A Closer Look at IBM's "Smarter Planet" Campaign

In December 2008, GreenBiz.com Executive Editor Joel Makower talked with IBM Corporation's Rich Lechner, Vice President of Energy & Environment, and John Kennedy, Vice President of Integrated Marketing Communications, about the company's "Smarter Planet" advertising campaign. (See related blog post.)

Following is the transcript of the interview, edited for clarity.

Joel Makower: We all see so many corporate ad campaigns. And I've always been curious about how these come about and the thinking behind them. So, let's talk about the Smarter Planet campaign - how this came to be, what it's about, from both a marketing standpoint and also from a company business strategy standpoint, and what success looks like.

John Kennedy: Well, it really started off as observing what was happening in the world through the experiences of our clients, and through our own experience as a company, and observing that the world has become flatter - and Tom Friedman had made that concept very popular. As a result of globalisation, the world is becoming smaller as improvements in technology and explosion of bandwidth have made the world feel smaller, but that something just as profound was happening in that the world at the same time was becoming much smarter.

Globalisation has many benefits, but also some tradeoffs because many of the systems that the world operates in today - and by systems, we mean systems in every sense of the word, from systems in companies, to manmade systems and natural systems - needed to become smarter, to handle and take advantage of the greater connectedness in the world.

So it started off with those observations. And the more we worked on this, we began to realise that not only was this a dynamic that was very compelling, but as well, we felt that it was a good opportunity for IBM. This is a company that covers multiple industries, has a depth of research - has through our entire history taken on some of the toughest problems in the world in a way to help the world work better, to help our clients' companies work better, and help governments and universities work better. So we felt like it was a very natural platform for us.

Rich Lechner: I think that green and the whole energy-efficiency crisis have provided a very compelling and very visible manifestation of the need for the world's infrastructure to become more intelligent. As we looked around, there was no shortage of examples of the kinds of inefficiencies that existed in the world today.

In a world in which water, energy, power are severely constrained, you don't have to look far to see, for example, that only 30 per cent of the potential electricity that's available at the energy source actually reaches the doorstep of the consumer. Or that significant amounts of traffic congestion are caused just by people circling, looking for empty parking spaces, wasting fuel. You can look at our distribution systems around the world and see that more than 20 per cent of all the shipping containers and more than 25 per cent of the trucks moving around on a global basis are empty. You look at the way that food is distributed and understand that the average carrot in the United States - the lowly carrot - has traveled 1,600 miles to get to your dinner table, and you say clearly something could be done to improve the efficiency of our food distribution system.

And water: We're projecting that over a billion people won't have access to safe drinking water in just ten years time, and yet today, just five food and beverage companies consume enough water on an annual basis to serve the daily needs of everyone on the planet.

We looked around and we said there's plenty of room for improvement and our expertise in IT coupled with our deep industry knowledge and our ability to look at and re-engineer processes gave us a unique vantage point to comment on the need to exploit this growing intelligence and where the first opportunities for exploitation might exist.

Kennedy: The benefits that would accrue to society and also to commercial enterprise is another good one, one that is particularly current when you look at the crisis in the current financial markets. A major aspect of that crisis is the fact that although our financial systems and the mechanisms traded on those systems are increasingly sophisticated, the system itself wasn't smart enough to manage the complexities of the risk and to have visibility of the risk end-to-end in the financial system.

So the fact that a mortgage could be taken out in the United States, subprime, bundled into a portfolio, and traded numbers of times to wind up on another bank's balance sheet - the system did not have sufficient level of intelligence so that the bank that held that asset could understand what the nature of the risk was. That risk was accrued, or at least started, way down at the other end of the chain.

That's another example of a system that could be a lot smarter. And we have a lot of this technology. We have the intelligence. We have the instrumentation. We have examples today of smarter food systems where we can use technology to trace food from the farm to the fork, if you will, to address things like food quality issues, and to address recall issues, and things like that.

So much of this technology and computing power is there and as we started going through this and thinking about the various systems, the list just kept getting longer and longer. We started thinking about smart traffic, smart food, smart healthcare, smart government, smart water, smart retail. I mean we just went on and on and saw many opportunities to think about the world from this system perspective. We're looking at the world as a set of systems and not just an ecosystem around a company necessarily, or even an ecosystem around an industry, but an end-to-end system of all the participants, and so that's been another outcome of the work we're doing.

Makower: So, you've got this systemic view of how the world works and through that lens you see a great many inefficiencies and in some cases malfunctions that could be addressed through some of your technologies and solutions, and it's not just environmental. It's obviously much broader than that but certainly around energy, climate, environmental protection, there's a wealth of these opportunities.

Talk a little bit about the marketing and messaging side of this. You've created a "Smarter Planet" ad series. Tell me what this campaign looks like and the breadth of it in terms of the kinds of things you're doing and the kinds of places it's showing up.

Kennedy: Our first ad was on November 17, but our official public discussion was in a speech that our chairman, Sam Palmisano, gave at the Council on Foreign Relations on November 6th, titled A Smarter Planet: The Next Leadership Agenda. So that was Step One. Step Two is an ad series we're running - and we actually are calling it an "op-ad" because it's different from a traditional advertisement. They are running weekly and they are in a series, running every Monday in a set of national newspapers.

These are designed to do several things. First, they're designed to get a reader to think about the world from a systems point of view, and along the way, describe these opportunities for systems. In some of them, we get very specific. So, for example, our second op-ad was about the utility grid, to educate the reader that the utility grid is in fact a system. We talk about the sources of energy and alternate sources. We talk about the fact that it is one long system and that the system could get a lot smarter and go a long way towards providing and helping us address some of our energy issues.

The ads are all designed to do those things, and they are not intended to be overtly commercial. They are more agenda-setting, educating the reader about the world becoming smarter, and then in the end we talk a little bit about what IBM is doing today to help make a difference in these areas. So that is sort of an intentional phase we're in now and we're trying to do this in a thoughtful way. It's more of a short essay, and we try to convey this in that kind of a tone.

Lechner: Another aspect or attribute of this initiative is that we're making a very conscious and deliberate effort to talk to multiple audiences. Traditionally, IBM has spoken to our corporate customers - large enterprises or medium-sized businesses. But in the "Smarter Planet" initiative you'll see us very specifically talking to our corporate customers of all sizes, but also to individuals. You'll see these pieces aimed directly at you as an individual, whether you are the CFO or CIO of a large enterprise, or you are a student, an IBM employee, a housewife, or an activist. You'll also see them aimed very specifically at the city, state, and national government institutions, and at NGOs to try and influence the public debate and discussion on these important topics.

Makower: I'm trying to understand how this works from sort of a business strategy perspective. IBM doesn't sell to consumers. Activists certainly aren't a market nor do you seem to be much of a target of activists, so there's not necessarily a lot of, let's say, healing that needs to be done there.

And so when I look at these things I wonder what's the business rationale for doing this? What does IBM expect that's going to happen as a result of not just a housewife, or a student, or an activist, but a corporate leader reading these? How does that ultimately create new opportunities and revenue?

Kennedy: There are two ways. First of all, in practical terms, over time we will talk about how "smarter" is a way to think about transformation, and a way that industries can be transformed, and the way that companies in those industries can be transformed. So there are opportunities for banks to become smarter, retail firms to become smarter, healthcare to become smarter, government to become smarter. What you've seen initially are about larger issues because they resonate well. They are ones that the general population are familiar with.

Also, they are such great examples of how to look at the world from a systems point of view. This carries down into every industry that IBM does business with and the opportunities to make those industries more instrumented, more interconnected, and more intelligent. And as they become more intelligent, companies that have smarter capabilities have higher likelihood of being leaders and building competitive advantage.

The reason why this is so timely, we believe, from a business standpoint, is we're in a time of great change in the world and we're in a time in our history where change is being discussed everywhere from the kitchen table all the way to the boardroom table. And as a result, the leaders of many of our clients and leaders around the world are focused on transformation and see this as an opportunity to drive a great amount of transformation, and therefore it's a great opportunity to address ways that they can make their companies become more competitive as we come through this time of great change. That's the way we see the commercial opportunity.

Lechner: Let me add to what John said, from an energy-specific perspective. First of all, we can help clients become far more efficient in their use of resources, whether the resource is paper, water, energy, waste, etc. And as a consequence reduce their cost and become more competitive in the marketplace. That's at the corporate level. We can help them to compete more effectively for the shrinking wallet share of the end consumer by demonstrating that they are more efficient and that they are leaders in their industry, because we know that green is the topic that is important to individuals, whether the individual is a consumer or a prospective employee. So in a time when there's a global war for talent, helping our corporate clients demonstrate these values and walk effectively in this way will allow them to compete more effectively in the market.

It's in our interest to help frame the discussion in the marketplace with government agencies and non-governmental organisations because we think it's critical to effect the changes that we see are important to progress being made. It requires a collaboration and cooperation between private enterprise, the public sector, and NGOs. So we are initiating the conversation so that we can make progress in exploiting this more intelligent plan.

Makower: So it's about customer success in a resource-constrained world?

Kennedy: Looking ahead, as we step into a commercial discussion and we look up on the pressures on businesses in a smart world, one of the major pressures on companies in a smart world is around resource limitation, the need to use energy-related resources more efficiently, not only for the environment and for their sustainability but to improve a company's cost. That is one key way we step from "Smarter Planet" into a commercial discussion.

A second way we then step into a commercial discussion is that we're now moving into a world where we're getting to an Internet of things and devices and increasing instrumentation. We have an overwhelming amount of data that companies have to deal with. And that's another reality in a smart world - the need for new insight, new analytics, new intelligence to deal with this explosion of data. That's another angle in a smart world where IBM can help companies.

In a smart world, change is a significant dynamic and a significant threat to many of our clients, and this ability and need to have a flexible infrastructure to deal with that change is another key discussion to have with clients. And then finally, in a smart world there are new business and process demands on a company's workforce and on a company's processes that allow them to work more dynamically.

Makower: So these are conversation starters. They're door openers in some fashion. Connect the dots between how that happens and how you then get a customer opportunity that you might not have had as a result of these ads.

Kennedy: I want to re-emphasize that we're very early and there is more to come, and I guess there's only so much I can share in terms of how the communication strategy will work out. And we already have seen this happening in that you have clients, C-level executives, leaders at companies, begin to think about their own industry from a systems point of view, about how their industry could become smarter. And then it starts a conversation and that conversation then turns into a discussion around ways we could make their company and industry smarter.

Makower: So I know that there's more to come and that you're not ready to talk about that, but can you give me any broad outlines? Is it more and different media, for example? Are you going to go beyond newspaper print to other kinds of things, or events, or programs?

Kennedy: IBM uses all the traditional forms of media and increasingly nontraditional forms of media. You're seeing all types of media online, and on the Internet, and social media, and so forth, and as we roll this out in the future, we'll use all of those and it will be a comprehensive, integrated campaign.

Lechner: We start with the idea of the provocation. Get people thinking about where is there need for improvement to be made. How can we allow you to get more control and reduce your energy cost as a consequence to the business level, to the industry level, like a utility network? And then provide examples of those who have successfully accomplished that.

In the Pacific Northwest consumers are seeing a 20 per cent reduction in energy use simply because they can now make conscious choices of when they run the dishwasher, or what temperature they set the heater at. Behind those success stories, what capabilities does IBM bring to the table, whether it be industry expertise, hardware, software, services, or research capabilities?

That's how we connect the dots, as you put it, from the provocation all the way down to what, at the end of the day, IBM can bring to market that will help a client, or an industry, or a nation address those issues.

Makower: Is there a time horizon for this campaign? Is this a six-month, a year long, infinite effort? How are you thinking about it?

Kennedy: We think "Smarter Planet" will be with us for some time. I guess the best measure of success would be to the extent it is something that has long legs and would be with us for a long time. The more successful it is, the longer we will stay with it, and I think that would be our goal.

Lechner: I would just add that I would not characterise this as a campaign. I think that what caught your interest and what generated this interview was, of course, the advertising campaign that we've launched. I've been using the word initiative as we've gone through this discussion.

This is really a significant initiative, as significant as when we launched e-business a decade ago. And when the rest of the world was talking about the Internet, browser wars, and spinning logos, we came out and said, "You know what? There's something more here. This is going to fundamentally change the way the world of business works, the ways that societies interact." And it turns out we were right. This is at that kind of a level, and so I use the word "initiative", not "campaign".

Kennedy: I'm so glad Rich commented on that. It really is an agenda. It is a view of how the world works. It's a view of how the world can be improved and the systems that could be improved. We do talk about the role that we believe IBM can play, but one of the important points is that making the world smarter is not something IBM can do alone. This will require partnerships with many different types of companies, companies we have a partnership with, an ecosystem of partners you might not naturally associate with IT per se.

Makower: I'm sure some people would naturally compare it just for simplicity purposes to GE's ecomagination campaign.

Lechner: I think where the difference would be is that ecomagination is more narrowly focused on the green topic and role that GE can play in bringing innovations to market to help address climate change and energy. That's just a piece of what we're talking about here, and it's a piece I personally have lined up with. But what John was trying to articulate is that this view of "Smarter Planet" addresses so much more. If you think about some of the inefficiencies in our healthcare system, or the financial markets, and the lack of visibility that led to this market environment that we're in. Those aspects are things that certainly are not within the scope of ecomagination.

Makower: So, how do you measure success? Is the metric of success that is intended to provoke conversations going to be on how many conversations and with whom you're able to have as a result of this? Or is it more tangible than that?

Lechner: If I go back to e-business as an example, we said we believed that it was fundamentally going to change the way the world worked, and a decade ago we said that there would be ten million businesses connected to the Web, a billion people, and a trillion devices. Well, frankly, we were wrong on the devices; there's not that many devices attached just yet. But we were absolutely right in terms of the number of people that would be connected, and the number of businesses, and the way that it would have a change on society. So we would say we were successful in playing a small part in a global change.

I think from my point of view, how we will know that "Smarter Planet" is successful is if we are able to fundamentally improve the efficiency of the world's infrastructure, to deliver a utility network where more than 30 per cent - substantively more than 30 percent - of the energy reaches the end consumer, where we can fundamentally change the distribution networks and improve their performance.

Makower: But that's a societal benchmark. What about a business goal?

Kennedy: There are two very fundamental things we're looking for. One, we think this is a business-building platform. We know our clients are looking at this time as a time to drive transformation and change, and the prospect of making their industry smarter, we believe, couldn't come at a better time. That's for our current clients and as well for future clients, to see us as a company that can help them in these areas. So absolutely we wouldn't be doing it if we didn't think it were a way to drive business and client engagement.

But the other measure of success from a marketing standpoint is that we want to help build a clearer perception of what IBM is about. To many people, IBM is still known as a hardware company or a mainframe company. In reality, we are the world's largest professional services firm in terms of total number of consultants. We're a company that builds smarter traffic systems. We're a company that makes utility grids smarter. We're a company that makes financial systems smarter. We're a company that makes healthcare systems smarter. And, of course, we can help midsize companies tackle their biggest problems and become smarter, as well.

So this point around clarifying what we do - who IBM is - we think these capabilities are very differentiating and that the branding part of it is an important success criterion.

Joel Makower, is Executive Editor of GreenBiz.com, where this article first appeared

He also runs a green business blog called Two Steps Forward