Here's the lightning account of what's happened at General Motors over the last ten years. The company lead all automakers in cost. Even though its IT was outsourced, it ignominiously sported the most expensive IT costs per car. Enter Ralph Szygenda as CIO with the charter to fix the mess. Ralph (along with then CEO Roger Smith) realized that they had to change an out-of-control decentralized culture in which every brand did things their own way. So Ralph didn't focus on tech -- he centered on standardizing process -- designing, engineering, manufacturing, and selling vehicles the same way, all over the world. The results have been amazing: costs down, quality up, speed increased. With a single process language the company can now design a car in China and build it in Detroit. It has gone from total decentralization to global in the space of a decade -- an amazing achievement for an organization of its size.
Under Six Sigma, companies gradually improve process to enhance the quality of their products. With Social Sigma they use feedback from social networks to improve products.
Two great examples.
1) Credit Mutuel, the second largest retail bank in France, has been drafting its customers into product improvement through a program called, Si j'etais banquier -- "If I was a banker." The bank has recorded more than 50,000 suggestions, e.g., "If I was the banker, I'd explain the fees in clear terms." and recently let customers vote on the top 30.
2) GM's Fast Lane blog carries some amazingly straight-up conversations about GM's cars and trucks. Bob Lutz, the company's chief designer, uses the blog to hear firsthand from customers about design, quality, and product problems.
Product design and R&D will become much more of a continuous conversation -- not a black box, "Here it is!" process. Products will be revised under much tighter schedules, with obvious product errors corrected in new versions.
1) Google gets the best and the brightest from Yahoo. Why? Compensation. Microsoft, in a titanic mistake, eliminated stock options as an employee incentive early in the decade, replacing them with much less lucrative and leveraged restricted stock. If you're a hot programmer at Yahoo, you'll get options at Google -- not at Microsoft. Aside from compensation, Google's culture, speed, lack of bureaucracy, location, lack of legacy will be big attractors of talent.
2) The confusion factor. Microsoft has never acquired or absorbed anything as large as Yahoo -- unlike Cisco it has no culture or processes around large-scale integration. Microsoft's tight programming ethic will be naturally suspicious of Yahoo and its culture of media and advertising. When the inevitable integration plans are drafted, MSN and the search gurus at Microsoft will defend turf. In a market defined by a quick pace, Microsoft will take years to get this integration right.
I was involved in a session on social computing -- Facebook, MySpace, etc. I always bring Forrester data to Davos -- in an attempt to cut through the slugs of opinion/speculation emanating from all concerned. For U.S. people on-line, here's what percentage go to each of the following sites at least once a month: 31% YouTube, 29% MySpace, 22% Wikipedia, 8% Facebook, 3% Friendster, 3% LinkedIn, 1% Second Life. In every major country in Europe, MySpace is in the top three most popular social sites -- Facebook is only in the top three in the U.K. The social computing elite who populated my session beat me up about the data -- they all think Facebook is much bigger than the data suggests. My theory is that Facebook is the white collar place to be, and MySpace is too blue collar for the elite...
All of the Indian outsourcers were there. Infosys' lavish parties from year's past have upped the ante -- now all of the top Indian players are out in force. They have five worries: 1) the "tax holiday" that the Indian government bestowed on Indian IT companies will not be renewed in 2009, 2) the price of the rupee is too high, 3) the price of the dollar is too low, 4) U.S. recession, and 5) somehow, someway to get leverage. The ten year math on Tata/TCS, Wipro, Infosys and their smaller brethren doesn't work. There aren't enough smart, employable people to satisfy their current growth rates, and the planned growth of IBM, Accenture, and the captive players. They should go into the software business...
Asia was a hot topic. The consensus was that the Asian economy is not decoupled from the U.S. economy. A U.S. recession will take Asia with it -- at least for the next five years. There is $9 trillion of consumer spending in the U.S. per year, and only $1.6 trillion in "Chindia" -- China and India. If the U.S. consumer stops spending, Chindia can't make up the difference. Big debates about whether China can pass the EU or U.S. in GDP over the next 25 years without political reform. A lot of the hard-bitten economists and business people say that China will "muddle through." Pei Minxin of the Carnegie Foundation said that without political change, the Chinese people cannot see the future. He called China's expansion "authoritarian growth" or "high-speed, low-quality growth." In his opinion, political change is inevitable. But the Chinese government watched the clumsy Soviet Union to Russia transition and doesn't want to make the same mistakes.
The wane in U.S. power and influence was a subtext of the proceedings. If the U.S. economy was truly de-coupled from the rest of the world, you get the impression that no one at Davos would be talking about America --they'd be focused on the fast growing India, China, Korea, et al economies.
Lots of talk about the emerging worldwide water crisis. Some interesting thoughts: 90% of the world's water is used in agriculture. To cut this number we need another green revolution. That would be a genetic revolution -- but governments won't permit it. That's got to change if the impending water crisis is to be avoided. Energy places large demands on water supplies. It takes 2.5 liters of water to produce one liter of oil. The production of heavy oil or oil sands (the hard-to-get-stuff that the world will turn to as "easy" oil depletes) takes ten times as much water -- big problem. Ethanol is a double whammy -- it consumes lots of water to produce the corn, then it takes a lot of water to go from corn to ethanol. And you still get high CO2 emissions.
Seven years before the mast...I mean, hey, this is my seventh year attending the World Economic Forum! Lovely place -- snowy and cold. It's fun to watch all of these important people slipping and sliding on the ice in their expensive, leather-soled shoes...
Biggest topic: "Are we going to have a recession?" Everyone's worried. But when I probed on the health of their businesses, CEOs said that things looked pretty good. The world's best economists and finance ministers don't think a recession is imminent. If we do have one it will be mild. Unlike the Japanese debt crisis in the early 1990s which took six years to clean up due to slow-moving banks and government, Merrill, Citibank et. al. are moving fast to re-capitalize. The only other potential shoe to drop on the credit markets is a private equity or hedge fund collapse.