 Live from Las Vegas, it's theCUBE, covering IBM Think 2018, brought to you by IBM. Well, everyone, welcome back to theCUBE. We're here live in Las Vegas for IBM Think 2018. Through all the actions happening, our third day of three days wall-to-wall coverage. I'm John Furrier, co-host of theCUBE. We have two great guests here, Paul Pappas, global leader of digital strategy at IBM's IX New Digital Agency and his cohort, Matt Kandy, European leader of IBM IX, a new agency within IBM specifically developed for expanding the digital services to their customers to create the best experiences using technology data and other analog and digital capabilities, Wimbledon and among others. Guys, welcome to theCUBE. Thank you, thank you. Thanks for that great introduction. So take a minute, this is a novel concept. When I think of agency, I think ad agency, buy some keywords, PR firms, more of an ad junk to a core organization, kind of a service provider. You guys have a little bit different agency focus, more like management consultants meets, world economic forum meets, UX, UI design, because you are building this country. Take a minute to explain what IX is and what's different about it in context what people might think it is. Sure, and thanks, a great setup. And I think you melded a lot in there of what we do. So you can think of us as a combination of strategy consultancy, digital agency, consulting systems integrator. So we do three things with our clients. We help them design, well, we help them define their digital strategies, particularly their business strategy in a digital world. We help them design world-class customer experiences, experiences that are going to be personalized and have an impact. And then lastly, we help them implement the technology, implement the customer platforms that they use to engage with their customers in a personalized, meaningful, omnichannel way. All of those things that we do help drive a measurable business impact. So nothing we do is hypothetical. Everything we do is real and drives a real business impact for our clients. So where if you might look at an agency, a lot of people think of agency as marketing communications agencies and the world has changed so fast. Or advertising agencies. Or advertising agencies, in that vein, we're on the more transformational side. In fact, we consider ourselves a business design partner. So what we're trying to do with our clients around the world is help them redefine, redesign their businesses so that they're fit for purpose so they can survive and thrive in this modern world. Yeah, I want to get your thoughts on this because, you know, looking back as a historian, if you will, evolution. Technology used to be slower. So the agency's added value on something complex. Ad agencies would create ad campaigns and some glamor around something. And we even started in some of the lead gen side of the business where there's a beautiful microsite and the graphics are amazing. It looks great, but it actually didn't scale. There's no tech behind it. Now, fast forward, you have the requirement for cool, relevant, and glamorous, but actually having tech involved. Cloud computing has really enabled this and the role of data has really enabled it. So this is now the new normal. The new normal for these higher-end functions is actually having a tech stack, technology stack, combined with business engineering logic and real business outcome, like profit, money, outcome objectives that people might want. How do you guys explain that story? Because, you know, I would just call a consultant up in the past, are you guys combining it to make it easier? What's the purpose that customers call you guys in? What's the, what are they asking for from you guys? So I'll start off in a minute. You can add color commentary. So the way we describe what you just brought to life there was we have multidisciplinary teams. So we have a combination of business strategists, right? So when our clients are engaging us, they could be working with the business strategist. It's really comfortable showing off the work and wearing a suit and tie. And he could be sitting next to, in our studio, sitting next to one of our creative designers who's tattooed from his wrist to his neck. Hoodie guy building everything. Hoodie guy, right. He's sitting there building there. Next to one of our data scientists who's popping open his Lenovo laptops, got the latest chip in it and he's so pumped because he's going to run some crazy data analytics on it, applying AI on top of it. And all of these people work together using design thinking. So we have an approach we call IBM Design Thinking. They've all been trained. We've trained over 16,000 people on design thinking. And they all work together to come together to solve our clients' problems. They work in a studio environment and we've opened up 38 studios around the world. Studios are places that we co-create with our clients so we invite our clients in to IDA, innovate, and co-create with their product. So it's agile to format on the projects. Not like waterfall. Hey, now you passed the ball to the other guy. It's all integrated team. Yes, and what you end up having is you end up having the view of understanding the business and the client's business challenge, which is where we start when we define the strategy. When we do the design work, it's underpinned with an understanding of the technology that's going to bring this to life. So we like to say that we don't do creative for creative sake or creative just for the beauty of the art. We do creative that can actually be made real. Yeah, you guys put a relevant practice together. So I got to ask you now, but what's the beauty of a cloud computing was is that it showed you don't have the provision of data center if you don't need it. And now you see people needing a data center for privacy reasons. They just throw their data, hence the hybrid cloud strategy, et cetera, et cetera. But if I want to do something like what you guys are doing, it's going to cost me money to build it out. One, we're the people, skills of the people, salaries of the people, tools for the people, all that is expensive to build out. So it's natural to go to someone who's already got it. So I want you guys to talk about that dynamic of buy versus build, what stays in house, that's core competency, and what's the scale leverage that the clients get from working with you guys? Because you have that advantage. Yeah, and actually what I'd like to tee up is this cost-effective approach that we use to help our clients jumpstart the work that they're doing, we call it an innovation garage. And Matt and the team in the UK and Europe have really been championing this approach. Why don't you share some of the work we do around innovation garages? Yeah, so I mean, one example is our client BP who we've been working with in this space and helping them drive a lot of the digital reinvention of their business. So teams of data scientists, designers, developers working hand in hand with product owners from the client side, but ideating, finding new different digital products and services that help improve advocacy of customers, drive loyalty, drive new revenue streams, but very quickly taking those ideas and turning them into prototypes, right? Paper prototypes, actual MVPs, minimum viable products, launching them into market, right? Choosing some target markets, but putting very measurable KPIs around each of those things. What's the timetable on that roughly, ballpark? Probably getting those MVPs out in eight to 10 weeks, right? So fast. Oh yeah, fast, right? This is not months. No, no, no. Not eight months. No, no, it's not waterfall, right? And so a radically different approach to getting things out there in the hands of real users. And then testing and learning, iterating, and then based on the data, actual fact and data back against those KPIs and measurements, then starting taking the decision around whether we're going to scale that into a global policy. Okay, before we go to drill down on that, what's the alternative to doing that? How many months would it take if I want to do it from scratch in-house? Spending up large transformation programs, right? And a year. Right, yeah. Minimum. Multi-years, multi-years, right? And I think the other thing, John, that's kind of key about this way of working is that you're starting to infuse new ways of working and new ways of thinking into the client organization, right? And so, you know, design thinking, lean, agile, DevOps, right? All of these approaches to get things done in a more rapid way. And so you're kind of driving change and transformation through making and creating and doing, not through some big change management program. And so we've been, you know, if I took BP, for example, you know, training and certifying their people in IBM design thinking, certifying them as product owners. And so through the act of making and creating these services, it's changing their culture and changing how they get stuff done. And it's a bit like a fire, kind of a little fire that burns and spreads within the organization as people see what's going on and want to become parliament. And one of the ways we do that, we actually co-locate in these innovation garages. So you take a company like BP, if you go to our South Bank office, we have a dedicated floor where you have 100 BP people with the IBM IX team working in this innovation garage model. It's not like you're doing all the work, they're integrating it. No, no, we're learning together and they're building new skills and we're building new skills and we're coming up with new ideas and innovations. We're doing it in a cost-effective way. To your point before, in the past, companies would spend a lot of money to try to go down a big path and try to, in essence, boil an ocean sometimes. Yeah, and if one guy quits, you got to replace it, skill gaps, massive. But also, if I look from the client's perspective, the thing that they're most proud of, some of the things they're most proud of is the bin, what they call the bin. And so it's all of those ideas that we've killed as far to the left as possible. And taking an idea that traditionally may have turned into some big program, multi-million spent on doing it, to find that it actually didn't deliver the outcome for the end-to-end consumer. So Matt, talk about the example with Wimbledon, because obviously everyone kind of can recognize that brand. You guys have been working with Wimbledon. You have a relationship with them, so they've known IBM for years. What's the current state-of-the-art with Wimbledon? What are some of the things you're doing with those guys? And how is IX team, the integrated design team, working with those guys? So we've been partnering with Wimbledon there for about 28 years. So relationship goes back to 1990. I mean, Wimbledon's been around back since the 1870s. The home of kind of tennis, tennis in an English garden, so complete with rain and drizzle and gray clouds and everything else. And so probably over the last seven years, we've been working with them to drive their digital transformation and so how they engage with fans and so how they use data and analytics to drive insights, to put very personalized experiences in the hands of fans. So if you think about an event like Wimbledon, runs for 13 days and about 500,000 people get to physically experience Wimbledon in the grounds. And so their whole strategy from a digital perspective is taking the beauty of the grounds and the experience and how they can manifest that digitally to millions of people around the world. More than live streaming. That's more than highlights. That's replicating the vibe, the buzz, the experience of being here. Completely. So if you look at the web channel, right? When you go to that website, you don't actually see tennis players and stuff on there. What you might see is a beautiful flower just wafting in the breeze, right? And so a lot of the technology and the experience that we put together is trying to bring to life the beauty of the grounds, right, through those digital mediums. And so, and also being very thoughtful and purposeful about the different channels. So when you think about the mobile app, right? People use that to get snack access to data. They're on the move. They want to understand the scores, alerts, iPad. People tend to use that sat on the sofa in front of the telly. You know, second screen experience, right? So there's a different set of use cases and demands. We launched the first Apple TV app for Grand Slam tennis tournaments. So again, people tend to be using that for catch up and replays. And so being very thoughtful and purposeful about the- You got to keep track of the digital culture because it's like fashion. You got to know what state of the art, what's going to sell, VR, AR, whole new creatives coming out. You do, but you also have to do it in a way that's authentic- Tech fashion. Yeah. The ladies and greatest. Hashtag, new hashtag, tech fashion. Tech fashion. But you also have to do what I was going to say, to do it in a way that's authentic to the brand that you represent. And relevant. Correct. So we're expressing the brand of Wimbledon online through digital channels and mobile channels. It has to be consistent with the brand, the brand values, the brand purpose, the brand mission. And that goes into the design side of it. Right. Because they're going to tell you, look, we're not the brand. We're not. The beauty, the elegance, the elegance of the sport, the elegance of the all England tennis club. You have to capture all of that and represent that in a way that you do anyway. All right, so this is where the melting pot between agency, creative. I had to even see where it's more and more about experience, less about the tech and tech come together. So I want to ask you, I did a panel this year at Sundance called The New Creative with Intel. And it was all about the emerging new creative artists that have tech behind it. And here's what we talked about. I'm going to get your reaction to it. Agile, which killed waterfall development, made things less risky. The old days was you build something, a lot of craftsmanship goes into it, but you ship it, you don't know if it's going to work. And you hope it works and sells. Then Agile de-risked that, but you're shipping code every day. But what we lost with Agile, that's now coming back. And I think this is where you guys are hitting the mark is the idea of craftsmanship in the product is coming away. So you got Agiles, that's good. But it felt boring. It felt the products didn't feel great. Yeah, certainly they were successful and they used data to be agile. It'll always be iterating, fail fast, et cetera. But now the users want craftsmanship. They want art. They want more experience in the tech product. What's your reaction to that? What's your vision? Do you agree? And if you do, what's your opinion? Well, I agree on the recommitment to craft. And the approach that we take to that is really starting with design thinking. And we view this a couple different ways. One, we think design thinking is a way to actually solve business problems in the modern world. Now design, we view as a craft. So we have very specific craft people that are pure designers. That's what they do every day for a living. Everyone in our organization practices design thinking. So I believe that the use of design thinking coupled with our design community and the world class talent that we have there is enabled to really get an underlying need. So when you're doing a design, you have to have the understanding of the underlying need of the customers that you're trying to serve. And that's what we really get at. So the craftsmanship that comes in through applying design thinking, applying your design principles to creating something that can then be made real and have an impact. If you ask our designers in our 38 studios around the world, what they love about being part of IBM IX and being part of IBM is the impact that they can have. That they can see their design scale. They can see it brought to life in a way that is far beyond anything they could have done in any agency. You can't fake design. Like security, you can't fake it. It either works or it doesn't. The way we think about design, right, is about almost design with a capital D. And so it's not just about how things look and feel, it's how they work. And so how you can apply design to help solve problems in a very different way, right? And how you apply design to strategy because designers are problem solvers. And so actually having people apply a designer's mindset to problem solving. You end up with very different outcomes, right? You end up with a lot more innovation driving into what you're building. And I think you end up with products and services that actually help make somebody's life a little bit easier, right? You're taking friction out of their life. You're delivering something meaningful and value to them. You're doing empathy mapping. You're doing customer journey mapping. You're doing a persona development. I want to build on what Matt said though that designers are problem solvers. When we look at design thinking, we have a method called IBM Design Thinking. And the logo that we use for design thinking is actually an infinity loop. So what we do is we combine design thinking with agile. And I think of IBM Design Thinking as a 3D printing of a solution to a problem. We're designing it. We're getting at an underlying need. We're prototyping something, creating a proof of concept. We're learning. We're now doing another iteration of design thinking and learning more about the underlying need, testing something. And as we keep testing and learning, we add more texture to the solution of the problem and it starts coming into focus for us. Yeah, the key word is problem. I interviewed a Stanford professors on the cutting edge of innovation design. She said, don't fall in love with your product. Fall in love with solving problems. And I think that's kind of what you guys believe. And I think John, to the point that you raised right about agile, we see many organizations driving kind of agile transformation and shifting. And I think our perspective very much is you need this combination of design of agile and DevOps together. Because agile allows you to pivot quickly. DevOps allows you to kind of learn and get rapid feedback from production and putting things out there. And you've got to have this kind of design-led approach to doing stuff because you've got to make sure that what you're building and putting out there serves a purpose and a real outcome for the end user. That's perfect, I tell you. And most people think, oh, we're agile, check. Oh, whoa, whoa, hold on. No, it's not a silver bullet. But you brought up a great point from a business leadership perspective that don't fall in love with your products, fall in love with the problems that you're solving. We are seeing that across every industry we work in. And I think this new digital age with all these emerging technologies going mainstream so fast, AI, AR, VR, blockchain, it's allowing companies to in some ways reimagine their purpose, but in some ways revisit their original purpose. So if you look at Ford as an example, they've declared that they're going from pure car manufacturing to mobility services. If you look at our clients in the life sciences industry, years ago they would have declared themselves as pharmaceutical manufacturers. But now they would look at themselves as partners in health and partners in the health ecosystem. And every industry we're operating in is that reimagining or revisit of the core mission. I think this is the only video for you I haven't asked about blockchain, but I was just talking to Jesse Lund about blockchain and we talked about digital currencies, digital, and we observed and we were talking about things are happening faster. So what's happening on digital, it's a speed game across the board with currency, there's no clearing, it's digital, it moves instantly. So his banking side, that's his thesis, but here your customers are challenged with looking down the barrel and being scared and going, damn, this is going to be fast. What if I screw this up? I mean, this is kind of how I see it happening. Like it's accelerated in all aspects. And this is where I think, in terms of the business that we're in, how we're different, and you kind of raised the traditional agencies and stuff earlier, John. I think the difference for us is when you think about the world of advertising and companies driving their message out through shouting loudly and campaigns and building websites, actually, our perspective very much is that these, most organizations need to look at how they digitally reinvent, right? And so therefore the scale of change needed as they look to reinvent their businesses, the business models, the skill pools within the organization, how they're going to use data and insights to drive different experiences. You start to move to a very different level of change and transformation, right? And one where these technology platforms and becoming a platform business in these organizations, right, need a partner fundamentally who can help you scale and drive that change. Using data, using cloud, DevOps, agile design, all rolled into a highly accelerated process. That's hard. It is hard, but you think about it. You guys are doing it, though. Well, yeah, this is what we do for a living, right? This is what our clients are faced with right now. It's kind of like a Dickinson-like challenge, right? It's a tale of two cities. With all the emerging tech that we were talking about before, there's never been a better time to create new innovations, to be innovative. And some of the things that we're doing with VP was a great example of that. Some of the bigger things we're doing with some clients that are trying to reinvent their organization around a renewed purpose. But at the same time, there's never been a bigger threat to existing companies in terms of there's never been more opportunity to be disrupted. So between these two poles of never been a better time to be in business, never been a tougher time to be disrupted, that's where our clients are operating. And this juxtaposition of core and new, where our clients who mostly have been in business for more than a few years, they have a core business that they need to grow and optimize while they also need to expand to the new. And they can do one or the other, they have to do both at the same time. And you know, the customers I talk to in the industry around this area, really look down, they look at three choices. Go for it, that's scary. You need a partner to do that, you guys are there for that. Don't do anything, but you're head in the sand. Or three, create blockers and fan stuff. So you're seeing kind of, you kind of walk in, you kind of figure out who's doing what. You see the blockers, there's all these excuses. No, well, we got this other, and then the head in that, well, we should be there. They don't do anything, they're not moving and then people will move. I mean, that's the reality right now. You know, we just published this research, a C-suite study. So we interviewed 12,000 C-suite executives, over 2,500 CEOs. And the title of the study is The Incumbent Strike Back. And that's what we're seeing now. So we're not seeing folks kind of sitting or putting their head in the sand. They're looking at their legacy business and the competitive advantage they have because of all the knowledge and incumbent advantage that they have and now applying that. Well, Paul and Matt, we don't have enough time to go into the impact of blockchain and cryptocurrencies and the initial coin offering's impact to the token economics of how your business will change, but we'll do that another time. Fantastic. Thanks for joining theCUBE. I'm John Furrier, here live in Las Vegas for IBM Think 2018. A lot of great conversations here on theCUBE. Number one, live tech coverage, extracting the signal of noise. We'll be back with more after this short break.