At IBM Think 2018, Ginni Rometty interviewed three different CEOs about what they are doing in this inflection point.
- CEO and Chairman of Verizon
- President of the IBM – Maersk joint venture
- CEO Royal Bank of Canada
Verizon: Lowell McAdam, Chairman and CEO of Verizon
Question: Talk about this industry. Every day someone is talking about your industry.
Answer: When we started Verizon, we controlled the vertical. But iPhone changes it all. Verizon became a more horizontal company.
Question: You do a lot of strategy.
Answer: We invest about $18 Billion a year. Most take 5 years to come to fruition. 5G was declared in 2015. We work to stay on the leading edge. Verizon decided to work with media.
Question: How did you get the name Oath?
Answer: We take an oath to get our customer the service they want.
Question: Tell us more about Oath?
Answer: We have enough fiber to go to Mars. On top of that, we are working on 5G. 5G will usher in the 4th industrial evolution. Example: today your handset does about 10 megabits of throghput. Under 5G your handset will do 1 gigabit throughput. We’ll be able to attach 1,000 X more devices to every cell site.
We’ll be able to save cities 30% in energy because of the attached cameras turning on and off lights. Latency will decrease by a huge amount tomorrow. That means you can put computing in the cloud. It also means you will use a lot less energy on your phone. Think about charging your phone once a month.
We know our limitations but we are committed to 5G.
Question: IBM built a computer the size of a grain of salt. Talk a little bit about views on partnering
Answer: We like to work with partners who are really good at something. This network has so many variables. We need to work with a group on a specific set of variables. We put Watson in our call centers. We upgraded those facilities to improve them.
Question: What do you see in the future?
Answer: Part of the reason we did the Oath investment is because we saw data analytics, security, etc. We get 4,500 hack attempts a day. We are no longer a video company, telco, etc. The lines become blurred.
Question: Share what your principals are on data and governing.
Answer: We don’t need your data to manage the network. We’ve made very clear pledges to not use your data in any way unless you’ve opted in. Our work is built on trust. We don’t want to be in the position of some companies in the valley.
Answer: I don’t know one industry that won’t be significantly disrupted. Barriers will go away. We’ll be able to do a handoff at 500 kilometers an hour. Planes will be able to do data handoffs before they land, helping the maintenance process.
Shipping industry is $4 billion.
Fact: 80% of what we have came from overseas. That’s $4 trillion in paperwork.
Mike White is the CEO of Maersk. It’s a joint venture between IBM and Maersk.
Question: What is a licensed broker?
Answer: It’s like a CPA but licensed to help companies bring in goods to the US
Question: Talk about the industry.
Answer: The market for global trade logistics is very robust with an increase of 3.7% per years. It’s a global economy. Companies want lean supply chains. But it’s hugely inefficient.
Question: If I want to ship something, how many groups touch it.
Answer: Look at a shipment of Avocados to Rotterdam. There are over 30 entities and 100 individuals to get one container into the EU.
Question: Why hasn’t anyone done anything about it?
Answer: With so many costs, the admin portion is higher than the actual cost of the product itself.
Question: When they asked you to do this job, what was your reaction?
Answer: When we had the opportunity to embrace the digitization our industry. I was all in. Why not Maersk.
Question: Blockchain will do for trusted transaction what the internet did for data. What made you a big believer in blockchain.
Answer: Logistics is one of the most complex networks. Logistics is hugely inefficient. Blockchain is the answer to all these failures.
Question: In the world of blockchain, permission is key. Why would competitors come together with this?
Answer: They stand to gain a lot from this. Every ecosystem gains. Carriers get this to cut down on integration costs. Ports and terminals get access much further upstream. Inland providers are interested. They want to know what’s coming to them as well.
Question: How much can global trade improve?
Answer: We see an 80% reduction in rekeying. Then you add the better event information.
Question: Momentum: 25 companies on board with 30 in the queue. What’s your sales pitch?
Answer: The industry is changing. It’s time to embrace the opportunities that digitization provides.
Question: 20 companies are in the food safety initiative. IBM, Walmart, Krogers, etc. It’s about getting these big network effects. Why JV?
Answer: We could have developed a bespoke solution but the issue is an industry wide issue. That’s why we created a separate company. It’s a platform. It makes everyone’s system more data rich. We are very excited about the opportunity. We are also establishing an industry advisory board.
Question: This is the power of how to change how work is done. It’s that network effect.
Answer: Since the announcement, the engagement has been phenomenal. Governments, ports, carriers, etc are buying into this. We’ve also seen a lot of interest from adjacent industries like finance and insurance companies.
Royal Bank of Canada
They are the top bank in Canada with over 80,000 employees and $3billion in technology. That investment is paying off. Dave Mckay is the president and CEO. He wants to automate everything.
Dave: Early on, we competed on advice, service, etc. The whole world has been disrupted. They are broadcasting their intent via social, google search etc. We need to rethink our value chain. Our services are being embedded everywhere.
Finally, mobility is a disruption. The move to mobile you couldn’t take the bank and offer it up. We had to rethink our technology backends. We are #1 or #2 in every product in which we compete.
AI: How do you take all that data and put that knowledge into value? We have 40 incredible researches but it’s not enough. We need to partner with IBM.
Cloud: We need speed to market. We need computing power. We have over 60 apps moving to the cloud. It allows us to experiment with minimum viable product. We have to get it right. Money has to move.
Blockchain: We have it in production. We are working with hyperledger with IBM.
Ginni: When these changes all combine, it pushes the inflection point. It’s technology and business. Talk about that.
Dave: We’ve had to redefine what business we are in. On the consumer side, we launched an AI called knowing and save. It looks at all the transactions and provides advice. They had 48 million interactions with their clients.
On the small business side, we partnered with a number of small fintechs. We’ve integrated end to end to register a small business, be your bank, and then work with Wave to provide accounting. We want to be an end to end company.
We created a mobile digital assistant for our employees who serve customer. Bring insight into data. It’s called Ava.
Companies whose employees are highly engaged prosper. I ask our employees, what do you want to be to our customers? What difference do you want to make to our community? That engagement level drives changes.
We have to change our leadership model. We decided to focus on skills. We want to bring the youth. We are making a $500M commitment to getting that next generation ready for the future.
Ginni: I want to end on this topic. This moment in time. How do you feel about stewardship of data?
Dave: Strength and trust in the financial system is at the root of our economy. You have to have a bilateral relationship. It has to be an opt in with a promise to keep the data private and within our walls. It’s the core of what we do but it has to be relevant to our customers.
This brings us full circle. This is an inflection point for business. It’s an inflection point for society. It’s an inflection point for IBM.
IBM’s big bet is you. We reinvented IBM in the hope that you will seize this moment and get that exponential change to become an incumbent disruptor.