Contributed by Shaku Selvakumar

The Forbes Business Leadership Forum is back after a great debut last year.  The Forbes Business Leadership Forum will offer over forty sessions for business leaders looking to effectively manage in today’s rapidly changing and complex market environment. Sessions will explore leading technology trends that drive greater business efficiency. Attendees will discover ways to simplify business processes and create new opportunities for growth. Executive learning sessions will focus on new approaches to manage change and complexity with innovative technology and tools that lead to breakthrough thinking. Additionally, attendees will learn how to improve marketing strategies through personalized customer interactions and targeted marketing campaigns.

 

Rich Karlgaard is the publisher of Forbes and the author of the weekly column Innovation Rules. He writes about technology, entrepreneurship, regional and economical development, and the future of business and work. He frequently lectures on these subjects and is a regular guest on Fox News Channel’s “Forbes on Fox.” In 2005, he began writing a daily blog, which appears on the homepage of Forbes.com. Rich joined Forbes in 1992 to start Forbes ASAP, a technology magazine, along with Forbes CEO and Editor-in-Chief Steve Forbes, and the futurist and writer George Gilder. At Forbes ASAP, he commissioned original works by Tom Wolfe, John Updike and other notable American writers. He co-founded two companies ( Garage Technology Ventures in 1997 and Upside Magazine in 1988) and one civic organization (the 5,500-member Churchill Club in 1985).

 

Rich, it is great to talk to you again.  Your interview on our blog last year was popular and insightful!  This is the second time Forbes is partnering with IBM after last year’s success.

 

Yes, the Forbes Business Leadership Forum sparked some great conversations about the intersection of business and technology last year.  Pleased to be back!

 

I was just thinking that in less than a quarter, we have had manmade and natural upheaval across the world and it’s accelerated change.  What are your predicts for 2011?

 

Yes, two things, Shaku. One is what has changed and one is what hasn’t changed. What’s changed is that the confidence that business leaders had at the start of 2011 when economic consensus growth figures in the United States were at about three and three-and-a-half percent GDP growth and world growth was looking even better particularly in the emerging economies.

 

And by the way the emerging economies of the world as Morgan Stanley measures it which should be the economies of China, India, Brazil and so forth are now larger than the U.S. economy. The emerging economies by that definition are 26% of the global GDP and the U.S. is 24 so you always have to begin talking about the world but in any event if you go back to the beginning of 2011, finally confidence is coming back and talk of a double-dip recession had abated.  Now with the recent turmoil the stock markets are reacting unfavorably as you would expect and people are a little bit more nervous.

Nevertheless I think that while growth in 2011 won’t be quite as robust as people had expected in January but on the other hand, it’ll be more robust than people had expected say in the fall of 2010 when the consensus growth forecasts were actually quite smaller than it was just two months later.  What doesn’t change is that the recovery will be - it has been and will continue to be - very uneven.

 

So then the question is then really about what it takes to really thrive in an uneven economy.

 

I think you can look across industries, not just in technology industry although it’s certainly fair to say that every technology - every industry today - even the oldest industries like your agriculture and transportation are driven more and more by technology.  You can look across all industries and you can see which business models are working and ones that are not.  It makes it challenging but not necessarily difficult. It’s not difficult I think if you can really see the patterns that are emerging. 

 

For instance, last year I talked about some of the things that are working extraordinarily well in this uneven economy and they continue to do so, things like great design. Now great design can be a well-designed product. It can be well-designed software. It can be a well-designed supply chain, well-designed processes; if you’re a retail business, a well-designed storefront. But in an increasingly complex and fast-moving economy, good design works better and better because it’s a way of how people deal with complexity.  That it’s actually hard-wired into our brains to seek coherent design and as the world seems more and more incoherent which it does now, coherence really stands out.

 

When we spoke last time, I think I left the impression that good design was solely affixed to product design, pretty-looking products, elegantly-designed products and so forth but it’s across all things that a company does.  It’s software, it’s processes, continuing education for employees. It’s sales training. All of these things have to be incredibly well-designed.

 

What about cost?

 

Cost remains huge and it doesn’t mean that the most skinflint company is going to prevail because if you’re a skinflint company, you may be tempted to chisel your supply chain or not pay your talented people enough. That’s not what it’s about. Keeping an eye on costs today really is about asking questions around the design of your supply chain. Or is your computing and telecommunications infrastructure fully utilizing the incredible powers of the cloud? How are you dealing with the explosion of smartphones and tablet computers in your organization?

 

These all have an incredible cost and getting the cost right on those big issues aligns you with the future in a powerful way and take one more issue, supply chains.  I mean, just since we talked last year Shaku, a lot of companies have to think about their supply chains as the price of fuel goes up. Is globally sourcing everything make as much sense if fuel prices are going up or will have companies have to start sourcing locally more.

 

Even if they take a little bit of a hit on wage costs, you know, they might do better because they are cutting their fuel costs so supply chains are being rethought.  Of course the tragedy in Japan, you know, has a big supply chain component to it.

So I think we’re going to see in supply chains some big shifts as companies rethink how they source their products and services around the world.

 

It’s not a one-size-fit-all solution.

 

It’s really not. I mean, strategy I think today is really being able to surf the waves of change and those waves can change abruptly at any minute. That’s why it’s so vitally important for companies to be strong at the core but flexible on the periphery.

 

I loved what you said about strong at the core and flexible at the periphery - that summarizes what business agility is all about. 

 

Yes and everything they do when they think about whatever process that they’re trying to automate, wherever there’s an IT intersection - and there’s an IT and telecom intersection with everything today.  You have to be strong at the core and flexible at the periphery because things are changing so fast, and many times unpredictably.

 

You know, you can predict Moore’s Law. You can predict the gains in bandwidth but you can’t predict these black swans coming over the horizon.

           

The companies that were flexible on the periphery and still had a strong core, with talented people who were able to see these changes and react to them quickly are going to do really well.  For larger incumbent institutions, it’s more challenging but on the other hand, you know, if they’ve been well-run companies, if they have a lot of cash reserves, a good brand and they’ve invested in those things wisely, they move ahead.

 

But I think it’s just vitally important today for the big companies to understand the importance of the cloud and how the cloud is changing the infrastructure of IT.

 

That is something IBM talked about even 15 years. The cloud is a resource that must be understood and mastered. 

 

You spoke about the business and IT intersection.  Can you elaborate?

 

There isn’t a single thing that any large company does today that doesn’t have an IT intersect whether it’s sales process, you know, supply chains, manufacturing, market and communications and branding.  Everything has an IT intersection to it and it continues to be at once one of the major investments for an organization but two, one of its strategic weapons so, you know, you’ve got to get that.  It is both a manageable cost but a powerful strategic weapon to get that balance right because you can, you know, if you are cost-obsessed, you can choke off the strategic weapon part of it. But if you’re profligate about cost, you know, you can overspend on the strategic weapon, you can make big mistakes too.

 

Yes, because then you have a longer turnaround to correct those mistakes.

 

Absolutely right.

 

We are also seeing that IT has actually become less difficult to understand by the business.

 

I think that’s absolutely true, Shaku.  A generation ago people who weren’t CIOs or coming out of IT were not that technologically sophisticated. Can you imagine if you just go back one generation in business, CEOs didn’t even know how to type.  Now everybody grows up very familiar with e-mail. It’s inconceivable that anybody could rise in an organization today without being pretty independent about how they use their own technology.

 

And the sophistication of end users and of business leaders within an organization is much, much more. It’s generational. It is a fact that one of the big developments in computing infrastructure is the cloud and the other is the consumerization of technology.

 

This has had huge implications for the CIO.

 

One of the difficult things that IT has today and that gets back to this point you’ve got to be strong at the center and flexible at the periphery so being the CIO and being the IT department of a large company today is challenging and difficult. But it’s also an opportunity because people who are in such a challenging environment and can figure it out are going to find themselves in high demand and well-compensated.  Companies understand that IT is so central to the future.

 

The C-suite is now getting more engaged around the technology strategy so how do you see that impact as we go forward? Do you see roles morphing?

 

I think it changes the nature of the CIO. The CIO needs to have the ear of all the other C-suite people.  The CIO role has always toggled back and forth between do you want an IT-centric CIO or do you want a business-centric CIO?  It is different by company but the fact of the matter is they have to be good at both.  Today the CIO has to delegate well and hire well so that the people running the core technology and putting the company on the core evolutionary path have to understand business and technology. For instance, understand both the objectives of utilizing the cloud and making it secure.

 

More like secure innovation...

 

Secure innovation, yes. The CIO really has to delegate well so as to thread both needles of security but with enough flexibility to be innovative. The CIO has to win the trust of not only the CFO and the CEO but also the Board of Directors and also the business line managers.  I think the CIO will need to get more involved in the other areas of business and understand everything from analyst calls to sales meetings to really get a feeling for how the company works.

 

That brings us to the intersection between IT and business at the Forbes Leadership Forum that you will be kicking off again after last’s year’s successful run.  

 

I think that the investment in employee education and training around the big picture about the business of technology is a real gap.  And the success of that leadership conference track shows that really smart companies believe in the tighter alignment between business and IT.  

 

 

Thank you Rich, for your time on this interview!  I enjoy reading the Innovation Rules blog and I am always inspired after talking to you.  I can’t wait to hear you speak at the Forbes Leadership Forum at Impact. 

Follow Rich and hear him speak at the Forbes Business Leadership Forum.  The Forbes Business Leadership Forum will offer over forty sessions for business leaders looking to effectively manage in today’s rapidly changing and complex market environment.

 

Register for Impact 2011

The Steve Jobs Of China
Rebecca Fannin
Alibaba's Jack Ma shows off his marketing flair at the annual AliFest summit.
Forbes column, 9/14/2010
Hangzhou, China -- If there is a Steve Jobs of China, it is Jack Ma, the founder and leader of Alibaba, China's largest e-commerce group. No other Chinese entrepreneur has the Jobs-like star quality, strategic vision and flair for promotion that Ma does.
Each September Ma can be found on stage at his annual AliFest in Hangzhou, the Chinese city known for its scenic West Lake and the home base for Alibaba. Labeled a "Netpreneur Summit," AliFest is, in effect, a love fest for Alibaba, its maverick founder and its accomplishments, which in ten years has gone from rising Chinese Internet startup to publicly listed player with global ambitions. In 2009, Alibaba earned $148 million on roughly $573 million in revenues (RMB 3.874 billion) and currently sports an $11 billion (RMB 77 billion) market capitalization. Yahoo invested $1 billion in Alibaba back in 2005 for a 40% stake.
This year's summit, held on Sept. 10, was on Ma's 46th birthday. To help him celebrate, Alibaba put on a show of impressive speakers: California Governor Arnold Schwarzenegger (on his first stop of a week-long trade mission), the U.S. Ambassador to China John Huntsman, and even a rival, eBay President and CEO John Donahoe. Last year's AliFest featured basketball legend Kobe Bryant and former U.S. President Bill Clinton.
Each one of these speakers complimented Ma for building Alibaba into an online trading platform for small businesses and creating millions of jobs. All called Ma a good friend, and presented him with a gift onstage.
Schwarzenegger gifted Ma with dark sunglasses and a form-fitting leather jacket, which Ma promptly put on. On cue, some 300 Chinese journalists and dozens of international reporters from madly snapped photos and shot video.
Later, at an Alibaba press conference, Schwarzenegger posed for more photographs and fielded questions as attendees were told that Alibaba aims to create 100,000 jobs in the U.S. (mostly in California, if the "Governator" has his way) and develop a Schwarzenegger-branded scholarship to train youngsters to be entrepreneurs.
See Forbes column continued here: http://www.forbes.com/2010/09/13/ebay-yahoo-ecommerce-china-technology-alibaba.html