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Week 3 - Strategy Formulation, The Internet and The Web as a Major Disruptive Force - Complete

Strategy formulation - the internet and the web as major disruptive forces
Coming up with the IBM internet strategy
The future of the internet


Gary Hamel "Waking Up IBM" Harvard Business Review 78 (2000): 137

1994 Lou Gerstner's first full year as CEO - previous three years showed $15 billion in losses and market cap had plummeted significantly.

The next six years transformed the company from production to service provider. Because the new technology - Internet.

David Grossman - shocked IBM was still using mainframe terminals, instead of UNIX and the Internet. Responsible for demoing the Internet to 
Irving Wladawsky-Berger (the professor of this class) and
John Patrick (guest lecturer, see below) head of marketing for the ThinkPad laptop.

David Singer joins Patrick in building a primitive corporate intranet.

Patrick publishes "Get Connected" extolling the way IBM could leverage the Web
- Replace paper communications with email
- Give every employee an email address
- Make top executives available to customers and investors online
- Build a home page to better communicate with customers
- Print a web address on everything and all marketing online
- Use the home page for ecommerce

Starts a virtual Get Connected team within IBM
- keeps grassroots instead of making a department
- provides the ability to articulate and summarize what everyone was doing
- makes a home page to show to Gerstner who was immediately intrigued - "Where's the buy button?" believed in the importance of network computing and therefore the internet made sense

On the agenda Patrick gives a presentation to the top 300 officers in May 1994
- everyone can have a virtual presence  
- people didn't understand how to make money with it
- but he insisted that this was the most powerful, important form of communication that has ever existed

Internet World trade convention coming up and Patrick invests money into getting the biggest booth.
- asks all general managers for anything Internet related
 - web technology was there but nothing was ready to go to market
- showcases Global Network as the world's largest Internet service provider and a web browser

Patrick fights parochialism
- the web is a company wide issue and not part of a single division
- the culture of the internet is boundaryless
- uses a talk about the ThinkPad to showcase the internet - on the ThinkPad
- "miss this and you miss the future of computing"

Nobody had any idea that it would be so popular

IBM supercomputer Deep Blue chess game website was overloaded and crashed

1996 Summer Olympics
- IBM, Grossman tasked with building the site
- surprised that all the people would visit the site for sports scores 
- built the world's largest website - withstood 17 million hits a day
 - replicated the site on servers across four continents
- did some e-commerce with online ticket sales - $5 million in orders
- got IBM to change by working from the outside in
- web server software evolves into Websphere and what was learned was the basis for a web hosting business

Created web-enabled software - new set of software development principles
- Start simple; grow fast
- Trial by fire
- Just don't inhale
- Just enough is good enoughh
- Skip the krill - go to the top
- Wherever you go, there you are - no boundries
- No blinders
- Take risks; quick mistakes fixed fast
- Don't get pinned to one way of thinking

Internet lab and "Web Ahead" project set up
- lets executives experience the web's possibilities
- upgraded the terminal-based corporate directory "Blue Pages"
- never a threat to any other part of the company
- borrowed and loaned people but this was a benefit - spreading the word

Notes from lecture


Guest Lecturer John Patrick - President, Attitude LLC; Internet Pioneer; retired IBM executive

Launching Potentially Big Ideas 

-The Idea

 where do you get them? - look to the outside
 -go to a lot of confrences
 -who else knows about the idea


 -the best skill to have
 -have a simple theme
  -people who know about it need to explain it
 -validate and listen
  -half of communications is listening

The Team

-teach them how to tell the story
-don't protect the content
 -defeat the purpose of spreading the word
-identify the visionaries and listen hard 
-encourage pointing out your weaknesses
-trust them to the hilt
-pay them well
-lose one person - gain the department they go to
-leverage the organization
-small teams
 -maximum freedom of action

Detractors and ambushers 
Understand their issue If you can't change it, ignore it 
Find other allies 

Guiding Principles 

-Think Big
-Start simple
-Iterate quickly 
-Just enough is good enough
-Plan build deliver 
-Think globally and act locally 
-Think Inside-Out 

The Future of the Internet 

The Big Picture 

The Internet has grown to it's infancy 
Expectations rising by the day 
The Internet is evolving rapidly 

The Pervasive Internet 

Millions of businesses 
Billions of people 
Trillions of devices 
Everything connected to everything 
Security and Privacy possible at all levels 

Internet Is Always On 

No more dial-up
-the big companies do not want government to provide free wifi

Social Networking
-application interface that integrates many social networks

Wikipedia - The Writable Web 

-will self-regulate

Blogging/podcasting revolution 

-important because of the tags
 -give web pages context - can be found

Semantic web

-making data smart


Ajax: content isn't what it used to be 
-data gets refreshed and updated in place

-separating the document from the content that created it 


-gotta spend the money
Privacy policy
-create framework to see if information is secure
Linkage of brand and digital ID 
Healthcare and Finance
Block bad things with technology – not laws 
-authentication and challenge response