05-20T09:06:00ZHow easy-to-use, single-application systems changed the face of computing, communications and business decision-making.http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-an-wang/240154981?cid=RSSfeed_IWK_Authors<!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img class="img175" title="Dr. An Wang" alt="Dr. An Wang" src="http://twimgs.com/informationweek/globalcio/great-minds/Wang_175.jpg "> <div class="storyImageCaption">Dr. An Wang</div> </div> <!-- / Image Aligning Right -->An Wang was a brilliant computer scientist who was a pioneer in magnetic core memory and storage, but that's not why he makes our list. <P> Before Dr. Wang, computing was done by the High Priests. Office automation wasn't even automated. Letters and documents were done by secretaries; every manager had a secretary, and executives had two. Wang bridged the gap. He automated the office just when the number of secretaries was waning because of cost cuts and the demand for speed and accuracy was waxing because of competition. <P> Wang, born in Shanghai, moved to the U.S. in 1945, received a Ph.D. from Harvard, and worked with Howard Aiken on his Mark IV, the second fully electronic computer built in the U.S. When Harvard cut funding and deemphasized computing (Way to go, Harvard!), he left to start Wang Laboratories in 1951. <P> His early product was a desktop calculator <i>system</i> whereby several devices could operate on one processing unit. By "time-sharing" this processor, he could give multiple number crunchers more power at lower cost and much faster speed than the mechanical solutions they had been weaned on. That same insight led him to his next big market. <P> By 1976, he had designed his first word processor, the WPS, followed by the OIS (Office Information System) and then Wang Office, a multiuser display-based system that had master disk storage connected to intelligent diskless slaves. Meantime, the Wang 2200 minicomputer, introduced in 1973, was the forerunner to the VS, a fully featured mini introduced four years later. <P> Wang's multiuser system, like the company's desktop calculator, was a time-shared system, but the user felt he/she had total control because it seemed that the system responded instantaneously. Wang Labs became the industry standard and leader; the company had loyal customers and a much better solution. <P> While Wang's prices were high ($4,000 for just a terminal), the word processing application worked elegantly. An entire generation of secretaries was first trained on Wangs, an enormous competitive advantage for any vendor. Happy users don't switch -- until they become unhappy or other companies enter with a substantially better/cheaper/faster alternative. <P> Dr. Wang once said, "Success is more a function of consistent common sense than it is of genius." Of course, that's easier to say if you actually are a genius. Today, we don't think of word processing as anything special; in its day it was revolutionary. It was an application everyone needed, but no one realized that until it was here. What the VisiCalc spreadsheet did for Apple and what Lotus 1-2-3 did for the IBM PC, word processing did for Wang Labs. <P> But here's the real reason An Wang makes our list: He taught the world to use computers. Before Wang, no executive would even consider actually <i>typing</i>. No, no, no &#8230; that was a job for a secretary with an IBM Selectric and some correcting fluid. Some of the advanced Selectrics could memorize <i>an entire line of text</i>, but no more. <P> Wang was giving them more. Secretaries and managers could see the entire page. They could move paragraphs and make endless revisions. Documents could be sent as drafts to others for comments and suggestions, and those suggestions could be incorporated into a final document. They could be stored, forwarded, annotated and messaged. Suddenly, the interoffice mail wasn't fast enough for the modern corporation. <P> <!-- Image Aligning Right --> <div class="inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/wang_computers.jpg" alt="Wang Computers" width="208" height="179" title="Wang Computers" /> </div> <!-- / Image Aligning Right --> <P> Even though they could do all of those things, Wang's innovations were simple to learn. And because they were networked, some cautious junior managers wanted -- and got -- direct access. They could compose, correct and <i>send</i> a document to others on their system &#8230; and then to others on similar Wang systems. And if a person could send a document, then he could send a message. So behind all of this cute technology was <i>electronic mail</i>. <P> At first electronic mail was a bastard child. Where did it fit? Who used it? What did it cost? The traditional IT shops wanted no part of office automation or electronic mail; they were fully employed in their domain. Only when corporations started screwing things up -- and the IT department saw that these damn office systems of the future were really minicomputers, and the IT guys realized that they really should control this beast before it got too far out of hand -- did some sanity arise. <P> When the top executives had an early email system to use, their secretaries would take dictation and send messages, then print out answers and bring them in. Very quickly, two things happened: First, managers wanted access to their executives, and to be cut out meant being at the bottom of the food chain. Which meant that <i>everyone</i> wanted to be on email. Second, the managers wanted to read and send answers themselves, at all hours of the day and without the secretary "intermediaries." So they started typing, albeit with two fingers, and found that it really wasn't emasculating at all. <P> So by building on his early core memory patents and his understanding of what businesses needed, Dr. Wang built his company around an application: documents. But the Wang VS system was really something more. It could be used as a data processing unit and/or a word processing device. It was user-programmable. <P> <center><img src="http://twimgs.com/informationweek/globalcio/great-minds/trojan_horse.jpg" width="445" height="347" alt="Old West scene" hspace="0" vspace="0" border="0" style="margin-bottom:7px;" /><br /></center></p> <P> In other words, Wang's devices were really Trojan horses. They came in as single-application devices but became communicating engines and powerful client/server computers. That manager who might have used just word processing to submit a monthly report could now do some forecasting, access demand and backlog and make better decisions -- more quickly.The power of office automation had little to do with secretaries and more to do with better management. A company could have far greater control of its operation if information could be shared, if departments could have budgets and progress could be measured against budgets, and if the span of control could go from 5:1 to 8:1 because information flowed naturally and seamlessly. <P> <div style="float:right; padding-left:10px;"><a href="http://www.informationweek.com/20-people-who-changed-tech"><img src="http://twimgs.com/informationweek/globalcio/great-minds/great-minds-bug4.jpg" width="200" height="109" alt="20 People Who Changed Tech" title="20 People Who Changed Tech" hspace="0" vspace="0" border="0" /></a></div> <P> The office telephone suddenly became part of the mix. Voice mail could supplement and sometimes replace the phone tag that used to be endless. Electronic mail, which would cost about $1 per message on a mainframe, could be put on a LAN or a minicomputer at a cost so trivial it wasn't even calculated. <P> By the mid-1970s, Wang was into calculators, word processors and minicomputers. Companies such as GE would standardize on DEC for minicomputers, Wang for word processors and IBM for higher-end computers. Wang was riding high; by 1989 it had 30,000 employees and was a recognized leader. <P> Then Dr. Wang made two fateful errors. He confused family with business. He gave his son, Freddie, responsibility for R&D, clearly not his strength. <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <P> His second error was staying in the hardware business, where the company had some awful issues with quality. Like <a href=" http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-ken-olsen/240153987">DEC founder Ken Olsen</a>, Dr. Wang was a believer that it was a hardware world and software was a necessary evil. He had it completely wrong. He also moved too slowly in responding to the IBM PC and realizing that his wonderful word processing software would be just an app. <P> If you were unfamiliar with computers, Wangs weren't intimidating. Once you started using them for documents, it was an easy migration to database management. Doing business calculations on them was a cinch. And by networking these devices together, time and space became no obstacle. <P> Customer companies really didn't worry that it was a closed system -- everything was a closed system back then. Your company knew that if it wanted this office automation multiplier, it had better stick with a system it already had installed. Wang's early system begat its later systems, and no one wandered off the reservation -- for a while. <P> <!-- Image Aligning Right --> <div class="inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/wang_computers2.jpg" alt="Wang Computers" width="239" height="335" title="Wang Computers" /> </div> <!-- / Image Aligning Right --> <P> When you think about it, both Ken Olsen and An Wang made enormous contributions to technology, but their companies lasted only one generation. <a href=" http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-thomas-edison/240150862">Edison</a>, <a href=" http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-moore-noyce/240153298">Moore/Noyce</a> and <a href=" http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-marconi-and-t/240151524">Marconi</a> spawned multiple-generation companies: GE, Intel, Marconi Radio. <P> Next we'll explore how satellite technology changed the technology landscape when we look at Irving Kahn, the father of cable television -- and a man who did some time in prison for bribing officials in Johnstown, Penn. <P> <i>Virtualization is rapidly evolving into a core element of next-generation data centers. This expanded role places new strains on the network. The <a href="http://www.networkcomputing.com/tech-center/nextgennetwork/download?id=189801427&cat=whitepaper?k=axxe&cid=article_axxe">Networking In A Virtualized World</a> report explores the technical issues exposed by virtualized infrastructure and looks at standards, technologies and best practices that can make your network ready to support virtualization. (Free registration required.)</i>2013-05-13T09:06:00ZBefore DEC, computing was scarce and precious. After DEC, computing costs dropped like a rock.http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-ken-olsen/240153987?cid=RSSfeed_IWK_Authors<!-- Image Aligning Right --><div class="inlineStoryImage inlineStoryImageRight"><img src="http://twimgs.com/informationweek/globalcio/great-minds/Ken-Olsen.jpg" alt="Ken Olsen" title="Ken Olsen" class="img175" /><div class="storyImageCaption">Ken Olsen</div></div><!-- / Image Aligning Right -->Ken Olsen, the founder of Digital Equipment, had both great insight and horrible foresight. He was the first to realize that a standalone minicomputer could do some jobs better, faster and cheaper than the larger mainframes sold by IBM and the six other domestic mainframe companies. His products led the industry, and he built a complete company: processors, software and communications. <P> Having beaten the Defenders with a new solution, he also said, in 1977: "There is no reason for any individual to have a computer in his home." So he never quite realized that the same downward pressure on prices and upward power of chips would do to him what he had done to IBM and the Bunch companies. <P> In 1957, Olsen and Harlan Anderson were getting frustrated because they couldn't raise money for their fledgling computer company. The Money thought the industry was already too crowded, and well-run companies such as RCA and GE were struggling. Finally, <a href="http://www.informationweek.com/20-people-who-changed-tech">Georges Doriot</a> of venture capital firm American Research & Development came up with $70,000 to buy 70% of DEC, an investment that came to be worth $355 million. <P> But even AR&D wasn't sure that a "mini computer" would make it, so the firm forced Olsen to talk about making "computer modules" that could be sold to developers. Olsen once told me that Doriot was concerned that DEC's directors were too old and feared it would take the company too long to make it in computers, so Olsen and Doriot thought that a shorter horizon would make the investment seem less risky and the directors could see results before they died. <P> The computing world at the time was run by High Priests who kept their computers in air-conditioned temples and behind locked and guarded gates. IBM genuflected to customers' every need and all things sacred were centralized; revisionism was a punishable crime. <P> But DEC's minicomputers were so cheap and rugged that they could be placed right in the lab or on the factory floor. Each one could be cost-justified based on the specific job it did. The heretics had taken over and the world would come to an end! <P> But maybe letting the light in and unleashing that computing power was a good thing. And the angels sang. <P> Before DEC, computing was scarce and precious. After DEC, computing costs dropped like a rock and the early PDP-8s and PDP-11s proliferated like rabbits. It really wasn't the IT department that bought these minis; it was the factory or lab manager. <P> <!-- Image Aligning Right --><div class="inlineStoryImage inlineStoryImageRight"><img src="http://twimgs.com/informationweek/globalcio/great-minds/old-pc.jpg" alt="Old PC" title="Old PC" class="img175" /></div><!-- / Image Aligning Right --> <P> Thing was, to be a DEC customer you had to be a company that was technically proficient and capable of running your own environment. So its customers tended to be companies such as TRW, GE, Foxboro and DuPont. There wasn't much early software, and what was there tended to be buggy. The DEC customers would take what they could get and then send the corrections back to DEC and thank it for the opportunity. In fact, DEC was kind of a cult. Its customers gobbled up more powerful DEC computers as soon as they came out. <P> Olsen did a few things very well. He invested in new technology, jumping on it early. DEC.com was registered in 1985! <P> DEC understood collaboration well before other companies and actually was ahead of Lotus Development for a time. It was the first computer company to open a public website, and its Alta Vista was one of the first comprehensive Web search engines. On the other hand, DEC never paid its salespeople a commission. Olsen didn't want his salespeople to "push" computers where they weren't needed, and he believed that salespeople deserved the respect of his engineers, and they weren't paid commissions. (You can imagine how well that turned out.) <P> Even as DEC racked up higher sales and profits and was becoming a big pain in IBM's butt, it knew its place: in the lab and the factory. But all that changed in 1984. One of DEC's biggest customers. DuPont, wanted something special. It wanted to tie its offices together. It wanted email, word processing, directory, document filing and calendaring. In short, DuPont wanted a suite, and it wanted it all from one company. DuPont didn't want to buy "best of breed" and have to be its own systems integrator. <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> So DuPont went to its favorite vendor, DEC. It realized it could gain enormous productivity if all these functions were on a mini, especially a mini that could network with other minis. DuPont was so sure that this was what it needed that it actually paid Digital to develop it for them. Somebody at DEC was very bright and decided that if the company made this offering industrial strength, it could take on IBM and Wang in the office. <P> DEC started to go mainstream. Even IBM diehards such as American Express and Phillip Morris were becoming intrigued with the higher performance and lower cost of minicomputers. I remember hosting a few dozen of these Big Blue customers, who were bitching about DEC's lack of handholding. "If we have a problem, IBM parachutes a dozen people in the next day. DEC won't," they told me. I explained to them that IBM could afford to do that when its computers cost $2 million and mainframe software was more profitable than cocaine. "IBM can do that if you stay with PROFS, which costs you about $1 per email message, but it can't afford to do that if you go to IBM minis," I told them. They grumbled, but they bought DEC solutions. <P> And it wasn't just DEC that was winning. HP was in the business, Data General, Wang, Prime and a host of others. But at its peak, DEC was the second-largest computer company in the world. It had 100,000 employees. A key executive, Gordon Bell, led DEC into building powerful, modular software so that its customers could cut development time. <P> <div style="float:right; padding-left:10px;"><a href="http://www.informationweek.com/20-people-who-changed-tech"><img src="http://twimgs.com/informationweek/globalcio/great-minds/great-minds-bug4.jpg" width="200" height="109" alt="20 People Who Changed Tech" title="20 People Who Changed Tech" hspace="0" vspace="0" border="0" /></a></div> <P> By the early 1990s, DEC started to falter. It merged with Compaq Computer, an early power in home computers, which itself merged with HP, which has been having some problems, as you may have heard. But at its peak, DEC stood astride the computer world with first-rate hardware, pretty good but underpowered software and a crack team. <P> If Olsen had a weakness, it was a bias toward hardware and a disdain for software, which he viewed as a necessary evil. Ed Roberts, who teaches at MIT Sloan and who was on the board of a healthcare software company, remembers Olsen saying dismissively: "You guys don't understand. It's not the software. It's the iron." <P> OK, he got that one wrong. But by getting computing power out of the hands of the High Priests and into the hands of actual users, Olsen led the way into the Internet, personal computers and even smartphones. <P> <i>A flat network or fabric provides more paths through the network and can maximize bandwidth and better support a highly virtualized data center. Get our <a href="http://www.networkcomputing.com/tech-center/nextgennetwork/download?id=189801463&cat=whitepaper&popup=true&download=true?k=axxe&cid=article_axxe">Understanding Flat Networks</a> for a look at standards-based approaches to designing a flat network. (Free registration required.)</i>2013-05-06T09:06:00ZGeorges Doriot understood that prosperity requires both innovation and strong management. He used that philosophy to invent the venture capital industry.http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-general-georg/240154010?cid=RSSfeed_IWK_Authors<!-- Image Aligning Right --><div class="inlineStoryImage inlineStoryImageRight"><img src="http://twimgs.com/informationweek/globalcio/great-minds/Georges-Doriot.jpg" alt="Georges Doriot" title="Georges Doriot" class="img175" /><div class="storyImageCaption">Georges Doriot</div></div><!-- / Image Aligning Right -->Nobody I knew ever called General Doriot "George" -- certainly not me, a young punk MBA (needless redundancy) when The General ran American Research & Development, the first venture capital fund and the grandfather fund to an entire industry. <P> Greylock, Kleiner Perkins, Sequoia and the other 400 or so venture firms in the U.S. all borrowed expertise from those who went before them. Remember, back in 1949 there weren't venture capitalists because there wasn't venture capital. How do you find companies? Evaluate ideas? Recruit management? All these were skills not yet in evidence when Doriot began AR&D. <P> Today we're on the third generation of what Doriot invented. Want an example? LinkedIn was founded by Reed Hoffman, who sits on the Facebook board and is a partner at Greylock, which was founded by Bill Elfers and Charlie Waite, who worked for General Doriot at AR&D. My son works at Sequoia Ventures after working at Battery Ventures and Summit Partners, whose founders worked for people who either took Doriot's course or worked for partners who came out of AR&D. Even those on another trajectory, such as Tim Draper, whose grandfather in 1959 formed the first venture capital limited partnership -- Draper, Gaither and Anderson -- acknowledge their debt to the firm formed 10 years before. <P> The General was a visionary and a genius. After the Second World War, he looked at the New England landscape and saw a lot of money -- made back in the time of <a href="http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-francis-cabot/240149954">Francis Cabot Lowell</a> in textiles, and in the older businesses of managing people's money. But next to nothing was going into new companies and technologies. <P> <!-- Image Aligning Right --><div class="inlineStoryImage inlineStoryImageRight"><img src="http://twimgs.com/informationweek/globalcio/great-minds/barbell.jpg" alt="Barbell" title="Barbell" class="img175" /></div><!-- / Image Aligning Right --> <P> So Doriot, along with New England industrialist, banker and politician Ralph Flanders and MIT president Karl Compton, passed the hat to the stodgy old companies and old money with a unique proposition: Let's set up a fund that will invest in promising young companies, often companies with little or no sales and with little management experience but with potentially breakthrough technologies. Let's understand that this will be "risk" capital; the firms have no real assets except the Yankee Brain, which gets up at 5 a.m. and works like hell. And let's not lend them money because it will be a long time before they could pay it back. But let's buy equity. Let's grow companies. <P> Doriot, who was a professor at the Harvard Business School, and Compton knew that there were some amazing technologies, often funded by the government for the war effort, which sought commercialization. Because AR&D had balky investors, it was structured as a publicly traded closed-end fund and was marketed to a few institutions and wealthy individuals. <P> For the first few years, AR&D struggled. But then Doriot backed a man named Ken Olsen, who worked at Lincoln Labs at MIT and wanted to build something called a "mini-computer." Doriot put $70,000 into Digital Equipment and saw that investment grow to $355 million. AR&D made 5,000(!) times its money on that one deal, and venture capital was off to the races. In the year 2000, venture funds raised $100 billion and financed about 5,000 new companies. <P> <!-- Image Aligning Right --><div class="inlineStoryImage inlineStoryImageRight"><img src="http://twimgs.com/informationweek/globalcio/great-minds/old-pc.jpg" alt="Old PC" title="Old PC" class="img175" /></div><!-- / Image Aligning Right --> <P> But The General did a lot more than grow companies. He grew an entire corps of managers, many of whom were his students. The General taught a very demanding course at HBS called Manufacturing, but it was really a course in understanding and adapting to change. "Somewhere, someone is working on a technology that is going to make your company's products obsolete," he would intone. <P> AR&D was not the first venture capitalist. King Ferdinand and Isabella bankrolled a guy named Columbus, who promised to find a shorter route to India and China. The Brits financed the American railroad industry and bankers such as JP Morgan backed <a href="http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-thomas-edison/240150862">Thomas Edison</a> and <a href="http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-marconi-and-t/240151524">Nikola Tesla</a>. The Rockefellers backed Eddie Rickenbacker and Eastern Air Lines, but Doriot <i>invented a systematic method of investing</i>, which became the world's model and the flywheel for America's postwar success. <P> Because Doriot taught about Big Business, he recognized that Big Business had ceased to be an innovator and that innovation would have to come from smaller, faster and more focused companies. He recognized a synergy between Big and Small -- they were going to need each other. He recognized that many potentially great managers would feel stifled in a large company, where promotion is often slow and politics clogs achievement. Doriot also recognized that his fledgling companies had to sell to somebody, and the best somebodies were large, financially strong companies that might be impressed enough with a $100,000 minicomputer that could do the work of a $2 million mainframe that they might take a chance on a new company without a pedigree. <P> Why "The General"? The U.S. government asked Doriot to leave his Harvard post and join the Quartermaster Corps, which ensured that the right material was in the right place at the right time -- very early supply chain management. He attained the rank of brigadier general and was always proud that as a native Frenchman, he had helped the war effort that freed France from Nazi occupation. <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <P> Investing in new companies and technologies is fraught with risk. Doriot figured out how to quantify and reduce the risk. He understood that even serious men and women working on the edges of technology were going to fail often, but if the upside was great enough, then the downside could be handled. Furthermore, he would argue that the benefits <i>to society</i> would be substantial if these fledgling companies could succeed. Lives could be improved, families could get educated, whole regions could recover. <P> You have to understand New England. Every industry we ever had went south. Textiles moved to the Southern states and then overseas. The rum trade hasn't been squat for 200 years. The shoe industry used to be a mainstay and now almost none of the manufacturing is done in the U.S., much less New England. As for agriculture, it's hard to grow anything in New England but rocks, and even heavy machinery found new homes. <P> <div style="float:right; padding-left:10px;"><a href="http://www.informationweek.com/20-people-who-changed-tech"><img src="http://twimgs.com/informationweek/globalcio/great-minds/great-minds-bug4.jpg" width="200" height="109" alt="20 People Who Changed Tech" title="20 People Who Changed Tech" hspace="0" vspace="0" border="0" /></a></div> <P> What Doriot saw was that the G.I. Bill was going to give a lot of servicemen returning from WWII a chance at an education, and that these men were in a hurry. The war had taken too many years from them. They wanted to marry, have kids, build a life. And there was pent-up demand for housing, cars, consumer products. Doriot believed that if you mixed first-rate educational and technical institutions with sophisticated capital and bright, strong, young management talent, you'd have an unstoppable formula. <P> So Doriot passed the hat. Investors included the academic institutions (Harvard, MIT, Penn) as well as the stuffy old companies (Hancock, Home Insurance, State Mutual, Mass Investors Trust). Doriot and his partners weren't sure that they would ever make money, but they bought into Doriot's view that they were investing in economic development and potential prosperity. In the end, they bought into The General. <P> In the end, Doriot was a missionary. His gospel was that strong management and great new ideas would spawn new industries and prosperity. And those of us who followed have stood on the shoulders of a giant. <P> <i>E2 is the only event of its kind, bringing together business and technology leaders across IT, marketing, and other lines of business looking for new ways to evolve their enterprise applications strategy and transform their organizations to achieve business value. Join us June 17-19 for three days of 40+ conference sessions and workshops across eight tracks and discover the latest insights in enterprise social software, big data and analytics, mobility, cloud, SaaS and APIs, UI/UX and more. <a href="http://www.e2conf.com/boston/?_mc=MP_BTMEDIWKAXE">Register for E2 Conference Boston today</a> and save $200 off Full Event Passes, $100 off Conference, or get a FREE Keynote + Expo Pass! </i>2013-04-29T09:06:00ZThree mavericks, part of the Traitorous Eight, help found Silicon Valley and the semiconductor industry.http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-moore-noyce/240153298?cid=RSSfeed_IWK_Authors<a href="http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-shockley-bard/240152808">Where were we?</a> Oh yes -- the three guys at AT&T Bell Labs who tackle the problem of burned-out vacuum tubes and wind up creating Silicon Valley. Let's start with William Shockley. <P> Shockley hates New Jersey (where Tony Soprano is the first to say "Garbage in, garbage out -- do you have any problem with that?"), goes home to Palo Alto, Calif., and starts Shockley Semiconductor in an old prune orchard. An aside: Would the place have had as much allure if we called it Prune Valley instead of Silicon Valley? <P> Shockley is a terrible manager but has a first-rate mind, so he knows that if his semiconductor company is going to succeed he will need Very Bright People, and he begins to recruit them. A few years later, these Very Bright People -- Gordon Moore, Robert Noyce, Eugene Kleiner, Jean Hoerni, Victor Grinich, Julius Blank, Jay Last and Sheldon Roberts -- have had enough of Shockley and his dysfunctional company and decide to bolt. <div class="inlineStoryImage"><center><img src="http://twimgs.com/informationweek/globalcio/great-minds/Something-Ventured-Traitorous-Eight_590.jpg" width="590" height="369" alt="Windows Phone" hspace="0" vspace="0" border="0" style="margin-bottom:7px;" /><br /> <div class="storyImageCaption" style="width: 590px">From left to right: Gordon Moore, C. Sheldon Roberts, Eugene Kleiner, Robert Noyce, Victor Grinich,<br> Julias Blank, Jean Hoerni and Jay Last (1960). </div></center></div></p> <P> This group, known in history as the "Traitorous Eight," turn to Arthur Rock, an investment banker, for financing. With additional financial support from Stephen Fairchild, they form Fairchild Semiconductor. <!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/dune.jpg" alt="sand dune" title="sand dune" class="img175" /> </div> <!-- / Image Aligning Right --> <P> Transistors are hot, hot, hot -- and sell for $100 each! --mainly because they aren't vacuum tubes, are cheaper to build and are super reliable. Somebody figures out that silicon is kind of like germanium and is as cheap as sand. Hell, <i>it is sand.</i> <P> Fairchild Semiconductor sees what Texas Instruments is up to by putting more than one transistor on a device and figures it can do better. It uses optical lithography and a mask, which allows it to put eight (eight!) devices on one chip. TI and Fairchild sue each other for a decade, then they agree to joint ownership of the integrated circuit. Customers want even more and more elements on a chip, so Moore, Fairchild's R&D chief, postulates that the number of transistors would double every year ... and the costs would drop correspondingly. <P> Moore is able to dine out on that one theorem for the next 50 years. It's a theorem as powerful as E = MC². All of a sudden, costs not only don't double when you double the number of components; they actually fall and markets explode. Fairchild and TI are on the edge with better technology in a smaller size at half the price. <P> By 1968, it's time for Moore and Noyce to say goodbye to Fairchild. They call their old friend Rock, the guy who brought Stephen Fairchild in the last time, to raise money for a new company, Intel. (Rock also helped finance another little company: Apple). They have no trouble raising money because Moore and Noyce are known quantities and the suspicion is that something remarkable is happening in Prune Valley. Intel gets started by making transistors like everyone else, and demand exceeds supply, but Intel is looking for Act II because its founders know that sooner or later basic transistors will become a commodity. <!-- Image Aligning left --> <div class="inlineStoryImage inlineStoryImageLeft"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/radio_red.jpg" alt="radio" title="radio" class="img175" /> </div> <!-- / Image Aligning left --> <P> Remember that great deal that AT&T offered for <a href="http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-shockley-bard/240152808">licensing transistor technology for $25,000</a>? One of the companies that was interested was Tokyo Tsushin Kogyo, which was struggling in the tape recorder business and searching for new products to make. It applied for a transistor license to MITI, the Japanese Ministry of International Trade and Industry, which originally turned the company down but eventually relented, letting it get a license for the AT&T patents. Tokyo Tsushin Kogyo started making little radios that fit into your pocket and changed its name to Sony. By that same action, MITI catalyzed the Japanese semiconductor industry, which by the 1980s was starting to give Intel fits. <P> Then there's this other company outside Chicago, called Galvin Manufacturing, which in the early 1930s was trying to get into new businesses. While one of its engineers, Bill Lear, was on a hot date, his lady friend suggested that she could be in a more romantic mood if his car could play music. Lear and his buddy invent the car radio, and Galvin changes its name to Motor-ola. Motorola understood cars and radios, but it never jumped on the consumer electronics market, so it missed what Sony saw. Motorola went into making chips itself; the early Apple computers ran on them exclusively. And, yes, Motorola did invent the cellular phone, in 1973; a cellular phone is just a special-purpose radio and will go on to become the ultimate piece of consumer electronics. <div style="float:right; padding-left:10px;"> <a href="http://www.informationweek.com/20-people-who-changed-tech"><img src="http://twimgs.com/informationweek/globalcio/great-minds/great-minds-bug4.jpg" width="200" height="109" alt="20 People Who Changed Tech" title="20 People Who Changed Tech" hspace="0" vspace="0" border="0" /></a> </div> <P> Lear goes on to get 107 patents and then builds ... the Lear Jet! Which is the plane of choice for Silicon Valley until the guys start buying G650s (Gulfstream), which you can buy today for around $70 million. <P> But we're getting ahead of ourselves. In the 1970s the Japanese play a critical role in getting Intel off the ground. <P> Enter Busicom, a Japanese calculator company, which shows up and wants 12 "custom" integrated circuits. Poor Intel is now faced with the problem that befuddles many a tech company: demanding customers that want their own solution. Intel assigns a guy named Ted Hoff to meet this demand, and he figures that the rest of his life will be spent designing custom solutions for every demanding client. Maybe a better solution is a processor that can be "reprogrammed" for each demanding customer. In other words, a generic solution for all of these specialized needs. Busicom offers to pay for this development, but it doesn't ask for ownership of the underlying intellectual property. <P> It's a trillion-dollar mistake. Hoff had created an entire computer, on a chip. No software yet, but some kid at Harvard, Billy The Kid Gates, along with his buddy Paul Allen, later figure out that with some instructions they could actually get a home/hobby computer to operate. <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <P> By the early 1980s, Intel is heavy into memory chips and is getting its rear handed to it by the Japanese semiconductor industry, which is cutting prices left and right. Moore asks Noyce what a new management team would do to straighten out Intel. "Why, they would get us out of memory chips," was the answer. Moore responds by suggesting that they do that themselves ... and they go heavily into computer chips and save the company. <P> Meanwhile, there's a thirsting need for money for all these new-fangled, tech-heavy startups, not the sort of money that Rock was able to raise from well-heeled individuals, but serious risk capital in the form of venture capital, a subject we'll cover next. <P> <i>Big iron is under relentless pressure to prove its value in an x86 world. We look at five ways to bring it into the distributed data center. Also in the new, all-digital <a href="http://www.networkcomputing.com/nwcdigital/031913s?k=axxe&cid=article_axxt_os">Mainframes In The Age Of The Cloud</a> special issue of InformationWeek: Five steps to a better wireless LAN. (Free registration required.)</i>2013-04-22T09:06:00ZAll hail the transistor, the building block of the computer, communications and space ages.http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-shockley-bard/240152808?cid=RSSfeed_IWK_Authors<!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/Bardeen_Shockley_Brattain.jpg" alt="John Bardeen, William Shockley and Walter Brattain" title="John Bardeen, William Shockley and Walter Brattain" class="img175" /> <div class="storyImageCaption">John Bardeen, William Shockley and Walter Brattain</div> </div> <!-- / Image Aligning Right --> I have a question for you: Where do all the bright people work? Maybe Google and Amazon and maybe startups funded by venture capital. Ten years ago it was clearly Microsoft; 20 years ago maybe IBM Yorktown Heights. But from 1930 to 1970, it was AT&T Bell Labs. No question. <P> This was the place that spewed Nobel Prize winners. It's where brainpower wanted to be. You could have formed a Mensa group on every floor. Want to know a little secret? Bell Labs really ran AT&T -- each AT&T telephone company was "assessed" 2% of its sales to fund Bell Labs and Bell Labs took on only those projects that were "interesting." Most manufacturing companies have an R&D department. Bell Labs had a manufacturing department: Western Electric. Out of Bell Labs came the transistor. <P> Before the transistor? The Stone Age. After? The Space Age. The Computer Age. The Communications Age. Call it what you will, this invention changed the world, changed the wealth of nations and changed the balance of power -- everywhere. <P> And it started quite simply. The light bulb was essentially just a vacuum tube with a filament, much as <a href="http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-thomas-edison/240150862">Thomas Edison</a> built it. Radio amplifiers are really variations on the same theme, just a light bulb with an extra plate. And as impressive as those amplifiers were, they failed with amazing regularity. They got hot, very hot, and when they got hot the materials inside began to break down. <!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/tube.jpg" alt="tube" title="tube" class="img175" /> </div> <!-- / Image Aligning Right --> <P> So you fix them, right? What's the big deal? It's simple if you're replacing a tube in your RCA Victor radio; it becomes a very big deal when you're AT&T and you need to amplify your signal to cross the country. So somebody, <i>anybody</i> had to go out and find that pesky dead culprit, change it and get the system working again. <P> Except that some of those amplifying boxes were in the middle of nowhere. So AT&T rang up its Home For Geniuses and told them to get hopping, find a replacement for those quirky vacuum tubes. World War II was over and voice traffic was escalating. Direct distance dialing was coming and an avalanche of people wanted to talk to each other. Ma Bell needs help! <div style="float:right; padding-left:10px;"> <a href="http://www.informationweek.com/20-people-who-changed-tech"><img src="http://twimgs.com/informationweek/globalcio/great-minds/great-minds-bug4.jpg" width="200" height="109" alt="20 People Who Changed Tech" title="20 People Who Changed Tech" hspace="0" vspace="0" border="0" /></a> </div> <P> William Shockley was put in charge, and he put John Bardeen, a physicist and electrical engineer, and Walter Brattain, a physicist, on the case. The three of them came up with the "transfer register," or transistor. Bell Labs patented the device in 1948 and the Three Amigos shared a Nobel Prize in Physics in 1956. (Actually, they weren't Three Amigos. Shockley was a bit of an ego head case.) <P> But here's where it started getting fun. Because AT&T was a public utility, it was forced to license its patents for (hold your hat) $25,000. So if you're a vacuum tube maker, what do you do? Slam dunk, you take out a license. RCA bought a license. So did GE. And Shockley himself bought one. Why not?<!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/trans.jpg" alt="transistor" title="transistor" class="img175" /> </div> <!-- / Image Aligning Right --> <P> Irony: Even though Bell Labs invented the damn thing, it didn't get around to using transistors for another 10 years. It still had a lot of vacuum tubes hanging around that it didn't want to write off. And it's that kind of thinking that ultimately cost AT&T an even bigger prize: dominating the still-non-existent computer industry. <P> One of the companies taking out a license was Texas Instruments, a small, innocuous division of an oil well services company that needed to build better instruments to find oil. Thus, transistor technology jumped from beautiful downtown Newark, N.J., to Texas and California. <P> The technology that could locate underground oil could be re-tasked to find underwater boats. And so TI began making sonar to find subs, becoming a defense contractor. A few years later, in 1958, a TI engineer named Jack Kirby was bold enough to put five of these transistors on a half-inch piece of germanium. It was the first integrated circuit, and Kirby would go on to win a Nobel in physics in 2000. <P> Shockley headed west and took a few of the Bright Boys from Bell Labs with him to what became Silicon Valley. Shockley was a terrible manager, and his loyal team was soon in revolt. These renegades, aka the Traitorous Eight (Gordon Bell, Robert Noyes, etc.), spun off from Shockley Semiconductor and went to Fairchild, where they came to be known as the Fairchildren. They got to work perfecting the transistor and working on multiple transistor devices ... to be known as semiconductors. <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <P> Let's imagine that you printed this article out on your home computer, and let's estimate that there are 1,000 words on that page. What did it cost you? Two cents maybe? But suppose you want smaller-type fonts and put 2,000 words on the page. Or 4,000. Or if you could make the type small enough, 4,000,000 words. Would your cost go up? Of course not. Yes, you might use a little more of that oh-so-expensive HP ink, but let's be serious. <P> Why is this important? Because once we start etching and putting more elements into one of these chips, the cost goes straight down. We're borrowing technology from the printing industry, which goes back to Gutenberg. The early transistors cost $150 each! <P> <center><div style="font-size:.8em;"><img src="http://twimgs.com/informationweek/globalcio/great-minds/microprocessor-transistor-counts-chart.jpg" width="595" height="468" alt="Microprocessor Transistor Counts - Moore's Law chart" title="Microprocessor Transistor Counts - Moore's Law chart" hspace="0" vspace="0" border="0" style="margin-bottom:7px;" /><br />Source: Wikipedia </div></center></p> <P> All of a sudden, the rules had been forever broken. Costs of electronic components would go down per element to almost zero, which would open up huge markets for computers, communications and consumer electronics. It would be possible to put <i>entire computers on one chip</i>, spawning the personal computer, cellphone and about every other advanced device we own and will own. <!-- Image Aligning left --> <div class="inlineStoryImage inlineStoryImageLeft"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/money-chip.jpg" alt="transistor and cash" title="transistor and cash" class="img175" /> </div> <!-- / Image Aligning left --> <P> Noyce and Moore would go off to start yet another company, Intelligent Telecommunications, or Intel. More on them in the next installment of this series. <P> The irony of all this: Because AT&T was forced to license out this technology and was reluctant to leverage this advantage itself, new companies sprung up to take the torch forward. AT&T on its own wouldn't have pursued such markets, but the Knew Kids On the Block figured out how to combine breakthrough technology and sophisticated money to create the largest pool of talent and wealth the world has ever known.2013-04-15T09:06:00ZIn this seventh installment in our series, Howard Anderson profiles the men behind the ENIAC.http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-mauchly-and-e/240152045?cid=RSSfeed_IWK_Authors<!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/John-Mauchly-and-J-P-Eckert.jpg" alt="John Mauchly and J.P. Eckert" title="John Mauchly and J.P. Eckert" class="img175" /> <div class="storyImageCaption">John Mauchly and J.P. Eckert</div> </div> <!-- / Image Aligning Right --> Philadelphia is a lot like Merry Old England. The first digital general-purpose computer, the ENIAC, was born in Philadelphia in 1946, so you might have expected a flourishing computer industry to spring up there, just as you might have expected Great Britain to become a technology force given its industry pioneers. But Philadelphia today is known more for its cheesesteaks than its high-tech prowess. (By the way, the best cheesesteak can be found at <a href="http://whitehousesubshop.net/">The White House</a> in Atlantic City, N.J. Mention my name.) <P> The credit for this first digital computer should go first to the U.S. government. The U.S. Census Bureau in 1890 realized that it was taking eight full years to compile the 10-year census and it needed a faster solution, so it turned to Herman Hollerith, an inventor and statistician, to make the first mechanical tabulators. He used punch cards, a technology the textile industry had used for years to program its looms. Hollerith's company eventually turned into International Business Machines. <P> IBM, recognizing something significant, bankrolled Howard Aiken and Grace Hopper, a Navy 2nd Looie, at Harvard in 1944. Their "Harvard Mark I" was an electro-mechanical device that could handle differential equations. Hopper, troubleshooting the Mark I, found a dead moth cooked by the vacuum tubes and removed it ... or, as she said, "debugged it." By 1947, the Mark IV was all-electronic and was using magnetic drum and magnetic core memory. <P> "Amazing Grace" was a computer scientist of the first order. She conceptualized the idea of machine-independent programming languages, which was the forerunner of COBOL. Hopper eventually was promoted to rear admiral in the U.S. Navy. <P> Aiken, the senior dude on this team, gave credit to Charles Babbage, the English mathematician who in the early 1800s originated the concept of a programmable computer, though he never got one to work. The need was for a better way to do logarithms, which at the time were done by people. Babbage designed a system in which the data and program memory were separated and the machine had a separate I/O unit. It was the forerunner of the computer as we now know it. <P> The British government sponsored that program for 10 years but eventually gave up. The wimps! In 1991, the London Science Museum actually built Babbage's Difference Engine -- just 200 years too late! <!-- Image Aligning Left--> <div class="inlineStoryImage inlineStoryImageLeft"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/eniac.jpg" alt="Computer" title="Computer" class="img175" /> </div> <!-- / Image Aligning Left --> <P> Back we go to Philadelphia in the 1940s. World War II is on and the U.S. Department of War (renamed the Department of Defense in 1949) had a problem: It had to calculate firing tables for artillery. Suppose you're in a ship that's listing back and forth and the wind is blowing at 15 miles per hour and you're moving at 15 knots. Now what? The military had hired hundreds of young women, called "computers," to work out the complex math, but even that solution was too slow. <P> While Aiken and Hopper were working on computers in Cambridge, Mass., John Mauchly and J.P. Eckert were pursuing parallel development in Philadelphia, sponsored by the U.S. government. They developed the ENIAC (Electronic Numerical Integrator And Computer). Containing 17,000 vacuum tubes, weighing 30 tons and consuming 160 kilowatts, it could perform 5,000 additions or 357 multiplications in one second, which was 1,000 times faster than those perky human "computers" could do. The ENIAC could do in 30 seconds what a person could do in half a week. <div style="float:right; padding-left:10px;"> <a href="http://www.informationweek.com/20-people-who-changed-tech"><img src="http://twimgs.com/informationweek/globalcio/great-minds/great-minds-bug4.jpg" width="200" height="109" alt="20 People Who Changed Tech" title="20 People Who Changed Tech" hspace="0" vspace="0" border="0" /></a> </div> <P> Just as no one quite knew what to do with the first personal computers (store recipes?), no one was quite sure what could be done with the first electronic computers. There was no software, no applications and no trained IT industry. <P> Rumor had it that the first time the ENIAC was fired up, the lights dimmed in all of West Philadelphia. This is the first known benefit of digital computers. Others suggest that there were only dim lights at Mauchly and Eckert's University of Pennsylvania, which was foolish enough to grant me a degree. (And no, they can't have it back!) <P> Still, the score was Penn 1, Harvard 0 in the race to build the first real computer. <!-- Image Aligning left --> <div class="inlineStoryImage inlineStoryImageLeft"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/hand.jpg" alt="hand" title="hand" class="img175" /> </div> <!-- / Image Aligning left --> <P> Mauchly, the physicist, developed the mathematical theory for the ENIAC. Eckert, the electrical engineer, developed the hardware. Eckert had been the instructor when Mauchly took an early EE course at Penn. Later, having enough of academia, both left to start the Eckert-Mauchly Computer Corp., which started making machines for commercial use and which morphed into Univac. <P> The ENIAC was perfected after World War II ended, but by 1945 it was used to do the millions of discrete calculations for top-secret work on the hydrogen bomb. <P> Twenty years later, there were really just six mainframe computer companies: IBM, Burroughs, Univac, NCR, Control Data and Honeywell. Most of them would ignore the revolutionary minicomputer to their ultimate detriment. <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <P> So within 70 years, technology leaped forward. The infrastructure was in place: energy/electricity. The early light bulbs morphed into the early vacuum tubes. U.S. government funding pushed the technology world forward, and that technology jumped the Atlantic. <P> The trouble with all those vacuum tubes is that they burn out, a problem tackled by three guys at AT&T Bell Labs: William Shockley, John Bardeen and Walter Brattain. AT&T needed to build a labor-efficient method that would amplify long-distance signals, which meant finding a replacement for those unpredictable vacuum tubes. So in this case it was the burgeoning communications industry that drove the demand. All three would win the Nobel Prize, and they "germinated" (inside joke) Silicon Valley. It's a subject we will cover in our eighth installment in this series.2013-04-08T09:06:00ZIn this sixth installment in our series, Howard Anderson profiles the pioneers of radio.http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-marconi-and-t/240151524?cid=RSSfeed_IWK_Authors<div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/Marconi-Tesla.jpg" alt="Guglielmo Marconi And Nikola Tesla" title="Guglielmo Marconi And Nikola Tesla" class="img175" /> <div class="storyImageCaption">Guglielmo Marconi And Nikola Tesla</div> </div> <!-- / Image Aligning Right --> You gotta like Marconi, but you gotta love Tesla. <P> Guglielmo Marconi is usually credited with inventing the radio and pioneering long distance radio transmission, but Nikola Tesla's work on both was more seminal and farther reaching. For their contributions to wireless telegraphy, Marconi and Karl Ferdinand Braun, another early innovator, won the Nobel Prize in physics in 1909. But because Tesla and <a href="http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-thomas-edison/240150862">Thomas Edison</a> were involved in a pitched battle on the AC/DC front, the Nobel Committee was probably looking for a set of compromise candidates. How pitched was that battle? Edison electrocuted an elephant to demonstrate the "danger" of Tesla's alternating current. An elephant? Weren't there any lawyers around? <P> Marconi was a first-rate businessman and built a major financial and manufacturing empire. He was a millionaire and tooled around on a luxury yacht. He proved Edison wrong. Edison thought the curvature of the Earth would limit radio transmission to 200 miles, but Marconi caught a break: The ionosphere reflected back electromagnetic waves. <P> The Supreme Court would later overturn Marconi's patent, in 1943, and award it to Tesla. It didn't hurt Tesla that Marconi was suing the U.S. government for using his patents and, if Marconi didn't really have a patent, the government wouldn't have to pay him a dime. Nor did it hurt that Marconi was a recognized fascist while Tesla, born and raised in the Austrian Empire, had become an American citizen. <!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/radio-antenna.jpg" alt="Radio Antenna" title="Radio Antenna" class="img175" /> </div> <!-- / Image Aligning Right --> <P> Marconi started out experimenting on ways to use radio waves to supplant wires in sending telegraphy, and by 1902 he had successfully sent a message across the Atlantic Ocean. Radio is everything today -- it powers your LANs, your iPhones, your routers -- which is why Marconi makes our list. <P> But Tesla? He was a genius' genius. Even though Edison did everything in the world to discredit alternating current, Tesla was right and it took Edison years before he admitted it. Edison's solution would have required a power station every square mile; Tesla's required one every decent-sized city. Which do you think would win? <P> Edison and his financial backer, J.P. Morgan, counted on first-mover advantage in the hopes that having an installed base would force the issue toward DC. Tesla saw that a better technology would ultimately win. <P> Edison was also the consummate businessman. He measured his patents based on the amount of money each made. Tesla was into discovering and inventing revolutionary processes. He was ultimately a scientist -- once he discovered something worthwhile, he often lost interest. Half the time he didn't even patent his breakthroughs. (Still, he recorded 700-plus patents.) When told that Marconi had done something amazing with radio transmission by sending the first trans-Atlantic message, Tesla replied: "Marconi is a good fellow. Let him continue. He is using 17 of my patents." <div style="float:right; padding-left:10px;"> <a href="http://www.informationweek.com/20-people-who-changed-tech"><img src="http://twimgs.com/informationweek/globalcio/great-minds/great-minds-bug4.jpg" width="200" height="109" alt="20 People Who Changed Tech" title="20 People Who Changed Tech" hspace="0" vspace="0" border="0" /></a> </div> <P> Marconi was a rich kid whose father bankrolled his early experiments. Tesla arrived in New York in 1884 with four cents in his pocket and a letter of recommendation from one of Edison's friends to present to Edison. The letter said: "I know of two great men. You are one. The man you are talking to is the other." <P> Radar? Yes, it was officially invented in 1935, but 18 years previously, Tesla had outlined how it would work. Tesla pitched the idea to the U.S. Navy, which turned it down. And who was head of R&D for the Navy at the time? Thomas Edison. <P> <!-- Image Aligning Left --> <div class="inlineStoryImage inlineStoryImageLeft"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/hand-x-ray.jpg" alt="X-Ray" title="X-Ray" class="img175" /> </div> <!-- / Image Aligning Left --> X-rays? The official inventor was German physicist Wilhelm Rontgen, but it was Tesla who also warned people that they could be dangerous and who outlined the science years before Rontgen did. <P> Who built the first hydroelectric plant at Niagara Falls? George Westinghouse and Nikola Tesla. Are you starting to see a pattern here? <P> More? OK, who was the first person to record radio waves from outer space? Who invented remote control? Neon lighting? Tesla. <P> Tesla also came up with an idea to provide free electricity for everyone, drawing it from the ionosphere. J.P. Morgan didn't like that idea very much. Morgan was no fool. He saw a great business in generating electricity -- and charging for it. Morgan wanted two horses in the electricity race and backed both Edison and Tesla -- until Tesla started wandering off the reservation. <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> Tesla's IQ might have been several times that of Marconi and Edison combined. He visualized inventions and devices in his mind and then built them. <P> He was given to hallucinations and seeing "bright spots." When he died, penniless, his papers were mysteriously "misplaced," including one about a "death ray" he had said could bring about world peace. <P> So with this infrastructure in place, we can begin to see how it all started to come together for the computer, communications and consumer electronics industries. Next up: At last, computers!2013-04-01T09:06:00ZIn this fifth installment in our series, Howard Anderson chats up the Wizard of Menlo Park.http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-thomas-edison/240150862?cid=RSSfeed_IWK_Authors<!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/Thomas-Edison.jpg" alt="Thomas Edison" title="Thomas Edison" class="img175" /> <div class="storyImageCaption">Thomas Edison</div> </div> <!-- / Image Aligning Right --> Mr. Edison, you're The Man. Two years ago, in 1877, you invented the phonograph, which amazed the world and changed the entertainment industry. You're not only the Wizard of Menlo Park, you're the Steve Jobs of your era. <P> You have invented the stock ticker (which is really just an application of the telegraph, and you were a crack telegraph operator, which is where you got interested in electricity), the movie camera and the microphone for the telephone, which will be used for the next 80 years. You almost invented the telephone -- in fact, you and Alexander Graham Bell had labs in the same building in Boston at the same time. You have revolutionized or started five or six major industries. You will eventually have 1,093 patents in your name. <P> Now, you just invented the first commercially practical incandescent light. What's next? <P> <strong>Me:</strong> Tom, great invention. Where do I plug it in? <P> <strong>Tom:</strong> You can't plug it in unless you have a battery. (I actually have built an advanced battery for electric cars, by the way. See me in about 125 years and we'll catch up on how this is going.) Just attach it to a battery. <P> <strong>Me:</strong> Battery? That&#8217;s not going to hack it. <P> <strong>Tom:</strong> Hey, do you want to keep getting your light from natural gas? Smelly! Dark! Causes smoke and fires. Your <em>current</em> method just won't hack it. <P> <strong>Me:</strong> "Current." That's funny. <P> <strong>Tom:</strong> Here's my idea. I'm going to build a company, the Edison Electric Light Co., and we'll generate electricity. In fact, I'll build branches all over the country: Consolidated Edison, Southern California Edison, Detroit Edison, Boston Edison. &#8230; They'll wire factories and homes everywhere. We'll do generation, but I still have to invent the technology and distribution, so I have to figure out how to do the step down and step up. Shouldn't be a problem. I have J.P. Morgan and Cornelius Vanderbilt ready to finance this. <P> <!-- KINDLE EXCLUDE --><!-- GLOBAL CIO GLOBE --><div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"><div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"><a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a><div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div><span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span></div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <P> <strong>Me:</strong> Tom, Tom, Tom. Who is going to manufacture all this stuff? <P> <strong>Tom:</strong> Funny you ask. I'm going to start a manufacturing company, Edison General Electric. Maybe one day we'll just call it "GE." Maybe we could actually finance some of the equipment we make. <P> <strong>Me:</strong> That sounds great, but how are you going to keep improving the product? <P> <strong>Tom:</strong> I'm going to invent the research lab, whose only job will be to invent things. I will hire the best and the brightest. Some stuff we'll invent and manufacture, and others we'll license. <P> <div style="float:right; padding-left:10px;"><a href="http://www.informationweek.com/20-people-who-changed-tech"><img src="http://twimgs.com/informationweek/globalcio/great-minds/great-minds-bug4.jpg" width="200" height="109" alt="20 People Who Changed Tech" title="20 People Who Changed Tech" hspace="0" vspace="0" border="0" /></a></div> <P> <strong>Me:</strong> Tom, let me understand this. You're coming up with a major invention every two years -- revolutionizing inventions. You're going to put the candle and natural gas companies back on their heels, and you're going to wire America, if not the world, to get electricity &#8230; which you're going to sell as a <em>service</em>! And you're going to build all the equipment you need &#8230; and then sell it to your own electric utilities. And then you're going to create the largest R&D organization in the world? <P> <strong>Tom:</strong> I don't plan to sleep. Sleeping's for wimps. <P> <strong>Me:</strong> Tom, you must have a very smart staff. <P> <strong>Tom:</strong> I have some terrific people. In fact, I have to run off to a meeting with one of them, Nikola Tesla. Very bright guy, very bright. He thinks that "alternating current" may be better than direct current. What do you think? <P> <!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/edison1.gif" alt="Smiley Lightbulb" title="Smiley Lightbulb" class="img175" /> </div> <!-- / Image Aligning Right --> <P> <strong>Me:</strong> AC would be great for electrocuting animals. <P> <strong>Tom:</strong> Exactly! That's what I keep telling Tesla. Let me tell you about Tesla. The guy is a certified genius. He comes up with solutions to problems and then forgets to write them down. Me? As soon as I or my team has something, bang, we're off to the Patent Office! <P> <strong>Me:</strong> You're a very busy man. By the way, since you have so many patents in the movie industry, what do you think about "talkies" -- marrying your voice technology from the phonograph with your movie camera? <P> <strong>Tom:</strong> Don't think so&#8230;. <P> <i>The Enterprise Connect conference program covers the full range of platforms, services and applications that comprise modern communications and collaboration systems. Hear case studies from senior enterprise executives, as well as from the leaders of major industry players like Cisco, Microsoft, Avaya, Google and more. Register for <a href="http://www.enterpriseconnect.com/orlando?_mc=IWKPREM">Enterprise Connect 2013</a> today with code IWKPREM to save $200 off a conference pass or get a free Expo Pass. It happens March 18-21 in Orlando, Fla. </i>2013-03-25T09:06:00ZIn this fourth installment in our series, Howard Anderson tells how a masterful inventor and a business genius transformed communications.http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-alexander-gra/240150727?cid=RSSfeed_IWK_Authors<!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/Bell_Vail_175.jpg" alt="Alexander Graham Bell and Theodore Vail" title="Alexander Graham Bell and Theodore Vail" class="img175" /> <div class="storyImageCaption">Alexander Graham Bell and Theodore Vail</div> </div> <!-- / Image Aligning Right --> Is this one person or two? The real issue is that Alexander Graham Bell was the masterful inventor and Theodore Vail was the organizational genius who made it all work. <P> Wait, was Bell really such a great inventor? He didn't even know what every other inventor playing with electricity already knew: that it was <i>impossible</i> to send a voice call over telegraph wires! So Bell pursued the idea with the help of his father-in-law, who bankrolled his experiments. <P> By 1876, Bell was the first to patent the telephone, beating Elisha Gray to the patent office ... by five hours. Three days after he filed the patent, he actually got his telephone to work by transmitting: "Your call is important to us ... please hold." No, he actually said to his assistant: "Mr. Watson: Come here. I want to see you." Watson immediately filed a class action suit for harassment. (Whoops. No, he didn't.) <P> Bell and his father-in-law attempted to sell Bell's patents to Western Union for $100,000, and Western Union turned them down. Supposedly, Western Union's CEO said something like: "Mr. Bell, the obvious conclusion of your idea would be we would have to wire America -- clearly not feasible," ensuring his inclusion in "The Great Dumb Acts In Technology History." <P> <!-- Image Aligning right--> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/telephone-wires.jpg" alt="Telephone Wires" title="Telephone Wires" class="img175" /> </div> <!-- / Image Aligning right --> <P> Bell was the inventor, but he wasn't the businessman. By 1878, Theodore Vail became general manager of AT&T and its guiding force. Vail pushed for long distance service and made AT&T expand nationally. <P> But Vail's real contribution came after he left the company in 1889 and returned in 1907. By that time AT&T was headed into a windstorm: Its early patents had expired and small companies were nipping at its heels. <P> Vail began what became Bell Labs and used the company's equipment subsidiary, Western Electric, to make the best and most reliable equipment. He built an extraordinary long distance network and let the local competition interconnect to it, but his greatest feat was convincing America that a "national monopoly" was in its best interests. Instead of maximizing profits, he sold the idea of universal service, whereby everyone would have equal access and pay similar fees. <P> Eventually, the company grabbed 100% of the U.S. long distance market and 90% of the local telecom markets. And Ma Bell was born. By 1914, it was possible to call from New York to San Francisco; by the next year, calling Europe through an undersea cable was a reality. <P> In my office I have a 1908 Kellogg crank phone with a handle that would ring up "central" and connect the caller to an operator, who would connect to the final party. This was way before rotary phones and phone company switching. <P> <div style="float:right; padding-left:10px;"> <a href="http://www.informationweek.com/20-people-who-changed-tech"><img src="http://twimgs.com/informationweek/globalcio/great-minds/great-minds-bug4.jpg" width="200" height="109" alt="20 People Who Changed Tech" title="20 People Who Changed Tech" hspace="0" vspace="0" border="0" /></a> </div> <P> Kellogg Telephone Co. was purposely violating AT&T's patents by selling equipment to these upstart independent phone companies, which were AT&T's nemeses. But Kellogg was secretly owned by AT&T, whose grand scheme was to get those Kellogg phones declared in violation of its patents, and hence illegal, in order to force the upstarts that had bought that equipment into bankruptcy. <P> When this fact became known, AT&T backed off, and it was Vail who understood that such behavior, which was the sort of thing J.P. Morgan and his pals used to do, wouldn't be amicable to having the sweetest monopoly since Rockefeller's. Remember that this was shortly after Teddy Roosevelt had railed against the malfeasance of evil monopolists. <P> <!-- Image Aligning Left --> <div class="inlineStoryImage inlineStoryImageLeft"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/bell-telephone.jpg" alt="Telephone" title="Telephone" class="img175" /> </div> <!-- / Image Aligning Left --> <P> In short, Vail steered AT&T into the realm of the blessed. AT&T effectively kept its communications monopoly <a href="http://www.corp.att.com/history/milestones.html">until 1984</a>, after the Carterfone decision allowed interconnection of hardware and the MCI decision ushered in long distance competition. But for 80 years AT&T flourished as a protected monopoly under beneficial regulation while Rockefeller's Standard Oil was split into half a dozen companies. Vail gets the credit for pulling off the public relations coup of the century, and I do mean century. <P> Vail pushed for a closed system, centralized planning and end-to-end ownership. AT&T owned the long distance network, most of the local networks, the equipment provider and the research organization. He convinced Woodrow Wilson that this vertically and horizontally integrated system, operated as an "enlightened monopoly," would be best for the country. <P> Technology wars usually pit the Attackers against the Defenders. Western Union owned the telegraph market and was in denial that an upstart such as AT&T could make its own monopoly obsolete. Defenders go through four distinct phases: They insist the new technology won't work; they say their customers don't really want it; they concede that, well, maybe it does work so they should try it; then it's game over. <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <P> Western Union's dominance was kind of like that of the Pony Express: It was very important and innovative for a short period of time, and then it got completely outflanked by better technology and better management. <P> Imagine that you're J.P. Morgan and you're offered both Bell and Thomas Edison as an investor, and you can pick only one of them. Which would you choose? But wait -- we have an even better offer! Next week we'll profile Edison ... then decide.2013-03-18T09:06:00ZIn this third installment in our series, Howard Anderson profiles a world-class artist turned inventor of a building block for today's computers.http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-samuel-morse/240150285?cid=RSSfeed_IWK_Authors<!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/Samuel_Morse.jpg" alt="Samuel Morse" title="Samuel Morse" class="img175" /> <div class="storyImageCaption">Samuel Morse</div></div> <!-- / Image Aligning Right --> Can you read the following? &#8230;---&#8230; It's SOS -- "Save Our Ship," you landlubbers. But more importantly, it's Morse code. <P> This was one of the first things I was taught as a seaman apprentice in the U.S. Coast Guard (motto: "Semper Paratus," which means "Why does the U.S. Navy get all that money and we get bupkis?") <P> Amazingly, Morse code was still being taught to everyone 125 years after its invention. Will we still be using C++ in the year 2125? I don't think so. <P> <!-- Image Aligning left --> <P> <div class="inlineStoryImage inlineStoryImageLeft"> <P> <img src="http://twimgs.com/informationweek/globalcio/great-minds/morse1.jpg" alt="Morse Code" title="Morse Code" class="img175" /> <P> </div> <P> <!-- / Image Aligning left --> <P> Not only that -- it's digital! We can make the case that it was the first universally used computer language. And it was developed by an artist -- not just a hack, but a world-class artist: Samuel Morse. <P> Morse code was used way into the 1890s and beyond for radio communications. David Sarnoff, later CEO of the Radio Corporation of America, was a young telegraph operator who received the first SOS from the Titanic in 1912. Thomas Edison was a crackerjack telegraph operator before he invented the light bulb and everything else. <P> Morse spent the first 20 years of his life painting. He hung with James Fennimore Cooper and other literati in Paris and painted some very important pictures, one of which hung in the Hall of Congress. Back in those days, educated men dabbled in science and did experiments, truly Amateur Night. But Morse was different. <P> He built an entire industry, solved some of the world's most technical problems, built the language ... and eventually quit painting. Some say the impetus was when a message that his wife was deathly ill was delivered too late for him to be at her bedside when she passed away. From that episode came an inkling that there needed to be a method of rapid long-distance communication. <P> <div style="float:right; padding-left:10px;"> <a href="http://www.informationweek.com/20-people-who-changed-tech"><img src="http://twimgs.com/informationweek/globalcio/great-minds/great-minds-bug4.jpg" width="200" height="109" alt="20 People Who Changed Tech" title="20 People Who Changed Tech" hspace="0" vspace="0" border="0" /></a> </div> <P> In the early days of telegraphy, it was possible to send a message, but only if you used 26 wires -- one for each letter. And then the message could go only about 40 feet. Morse figured out how to send a message on one wire by basically turning the electricity on and off, which is kind of how computers work. <P> His first idea was just to transmit numbers; every word would have a number code, which could be looked up. He soon had a better idea: Give each letter a code that an operator could translate. Morse also figured out how to use repeaters or relays to regenerate the signal. <P> <!-- Image Aligning Right --> <P> <div class="inlineStoryImage inlineStoryImageRight"> <P> <img src="http://twimgs.com/informationweek/globalcio/great-minds/morse2_sm.jpg" alt="Old West scene" title="Old West scene" class="img175" /> <P> </div> <P> <!-- / Image Aligning Right --> <P> By 1844, he ran an experimental 38-mile link along a railroad right of way and transmitted from Washington to Baltimore the message: "What hath God wrought," which is as famous as "Watson, come here, I need you" and "One small step for man, one giant leap for mankind." <P> Up to that point, the way information moved was to move atoms: ships, horses, people. It was labor-intensive, slow and costly. Morse figured out how to move electrons ... and changed the world. By 1851 Western Union was formed; by 1861 it was possible to send a message from New York to California. And with that innovation, the Pony Express was DOA. <P> Five years later, undersea cables were laid to Europe, and the world was for the first time instantly connected. <P> That relay product was cute. It was a spring-loaded switch that an electromagnet could open and close. It became a building block for computers 100 years later. President Obama has the original patent application and model for Morse's telegraph on a shelf in the Oval Office. He told author Michael Lewis: "This is the start of the Internet right here." <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <P> For the next 30 years, telegraph wires went everywhere, but this mode of communication was still partially electrons and partially atoms, as delivery boys still had to take the message the last mile from the telegraph office to your home. <P> But by 1875, a Canadian named Alexander Graham Bell was working on something called the harmonic telegraph, which allegedly could send messages on different pitches or notes down telegraph wires. <P> More on that to come in the fourth part of our series. <P> <i>Three technologies are vying to upend legacy data center networks. Which one will you back? Also in the new, all-digital <a href="http://www.informationweek.com/nwcdigital/feb13?k=axxe&cid=article_axxt_os">Welcome To The Revolution(s)</a> issue of Network Computing: Startups are bringing fine-grained I/O quality of service to solid-state arrays. (Free with registration.) </i>2013-03-11T09:06:00ZIn this second installment in our series, Howard Anderson profiles one of the great thieves and populizers of the Industrial Revolution.http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-francis-cabot/240149954?cid=RSSfeed_IWK_Authors<!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/francis-cabot-lowell.jpg " alt="Francis Cabot Lowell" title="Francis Cabot Lowell" class="img175" /> <div class="storyImageCaption">Francis Cabot Lowell</div> </div> <!-- / Image Aligning Right --><em>"And this is good Old Boston, The home of the bean and the cod, Where the Lowells talk only to Cabots, And Cabots talk only to God."</em> <P> You're going to love this story. The father of the American Industrial Revolution wasn't an inventor, or even a financier. He was a thief -- a Brahmin thief (Exeter, Harvard), but a thief nonetheless. <P> What did he steal? Intellectual property. Some of those who changed the technology world were populizers who took (and I mean <i>took</i>) an innovation and brought it to fruition &#8230; in the U.S. <P> When Britain set up its colonies, it had in mind a terrific business model. The colonies (us, India, Australia, Canada, etc.) were supposed to supply the mother country with cheap raw material, such as cotton and wool. And we were supposed to buy costly finished goods, such as fabric and clothes, at full retail (no discounts for those ex-convicts and revolutionaries). And, of course, the Empire would get richer. The Crown and the wealthy noblemen would own the means of production, and that manufacturing asset would not be exported to the "colonies." <P> <!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/loom.jpg" alt="Textile Loom" title="Textile Loom" class="img175" /> </div> <!-- / Image Aligning Right --> <P> Back in Merry Old England, every family used to make their own clothes. They did the carding, the spinning and weaving at home -- remember Ben Kingsley in "Gandhi"? <P> Carding meant taking a wooden block with metal spikes and running it through wool or cotton to make fibers. Fibers were run through a spinning wheel powered by a human foot, turned into thread and woven on a home loom to create cloth. This technique was pretty much the same going back to the Egyptians. The Brits found that their spinning frame could automate the task, but they needed power -- even more than a team of horses could provide. So they first put their spinning frames near fast-moving streams or rivers, but eventually they hooked them up with one of <a href="http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-james-watt/240149696">James Watt's steam engines</a>. <P> This solution led to automated factories, which threatened the livelihood of the British textile industry workman -- so much so that Ned Lud and the Luddites (which I know sounds like a bad rock band) destroyed several of these early factories. About that time, a Yalie called Eli Whitney perfected the cotton gin, which drove the cost of raw material down even more. Got it? So Britain had automation, cheap raw materials and a stranglehold on the technology -- and even better, a virtual monopoly. <P> Enter Francis Cabot Lowell. <P> Lowell was a merchant. He imported silks and tea from China and textiles from Britain, and he went on factory tours -- lots of factory tours. He spent two years going from English factory to factory, studying spinning and weaving machines that operated on both water and steam power. At the time, the Brits would allow no drawings of these machines to leave the island, nor would they allow the machine designers off of Britain's shores. Talk about a closed system. <P> <div style="float:right; padding-left:10px;"> <a href="http://www.informationweek.com/20-people-who-changed-tech"><img src="http://twimgs.com/informationweek/globalcio/great-minds/great-minds-bug4.jpg" width="200" height="109" alt="20 People Who Changed Tech" title="20 People Who Changed Tech" hspace="0" vspace="0" border="0" /></a> </div> <P> So Lowell <i>memorized</i> the inner workings of British power looms. He told everyone he was "recuperating" from an illness, and that was why he was spending so much time in Britain. He had reached the conclusion that the U.S. needed to manufacture here and stop buying there. He was, of course, not able to buy drawings or obtain a model of power looms. <P> By the time the War of 1812 started, Lowell was back in Boston, starting the first integrated factory -- taking raw cotton and turning it into finished cloth. He hired young women as textile workers and built a system -- and for the next 100 years, textiles were the basis of much of New England's wealth. But Lowell wasn't the only one. Samuel Slater also learned textile machinery as an apprentice in Britain. He knew cotton spinning technology inside and out and memorized as much as he could before departing for the U.S. <P> In America, we know Slater as the Father of the American Factory System. But in Britain, he's Slater the Traitor. (Brits have to work on their sense of humor -- or humour.) So let's not hear any more about how Huawei may have inadvertently expropriated some Cisco operating systems, or how the evil Chinese are electronically rifling our best technology&#8230; <P> I love this story for a whole bunch of reasons: Their traitors are our heroes. By starting manufacturing here, America built up its skill set. Some of those early mill buildings on the Merrimack River later housed companies such as Digital Equipment. <P> <!-- Image Aligning left --> <div class="inlineStoryImage inlineStoryImageLeft"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/abstract.jpg" alt="abstract image" title="abstract image" class="img175" /> </div> <!-- / Image Aligning left --> <P> Steve Jobs was once offered a factory tour by Xerox, where he saw the first real computer workstation. Jobs was so impressed he went back and eventually built Lisa, and from Lisa came the Mac and from the Mac came everything else. Actually, Xerox got the technology from Citibank, which back then was building its own computer workstations and PBX under a bank automation initiative called Project Paradise. Citibank believed that no computer or telecom company understood its needs. So Jobs "borrowed" from Xerox, which "borrowed" from Citibank. <P> Years ago, many of my clients at The Yankee Group were Japanese companies that wanted tours of U.S. factories. Some said yes, but General Electric always said no. Maybe they knew something. <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <P> Lowell died at age 42 (who said that only the good die young?) His machine shop sold power looms all over, and it later built locomotives. With steam power, the importance of rivers became less important, so the textile industry was able to move to the South, then to the Midwest, and eventually to the rest of the world. <P> In his own way, Francis Cabot Lowell was a genius -- not a technical genius, but an organizational one. He conceived of the fully integrated factory, one that would take raw material in at one end and deliver a finished good out the other. America had both a domestic market for home consumption and a thriving export market, but not so much in Great Britain, where they also had a very good memory. <P> <i>Attend Interop Las Vegas May 6-10 and learn the emerging trends in information risk management and security. Use Priority Code MPIWK by March 22 to save an additional $200 off the early bird discount on All Access and Conference Passes. Join us in Las Vegas for access to 125+ workshops and conference classes, 300+ exhibiting companies, and the latest technology. <a href="http://www.interop.com/lasvegas/?_mc=MP_BTMEDIWKAXE">Register today</a>! </i>2013-03-04T08:36:00ZIn this first of a series on the great technical minds of history, Howard Anderson chronicles the enormous impact of the inventor of the steam engine.http://www.informationweek.com/global-cio/interviews/20-people-who-changed-tech-james-watt/240149696?cid=RSSfeed_IWK_Authors<!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/James-Watt.jpg" alt="James Watt" title="James Watt" class="img175" /> <div class="storyImageCaption">James Watt</div> </div> <!-- / Image Aligning Right --> We stand on the shoulders of giants. Virtualization, cloud computing, smartphones -- they all came from somewhere. What's the greatest invention of the last 300 years? The telephone? Computer? Internet? Remote clicker? Nope. It's the steam engine, the invention that launched the Industrial Revolution and changed the world. <P> When the sun finally came out in Britain in the 1720s, agriculture blossomed &#8230; and prices fell. Suddenly, many of the 97% of the population who made their living off the land had to find some other way. Instead of making crops, some had to make products. <P> Problem: The existing metals were too brittle and wood was too soft for manufacturing. So iron was needed for gears and wheels, but iron ore was underground and the mines often flooded. The usual solution was to have horses go round and round in a bucket brigade, but that method was costly and inefficient -- and it left lots of poop. <P> <!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/gears.jpg" width="175" height="117" alt="gears" title="gears" class="img175" /> </div> <P> Enter James Watt, a technician at Glasgow University who was doing repairs on an early version of the steam engine. Like any good entrepreneur, Watt improved the design, got a patent carving out a monopoly, attracted an early venture capitalist (Mathew Bolton) and created a new business model: <em>leasing</em> steam engines to mine owners for a third of what it cost them in horse power and later in the cost of coal. <P> By 1776 Watt was installing engines in mines, but others began finding new applications -- using them for grinding, weaving, milling. By 1807, Robert Fulton had mounted a steam engine on a boat and was offering passenger service from Albany to New York in 32 hours (150 miles). Soon steamers were hard at work on America's rivers, and freight costs dropped from $5 for every 100 pounds to &#8230; 25 cents. Take that, Gordon Moore! It used to take a month to move a flat bottom boat down the Mississippi and three months to bring it back up. Steam engines cut those times by 75% to 85%. <P> <!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/steamboat.jpg" width="110" height="110" alt="steamboat" title="steamboat" class="img175" /> </div> <!-- / Image Aligning Right --> <P> Watt basically started the Industrial Revolution. Before him, animal power; after him, steam power. Put a steam engine on a ship and you no longer depend on the wind. You can cross an ocean in days, not months, and you can drop the cost of shipping cargo by 95%. <P> Put the engine on rails, the same thing happens. Instead of horses carrying freight, rails could do it quicker and more reliably. By 1829, steam locomotives had started, and over the next two decades this was the hot growth industry, replacing canals as the primary mode of freight transport. <P> <!-- Image Aligning Right --> <div class="inlineStoryImage inlineStoryImageRight"> <img src="http://twimgs.com/informationweek/globalcio/great-minds/steamengine.jpg" width="175" height="146" alt="steamengine" title="steamngine" class="img175" /> </div> <!-- / Image Aligning Right --> <P> If the Brits had such a head start, why weren't they more dominant in technology? Good question. They had first-rate universities. They had a rich history of scientific discovery. They had plenty of experience providing risk capital -- who do you think financed all of those railroads and ship building companies? They were quite serious about patent protection. James Watt spent half his career suing those who infringed on his intellectual property. <P> In fact, Britain allowed New York and Paris to have Watt's pumps only to help with the water supply -- and this was done for humanitarian reasons. <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <P> Part of the problem, as watchers of <a href="http://www.itv.com/downtonabbey/">Downton Abbey</a> well understand, is when rich people are rich because they inherited their land but weren't into "commerce." Too tacky. Land rich but cash poor. Want an example? <P> Back in the 1400s the nobles wanted brighter hues for their coats of arms so that their soldiers could identify their leaders from the next hill during battle. But the British tradesmen weren't inclined to do the experimentation necessary to make what the market needed. The Germans were, and they quickly became the suppliers. From this chemical work came the German chemical industry, then the petrochemical industry and even the budding pharmaceutical industry. All this while the British were standing around, waiting to be properly introduced. <P> <div style="float:right; padding-left:10px;"> <a href="http://www.informationweek.com/20-people-who-changed-tech"><img src="http://twimgs.com/informationweek/globalcio/great-minds/great-minds-bug4.jpg" width="200" height="109" alt="20 People Who Changed Tech" title="20 People Who Changed Tech" hspace="0" vspace="0" border="0" /></a> </div> <P> Watt did more than just perfect and commercialize the steam engine, He was the catalyst for creating new opportunities in textiles, land shipping and open water commerce. In one fell swoop, he disrupted the status quo and created enormous value. All the subsequent development in manufacturing owes a debt of gratitude to him. <P> When an industry changes, the battle is first won by the arms merchants &#8230; and Watt was the first of these. He created Power and everything after that was an application of Power. <P> <b>Next In Our Series:</b> How Watt's innovation jumped the Atlantic to America.2012-11-02T09:06:00ZStu Laura, our irascible CIO, discusses the promise and pressures of private clouds.http://www.informationweek.com/news/240012685?cid=RSSfeed_IWK_AuthorsStu Laura, our intrepid CIO, was once again fit to be tied. <P> <strong>Laura:</strong> Those idiots on Mahogany Row are driving me nuts! <P> <strong>Anderson:</strong> And this is different from the usual in what way? <P> <strong>Laura:</strong> Clouds! Public clouds! Private clouds! If a little knowledge is a dangerous thing, then these bozos are toxic! <P> <strong>Anderson:</strong> Because? <P> <strong>Laura:</strong> One of our board members read that Amazon has dropped the price for using its cloud 16 times in the past six years! And he wants to know if "we can match that?" Of course we can't! <P> <strong>Anderson:</strong> Why not? <P> <strong>Laura:</strong> Because as big as we are, we ain't Amazon. I, and every other Fortune 500 CIO, much prefer having our own private cloud. <P> <strong>Anderson:</strong> Because? <P> <strong>Laura:</strong> Because we are CONTROL FREAKS! I want my cloud right down the hall from me, right smack dab in the middle of my data center. <P> <strong>Anderson:</strong> Because? <P> <strong>Laura:</strong> Aren't you listening? Because I am a control freak! Because I need to chew someone's rear end off if things go wrong. What am I going to do if Amazon has a problem -- scream at Jeff Bezos? Bezos is just selling excess capacity, and when push comes to shove, I'm not his major priority. <P> <strong>[ CIOs will soon see a major transformation in roles and expectations. See <a href="http://www.informationweek.com/global-cio/interviews/gartner-cios-begin-3-year-shift-in-respo/240009599?itc=edit_in_body_cross">Gartner: CIOs Begin 3-Year Shift In Responsibilities</a>. ]</strong> <P> <strong>Anderson:</strong> So you're worried about security? <P> <strong>Laura:</strong> Not anymore. That problem has been solved. I'll tell you what I am worried about: desktops. <P> <strong>Anderson:</strong> Desktops? Why? <P> <strong>Laura:</strong> They're sucking all of my resources! I have 20,000 desktops around the world, and it's costing me somewhere between $1,200 and $2,000 each to maintain those suckers. <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <strong>Anderson:</strong> That's $34 million to $40 million! <P> <strong>Laura:</strong> No crap, Sherlock. And I'm under real pressure to cut my costs ... which is mainly support. Can someone please tell me why I'm even in the business of supporting desktops, laptops, smartphones? Why can't we just give every employee $1,000 and tell them to buy what they want ... and use the cloud instead? <P> <strong>Anderson:</strong> OK, I'll bite. Why not? <P> <strong>Laura:</strong> That is where I want to go, and I will be damned if I know why my strategic vendors haven't stepped up to this. See, while Amazon has the size, there's no way in hell they will ever be a strategic vendor to me. I want IBM or HP or Cisco or Oracle or EMC to own this -- somebody I can count on to make it work and somebody I can ream if it doesn't! I want someone who solves my integration problems before forcing me to do it. If I'm going to save $16 million or $20 million, it's going to come out of support, so I need a real backstop. <P> <strong>Anderson:</strong> So you're sold on virtualization? <P> <strong>Laura:</strong> Look, I resisted it for a long time. But it's far less risky than I thought. The uncertainty threat is manageable, and the numbers just work. And if I don't do it, who will? This is what always happens: I have to get out ahead of my divisions and be more than a high-end purchasing agent. I have to drop my cost per transaction each year ... and increase availability ... and decrease latency ... and ... <P> <strong>Anderson:</strong> Is that possible? <P> <strong>Laura:</strong> Look, if I can show that we can save $20 million and INCREASE latency by only a hundred milliseconds, is there anyone who wouldn't take that tradeoff? <P> <strong>Anderson:</strong> What's the downside? <P> <strong>Laura:</strong> There is some upfront cost, and there's no guarantee on the metrics. But why the hell not? <P> <strong>Anderson:</strong> Whom do you have to convince? <P> <strong>Laura:</strong> Whom? What, are you some Ivy League snob? I have to convince the divisional GMs! I have to convince the compliance officers! I have to convince the board! And the C levels! <P> <strong>Anderson:</strong> Are they bitching? <P> <strong>Laura:</strong> Of course they're bitching! They want to know why it takes us six weeks to buy a server to get a new application up. Even now, they're putting applications up on Amazon and using their Amex card to pay for it! I'm losing control! <P> <strong>Anderson:</strong> What do they want? <P> <strong>Laura:</strong> They want higher reliability, higher availability, higher speed of application development. And they want reduced cost. Did I mention that my year-end review is coming up? How do you think that's going to go? <P> <strong>Anderson:</strong> I'll bite again. <P> <strong>Laura:</strong> "Well, Stu, what did you accomplish this year? How did you do with your goals? Your stretch goals? What have we done to reduce risks, Stu? Have we dropped our costs, Stu? Have we been able to keep headcount flat, Stu? Have you looked into this AT&T/IBM cloud solution, Stu? Or the VMWare/Cisco/EMC solution, Stu? <P> "The GMs are complaining that it takes too long to get new applications up, Stu. Do you know that in the past the big ate the small, but now the fast eat the slow, Stu? What are we doing about Big Data, Stu?" <P> <strong>Anderson:</strong> So is all of this possible with private clouds? <P> <strong>Laura:</strong> Unfortunately ... yes!2012-09-17T09:06:00ZMicrosoft must reverse the five stages of decline before hubris descends into irrelevance, and it's too late.http://www.informationweek.com/news/240007392?cid=RSSfeed_IWK_AuthorsHappy Birthday, Microsoft! You are now 37. <P> And like other 37-year-olds, you're starting to look ahead. And you don't like what you see. Your arteries are starting to clog. You've added 30 or so pounds (not all muscle) in the last 10 years. <P> Yes, you've done well, but the 12,000 millionaires you created by your 1986 public offering have pretty much moved on. Curiously enough, two of the three billionaires you created are still active, Ballmer more than Gates. But Gates is busy saving the world (thanks, Bill!). And Ballmer? He's sounding a little shrill these days. And it's awfully hard to compete against a religion (Apple, if you get my drift). <P> But worse, you have become ... irrelevant. Kind of like Madonna. She still sells a lot of music, but nobody really notices her. Oh, you have bought things (Skype for $8.5 billion), and you still dominate office software and PC operating systems. But Bing? Yammer? <P> You're kind of like a 37-year-old who goes into a bar and says to the young barmaid: "Where have you been all of my life?" And she replies: "Well, sir, for the first 20 years, I wasn't born." <P> OK, maybe Dr. Howard can help you out here. <P> You've got a disease. It's called middle age. It's harder to detect but easier to cure in its early stages; it's easier to detect but harder to cure in its later stages. You're about halfway. <P> <strong>[ Microsoft still wants to make it in the smartphone game. See <a href="http://www.informationweek.com/mobility/smart-phones/windows-phone-8-what-microsoft-needs-to/240006985?itc=edit_in_body_cross">Windows Phone 8: What Microsoft Needs To Compete</a>. ]</strong> <P> Great companies don't fall gracefully. They pound along ... and then fall quickly. Evidence: Motorola, Circuit City, Kodak, Bank of America ... Shall I go on? <P> Jim Collins, in his book <em><a href="http://www.amazon.com/How-The-Mighty-Fall-Companies/dp/0977326411">How The Mighty Fall</a></em>," talks about the five stages of decline. Stage 1: Hubris. Stage 2: Undisciplined Pursuit Of More. Stage 3: Denial of Risk. Stage 4: Grasping For Salvation. Stage 5: Capitulation To Irrelevance Or Decline. <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE -->You are Stage 1. Lots of hubris. See my July 20 <em>InformationWeek column</em>, "<a href=" http://www.informationweek.com/global-cio/interviews/microsoft-a-victim-of-its-own-success/240004089">Microsoft A Victim of its Own Success</a>." The last decade has taken you from invulnerable to vulnerable, from focused to defocused. <P> The hubris stage is when you decide that you're bulletproof, that your momentum will carry you forward. The next Windows will come out, the next Xbox 360 will magically appear, Windows Phone will wow people, you can come out with a tablet that people will just buy. You will run the numbers on Office and just KNOW it will succeed because <em>you are Microsoft</em>. <P> The next phase scares the hell out of me, and I hope it does you. This is where you scale hubris and decide that you have the management chops to just do more: more versions, more growth. <P> In case you haven't noticed, the "best and the brightest" don't work for you anymore. I teach at MIT; most of my best students went to work this year for Amazon and Google. You just ain't getting them anymore, and it's not the weather in Seattle. When you stop filling those key seats with the best people, then you fill them with the Seattle version of "suits." But don't worry, you're still racking up sales and profits. <P> Actually, I do mean worry. I'm being subtle, because right after Stage 2 comes the problem: You start going into Denial, saying "our best days are ahead of us." They ain't. <P> This is where the warning signs are easily explained away. We had trouble with foreign currency. We missed our projections because the economy in China/Greece/Spain turned down. <P> In your youth, you were a technology company, and a great one. When everyone hates you, you must be doing something right. Then you became a marketing company. And now you're a company that's financially driven. Just when you think there's nothing fundamentally wrong, there's something fundamentally wrong. <P> But the scariest stage comes next, and that is when you begin to lurch from side to side, trying to pull the proverbial rabbit out of the hat. And here is your enemy: the investment bankers, who will come up with beautiful PowerPoints showing you that if you would just make this and that and score this acquisition, then you would be back on the path of prosperity. Kind of like those ab crunchers they sell on late-night TV that promise to help you lose 30 pounds in 30 days. It took you 10 years to get to where you are (or are not). It may take you another 10 to get things right again. <P> We don't even want to talk about Stage 5--capitulation and irrelevance or death. This happens when you keep grasping for those magic potions, do multiple false starts, and "reorganize" (the McKinsey Full Employment Act). <P> OK, what do you want to do about it? Some companies make it out of this dilemma. Apple comes to mind. And to an extent, IBM, P&G, and Intel. <P> First, kill the bean counters. Go hire the best young technologists. The stock price sucks, so don't worry about it. Spin them off into small teams. Don't buy big companies--you will just screw them up. Buy little companies with great brains--you want their brains more than their products. Put them into a separate company, where you own 50% and these young turks together have options on the rest. <P> Second, cut staff, big time. Maybe 20%. I don't know what all of those people do and neither do you. <P> Third, tell Steve it's time to go. He had a good run, but it's time. Keep Bill. <P> Let me recommend a book, <a href="http://www.amazon.com/s/ref=nb_sb_noss_1?url=search-alias%3Dstripbooks&field-keywords=younger+next+year&rh=n%3A283155%2Ck%3Ayounger+next+year"><em>Younger Next Year</a></em>, whose authors say that if you work out hard six days a week, really hard, you can be physically younger a year from now. It takes discipline, commitment, and a sense of urgency. <P> Or as Lewis Carroll says in <em>Alice in Wonderland</em>: "If you don't know where you are going, any road will take you there." <P> Feel better. And Happy Birthday.2012-07-20T11:10:00ZFor all its cash and market advantages, Microsoft is a company in decline.http://www.informationweek.com/news/240004089?cid=RSSfeed_IWK_AuthorsThere's a wonderful article in <em>Vanity Fair</em> this month by Kurt Eichenwald, "<a href="http://www.vanityfair.com/online/daily/2012/07/microsoft-downfall-emails-steve-ballmer">Microsoft's Lost Decade</a>," which details the cannibalistic culture that took Microsoft from invulnerable to highly vulnerable. Ten years ago, we all were echoing that Microsoft had all the applications, all the operating system revenue, and all the talent, and so was an impregnable fortress. It would swat all competitors like so many mosquitoes. And we were dead wrong. <P> Fifteen years ago, we were saying the same thing about IBM. Its profits were larger than those of the next seven computer companies combined and its R&D budget was larger than anyone else's profits. How could we be so consistently incorrect? It's a talent. <P> Eichenwald puts the blame squarely on CEO Steve Ballmer and makes the case that his talents lay not in technology, but in sales/marketing and other assorted alleged skills. But the real reason is management. Microsoft, like every other large company, was the victim of its own attempts to bring order to chaos. Ten years ago, everyone at Microsoft was getting rich--the stock appreciation alone created 4 million (!) millionaires as the stock options became vested. Then the music stopped. And when it stopped, the only way to get ahead was to get promoted. You couldn't get rich on your stock options anymore because the stock wasn't moving up. <P> <strong>[ If IT organizations don't get their act together, the best and brightest will chart their own destinies. See <a href="http://www.informationweek.com/news/global-cio/interviews/240003422?itc=edit_in_body_cross">Here Comes Corporate Brain Drain</a>. ]</strong> <P> Those who had gotten rich either physically or mentally checked out. Then Microsoft subscribed to the <a href=" http://en.wikipedia.org/wiki/Vitality_curve">forced curve</a>, which said that only 20% of any team could be judged "excellent," 50% had to be called "acceptable," 20% had to be labeled "deficient," and the bottom 10% had to be made eligible for "reduction." Sounds like some MBA theory; in fact, it's a lift from Jack Welch's reign at <a href="http://www.informationweek.com/news/global-cio/interviews/240003440">GE</a>. <P> So what would you do if you worked at Microsoft and wanted to be a survivor? Would you gravitate to the high-performing teams? No way! Even if you were quite accomplished, you might wind up in that bottom 30%, and you wouldn't be promoted within your lifetime. No, No, No--you would migrate to poorly performing teams, where you could be a superstar. In the land of the blind, the one-eyed man is king. In a high-performing team, you might be cannon fodder even if you met all of your yearly objectives, especially if your peers exceeded theirs. <P> The second behavior of the Microsofties was even more insidious. In any team, you would delicately and subtly sabotage your peers. Did someone on your team need data by Wednesday for a report due to a Big Boss on Friday? Then why not send it late, send it incomplete, send it by interoffice mail. You sent it, didn't you? No one could complain that you were non-compliant, except that your peer would miss a deadline, which meant that someone's year-end review wouldn't look quite so good. <P> The result of all of this insidiousness: products were late and decisions were postponed--even as Microsoft racked up record earnings and cash kept accumulating. This dysfunctional "gaming the system" was just the sort of behavior which would have driven Steve Jobs crazy--and which he never allowed. <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> There's a lag time between when a company gets into trouble and the world realizes it. For a while, everything is hunky dory--the company is cranking along, making some acquisitions, building derivative products. But there's trouble below the water line. In other words, its success is a predictor of its failure. <P> I remember a discussion I had once with Cisco CEO John Chambers. I was keynoting a Goldman Sachs conference evaluating the technology sector, and I was rating companies on growth, international sales, products, and the ability to handle adversity. I gave Cisco high grades on all but the last category, and Chambers was ripped that I would even suggest that he didn't face sufficient adversity. <P> "Howard! All of my key management is filthy rich, and they're all leaving because their stock options are golden--isn't that adversity?" Chambers said. I had to admit that I didn't think that when your company was worth half a trillion dollars you'd be crying the blues. <P> Every company needs to find some common enemy upon which to rally the troops. If it can't find such an enemy, it will find the enemy within. This is where the backbiting, the gaming of the system, the convoluting of the mission takes place. <P> Too many years ago, I rowed crew at the University of Pennsylvania. The coach, Joe Burk, had just installed the first ergometers right on the shell, where one to four lights would light up at the cox's position, depending on how hard you were pulling. The coach would follow the boat, looking over the cox's shoulder, and shout: "Anderson, pull harder! You're only lighting three bulbs!" And I would drive my legs harder... while he was looking. Then I (or my teammates) would slack off until the coach came by again. Needless to say, we didn't win many races. <P> This is what has happened at Microsoft (and IBM, AT&T, Yahoo, HP, Cisco, and SAP), and it will happen sooner or later at Google, Facebook, and Kayak. Maybe not at Oracle, as long as Larry Ellison remains the meanest SOB in the Valley and just won't put up with this BS. <P> Karl Marx said that capitalism breeds its own destruction, and I think he may have overstated his case. Sorry, Karl, but success can destroy a company much faster (examples: Wang Labs, Digital Equipment). <P> Groucho Marx (no relation to Karl) was once told that a solution was so obvious that "a 5-year-old child could see it." His answer: Send for a 5-year-old child.2012-05-23T11:42:00ZOur intrepid CIO, Stu Laura, reflects on where to find and cultivate the true power in an IT organization.http://www.informationweek.com/news/240000888?cid=RSSfeed_IWK_AuthorsOnce again, we visit with Stu Laura, CIO of a major corporation and a man who doesn't suffer fools lightly. <P> <strong>Laura:</strong> I'm still recovering from my last 360 evaluation, which was the worst I've had in the last 15 years. I'm quite shaken. It seems that the things I used to do well I'm all of a sudden screwing up monumentally. <P> <strong>Anderson:</strong> Why? <P> <strong>Laura:</strong> I'm really not sure, but I have a few ideas. Like every big IT organization, we have had problems--problems moving to the cloud, problems with understanding big data, problems with our operating divisions and platforms. And each time we think we have things solved, we've been plagued by bad implementation. We used to be able to build a team, attack the problem, and get it solved on time and on budget. But during the last few years, we've missed our benchmarks. We've had more than our share of runaway projects. And the divisional vice presidents are going from sullen to mutinous, sometimes calling in outside firms to do things we used to do and do well. <P> <strong>Anderson:</strong> You're a bright guy. What changed? <P> <strong>Laura:</strong> I think I genuflected too much toward Efficiency and forgot about Effectiveness and thought that the organizational structure I used would see us through. If I made any mistake it was thinking that the formal organization ruled, when in fact it was the informal network that really showed me where the power was. <P> <strong>Anderson:</strong> Don&#8217;t you have the power? <P> <strong>Laura:</strong> Ha! That shows you how much you know. Forget the title&#8230;it's the informal organization that you never want to cross. It's the informal organization that actually gets things done&#8230;that knows how to bend the rules and even break them when necessary. Cross the informal organization and things go "clank." Power comes from below, not from above. It seeps upwards&#8212;it's like WD-40. <P> <strong>Anderson:</strong> WD-40? <P> <strong>Laura:</strong> Understand what we have is a system of networks in the company. Not computer networks--we have all of them--but people networks. We have advice networks--who goes to whom for advice. We have friendship networks--who is trusted and who will do favors for whom. Sometimes our networks are broken out by age; the people in the same age category somehow implicitly will work together. Sometimes they break out by religion and sometimes by where they've worked in the company. <P> <strong>Anderson:</strong> Have you ever figured out who your best people are and backed them? <P> <strong>Laura:</strong> I tried. What I found out was most interesting. Some of our quiet people just knew what entire other parts of the company were doing and were invaluable. Some of our best people came from operating roles into IT, and they could understand requirements better than anyone else. And we found that those IT managers who understood the informal organization greatly outperformed those who were more technically qualified. And then we found the real bottleneck. <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <P> <strong>Anderson:</strong> Which was? <P> <strong>Laura:</strong> Me! I took the pieces and thought that I could gerrymander the organization on a completely rational basis. I assumed that neat lines trumped human dynamics. I found that sometimes the Friendship network isn't fair--the friends did seem to favor each other--but it usually could get the job done on time and under budget. <P> Power kind of accrues to the people in the middle. I was finding that those who are gatekeepers of information seem to be able to gather the right resources at the right time--and that I was out of the information loop. <P> <strong>Anderson:</strong> Example? <P> <strong>Laura:</strong> We had resources that were underutilized--people, machines, etc.--and we had divisions that were resource-starved. But I didn't really know which was which, and when I tried to make sense of things, the informal network protected itself. Instead of using that accumulated expertise, I tried to convolute it, and it rebelled. Not drastically, but quietly. <P> <strong>Anderson:</strong> OK, so you got taken to the woodshed. What are you going to do differently? <P> <strong>Laura:</strong> The first thing is that I admitted to my boss that the evaluation was correct. I had thought that we needed a reorg, God knows why. The second thing is that I'm spending a lot more time finding out who the real leaders are. I have brought in HR to help me do that. I'm now instituting a system of rotating my people through the operating divisions. <P> <strong>Anderson:</strong> Good luck! <P> <strong>Laura:</strong> Thanks, I'll need it. And if this doesn't work, I'll have to go to Plan B. <P> <strong>Anderson:</strong> Do you even have a Plan B? <P> <strong>Laura:</strong> Sure, I'll call in McKinsey and they will suggest a very expensive reorg. <P> <strong>Anderson:</strong> That's a very cynical answer. <P> <strong>Laura:</strong> Tell me about it. <P> <em>Howard Anderson, founder of Yankee Group and co-founder of Battery Ventures, is currently the William Porter Professor of Entrepreneurship at MIT. He can be reached at <a href="mailto:handerson@mit.edu">handerson@mit.edu</a>.</em> <P> <i>Get the new, all-digital <a href="http://www.informationweek.com/gogreen/052112hc/?k=axxe&cid=article_axxt_os">Healthcare CIO 25</a> issue of InformationWeek Healthcare. It's our second annual honor roll of the health IT leaders driving healthcare's transformation. (Free registration required.)</i> <P>2012-03-08T10:27:00ZIt's time to check in with our good buddy Stu Laura, CIO Supreme, about big data and what his company is doing about it.http://www.informationweek.com/news/232602233?cid=RSSfeed_IWK_Authors<strong>Stu Laura:</strong> Ask me how I know that "big data" is a myth? Go ahead, ask me. <P> <strong>Howard Anderson:</strong> Consider yourself asked. <P> <strong>Laura:</strong> McKinsey has just written a 143-page report, "Big Data: The Next Frontier." Oracle has a long white paper on the subject. So does IBM. These people are going to strain something jumping on a moving bandwagon. And you! Didn't you write a column for <em>InformationWeek</em>, "<a href="http://www.informationweek.com/news/global-cio/interviews/229401796">Analytics Will Take Over Your Company</a>"? <P> <strong>Anderson:</strong> Guilty. So what's your problem? <P> <strong>Laura:</strong> Don't you realize this is HARD? The basic reason is that we in IT are tasked with driving transaction costs down. Now that logistics and marketing and everyone else wants big data, they want more of everything--more storage, more software, more databases, more processors. Who's going to pay for all of this? Me? My budget is squeezed tighter than a clam. I've outsourced, rightsourced, and downsourced. <P> <strong>Anderson:</strong> We've been through this before. You're really good at sucking up money from the operating divisions--go plead your case! <P> <strong>Laura:</strong> What case? Everyone has the same idea: "Build it and I will come." But you tell me how to get HR, logistics, marketing, and finance on the same page. It's kind of like pornography--everyone knows it when they see it, but no one can point to what this will mean ... so they're suggesting to me that my group bite the bullet. I have been through this a few times. <P> <strong>Anderson:</strong> Do what you always do: Find a few of your competitors that have used big data to build a case and scare your management. <P> <strong>Laura:</strong> That used to work, but now everyone is being very closed mouthed about what they're doing. The hype machine is breaking down. We're back to talking about "the strategic value of information," and we can't do any more than quote the same apocryphal tales. And you! You talked in your column about a Chief Analytics Officer. Do you know what problems you're creating? <P> <strong>Anderson:</strong> It seemed like a good idea at the time. <P> <strong>Laura:</strong> Let's just take the relationship we have with marketing inside our company. Those clowns just know how to spend money. So they're playing all sorts of "what if" games. What if we looked at our customers and figured out which sub-segment was about to switch from us to another vendor? What if we knew about the customers of our customers? Every time these clowns ask another "what if" question, it costs me $500,000. If you don't know where you're going, any road will take you there! <P> <strong>Anderson:</strong> Calm down, big fella! Surely you're exaggerating! <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <P> <strong>Laura:</strong> Let me tell you what's going to happen. We're going to have a feeding frenzy. Every group is going to get into the act, and we'll buy two of everything. Then we'll have three years of chaos and people tripping over one another. Then we'll try centralization. That won't work. Then we'll try decentralization. That won't work either. <P> Then we'll try task forces and get mixed results. Then they will decide it belongs in my shop and allocate about three extra dollars. That won't work. Then we'll outsource the analytical function, but we'll be reluctant to turn this over to anyone. Then a few people will get fired. <P> <strong>Anderson:</strong> And ... <P> <strong>Laura:</strong> Then we'll finally have figured out a management system that can take advantage of one of the clearest breakthroughs in 20 years. <P> <strong>Anderson:</strong> It sounds like your traditional skepticism is giving way to galloping cynicism. But it sounds like you, in the end, are a believer. <P> <strong>Laura:</strong> Of course I am. I may be dumb, but I'm not stupid. <P> <div style="border:1px solid #0e374b; padding:10px;"> <P> <img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" alt="GlobalCIO" width="75" height="75" border="0" align="right" style="margin:0 10px 0 10px;"> <P> <strong>Howard Anderson, founder of Yankee Group and co-founder of Battery Ventures, is currently the William Porter Professor of Entrepreneurship at MIT. He can be reached at <a href="mailto:handerson@mit.edu">handerson@mit.edu</a>.</strong><br /><br /> <P> For more Global CIO perspectives, check out <a href="http://www.informationweek.com/blog/main/archives/global_cio/index.html">Global CIO</a>. <P> </div><br clear="all"> <P>2011-10-07T10:14:00ZHe was demanding, persistent, and supremely self-confident. Jobs 1: absolute excellence.http://www.informationweek.com/news/231900287?cid=RSSfeed_IWK_AuthorsBy now, you're probably convinced that Steve Jobs was the Second Coming of Jesus. He wasn't. <P> He was a demanding, mercurial perfectionist. He could be, and often was, an incredible pain in the butt. He was the first technology diva. He needed "enemies" the way a fish needs water. He was more like Howard Roark, the protagonist of Ayn Rand's <em>The Fountainhead</em>, than he was Thomas Edison. <P> He led the most successful turnaround in technology history. He revolutionized a gaggle of businesses: consumer electronics, software, computing, retailing, music, film. <P> The key to understanding Jobs was to understand he wandered in the desert like Moses, not for 40 years but for 10. This was his time after Apple, when he invented NeXT, maybe the most powerful personal computer of its time. NeXT was a technical marvel and an economic wasteland. Only the true nerds wanted one, but once they had one, they wouldn't let go. <P> NeXT was Jobs' ticket back to Apple, which was badly in need of ... everything. But especially an operating system, so Apple bought NeXT and got Steve--buy one, get one free! Or you may have a different interpretation--buy Steve, get a free operating system! <P> Jobs had been driven from the temple by the Suits, namely, John Sculley. Sculley was much more the consummate politician, but in the end he was a soda water salesman. Sculley had learned the right words, but he never had the tune right. Exit Sculley. <P> In comparisons with Jobs, Bill Gates is usually cited as the better businessman, and perhaps he was. But at a certain point, Gates got tired, tired of the drag of running a business, tired of the Justice Department, tired of quarterly reports. Jobs never got tired. His thing: design. Design above all. Jobs once had a little Steve fit because he didn't like the screws inside the Mac. The screws! No one was even supposed to ever see them! <P> Jobs was the consummate venture capitalist, even though he wasn't one. He bought Pixar for a song--$10 million--from George Lucas. He nurtured Pixar, gave it life, let it make films (Toy Story), and hired brilliant people. He was running two companies at the same time, Apple in the morning, Pixar in the afternoon. Alert the helicopter; Steve is moving! The reason Jobs was worth $8.4 billion is that his little $10 million investment in Pixar grew to $5 billion. <P> Henry Kissinger once asked a staffer, who had the assignment to prepare a white paper, if this was his "best work." The staffer asked for the paper back and tried again. Kissinger then repeated the question, and the staffer then went back and tried a third time, afterwards telling Kissinger it was indeed his best work. Kissinger then replied: "Now I will read it." Jobs not only hired brilliant people, but he also got their best work. No one wanted to disappoint him. Also, no one wanted to be told that "This is the worst piece of ..." <P> Jobs' view of his competitors: sympathy. He never could understand why any company would release products so buggy and flawed, and why anyone would actually buy them. <P> <!-- KINDLE EXCLUDE --> <!-- GLOBAL CIO GLOBE --> <div style="margin:0; padding:0 0 10px 15px; width:244px; float:right;"> <div style="margin:0; border-top:1px solid black; border-bottom:1px solid black; padding:6px;"> <a href="http://www.informationweek.com/global-cio/"><img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" width="75" height="75" border="0" align="right" alt="Global CIO" style="margin:0 0 6px 6px;"></a> <div style="margin:0 0 6px 0; font-size:1.3em; font-weight:bold; color:#113e53;">Global CIOs: A Site Just For You</div> <span style="font-size:.9em; font-weight:bold;">Visit <a href="http://www.informationweek.com/global-cio/">InformationWeek's Global CIO</a> -- our online community and information resource for CIOs operating in the global economy.</span> </div> </div> <!-- /GLOBAL CIO GLOBE --> <!-- /KINDLE EXCLUDE --> <P> Apple had every Jobs strength--and many of his weaknesses. He believed that individuals created and that products, such as Macs, should help creative people learn. Jobs actually never believed in teams or groups or collaboration. So the early Apple products were weak where Jobs was weak. <P> Jobs never really viewed his competition as Sony or Motorola or Nokia. To him content and media and presentation were simply manifestations of the same creative process. <P> Was Jobs easy to work with? No. No. No. Clearly, the media industry and the app providers learned that lesson. But give him credit: The music industry titans always viewed the pirate copy as their enemy. Jobs pointed out that they were fighting a losing battle and he had enough clout to get these dons to sit down and support iTunes, reluctantly. <P> When Walt Disney proposed that his company take its characters and make them into a theme park, the company's board members opposed it. Only because Walt was Walt did they go along. When Jobs saw a market for a tablet--actually, an updated version of the ill-fated Newton--no one else did, citing the number of beached whales the rest of the industry had buried. He invented the category. <P> He also reinvented retailing. The Apple stores, all 345 of them, stand alone: clean, stark, no frills, no hustle/bustle. <P> Jobs taught us that design and execution matter, that the newcomer can clobber the incumbent with simplicity and performance, that customers will pay higher prices if a product connects with them. While paying lip service to open source, Job hated it. He believed in a closed shop, whose products work elegantly, whose designs are understated, and which forges an implicit contract with the buyer/user. <P> Jobs' legacy isn't Apple Inc. His legacy is that excellence can and should be rewarded. And if the Googles, Twitters, and Facebooks of the world learn and remember that, it's because their leaders have stood on the shoulders of a giant. <P> <div style="border:1px solid #0e374b; padding:10px;"> <img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" alt="GlobalCIO" width="75" height="75" border="0" align="right" style="margin:0 10px 0 10px;"> <P> <strong>Howard Anderson, founder of Yankee Group and co-founder of Battery Ventures, is currently the William Porter Professor of Entrepreneurship at MIT. He can be reached at <a href="mailto:handerson@mit.edu">handerson@mit.edu</a>.</strong><br /><br /> <P> For more Global CIO perspectives, check out <a href="http://www.informationweek.com/blog/main/archives/global_cio/index.html">Global CIO</a>. <P> </div><br clear="all"> <P> <i>Attend Enterprise 2.0 Santa Clara, Nov. 14-17, 2011, and learn how to drive business value with collaboration, with an emphasis on how real customers are using social software to enable more productive workforces and to be more responsive and engaged with customers and business partners. Register today and save 30% off conference passes, or get a free expo pass with priority code CPHCES02. <a href="http://www.e2conf.com/santaclara/?_mc=CPHCES02">Find out more and register.</a> </i> <P>2011-08-02T10:43:00ZStu Laura, our intrepid CIO, takes on a failed and flawed model: providing Least Access to data.http://www.informationweek.com/news/231300024?cid=RSSfeed_IWK_AuthorsRemember our friend Stu Laura, the CIO who daily fights the internal battles on Mahogany Row? Let&#8217;s check in to see what's aggravating him this week. <P> <strong>Laura:</strong> I'm going to change my first name to Zoloft or Prozac or something. These ongoing wars inside our shop between those who want access to internal data and those who want to restrict access and lower risk are killing me! They want it both ways and they can&#8217;t have it both ways. <P> <strong>Anderson:</strong> Stu, you've never suffered fools gladly. You work for a data-rich company. You exist by having your financial samurai continually come up with such arcane products that no one understands them--and then selling them to clueless customers, right? <P> <strong>Laura:</strong> You bet. Sometimes, however, the innovations have nothing to do with the customer and have everything to do with internal systems. But the real line in the sand is deciding who can get what access to which data. Our model was a failed and flawed one--Least Access--which meant that we give only minimal levels of access to people so that they can carry out their jobs. It's the equivalent of &#8220;name, rank, serial number,&#8221; but that gets right in the way of the sort of creativity and initiative that we need to build arcane but profitable products! Creativity happens on the edge. Least Access just doesn&#8217;t work. It never has worked and it never will. We found that at least half of our staff was over-entitled, and maybe that figure is close to 90%! <P> <strong>Anderson:</strong> So the problem is that the more you follow the rules, the more you restrict access, the lower your risk. But at the same time, you don&#8217;t get the &#8220;bonus&#8221; of coming up with creative solutions that cross boundaries? <P> <strong>Laura:</strong> Katherine Hepburn once said: "If you obey all the rules, you miss all the fun," and I didn&#8217;t even know she knew IT. But it's true. We have tried and tried to find a balance between the two--and we can&#8217;t. <P> <strong>Anderson:</strong> Surely there's some data that shouldn&#8217;t be shared. <P> <strong>Laura:</strong> Of course. Our most sensitive data we will never allow to escalate. But there's an enormous amount of data that is &#8220;gray&#8221;--not really strategic but which has some value. It's this second category where the battle lines are forming. <P> <strong>Anderson:</strong> What's the root problem? <P> <strong>Laura:</strong> Asked like the consulting puke you used to be! The problem is that some idiot thinks that this is a computer science problem when it's not. It's just one more dead flounder that they've dropped in my lap. <P> <strong>Anderson:</strong> OK, if it's not a computer science problem, what kind of problem is it? <P> <strong>Laura:</strong> It&#8217;s a business management problem! We can implement a strategy, but that's it. Management&#8217;s goal should be not to limit access to data, but to figure out a way to facilitate access. They haven&#8217;t and they won&#8217;t. They want to brag about the benefits when the company comes up with something great, something really innovative, but they want deep cover to protect their rears when and if we have given the wrong level of access to the wrong people. <P> <strong>Anderson:</strong> Now who&#8217;s mouthing platitudes? <P> <strong>Laura:</strong> The real key around here is timeliness. By the time someone who needs data gets the approvals of the Nazi gatekeepers around here, we have lost the ability to move quickly. We use approval cycles as a way to quickly squash great ideas. We kill with kindness and best intentions. <P> <strong>Anderson:</strong> Solution? <P> <strong>Laura:</strong> The only thing that might work--and I emphasize <em>might</em>--is if we allow people to escalate and then come down very hard after the fact on those who abuse the privilege. <P> <strong>Anderson:</strong> Will that plan work? <P> <strong>Laura:</strong> I don&#8217;t see why not. In fact, I'm waiting for approval of it now. <P> <div style="border:1px solid #0e374b; padding:10px;"> <img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" alt="GlobalCIO" width="75" height="75" border="0" align="right" style="margin:0 10px 0 10px;"> <strong>Howard Anderson, founder of Yankee Group and co-founder of Battery Ventures, is currently the William Porter Professor of Entrepreneurship at MIT. He can be reached at <a href="mailto:handerson@mit.edu">handerson@mit.edu</a>.</strong><br /> <br /> For more Global CIO perspectives, check out <a href="http://www.informationweek.com/blog/main/archives/global_cio/index.html">Global CIO</a>. </div><br clear="all"></p> <P> <em>At the 2011 InformationWeek 500 Conference, C-level executives from leading global companies will gather to discuss how their organizations are turbo-charging business execution and growth--how their accelerated enterprises manage cash more effectively, invest more wisely, delight customers more consistently, manage risk more profitably. The conference will feature a range of keynote, panel, and workshop sessions. St. Regis Monarch Beach, Calif., Sept. 11-13. <a href="http://www.informationweek.com/conference?k=axxe&cid=article_axxe">Find out more and register.</a> </em>2011-06-07T08:00:00ZOur intrepid CIO friend, Stu Laura, suggests that if the military can use computer games to help recruiting, why not the IT profession? Warning: If you can't have a sense of humor about the treachery in your own industry, don't play.http://www.informationweek.com/news/230200023?cid=RSSfeed_IWK_AuthorsOur old friend, CIO Stu Laura, was on a tear once again: "Where is the next generation of CIOs going to come from? If Farmville can inspire the next generation of farmers, what are we doing as an industry to encourage talented people to become IT managers? Let me tell you: nothing!"</p> <P> <strong>Anderson:</strong> Look, let's face it. They want to be stock car racers or investment bankers or entrepreneurs. They want to be reality show winners or rock stars. <P> <strong>Laura:</strong> Wrong, wrong, wrong. We spend the largest amount of money in industry, and we can't get any respect! That's why I invented "Call of CIO Duty: The Game."</p> <P> <strong>Anderson:</strong> I will alert the people at Activision and Zynga. But what happens in your game?</p> <P> <strong>Laura:</strong> The CIO gets a call from the CFO--he's over budget! The general managers refuse to pony up for a better firewall! The application development chief gets into a fistfight with the God of Legacy Systems! Like it?</p> <P> <strong>Anderson:</strong> If the military can use computer games to help recruiting, why not? What else happens? </p> <P> <strong>Laura:</strong> You have to pick an enterprise-wide HR software package, so you run a bakeoff, but one of the vendors has persuaded two people on the evaluation committee to change the criteria! You catch wind of this at the last moment and level the field, but then one of the losers goes over your head to tell your boss you have "no vision" and are probably on the take. And the divisional IT guys see a chance to bring you down, big time! Like it?</p> <P> <strong>Anderson:</strong> Won't this level of reality scare away some talented people?</p> <P> <strong>Laura:</strong> Hell no! It'll attract the kind of people we want--those bored with Grand Theft Auto. We need people in this job who can make quick decisions &#8230; you snooze, you lose!</p> <P> <strong>Anderson:</strong> I am, of course, intrigued...then what happens?</p> <P> <strong>Laura:</strong> It's midnight, and suddenly a massive Attack of Service! Then cybercrime rent-a-cops move in, but they're really a different gang intent on stealing IDs. At the same time, the CEO's kid wants help on his fifth grade paper titled "Steve Jobs: God's Gift." Which do you do first?</p> <P> <strong>Anderson:</strong> Tough call. So you explore the inner workings of the IT department to teach management skills?</p> <P> <strong>Laura:</strong> Even better. We teach treachery. We teach double dealing. We teach how to play vendors off one another! We teach how to camouflage operating expenses as capital expenses and use felicitous depreciation schedules to prove points! After all, it's an accounting judgment call. We teach obfuscation using PowerPoint to confound your enemies!</p> <P> <strong>Anderson:</strong> Sounds a tad underhanded, but who among us hasn't helped his CFO on occasion. Let's not forget who controls the sacrosanct budget. The lessons you're teaching here seem to go well beyond the standard operating systems in IT.</p> <P> <strong>Laura:</strong> Hell yes. We're teaching vital life lessons. Tell me, does MIT do this? Harvard? Isn't this course clearly needed?</p> <P> <strong>Anderson:</strong> Maybe. Is your game realistic?</p> <P> <strong>Laura:</strong> Realistic? You bet. I get acid reflux every time I play it. All of a sudden you're in a firestorm with the lines of business. You have to prepare a presentation on "private clouds"--and you know that it's all vaporware. Your competition has embraced some archaic operating system and you have to make a board presentation on why it's a bad idea--right after Fortune magazine says it's a good idea! And just when you see the light at the end of the tunnel, you have to make a decision on smartphones, carriers, and how to secure your company's intellectual property! And your CFO wants to cut your budget.</p> <P> <strong>Anderson:</strong> Is it a multi-user game?</p> <P> <strong>Laura:</strong> That's the beauty of it. Not only is it multi-user, but you're also playing against unseen enemies. Sometimes it's your competition, sometimes it's the consultants, sometimes it's your own trusted vendors! It's dog eat dog! </p> <P> <strong>Anderson:</strong> And what's the prize if you win?</p> <P> <strong>Laura:</strong> My job. I'm sick of this damn place.</p> <P> <div style="border:1px solid #0e374b; padding:10px;"> <img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" alt="GlobalCIO" width="75" height="75" border="0" align="right" style="margin:0 10px 0 10px;"> <strong>Howard Anderson, founder of Yankee Group and co-founder of Battery Ventures, is currently the William Porter Professor of Entrepreneurship at MIT. He can be reached at <a href="mailto:handerson@mit.edu">handerson@mit.edu</a>.</strong><br /> <br /> For more Global CIO perspectives, check out <a href="http://www.informationweek.com/blog/main/archives/global_cio/index.html">Global CIO</a>. </div><br clear="all"></p> <P> <i>Employees have more ways to communicate than ever, but until the mishmash of tools gets integrated, productivity will suffer. Also in the new, all-digital issue of InformationWeek: A buyer's guide to enterprise social networking. <a href="http://www.informationweek.com/gogreen/060611/index.jhtml?k=axxe&cid=article_axxe_os">Download it now</a>. (Free registration required.)</i></p> <P>2011-04-18T16:09:00ZResistance is futile, as fact-based decision-making trumps gut feel.http://www.informationweek.com/news/229401796?cid=RSSfeed_IWK_AuthorsDid you read the Michael Lewis book "Moneyball"? Of course you did...and you were impressed with how using numbers and finding relationships allowed a tier-two city (Oakland) to have a tier-one Major League Baseball team, a team that was often in contention with a below-average payroll.</p> <P> That same thinking is changing the business world. It's the murky world of business analytics, and it's going to take over your company and industry. Get ready.</p> <P> Who's going to be using this software? Who isn't. The Pricing people want to know yield management, which for Marriott means should it charge you more for your room if you aren't invading the mini bar. The Loyalty people are trying to find out which of your customers will yield the highest lifetime value. The HR people want to identify which job candidates are going to be outperformers...and will stay with your company. The Logistics people want to learn new patterns of suppliers.</p> <P> It ain't going to stop. <a href="http://www.informationweek.com/news/internet/b2c/219700578">Progressive Insurance</a> found that if it looked at people's credit scores, it could find who it should and should not insure--the higher the score, the less likely the potential customer would have a costly fender bender. Just the way that <a href="http://www.informationweek.com/news/204702770">Harrah's</a> can know that if you haven't shown up at one of its casinos in two months, it's better off baiting you with $50 in chips than a free room.</p> <P> Years ago we called this business intelligence. You have been accumulating data--reams of data--and what have you really done with it? Mostly nothing. But that's changing. </p> <P> Companies are beginning to compete using predictive analytics. Can I estimate what pricing can fill my airplane? Can I find which route can get my delivery trucks back home faster? Faster with less fuel? At what time? On which days?</p> <P> Companies are actually sharing some of these geek findings, the idea being that they benefit if their competitors aren't so stupid. Max Hopper, a recently deceased friend of mine and the architect of the American Airlines Sabre reservation system, once said: "In the airline industry, we are slaves to our dumbest competitor"--so having smarter competitors means they aren't pricing incorrectly and forcing you to follow them.</p> <P> Companies are finding that they can improve their profitability by a series of "micro-decisions" that boost their multiple. The main reason Stanley Works was able to acquire Black & Decker, instead of the other way around, was that Stanley had built an impressive cadre of analytics that made it more profitable. And companies are finding that if they can increase earnings, they can carry more debt, which makes them an acquirer, not an acquiree.</p> <P>Capital One has led in credit cards, Netflix in online movies. Think about Amazon.com: It knows what you buy, when you buy, and what you would probably buy next. Further, it knows what you're buying on Kindle and has a "suggestion engine" that takes that one $9.95 purchase and runs it up with your help to $27.</p> <P> Most of the analytics innovation is in business-to-consumer. There's the classic example of 7-Eleven knowing that people who buy beer at 10:30 at night often buy diapers (go figure). Some are even raising their prices, when their competition is closed. When you need diapers, you REALLY NEED DIAPERS.</p> <P> What will these companies need from their IT organizations? Clean data. Data available from a warehouse. And data that is distinctive. They will need to be able to communicate and coordinate from all those stovepipes you have been bitching about. Eventually, you'll want to tie your Web analytics in.</p> <P> The day is coming (trust me) when your company will have a chief analytics officer. Which companies will make best use of analytics? Those whose leaders have gone beyond skepticism and who believe with a capital B. Former <a href="http://www.informationweek.com/news/global-cio/interviews/228500182">Procter & Gamble</a> chief A.G. Lafley was a modest adherent, but Bob McDonald, its CEO since 2009, is a true Believer.</p> <P> Neural computing promises better results. What are the relationships that are not evident but are powerful? If you work for a bank, are heads of households whose last name ends in a vowel and who were born between 1965 to 1975 40 percent less likely to have a bad loan than the rest of the population?</p> <P> Many IT vendors want to help you: SAS, IBM, Oracle, SAP, Teradata, Microsoft, EMC, HP, Accenture, Deloitte, as well as smaller players. Who do you let in? <P> Every time a change comes in IT, the corporate types (that's you) start by resisting, then put a wall up to keep the problem away, then figure that they'd better take over before the amateurs really screw it up. It happened in office automation, it happened in CRM, and now it's happening in analytics.</p> <P> In business, it's not what you don't know that kills you. It's what you think you know that ain't so that will. Analytics is just a better way to run things--run your company on pattern recognition and facts, not intuition.</p> <P> The Red Sox lost an American League Championship Series when manager Grady Little kept pitcher Pedro Martinez in the game when he thought Pedro could last another inning--when Bill James, the team's sabermetrician, knew that after 105 pitches, the opposition lights up Pedro like a pinball machine. Facts trump gut feel. True in baseball, true in your company.</p> <P> <P> <div style="border:1px solid #0e374b; padding:10px;"> <img src="http://twimgs.com/infoweek/1217/217ID_GlobalCIO_75.jpg" alt="GlobalCIO" width="75" height="75" border="0" align="right" style="margin:0 10px 0 10px;"> <strong>Howard Anderson, founder of Yankee Group and co-founder of Battery Ventures, is currently the William Porter Professor of Entrepreneurship at MIT. He can be reached at <a href="mailto:handerson@mit.edu">handerson@mit.edu</a>.</strong><br /> <br /> For more Global CIO perspectives, check out <a href="http://www.informationweek.com/blog/main/archives/global_cio/index.html">Global CIO</a>. </div>