Coevolving Innovations

… in Business Organizations and Information Technologies



Converging digital and physical infrastructures: instrumented, interconnected, intelligent 1

Posted on December 30, 2008 by daviding

I was listening to Sam Palmisano’s talk on “A Smarter Planet” as part of the Technology and Foreign Policy discussion at the Council for Foreign Relations — the audio version, because I prefer to not sit at my computer to watch the video. He said that as the world gets “flatter”, smaller and more interconnected, the planet is becoming smarter. Smarter means that …

… digital and physical infrastructures of the world are converging.

Three advances in technology are driving this change.

  • The world is becoming instrumented: transistor technology is embedded in the mobile phones of 4 billion mobile subscribers today, and there will be 30 million RFID (Radio Frequency Identification) tags within 2 years.
  • The world is becoming interconnected: the Internet not only means 2 billion people connected person-to-person, but also the ability for instruments / devices to connect machine-to-machine.
  • Things are becoming more intelligent: since instrumented devices generate data that can be stored and analyzed, advanced analytics enables intelligence that can be translated into action — with nearly-continual real-time updates streaming from supercomputers.

The talk continued with a discussion about how much waste — in energy, gridlocked traffic, supply chain inefficiencies, unsystemic healthcare, and water usage — in the physical world might be reduced through acting smarter. In the pure information world, financial institutions were able to spread risk, but not track risk, which undermined confidence in the markets.

I follow the ideas coming from IBM more closely than most people. I’ve also had the benefit of studying businesses for three decades(!) in various academic contexts. This has led me to reflect on the conjoined ideas on technology and business that have coevolved with me over the past decade. Some significant themes have included:

  • 1. e-business (1997) and sense-and-respond organizations
  • 2. On demand business (2003 – 2004) and inter-organizational governance
  • 3. Innovation that matters and complex systems (2006) and the science of service systems
  • 4. Converging digital and physical infrastructures (2008) and systems modeling language

Formal, historical records of IBM’s directions are clearly documented in annual reports. I’m not an IBM executive, so my academic research is unlikely to impact corporate reports. However, it’s undeniable that my continuing on-the-ground engagements with clients and ongoing conversations with key thinkers inside IBM have shaped the way I see the world. From an academic perspective, I’ve moved closer to Normann (2001) in the view that economic progress is related to technological progress.

The effect of technology is — and always has been — to loosen constraints. As a result of technological development, what was not possible becomes possible. Or what was not economically feasible becomes so. [p. 27]

Each of the four themes are described below. Three themes are historical perspectives. The fourth continues to emerge with my current ongoing research.



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