Stan Litow
Adam:
So we’ll start withquestion one. When CEO Sam Palmezanoinitially announced the global systems portfolio in 2007 as part of IBM’stransformation to become a globally integrated enterprise, did you anticipatethat it would grow quite as quickly as it has?
Stan:
Well we thought itwas a good idea and we’d spent a lot of time talking internally at IBM and wethought it would be something that would be responsive to the concerns of thebroader citizenry, but I think it’s fair to say that the excitement and theinterest is something that we hoped would happen but the extent to which it hashappened has really been very gratifying.
Adam:
Of course. Has there been a link between 2007 before thefinancial meltdown, that occurred during its launch, but do you think there’sactually somehow been a positive for corporate citizenship?
Stan:
Well I think that itdepends on who you talk to. There are anumber of companies who as a consequence of the economic downturn have decidedto invest less in their corporate citizenship activities, whether it’s theirsustainability efforts or their community partnerships or corporatephilanthropy. From IBM’s perspective weif anything ramp things up a bit more, and I think that’s for a couple ofreasons. Number one, I think that we seeour community activities and our corporate citizenship activities as notsomething that is separate from business strategy but directly connected toit.
Second of all withthe premium now on efforts that are engaging not just the private sector butthe public sector as well and the strong interest in the public sector, I thinkcorporate citizenship activities and strong behavior from an environmentalstandpoint, from a community standpoint, are things that become more important,not less important. So from ourperspective it’s something that we saw as an opportunity to increase. It’s directly connected to smarter planet andsmarter cities, IBM’s entire branding effort, and it’s critical in terms of ourbusiness strategy. So from our standpointwhile some have decreased their involvement, we did not.
Adam:
Do you find that youremployees actually are more engaged because they see the financial impact,because perhaps they’re affected maybe not directly but with family members orfriends? Do they want to be more engagedwith people now?
Stan:
Withoutquestion. I think that our employees areinterested and have said so in a million different efforts. They’re interested in a company that has astrong citizenship profile. They’reinterested in sound environmental practices. They’re supportive of efforts around business ethics and othersustainability questions. They’re veryengaged in their communities. To giveyou some evidence, we have a little over 400,000 employees worldwide and about140,000 of them regularly do community service, so if you’re looking forevidence of interest by our employees and their communities, that’s a goodexample of their interest.
So I think it’ssomething that our employees are definitely interested in and concerned about,but if you went outside of IBM I think that all of the data indicates thatcitizens in general are more interested in their community and their communityengagement. I’ll give you an example. At the Harvard Business School there are morestudents who are involved in the social enterprise club than all other clubs oncampus put together, so people generally think that business school studentsare only interested in business and bottom line, but the reality is thatcitizens now in whatever walk of life, they’re interested in the planet,they’re interested in making sure that their community is successful, they’reinterested in their children’s schools, so a company that demonstrates itsengagement in corporate citizenship is identified as a company that people aremore interested in working for and staying at.
Adam:
Absolutely. Thank you very much indeed. So you said “When I got to the company, thesense was that in the corporate philanthropy area in particular it lacked afocus. While IBM was spending a lot ofmoney, it didn’t have a strategic element attached to it.” What then were your first steps?
Stan:
Well I thinkinitially was to get to know what were the biggest strengths in the company,and that largely was our research facilities. The biggest strength that we had for our clients was our capability toinnovate and to continue to develop new and better and more cutting edgesolutions to their problems and in a tour of the IBM research facilities I sawa number of tools that from my experience in the public sector and in thevoluntary sector might be particularly significant in addressing a variety ofdifferent social problems that were among the most difficult for people tograpple with.
It was out of thatthat it was clear to me that while money is always important to people in thecommunity weather they’re in the public sector or the voluntary sector, moneymeans then you have to go out and translate that money into capability, andwhat IBM had that was unique is it had that capability to address the kinds ofresearch capabilities and tools and technology that we had and were applying tobusiness problems. It could in the sameway apply them against social problems, and that was the beginning of atransformation from what we would characterize as checkbook philanthropy, whichis writing checks to solve problems, into a more substantive and meaningfulcontribution, which is helping people solve their problems. That’s been a road that we’ve been on overthe last ten or more years that has produced for us a fundamental change in howwe operate, but it’s added significant amount of value in the communities whereour employees live and work.
Adam:
Absolutely. Talk a little bit if you don’t mind aroundyour background because we were discussing earlier before the cameras were on,it’s not pure business. You mentionedprivate sector there.
Stan:
Well I spent time inall sectors of the economy. I worked ingovernment for the mayor and the governor. I ran a think tank in the voluntary sector and did a lot of communityorganizing and social enterprise activities from the voluntary sector. I’ve taught at a university level, so I’vehad a lot of different kinds of experiences I think that help me. I was deputy chancellor of schools here inNew York City, which is the largest school system in the United States, so Ihad a lot of understanding about how the public and the voluntary sectorapproaches a lot of problems.
What was clear to meat IBM is that we had some unique capabilities, and again our innovation andour technology, but then clearer and clearer to me it was our people, thetalent within our company, the people who had significant amount of engineeringtalent, business consulting talent, software developers, researchers, and thatwas really a unique capability that could be coupled with innovation andtechnology to bring about substantive change. I like to think that my background helped prepare me for this work in away that people who perhaps had spent their entire career in the private sectormight not have been as connected to the people at the grassroots level whoyou’re really looking to serve.
Adam:
I’m guessing thenthat the job here, the opportunity here, was almost too good to turn down. It must’ve been really sort of quite aneye-opener for you.
Stan:
Well I think I mustsay that when I got to the company I wasn’t as clear about the depth of itscapability once I got here. I think thata lot of people who come out of the public or the voluntary sectors see theprivate sector as basically a deep pocket and a source of funding, especiallycorporate contributions. I think when Igot into IBM it was clear to me that there was a whole lot more than thefinancial wherewithal of the company, and I think we’ve seen a shift not justwithin IBM but within other companies to be more involved beyond just cashcontributions or check writing. RosebethCanter at the Harvard Business School wrote an article for the Harvard BusinessReview describing the IBM approach as going from spare change to real change,and the explanation of that is the spare change approach is a company makes asum of money and if it is generous it contributes some portion of that smallchange into the community, but generosity in and of itself isn’t enough toaddress the really serious problems that people have in education andhealthcare and the environment, and that’s where the real change comes in.
So if your approachisn’t just spare change, you wanna produce real change, then what you’re givingaway is not what’s least valuable to you, your spare change. You’re giving away what’s most valuable toyou, and in our instances that’s innovation, technology, and our people, butthe result is much greater. The resultin the community and the result for the company is much more fundamental andmuch more connected to your business strategy and your mission, and likely tosurvive difficult times, whereas the spare change approach if you don’t havespare change you can’t give it away.
Adam:
Absolutely. Thank you very much indeed. So another quote, the corporate servicecorps, the key component of the overall initiative is about creating culturallyaware leaders who understand the link between social responsibility andbusiness strategy. You even likened itto a corporate version of the Peace Corps. What can you tell us about this component of the GCP and why does IBMbelieve that this type of initiative is so important?
Stan:
Well it’s vitallyimportant because it’s connected to how you grow your next generation ofleaders in the company. A corporateservice corps, and yes we do characterize it as a corporate version of thePeace Corps, is fundamentally about leadership and leadership development. We have seen a shift in our business model tobecome a fully globally integrated enterprise, and what that means is there’s agreater premium for people operating on a global stage. You’re doing business with people in culturesand communities different from your own, so where you are physically locateddoesn’t mean where you spend your business day interacting with people,clients, government leaders, community leaders, and to do that you need a muchmore sophisticated understanding of the relationship between the public sector,the private sector, and the voluntary sector. You need a much greater cultural understanding.
You need tounderstand teaming skills in ways that are at a much higher level, and what thecorporate service corps offers to our best emerging leaders within the company,this is 500 people selected in a very competitive way over each year, andthey’re assigned in teams of 8-10 in communities in Nigeria or Ghana orTanzania or Vietnam or the Philippines or Egypt or Romania, and they work as ateam living together, working on a critical social problem, usually connectedto economic growth, job development, using their technical skills, working as ateam of people from the U.S., from Canada, from the UK, from China, from India,from Africa, working together and solving a critical problem in theirassignment.
So at the end of thatprocess what we’ve identified is people have completely improved their teamingskills, their cultural adaptability, their understanding of growth markets,their understanding of the relationship between government, business, and thenot-for-profit sector. So it’s a way ofbuilding the most sophisticated level of leadership in the next generation ofyour leader. So I see the corporateservice corps not only being a model in how IBM develops its next generation ofglobal leaders, but we’re increasingly seeing other companies wanting toemulate that model and learn from the success that we’ve had through ourcorporate service corps in attempting to do things that are similar.
Adam:
How long do they goout for?
Stan:
Well they spend abouttwo and a half months working online as a team, building their work, learningabout the project. They spend one monthtogether on the ground working on the problem, delivering results on the ground. Then they spend the next two and a halfmonths working together in their post-work phase, finishing off the project,and then mentoring the next team that goes in. So you could have in a geography like Nigeria, you could have two orthree corporate service corps teams coming every three or four months,maintaining the continuity of the project. So for example a team could set up the equivalent of an entrepreneurshipprogram for women in Ghana. They couldhelp develop a plan for a tax-exempt zone to grow tourist industry in Tanzania.
So the work that theydo might not be completed in their one month, but the deployment of corporateservice corps teams at the end of a year or two years would really buildcapacity and capability on the ground, and then they maintain contact onlinewith the people with whom they’ve worked. So not only have we seen improvement in the skills of the people whowork for us, but we’ve also been able to document a significant amount ofimprovement in the skills of the people in the community with whom theywork. We like to describe the program ashaving a triple benefit. The individualbenefits, the most extraordinary leadership development program, and manydescribe it as the experience of a lifetime, a benefit in the community, theequivalent of hundreds of thousands of dollars worth of business consultingservices and each engagement really helping people solve problems, grow jobs,and improve their economy, and a benefit to the company in growing a generationof leaders who have a much more grounded understanding about growth markets andculture in the communities where we see our future.
Adam:
Absolutely. If there was an SME, I mean that sounds likea really, really fantastic idea and it’s clearly working very well for IBM, butwould it be scalable down? So if I’m inSME and I can’t perhaps afford to have key members of my staff out for fivemonths or traveling around the world or whatever, do you see that it would bescalable? Are there smaller options thatpeople could take?
Stan:
Yeah. I think that what you see IBM doing,obviously 500 people a year covering 14 different countries with economic valueof the teams in the neighborhood of $14 to $15 million a year, that obviouslyis something on a size and scale that a small or medium sized enterprise mightnot be able to do, but it is conceivable that those programs might approach asmaller number of people and for a shorter period of time. The other thing you have to look at is thereare companies, small, medium enterprises, who are already engaged in one-yearor two-year assignments, which is the more common model about replacing a skillthat you think that you don’t have in a geography, and the corporate servicecorps compared to that is a much more economical model, a much lower costmodel.
So I think you mightsee small and medium enterprise approaching that, but there can’t be a one-sizefits all approach to problem solving. One of the things that we’ve done with small and medium enterprise thatI think is particularly noteworthy is IBM collaborated with the World Bank tocreate a free site on the web for small enterprise to advance their businessdevelopment and business planning. It’scalled the SME toolkit, smetoolkit.org, and it has a range of free servicesspecifically focused in on small enterprise: how to do a business plan, how tocreate your marketing strategy, how to collaborate with other small enterprise,how to grow your business in a variety of different international geographies,and the corporate service corps teams have brought to small enterprise ingeographies the toolkit, explained to them how to use it.
They’ve integrated itinto their work. So I don’t think thatthere is only one solution. IBM has onemodel, corporate service corps, everybody should do it or should do it in thesame kind of way. I think that what wepresent to local government, to cities, to our clients, to not-for-profitorganizations is a range of solutions. Each of them can be tailored to meet a variety of local needs indifferent ways. Again one-size-fits-alldoesn’t make sense in the business arena and it certainly doesn’t make sense inthe corporate citizenship arena.
Adam:
Of course. What role does IBM’s smarter plan initiative,which you made reference to at the start in smart cities, play in thisgoal? How are these initiatives enablingIBMers to understand global challenges and shape the future of learning?
Stan:
Well the wonderfulthing about smarter planet is that it is fundamentally connected directly tocorporate citizenship, corporate social responsibility in meaningful ways. Whenwe talk about a smarter planet, being more intelligent, more interconnected,and able to utilize technological advances to solve critical problems whetherthey’re transportation, energy, healthcare, education, or the environment, it’sall about making the planet smarter, but the planet isn’t going to be smarterjust on the basis of technology or innovation. It’s going to involve local action and local activity, and it involvesintersection with the schools and community organizations, a variety of levelsof the community operating together, and that’s where IBM’s smarter communitiesand smarter citizenship activities and the agenda of smarter planet or smartercities comes together. We energize thefull capability of our company, our people, our technology, their time, theireffort in the communities where they work and live to be able to make theplanet smarter not just through our business engagements but through ourengagement with community and society more broadly.
Adam:
IBM, it’s industrial,industry business machines?
Stan:
International.
Adam:
InternationalBusiness Machines, which is a really sort of strange company name, isn’tit? It’s moved on so much fromthat. It reminds me of – who’s the guythat owns WPP, which is a sort of giant advertising?
Stan:
Oh yeah. Sure.
Adam:
WPP stands for Wireand Plastic Products. IBM has that samesort of thing. What was the processinvolved in deciding who would be sent on the Peace Corps? How do you pick your emerging leaders?
Stan:
Well the corporateservice corps was first and foremost an open and competitive process. People had to apply and the criteria includedbeing a top performer, having had prior experience in community service in somecapacity, having strong recommendation by your local management, and then anapplication had to be drafted and thousands and thousands of peopleapplied. In the first year almost 25,000people applied for the first 100 or 200 places that were available in thecorporate service corps and it continues to be a very competitive process. So we look for the best of the best. We look for people who have a variety ofskills and experiences. They come fromabout 50 different countries. Theyrepresent the full gamut of skills that are represented in the company.
So people who getselected are business consultants, researchers, software developers, marketingpeople, communications people, finance people, so they represent all thecritical skills and they represent skill at a high level across a variety ofdifferent countries. So when a teamcomes together such as a recent team that just came back from Ghana, they wereable not only to address the problems that were presented to them, but they hadso many nuanced skills that they were able to solve problems that people didn’teven know that could be solved. I thinkit’s a very, very competitive program.
We describe itsometimes as being harder to get into than some of the most competitiveuniversities in the United States, but the key to sustaining a program likethis is that people give it 100 percent effort 24/7, and that’s what winds uphappening when these teams come together. It’s easy to say they’re only available for a month, but if they’re twoand a half months in advance, two and a half months afterwards, 24/7 whilethey’re living together and working together, mentoring the next teams comingin, all independent evaluations indicate that the people who get these teamssee them as being uniquely valuable in addressing and solving the problems thatthey’ve got.
Adam:
And what aboutIBM? How does that informationabsorption process work? So they go out,they learn all these tremendous and incredible new skills. How are IBM then making the best out ofit? You talked about them as emergingleaders.
Stan:
Well I think first ofall the skills that they acquire or they develop or they enhance match up tothe critical skills that are acquired within the company, but increasinglypeople say that people who participated in this program are more flexible, moreculturally adaptable, they’re better at teaming projects, they’ve improvedtheir personal networks of people on a global basis within the company, sothey’re not only uniquely valuable for their corporate service corpsassignment, but they improve their capability in their day job on a regularbasis. Then there’s another advantagethat perhaps you might not have thought about going into it. An independent evaluation done by the HarvardBusiness School, 100 percent of the participants in the corporate service corpsindicated that participation in this program increased their likelihood ofcompleting their career at IBM.
We’re talking abouttop talent, and if you talk within HR departments not just at IBM but in mostcompanies, your top performers who have been with a company for seven or tenyears are those that you’re most at risk of losing if somehow they don’t feelexcited and motivated about their work, and nothing could be more exciting ormotivating to an IBM young emerging leader than participation in the corporateservice corps. So it’s not only been away of training your best leaders but retaining your best leaders, and finallyit’s a great attraction tool. I talk tobusiness schools and computer science departments and universities all the timewhen I explain that if you came to work at IBM you could conceivably apply forand gain acceptance into this program.
I think it motivatespeople to wanna choose IBM as a place that would be a place where you couldcombine an exciting business career and not have to put your social valuesaside, where most people think you have a choice to make. You could decide to work in a community or anot-for-profit organization and then you could get the joy of contributing tomaking your community stronger and more effective, or you can make an economicchoice to pursue a business career, but I think what we’re saying is that youcan combine both. You can be moreeffective at your job, more effective in the community, and you can help builda smarter planet.
Adam:
I’m sold.
Stan:
Okay.
Adam:
Sounds great.
Stan:
Good. Case closed.
Adam:
Yeah. Okay, so we’ll just do one more on thatactually and then a couple of personal ones and then I think we’ve got it allcovered off. How would you measure –obviously business is business, competition, etc. How do you measure the ROI on investmentssuch as these? Is it just in terms ofstaff enrichment or is there a basic sort of fundamental business metric?
Stan:
There are some basicbusiness metrics and measurements to determine the value of your corporatecitizenship. Obviously first andforemost is talent. You wanna use theseprograms and you wanna use this capability to recruit, retain, the best toptalent that you can, because that’s a differentiator in the marketplace. We develop pretty good return on investmentmeasurements that demonstrate that the scope of all the programs that we’redoing helps us to recruit and retain the best talent. Second of all, a lot of the work that we doinvolves technological advance. So we’veused our voice recognition technology to create new tools to help teachchildren how to read.
We’ve used ourautomatic language technology to create bilingual email and automatic languagecapability to bridge a cultural divide. We’ve used our cloud computing to be able to extend world communitygrids, something we created to do humanitarian research around the world toaddress fundamental research issues in the area of AIDS or cancerresearch. We’ve used business analyticstechnology to help clean the great river systems of the world, and every timewe do that we advance our technical knowledge, our understanding, sometimesgaining new patents or improving the skills or the intellectual capacity of ourbest people, so that’s a second important return on your investment. So it’s the talent and the people, but it’salso the technological capability that you’re building, and the benefit is bothto society and also to your business customers.
Third, there’s about$1 trillion that are being controlled right now by socially responsibleinvestment funds, and they have a choice to make. They’re looking for good companies to investin, to buy the stocks of good, solid companies, but also companies that have astrong social responsibility profile. Soyou see a third return on your investment in being able to attract more capitalfrom socially responsible investment funds. So you’re adding to the talent and technology, to the businesscapability to be able to attract socially responsible investment funds, andfinally you also have the capability if you’re doing things that are creativeand meaningful to get media attention for what you’re doing, and in a way thatmight not be possible simply for your products and services, and you canmeasure the return on investment on that too. If you’ve got an important story to tell and it goes beyond generosity,let me give you a very specific example in terms of IBM’s response after theearthquake in Chile.
We very quicklycontributed our best people, our best servers, our best software, something wecall disaster relief in a box, and within a relatively short time after theearthquake itself were able to set up a data center that could help thegovernment and the Chilean Red Cross to be able to figure out where suppliesneeded to be delivered, track the delivery of medical equipment, help searchwhich families could be connected with one another, and that’s a good exampleof the difference between if you write a check, the story might be here’s alist of companies that were very generous after the earthquake in Chile, andpeople might think positively about IBM as they would with a variety of othercompanies.
But the story in theChilean newspapers about what IBM had done is helping for people to form a viewabout the IBM company, and that is in a disaster they had the right solution,they were able to deploy it quickly, it was intelligent and delivered in ashort period of time, and it made a critical difference. So it’s not just a brand, important to yourbrand to be on a wall “we contributed to the following activities”, or thefollowing companies contributed their cash”, but the message is similar to themessage that you’d want to have covered about your company. We’re a business that’s around technology,innovation, service to our clients, making a difference for them, make adifference in the community, so the media coverage of that is of a differentnature.
Adam:
Two more questionsand then I’ll let you go.
Stan:
Okay.
Adam:
Just talk a littlebit about you if you don’t mind, about your kind of core values and then yourviews on leadership and these emerging leaders. So if you had to pass on just one lesson about how to kind of live alife and to give back, what would you say?
Stan:
Well I would saydon’t stop learning and don’t stop listening. I had a career in public service and in the not-for-profit world, and Ithink what’s clear is there’s not one answer and you really need to informyourself about different people’s perspectives on issues and problems whetheryou’re – if you’re trying to make a smarter world, and that starts with smarterschools, this can’t be done just by the private sector alone, so you’ve got tolisten hard to the problems of teachers and administrators and school systemsaround the world. If you’re trying toimprove water quality you need to get people to change their behavior and youcan’t do that by mandating that from the top.
So listening andlearning and informing yourself is a very important characteristic of beingable to make an impact in your own personal life or in a community, and thenunderstanding that it’s one thing to have the smartest solution; it’s anotherthing to get people engaged to implement that solution. That’s an important lesson that takes youfrom a brilliant technological example that can’t be brought to scale and somemeaningful reform. All of that requiresa much more genuine sense of collaboration with people across geographies andacross sectors of the economy, and I like to think that I’m still learning andstill developing, and the ability to solve problems tomorrow depends on that.
Adam:
Of course. Now you’re in the business of creating futureleaders. We talked about that at thebeginning of the interview, but what does leadership mean to you? To quote GE’s CEO, this is just taken fromhis leadership course, “Leadership is an intense journey into itself.” How do you define what makes a good leaderfor business? How much self-awareness doyou think there needs to be?
Stan:
Well I think thatself-awareness is a critical component. Obviously you need to understand your capability. You need to understand the capability of yourcolleagues and need to form a team because leadership is not an exercise that’sa solitary exercise of one person. Thebest leaders are leaders who provide an example, but they also operate in acollaborative mode, and that’s something that’s very, very important, and Ithink that leadership is not just about doing but it’s about collaborating andlistening. So I think that’s a change,and especially in a globally integrated economy, a world where people areoperating with people who have different cultures. In some communities, well does everybodyagree with me if nobody says they disagree, that’s fine? That’s not fine in a variety of cultureswhere people are less likely to voice their disagreement. So you need to understand different culturesand different communities and that’s an important characteristic of leadershiptoo, and also not to understand that we have just one answer.
There’s a lot ofexamples of you could find a great school in the United States or the UK, butwhy aren’t there 10,000 of them like that? It’s not because you couldn’t build one brilliant example, but youcouldn’t translate it into a scaled example that involved a lot of otherschools. One example of a community thathad a high quality transportation system or public safety system, but anexample wasn’t enough. You had to domore. So the leadership involves notjust identifying something that is an example of excellence but being able toroll up your sleeves and work with people on their own terms to be able tospread that example into other cases and other communities, and that’s whatreal leadership is all about.
Adam:
Stan, thank you verymuch indeed.
Stan:
Thank you.