Friday 29 Mar 2024
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The first decade of the new century has awakened us to the peril and promise of global integration. The opportunities are extraordinary ­— and the need for action is acute. Most importantly, employees, citizens and families are ready, eager and anxious for change. This moment will not last long. The question is, will leaders in all spheres seize it?

Periods of discontinuity are periods of opportunity for those with courage and vision. It may not be easy to see now, but I believe this moment calls for winning not by surviving the storm but by changing the game.

To do that, however, we will need new forms of leadership. In today’s world, very few systems are the responsibility of a single entity or decision-maker. Almost all of them require many different kinds of expertise. And technology is the easy part. We must infuse not just our processes, but also our decision-making and management systems with intelligence.

Leaders of businesses and institutions everywhere confront a unique opportunity to transform how the world works. We have this chance for reasons no one wished for — but it’s an opportunity we must seize.

The meltdown of the world’s financial markets has jolted us awake to the realities and dangers of highly complex global systems. In fact, this decade has been a series of jarring realisations. In the last few years, our eyes were opened to climate change, and to the environmental and geopolitical issues surrounding energy. We have been made aware of global supply chains for food and medicine.

Each of these collective realisations shared, I believe, a single subject. They were stages of our awakening to the reality of global integration. We are continually being reminded that we are all now connected — economically, technically and socially. But we are also seeing that being connected is not sufficient.

Fortunately, new capabilities are at hand. Our planet is becoming not only smaller and flatter but also smarter.
This isn’t just a metaphor — I mean infusing intelligence into the way the world literally works: the systems and processes that enable physical goods to be developed, manufactured, bought and sold; services to be delivered; everything from people and money to oil, water and electrons to move; and billions of people to work, govern themselves and live.

Think about this: by 2010 there will be a billion transistors per human — and each one will cost about one ten-millionth of a cent. The technology is being embedded into hundreds of billions of objects — cars, appliances, cameras, roadways, buildings, pipelines. Very soon, the Internet will connect all of this, in addition to some two billion people. Behind the scenes, massively powerful computers and computing “clouds” can be affordably applied to processing, modelling, forecasting and analysing the mountains of data all this will generate, as well as just about any workload and task.

In other words, the physical and digital infrastructures of the planet are converging. Almost any thing or process can become digitally aware and interconnected.

With so much technology and networking abundantly available at such low cost, what wouldn’t you enhance? What service wouldn’t you provide a customer, citizen, student or patient? What wouldn’t you connect? What information wouldn’t you mine for insight?
The answer is, you — or your competitor — will do all of that. You will do it because you can. Indeed, we will all do it because we must. We simply cannot move forward with systems as inefficient as those we have today.
The global financial meltdown triggered by the crisis in the US has been, to some extent, attributed to systems that have become quicker, but not necessarily more intelligent. The current financial crisis — in which our institutions spread risk but weren’t able to track risk — is just the tip of the iceberg.

According to the US Department of Energy, for example, 67% of all electrical energy is lost due to inefficient power generation and grid management. Congested roadways in the US cost US$78 billion (RM282 billion) annually in the form of 4.2 billion lost hours and 2.9 billion gallons of wasted gas. Consumer product and retail industries lose about US$40 billion annually, or 3.5% of their sales, due to supply chain inefficiencies, according to one report. And our healthcare system can’t link from diagnosis to drug discovery, to healthcare deliverers, to insurers, to employers.

Although we may not have the official statistics for Malaysia, we are facing the same challenges and issues. These and other systems may be interconnected, but that doesn’t make them smart. The good news is, now they can be.

Consider Stockholm’s smart traffic system, which has resulted in 22% less traffic, a 12% to 40% drop in emissions and a reported 40,000 additional daily users of the public transport system. Many other cities — from London to Brisbane — are deploying such systems. Intelligent oil field technologies can increase both pump performance and well productivity — in a business where only 20% to 30% of available reserves are currently extracted. Similar smart systems are transforming healthcare delivery, food tracking and supply chains. They are ensuring the authenticity of pharmaceuticals and the security of currency exchanges.
There are many, many other examples, and not just from the world of business. Countries, regions and cities are increasingly competing on the basis of smarter physical and social infrastructure — efficient transport, modern airports, intelligent and reliable energy grids, transparent and trusted markets and quality of life.

But the task ahead is daunting. At current course and speed, modernising the world’s urban water, electricity and transport systems alone would require US$41 trillion over the next 25 years, according to one study. Given the trajectories of development driving the planet today, we are going to have to run a lot faster (and a lot smarter) just to keep up — especially as we seek to identify and target our investments at the next sources of economic growth that will help move large parts of the global economy out of recession.

The leaders of the coming era will be those who succeed in tackling our new challenges by collaborating in new ways, and by stepping outside their traditional comfort zones. We need leadership that pulls across systems, given the integrated nature of our work and our world.

Ou Shian Waei is managing director of IBM Malaysia. This is the first of the Building a Smarter Planet series by IBM.


This article appeared in The Edge Malaysia, Issue 748, March 30-April 5, 2009.

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