How Watson Changed IBM

Remember when IBM’s “Watson” computer competed on the TV game show “Jeopardy” and won? Most people probably thought “Wow, that’s cool,” or perhaps were briefly reminded of the legend of John Henry and the ongoing contest between man and machine. Beyond the media splash it caused, though, the event was viewed as a breakthrough on many fronts. Watson demonstrated that machines could understand and interact in a natural language, question-and-answer format and learn from their mistakes. This meant that machines could deal with the exploding growth of non-numeric information that is getting hard for humans to keep track of: to name two prominent and crucially important examples,

• keeping up with all of the knowledge coming out of human genome research, or 
• keeping track of all the medical information in patient records.

So IBM asked the question: How could the fullest potential of this breakthrough be realized, and how could IBM create and capture a significant portion of that value? They knew the answer was not by relying on traditional internal processes and practices for R&D and innovation. Advances in technology — especially digital technology and the increasing role of software in products and services — are demanding that large, successful organizations increase their pace of innovation and make greater use of resources outside their boundaries. This means internal R&D activities must increasingly shift towards becoming crowdsourced, taking advantage of the wider ecosystem of customers, suppliers, and entrepreneurs.

IBM, a company with a long and successful tradition of internally-focused R&D activities, is adapting to this new world of creating platforms and enabling open innovation. Case in point, rather than keep Watson locked up in their research labs, they decided to release it to the world as a platform, to run experiments with a variety of organizations to accelerate development of natural language applications and services. In January 2014 IBM announced they were spending $1 billion to launch the Watson Group, including a $100 million venture fund to support start-ups and businesses that are building Watson-powered apps using the “Watson Developers Cloud.” More than 2,500 developers and start-ups have reached out to the IBM Watson Group since the Watson Developers Cloud was launched in November 2013.

So how does it work? First, with multiple business models. Mike Rhodin, IBM’s senior vice president responsible for Watson, told me, “There are three core business models that we will run in parallel. 

• The first is around industries that we think will go through a big change in “cognitive” [natural language] computing, such as financial services and healthcare. For example, in healthcare we’re working with The Cleveland Clinic on how medical knowledge is taught. 
• The second is where we see similar patterns across industries, such as how people discover and engage with organizations and how organizations make different kinds of decisions. 
• The third business model is creating an ecosystem of entrepreneurs. We’re always looking for companies with brilliant ideas that we can partner with or acquire. With the entrepreneur ecosystem, we are behaving more like a Silicon Valley startup. We can provide the entrepreneurs with access to early adopter customers in the 170 countries in which we operate. If entrepreneurs are successful, we keep a piece of the action.”

IBM also had to make some bold structural moves in order to create an organization that could both function as a platform as well as collaborate with outsiders for open innovation. They carved out The Watson Group as a new, semi-autonomous, vertically integrated unit, reporting to the CEO. They brought in 2000 people, a dozen projects, a couple of Big Data and content analytics tools, and a consulting unit (outside of IBM Global Services). IBM’s traditional annual budget cycle and business unit financial measures weren’t right for Watson’s fast pace, so, as Mike Rhodin told me, “I threw out the annual planning cycle and replaced it with a looser, more agile management system. In monthly meetings with CEO Ginni Rometty, we’ll talk one time about technology, and another time about customer innovations. I have to balance between strategic intent and tactical, short-term decision-making. Even though we’re able to take the long view, we still have to make tactical decisions.”

More and more, organizations will need to make choices in their R&D activities to either create platforms or take advantage of them. 
Those with deep technical and infrastructure skills, like IBM, can shift the focus of their internal R&D activities toward building platforms that can connect with ecosystems of outsiders to collaborate on innovation.
The second and more likely option for most companies is to use platforms like IBM’s or Amazon’s to create their own apps and offerings for customers and partners. In either case, new, semi-autonomous agile units, like IBM’s Watson Group, can help to create and capture huge value from these new customer and entrepreneur ecosystems.

More blog posts by Brad Power

ORIGINAL: HBR

by Brad Power

August 22, 2014

Meet Genesis Angels, A New $100M Fund For AI And Robotics, Co-Founded By Investor Kenges Rakishev And Chaired By Israel’s Ex-PM

ORIGINAL: TechCrunch
Ingrid Lunden
Friday, April 19th, 2013

 

For those startups in newer areas like robotics, artificial intelligence and augmented reality who complain that VCs are too focused on consumer internet companies, help is at hand: Genesis Angels is a new VC that has raised a fund of around $100 million, with a large chunk coming from co-founder and serial investor and Kazakh petrochemical mogul Kenges Rakishev, which it plans to use for early stage investments in emerging areas like these and others. Based in Israel, but looking for startups worldwide, Genesis launched just this week, naming ex-Israeli prime minister Ehud Olmert as its chairman.

Moshe Hogeg, the other co-founder behind Genesis Angels (and founder and CEO of mobile video/photo startup Mobli, pictured here with Rakishev, left, and Olmert, center), says that the idea for Genesis came out of his and Rakishev’s observation that while the market for consumer internet services is saturated with a lot of me-too companies, there is a flourishing world of R&D in areas like robots and artificial intelligence that is not getting enough attention. It’s mostly giant tech companies like Google and Microsoft and academic institutions that are putting money into the very cutting edge of technology.

(Indeed, it was just yesterday, during Google’s earnings call, that CEO Larry Page talked about the “big bets” that Google wants to make on new technology. Google is not afraid to make big investments, he said, because the fear is that if it doesn’t it may miss out on the next big thing.)

The problem with this is that it leaves little room for startups. And although more recent developments like Kickstarter and Indigogo are creating a new groundswell of interest and financial support for some of these projets, there are yet others that will not want that kind of public profile for what they’re working on.

Hogeg describes Genesis’ role as something between the concept stage and when a VC may typically become interested in a company working on cutting-edge technology. “You can send the most brilliant scientist to a VC, but often it might take that scientist and his startup five years to create their products,” he explained in an interview. “VCs will say, ‘No problem, come back in four years.’ Genesis will invest in those companies in the meantime.” Typical investments will be in the range of $200,000 and $2 million.

If you visit Genesis Angels’ site, you will see that it already lists a number of companies in its portfolio, including Hogeg’s. These are listed, he says, because they are some of the investments Rakishev himself has made. Genesis, he notes, is still raising money for its first fund, with the total in play currently close to $100 million. Among those contributing to the fund are merchant bank Forbes & Manhattan, as well as private individuals who are well-known in the space of angel investments specifically around areas like hardware and new technology. The first three investments that are being made out of the new fund, Hogeg says, will be coming out shortly.

Ehud Olmert’s appointment as chairman is about laying the groundwork for the kind of assistance that Genesis Angels will be able to offer its portfolio companies, Hogeg says.

“He is a big believer in technology. Irasel invested the most in this area when he was still prime minister,” he notes. The relatively small country currently has some 3,000 tech companies, according to this report from the AP on the launch of the new VC.

Olmert took office in 2006 but left in 2009 under a corruption scandal cloud that he is still fighting. But that, apparently, has not affected his wider influence. “Mr Olmert is a very powerful man and he can use his contacts to help us and our companies, for example in partnering and joint ventures. He can open any door in the world.”

There have been other VC funds focused on these emerging areas. Dmitry Grishin, for example, the CEO of Mail.ru and founder of Grishin Robotics, last year started a $25 million fund dedicated to investing in other robotics companies (examples of his investments here, here and here).

It may be that Genesis teams up with people like this to cooperate on investments. “He shares a vision with us about this space,” says Hogeg.

EPM invierte $100 mil millones en un Fondo de Capital Privado para apalancar desarrollos empresariales en innovación, ciencia y tecnología

ORIGINAL: EPM

• Es el primero de su género en Colombia
• El Fondo ya fue avalado por la Superintendencia Financiera y será administrado por la firma Correval

En un hecho sin antecedentes en Colombia para una empresa de servicios públicos, EPM anunció este viernes una inversión de $100 mil millones en un Fondo de Capital Privado, con el fin de apalancar los desarrollos de empresas colombianas que trabajen en procesos de emprendimiento e innovación relacionados con servicios públicos domiciliarios, para potenciar su crecimiento.

El “Fondo de Capital Privado “Emprendimiento e Innovación SP”, como fue denominado, ya cuenta con el aval de la Superintendencia Financiera. Fue presentado este viernes por el Alcalde de Medellín, Aníbal Gaviria Correa, y por el Gerente General de EPM, Juan Esteban Calle Restrepo, en las instalaciones de Ruta N, el nuevo símbolo de la innovación y la tecnología de Medellín, elegida precisamente la semana anterior como la ciudad más innovadora del mundo en el marco del concurso City of the Year, que organizan The Wall Street Journal y el Citigroup.

EPM es la primera empresa colombiana que le apuesta a la inversión en emprendimiento, innovación, ciencia y tecnología a través de un Fondo de Capital Privado, el primero de su género en Colombia, el cual impulsará inversiones de capital en empresas y proyectos que incorporen altos contenidos de ciencia o tecnología aplicada, a través de las cuales persigan la innovación en la producción de bienes o servicios, o procesos, que puedan ser empleados en la prestación de los servicios públicos o TICs.

El Fondo, que tendrá como únicos inversionistas a EPM y a su filial EPM Inversiones, fue constituido con un plazo de 10 años, 5 de inversión y 5 de maduración y desinversión. Se concentrará en negocios en etapa de crecimiento o de rápidos movimientos competitivos (“Venture Capital”), en los cuales el concepto esencial es establecer el negocio y hacerlo crecer de una manera acelerada. Se buscarán negocios maduros con crecimientos estables, que estén dentro del objetivo y política de inversión.

Una apuesta por el futuro

“Somos una empresa que promueve la innovación, el desarrollo y el emprendimiento, elementos que conjugados contribuyen a la consolidación de un ecosistema de ciudad innovadora”, señaló el Gerente General de EPM. Recordó que la organización destina hasta el 0,6 % del total de sus ingresos anuales para ser reinvertidos en estrategias de innovación y desarrollo. Como punto de referencia, esta cifra para el año 2012 equivalió a más de $ 29 mil millones.

En el acto de presentación de este nuevo vehículo de inversión, los gerentes de EPM y de EPM Inversiones suscribieron los documentos de vinculación al Fondo, formalizando la inversión, reconociendo y aceptando sus condiciones de funcionamiento. Además suscribieron el compromiso de inversión, por el cual ambas compañías se comprometen a invertir $100 mil millones y garantizan la entrega del capital para soportar los gastos de funcionamiento y realizar las inversiones en proyectos o empresas que se consideren viables y convenientes.

EPM confió la administración de los importantes recursos del Fondo a la firma Correval S.A, empresa comisionista colombiana que posee una alta experiencia en la administración y gestión de fondos de capital privado.

“EPM le sigue apostando a la innovación y al emprendiendo como uno de sus recursos más potentes para el desarrollo y el crecimiento, no solo de la organización y de nuestro Grupo empresarial, sino de la región y del país. Este Fondo generará empleo, apoyará el talento humano, impulsará el progreso e impactará positivamente en el desarrollo y la sostenibilidad de las regiones y en el crecimiento de nuestra gente”, recalcó el Gerente General de EPM.