 From around the globe, it's theCUBE with digital coverage of IBM Think 2021, brought to you by IBM. Hello everybody, welcome back to IBM Think 2021. The virtual edition, my name is Dave Vellante and I'm pleased to welcome back a long time CUBE alum, Jim Whitehurst, who's the president of IBM and I'll call him Chief Cultural Evangelist. Welcome Jim, great to see you again. Great to see you, Dave. Thanks so much for having me. Yeah, it's really our pleasure and I want to start off, it's just over a year as president of IBM, I wonder, you know, when you're a little kid or you know, early in your career, computer science classes, you ever think you'd be president of a company that was founded in 1911? I mean, amazing. I wonder if you could share, what's the most important thing you've learned in your first year? Well, well, I mean, as you said, I would have never thought it. Yeah, I was a kid to have an IBM PC on the block and was always into technology but never saw myself as like, you know, running a big tech company. So it is humbling. I would say that there are tons of lessons in the first year. I guess the two that strike me most is, one is just related to strategy and that's, you know, Red Hat and most technology companies were very customer focused but it's around, you know, whatever technology we're bringing to market where IBM has fundamentally transitioned, you know, kind of transformed itself over time to make sure it can meet customer needs. So it's sold off businesses, it's bought other businesses, it's created new businesses. So it really shows the focus and value on serving our customers and doing whatever it takes to do it. And that's been a fundamental kind of different strategy that most companies have had. I think one of the reasons that we've been around for over a hundred years. The second is, you know, I'm deeply into culture and I've talked a lot about the difference running Red Hat that's all about innovation versus, you know, Delta Airlines where I was before which is driving efficiency. IBM is both. And so really trying to think through how you run an organization that needs to run the financial systems of the world at extraordinary reliability and drive roadmaps on things like quantum computing. At the same time, be able to innovate iteratively, you know, with our customers and in open source communities and kind of getting that balance right as a leader. It's, you know, you're kind of doing what we did at Red Hat and what we did at Delta but kind of doing it together. And I think that stretched me as a leader and kind of taught me a lot about how we're thinking about continuing to evolve the culture at IBM. Now, of course you do this leadership series you put out things out on LinkedIn. And you know, words matter and that's what I take away from a lot of the little short hits that you do which I really appreciate. My stuff that I put Jim on LinkedIn is you got to invest like 15, 20 minutes. So I really appreciate the short hits but you do that regular series and I'm kind of curious. Do you do that to reach more IBM people? Do you, open source culture? You're trying to help others. And I'm curious as to sort of why that platform as opposed to sending around an internal thing on IBM. And I'm wondering if your principles and how they've evolved kind of post pandemic. Well, so first off, maybe that comes from Red Hat but I think IBM shares that it's, you know if you have something really, really valuable you want to share it. And look, when I am out talking to our customers CEOs and some of the biggest companies of the world honestly we rarely talk about technology because other people are more detailed or deep in that we primarily do talk about culture and how you think about again how do you take an organization that's been built to drive efficiency and scale on a global basis and make it able to be more nimble and more innovative. And so, you know and obviously hopefully that's all with IBM and Red Hat technologies but ultimately most of my conversations at a senior leadership level are about culture and leadership style to drive that. And so if that's valuable for CEOs of some of the world's largest companies it's valuable to leaders, you know kind of across all spectrums, all sizes. And so I think that LinkedIn is a good way to kind of take some of those messages and make sure we were able to share those much more broadly. So certainly I spend more time talking about it inside of IBM and I spend a lot of time with our clients talking about it. But I think those many of the lessons are applicable more broadly and so why not share them? And LinkedIn's a great platform to be able to do that. How about, how have your principles have your principles sort of changed and how have they evolved post pandemic? Well, I think a couple of things. So one is the pandemic kind of forces you to get more precise about it. And what I mean by that is, you know so much of leadership is about building credibility and trust and influence. And you know when you're seeing someone in 3D live you know visual cues can kind of mean a lot and the water cooler conversations or who you run into in the hall can all help kind of create that level of trust in but you can't do that in 2D, you know as great as Zoom and other platforms are you just can't quite do it. And so you have to be much more thoughtful in how you're creating opportunities to kind of create trust. So I'd say I've gotten more surgical in thinking about kind of what those elements of leadership are that do that. I think the second thing I've really learned at IBM again is back to this, you know we have to be able to do both kind of drive kind of a future state in a known world as well as I call it seek a future state in an unknown world. So, you know driving a roadmap for quantum computing takes a number of different technologies coming together in one year and two years and five years. And that really does have to be pre-planned which is very, very different and I'll call the iterative innovation approach that we use at Red Hat and open source communities and working with our clients. And we have to do both. And so as a leader, you really have to understand the problem you're trying to solve and apply slightly different kind of leadership tactics against that. So when you're executing a known versus you are trying to create something in an unknown does require different approaches and we have to do both in IBM. And I think that's the struggle a lot of companies have. Every company needs to do that. You know, if you're Delta Airlines, you don't want anybody innovating on the safety procedures before your flight. Yet you want a lot of innovation happening on your website and your mobile app. So how do you bring those together? And as a leader, you can have a common set of values but recognize you have to bring different tools to the table depending on the context in which you're leading. And so I've learned a lot more and gotten a lot crisper with that since being at IBM. Interesting. I mean, the pandemic we all know it's been terrible but one of the upshots has been we had a glimpse of the future sort of shoved into a fourth march of digital in 2020. And so, you know, obviously the next 10 years ain't going to be like the last 10 years. And one of the things we've been talking about is ecosystems and partnerships and the power and leverage that you can get from those. And Arvin has said, you know, late at night, we are returning to growth company. And so I wonder if you could talk to how partnerships and ecosystems play into that return to growth for IBM. Well, you know, first off, a key part of our strategy we talk about hybrid cloud and AI. It's not just about, hey, a platform that runs across, you know, all the different deployment models is convenient. It's also because innovation is coming from so many sources today. It's coming from, you know, a byproduct from the web 2.0 companies. It's coming from open source. It's coming from an explosion of startups because of the amount of capital in venture capital. It's coming from traditional software companies. It's coming from our clients who are participating in open source. And so you have so many sources of innovation. Much of what we're doing is landing a platform that allows you to consume innovation safely and reliably from wherever it's coming from. So a core part of a platform by definition is the ecosystem around it. You know, having a platform that runs everywhere is great. But if you don't have any applications that run on it, you know, who cares? And so ecosystem and partners have always been important to IBM, but for this strategy of this horizontal platform-oriented strategy, it is critical to our success because much of the platform is the ecosystem. And so, you know, we've already talked about, you know, investing a billion dollars in that ecosystem to get ISVs and other partners on our platform, again, to ultimately kind of create that kind of horizontal layer where, you know, I can run anything that I want to on it and I can run that anywhere I want to. And so the two sides of that, so all the innovation happening on top and making sure it runs everywhere is what really unlocks the freedom of choice that reduces friction to innovation, which allows everybody in the ecosystem from our clients to ISVs to hardware partners to innovate more quickly. And that's what we really see as the benefit of our platform. It's not a horizontal stovepipe come innovate in this one place. It's recognizing innovations happening so many places and the only way we're going to be able to allow people to ingest that is to have a horizontal platform that everyone's participating in, which is why partners and ecosystem are so important not only to the success of our platform, but to the, I'd say, success of this next generation of computing these horizontal fabrics that require an ecosystem kind of built around them. I think that's an important nuance that maybe people don't understand that yes, you have a platform. Obviously, OpenShift is a linchpin, but it's an enabler for people to build other platforms. It's not the be all end all platform that sort of ultimately becomes another island. And so that is a key part of the growth strategy and presumably expands your total available market. Oh, absolutely. And so this is the key is, we can talk about great IBM technologies, we're doing amazing things in security and AI and natural language processing and all these other areas. But the platform is a recognition that we're not going to do everything for everybody anymore. There's just the democratization of technology means that there is so many sources of innovation. And so first and foremost, we have to land a platform so you can consume anything from anywhere. And then of course we'll drive our own pace of innovation both in hardware and in software around that platform, but we are just a player against on that platform where, which we're really instantiating for really anybody to be able to reach customers or customers to reach sources of innovation. I know sustainability is a passion of yours and it's obviously a hot topic right now. It's oftentimes I joke tongue in cheek Milton Friedman's rolling over in his grave with all this ESG talk. And I know you just posted recently on LinkedIn and of course I went right down to Kavanaugh because my premise is not only is sustainability the right thing to do, it's also good business. But I wonder if you could, you'll give us your perspectives on this. Yeah, well, so first off, I mean as a large global citizen as IBM, I think this is an important role that we play. And look, this isn't new to IBM. We came out with our first statements around environment in 1970. We put out our first report that's become our environmental impact report in 1990. We've been talking about climate since the early 2000s. So we've been involved in this for a long, long time because I do think it's important broadly, but there's also a specific role I think IBM can play beyond just our own individual actions to reduce our own footprint. Because of some of the extraordinary technologies that IBM has worked on in the years, especially around semiconductors, we have just an amazing amount of technology, expertise, intellectual property around material science. And so just a couple of examples of those that relate to the environment. We in doing some other work realized that we had a way to be able to recycle PET plastic which is a real problem because so many clothes and other things are now made out of PET. And it's really hard to recycle, but a byproduct of other work we're doing realized we could do that. And so we've formed a JV and we're funding that to not profit from it, but to make sure that much more of the world's PET is recycled. Or the work that we're doing on batteries we're using ocean water instead of rare earth minerals to make batteries that not only are cleaner, but last longer. Those are kind of byproducts of our kind of core business, the areas that we can see the benefits of innovation and material science being able to impact the world. I am hopeful that we'll be able to play a role with all of that in clear air carbon capture. I mean, that's still far further away, but I do think IBM has a unique role that we can play because of our deep expertise in again, material science, quantum computing and modeling that put us in a unique position to have a major impact on the world. I wonder if we could talk a little bit about sort of IBM and its technology bets. And I've made the point a number of times in my writing that IBM's R&D spend has been about pretty constant about $6 billion a year, but as IBM has jettisoned certain businesses got out of the x86 server business and got out of the foundry business with microelectronics, now it's spinning out NUCO. What happens, the effect is that R&D is a percent of revenue goes way, way up and my premise has always been that allows IBM to be more focused. So whether it's hybrid cloud, AI, quantum edge, where are you placing your technology bets and maybe give us a sense of how you ranked them? Some of your favorites. Yeah, so look, that's exactly right. I mean, we are one of the few places that still invest a massive amount in R&D especially in fundamental research. And so, I've got to break down kind of the core area. So first off, what I'd say is part of the hybrid cloud platform is recognizing we don't need to do everything for everyone. There is great open source technology, there are great other vendors that are doing things that we can enable our customers to access via the platform. So, we're not trying to do everything for everybody in the way maybe 40 years ago we did because we understand there's so much great other technology out there that we're going to make sure that we expose. So, we're investing in areas where we think we can uniquely add value that need to happen that others aren't doing. So, AI, let me take that as an example. There's tremendous work happening in machine learning that we see every day because of Facebook and people trying to identify cats. And so, when you trivialize it, there's a phenomenal work happening there. There's a lot less work being done in AI on things where you have a lot less data or areas where you need explainable unbiased AI and the problem with machine learning engines is they're not auditable by definition. That's kind of a black box. And so, we do a lot of work in areas like that. We do a lot of work in natural language processing. So, we've had more of a as a kind of publicity kind of push the technology, something called project debater where Watson can debate kind of champion debaters. That was mainly to make sure we can understand language in context, which allows for being able to better handle call centers in areas like that. Allows us to understand source code, which helps us think about how you migrate applications from on-premise to the cloud. So, we have a bunch of AI things that we are doing and is a core focus of what we're doing. But specifically, we're investing in areas like anti-bias, auditability, natural language processing areas where others aren't, which is unique and we can bring those capabilities together with what others are doing. Security, obviously huge, huge area where we've invested in quantum safe encryption. We've invested in confidential computing. In other words, even in compute mode, your data is encrypted. So, you can keep your own keys. So, not even we on our cloud can see your data. So, a lot of investments happening around security and that's going to continue to be an area as we know that's going to get more and more and more scrutiny. So, heavy, heavy focus there. Heavily focused on technologies that help you kind of modernize your infrastructure. So, automation tools, integration tools and areas around that. So, on the software side, those are kind of the main areas. When you look on the hardware side, obviously quantum is a significant area where we have a leadership position. We continue to drive. But even semiconductor research in kind of process technology. So, we announced something with Intel to work with them to bring some of our process technologies. As we kind of go from seven nanometer to five to two to ultimately one, that set of technologies is an area where we have a real leadership position and you will continue to work with now Intel to continue to work with others to drive that forward. So, whole bunch of areas, both on the hardware and the software side that we continue to make progress on. Yeah, the silicon piece is interesting. When we saw that with Arvind as part of the Intel announcement, we thought originally, now maybe this is just about quantum, but it's really much more than that. You mentioned the process. We dug into it and we realized, wow, we said, power 10 actually has the highest performance and because of the way in which you, and not to geek out, but you disaggregate memory and Pat Gelsinger talked about system on a package. It turns out, folks, that IBM is actually the leader in that type of capability. The way that systems on chips use memory is very inefficient, but IBM has actually invented some techniques to make that much more efficient. That sort of the future of semiconductors and the reason why we spend so much time thinking about it is because it's of national interest. There's a huge chip shortage, which doesn't look like it's going away anytime soon. So that's a critical part of national competitiveness and technology competitiveness going forward. Well, and the other interesting part about that, and you talked about power 10, going back to the hybrid cloud platform that we talked about, it's not just about running applications across wherever you want to run them. It also abstracts the chip architecture. So all of a sudden, whether it's on the mainframe, it's on power, it's on ARM, it's on x86 and a whole bunch of other technologies that might get developed. We're making it much easier to kind of consume that specialization or variety at the hardware level. Recognize this Moore's Law runs its course. There's no longer this inevitability of everything's just going to go to x86. I think we are going to see more variety because we're going to have needs in the factory floor or in the automobile or with massive container as applications where you're going to need, whether it's kind of shared memory or different architectures all the way out to kind of low battery consumption and that whole kind of breadth and our hybrid cloud platform enables that variability. And then IBM obviously has great technology to enable kind of building unique capability in hardware. So we kind of play on both sides of it, both kind of developing great technologies but then making it really easy for developers that consume and use those specialized features. I'm glad you brought that up, Jim. We mentioned Moore's Law because we all talk about how Moore's Law is waning and it's quote unquote dead. But the reality is is the outcome of Moore's Law, which is the doubling of performance every two years is actually accelerating because of the combinatorial factors of CPUs and GPUs and NPUs and accelerators and DSPs. If you add all those up and actually we're actually quadrupling every two years. So we have more processing power at much lower cost because of the volumes that you're seeing on things like ARM. So it's actually a very exciting time. We're entering an era that we really, it's hard to get your mind around sometimes. So my question is how should we think about the future of a state of IBM? What does that look like? Well, so first off, the thing that I've found extraordinary about IBM kind of having been there now just a little over a year as an employee a couple of years, I guess is when it's Red Hat was acquired is it is unique and fundamentally changing again who we are to kind of meet the needs going forward. And if you think about the needs and technology recognize it was only like 20 years ago that Nicholas Carr wrote his famous article, IT Doesn't Matter. It's about back office. And in that world, IBM was really, really effective at building and running IT systems for our clients. We would just kind of do everything for them. Today, technology is the forefront of developing or building competitive advantage for almost any business. And so nobody wants to kind of hand the keys. So we no longer necessarily doing things for our clients. We're doing things with our clients. So there's a whole set of work that we talked about about how we engage with our clients how we're much more collaborative and co-creative and our whole garage model to help build the capability to innovate kind of with our clients is a key part of what we're doing. We'll continue to drive core technologies forward like quantum and kind of key areas that require billions of dollars of research that frankly no one else is willing to do. And then we bring it all together with this hybrid cloud platform where we recognize it's no longer about us to it at all for you anymore. We're going to do the things where we can uniquely add value but then provide it all on a platform which allow you to consume from wherever, however you want to in a safe, secure, reliable way. So as we watch this next generation of computing unfold cloud shouldn't end up being a bunch of vertical stove pipes. It truly needs to be kind of a horizontal platform that allows you to run any application anywhere in a safe, secure, reliable way. And our architecture helps do that. So it's no longer, hey, we'll do everything for you. It's we can do things uniquely on a platform and work with you to be able to help you kind of create your own pace of innovation, your own sources of advantage. And so that's the broad kind of direction that we're going. Again, as enterprises move from consuming technology to be more efficient to driving advantage with it, they need partners who understand that, focused on their success and can innovate with them. And that's really where we're going with our technology, with our services capability and kind of our approach to how we work with our clients. Yeah, Jim, you just laid out the holy grail of computing in the next, in the coming decade and with IBM's acquisition of Red Hat and it really enables that vision. Clearly the company is one of the top few that are in a position to do that. Jim Whitehouse, thanks so much for coming back in theCUBE, really appreciate your time. Thanks for having me, it's great to chat. All right, and thank you for watching. Keep it right there for more content of theCUBE's coverage of IBM Think 2021, the virtual edition, be right back.