Mobile computing, and Artificial Intelligence. They announced a new Business Service that will allow access to watson supercomputers. I am pleased to have the ceo of ibm at this table for the first time. Tell me where ibm is today. Where you want to take it. Ginni i have a great company. It is one of four years old. We said we are transforming. I say to everyone, you dont get to be one of four years old by 104 years old by doing the same thing. The Tech Industry violently reinvents itself, and you have to keep changing with it. I am reinventing ibm like my predecessors. We are a solutions company. When you mention some of those technologies it is not just about the technologies. They are at the heart of the solutions. It is what we do for clients that makes the most important difference here. We do some of the most missioncritical important work in the world. Really things that, i say trains dont run. Planes dont fly. But you have to do it in new ways. Solutions underpinned by the Current Technology trends. Charlie you have had declining revenue for a number of quarters. Your goal is to find new revenue. Ginni from an outside view, you would say they are declining. A lot of that is by design by us. One of the things i was taught and i learned is, dont ever protect your past. That is how you succeed in the future. Last year, we divested 7 billion of businesses. They were also negative profits. If you keep moving to higher value not just in the shareholders mine. Thats what we do for people. Bring them the next thing. If you keep move there, you will have to move out of some businesses and into new businesses. That is by design. 7 billion is a big number. Charlie it is more difficult for you than other ceos of ibm because you are moving so fast. You have to transform on multiple layers. Ginni i believe it is a challenge for everyone. There is an interesting thing about this moment in time. Technology always has some new shifts. When ibm was doing main systems, the pc came along. Then it was the internet. We again took the internet, made it real for enterprises, and are on the next set of trends. There are three trends at once. For why the world feels different, there is a real reason. You have the advent of all the data, which will talk about. Cloud, which i put as buying things as a service. And mobility. Underscoring the security and importance of it. Three things going on at once. They will reorder our industry. They will reorder yours, too. Whether you are a manufacturer a retailer it will make a change in how you operate. That is what makes a difference at this moment in time. Currency, macroeconomics, other geopolitical things. Charlie lets talk about mobile systems. He made a deal with apple and twitter. How are you combining with these two huge names . Ginni this is a huge point that history will reflect on. I am a big believer in these partnerships. They are wonderful at what they do for consumer ability. These of use. The market of the enterprise which we know so well. If you say, what does that mean . We are the Gold Standard for the enterprise. They are Legal Standard for the consumer. When we come together, it is good to know what you can do and what you should not do as a business. We can reimagine work in the enterprise if we worked together. Take their simple consume ability and our ability to know industries. Workflow. Integration. A perfect example, flight attendant. If you have ever been on a flight that is late, and you are thinking i have a connection. What do you do . You run to the counter and get your phone. Somebody is helping and typing away. We said, what about in the air . One screen note training. No training. We built it. We made it simple. That is a perfect example of reimagining work. In the workplace, with mobile devices, 70 it is email. They are really not imagining how work is done. Security is an underlying issue. Charlie this is an idea that steve jobs expressed. You often have to look at things with fresh eyes. You cant see them as an extension of what you do. Has that been one of the challenges for you . Ginni yes and no. This is not the first set of trends. This part about dont protect the past. We have invented some of those trends. Some you dont always invent. You swim into them as hard as you can. That is what this industry is like. I think adjacencies are good. Taking these technologies, it is taking us into different places. Things around the internet of things. What we are doing for health care. Back to your question on apple, twitter. It is about taking those ideas, massive data in the case of twitter. As he said, we could improve every business decision. We are taking those consumer technologies into the enterprise. I believe we will be the go to platform for the enterprise. Charlie you can access them through apple devices. When you talk about those kinds of partnerships, is that part of the way you see apples headlong rush into the future . We took all your Senior Vice President s two Silicon Valley and introduce them to react saying, we want to know what is going on out here. Ginni we have one of the First Research labs in Silicon Valley ibm. What i really wanted to do, i have a firm belief that these partnership ecosystems are going to be what lots of businesses do. To provide with their businesses need, it is through partnerships. Went out there for that reason. Formed that foundation. A lot of startups who by the way , part of what we do is help them. This watson one of the main things for watson is we build a platform to read this form of Artificial Intelligence, natural language, come build your own business. 4000 companies in line to build on watson. Charlie one of those those who write about you say, one of the challenges is to prove a Large Institution can be entrepreneurial. Ginni i agree speed is important. I believe now, the last results, the new businesses all around data and cloud and mobility they represent 27 of ibm. People go really . They have grown at 16 . That is a big number. 27 is a big number. That is our job. Continue that. I should Say Something interesting. It is not to say the other businesses are not good businesses. We do the things that are the heart beat of the world. We do banks. One of our most recent announcements, how to do mobility. How to encrypt everything you do for security. You invent that part as well. I dont think there is a topic more important than security. Every one of my clients i talked to, i say, whatever you do, it is not enough. It is important for individuals businesses. Countries and the like. Charlie lets talk about the cloud read were you late coming to the cloud . Ginni we were in private cloud years ago. I have had many of my friends go, what is the cloud . Just think of the cloud as anything as a service. You dont have your own electoral generation plane you know how to plug in to lo electricity. In the cloud. What we did first, i always look through the eyes of the company. We said, the first thing people will do is do it on their own premise. All my divisions, i want you to share. I will give you a private cloud. You are the only users. You will also agree. Because of the this standard, it is less expensive. The next thing was the public cloud. Typically that started in the consumer world. I have all my music on a cloud. Dont know where the cloud is. We started out, saying, people will do things like fast applications. The front application of a mobile bank. They will put those out on public clouds. We started to build that. It was moving too fast. We acquired a company. Simple words, what that means is it recognizes the importance of security. You must know where your data is. We deal with health care banking. You cannot know where it is at. Audibility. People do things there, just like the old days of the internet. You browsed, and some but he said, i want to buy something. You have to connect to all the systems that built things. Priced them. Warehousing. Thats the world called hybrid. We connect the two together. Many other parts of software and services do these things. Services, 60 . Software. Charlie that has been the big push, into services. Ginni we have acquired over 130 companies and software. People dont realize that. In areas of solutions. Back to, it is not just analytics. Analytics that help thanks do customer retention. Health care. If you go back in time, we have participated in some of the most glorious moments of history, whether it is the first system that did since this. Lending the man on the moon. Our moonshot will be the impact we have on health care. Im positive about it. That to me, while we do other things, that will be one of the most import. Charlie is that called Watson Health . Ginni we just announce something called Watson Health. Can i back up . Simply put, the first generation of computers counted things. The second generation, you program them. What watson represents, we use the word cognitive three to it is a system that learns. You do not program it. Artificial intelligence is a part of a part of it. Not all Artificial Intelligence is learning. We started natural language learning. We started with one of the toughest problems, health care. Oncology. This is some of the work you may have read about. We did work with sloankettering. Diagnosis and treatment. M. D. Anderson. Cleveland clinic, how to teach doctors. Watson has been true to rig or. Take one cancer, Breast Cancer. 2 million new cases a year. He would guess, given all the progress but mortality is up to read incidents are up 20 . The number of therapies for Breast Cancer approach 800 or more. Watson can look at all your medical records. Comes up with what are the probable diagnosis. Why. That has just started to roll out in southeast asia, 2 million patients. Charlie talking about big data, you said it would be the Natural Resource of the 21st century. Ginni every company will say it has enough. So much information, no knowledge. This idea now the amount of information created around us. Pictures. Images. Every day, to make an analogy 500 million worth of hd movies worth of data get created. Until you do something with it, it is no good. You watch what happened with electricity, steam, fossil fuels. Data. But just like other resources the benefits go to people who refine it and do something with it. Many companies have Natural Resources it are poor. The same analogy. It will be the phenomena of our time. This will be about looking forward. That will make all the difference in the world. Prediction. Watson is sitting out here on the spectrum. It is iconic, to represent that future. This is about helping predict which kids will struggle in school. Charlie it is not just a collection of the data and assessment, we now have better means to collect it. It is impacting medicine in ways we would never know. There are ways to measure your human body more precisely, then we have ever been before. Therefore, with the collection of data, you can take this information and look at a compilation of a thousand other cases. Ginni evidencebased medicine. What you just described is a perfect example of the announcement we made. Which included apple johnson and johnson. Partnership. An open platform, back to the idea of partnerships and ecosystems. For every human, 10 of the information in your lifetime collected about you will be the formal medical records you know of today. Another 20 will be the genomics. There is another 70 which people call exogenous eta. Data. What you are eating. Your heart rate. 300 million books worth of data per person. With that, you have a whole mother world that can be health and wellness for the individual. Charlie the capacity to not be overwhelmed by it. Ginni privacy, security, but not be overwhelmed. Charlie you said watson is just an early glimpse. They will have deeper reasoning. They are going to see and touch and feel. We see no fundamental limits to that capability. Ginni that is one of my colleagues, but i agree. John kelly said that. We are working on giving watson eyes. One of the first things he is working on is melanoma. How to read melanomas that are cancerous. There are many false negatives and positives. That is a good example. Usually that leads to the next question, does that replace everyone . This is all about augmenting the decisions you and i make. It will be a long time if ever you will see that. I have had that discussion with walter isaacson. This is about augmenting. We will augment so much of the decisionmaking to make better decisions. Have us do different things. Charlie we will be able to redirect our time. How will a transform law and journalism . Ginni we are working with a client in the way of law. Think of watson as an advisor or discover. You think of the same word in legal, discovery. The ability to find connections between information is something watson does well. Which is why we are working with pharmaceutical companies to find and explore new compounds they had not thought about. Think about that. You cut the pipeline down for innovation. The time way down. You get it out faster. This idea for legal is a wonderful area to say, how could i do, even at a minimum discovery of information . We are working with clients to do that. Ginni is there a timeline, in terms of your plans to be fully engaged where you want ibm to be fully engaged . Ginni not a timeline. I feel we are engaged in the major areas we need to be putting down our roots in. Place our bets. It is about speed and scale. You said big data. You can tell, i hope from what i am saying, our goal is not just to have the technology but transform industries. Mobility, to reimagine work. When we talk of the cloud, to make it into Price Strength and speed up what people can do. These are big businesses. Data analytics is 17 billion. We scale them. More industries, people, places. Charlie you have been buying back your stock and paying dividends. What is the reason behind that . Ginni this has been, it is not an either or question. I know there was a lot of discussion about that. You go for the past decade, we have invested 133 billion into our business. Clearly a balance. A balanced tilted towards reinvesting. My own allocation it is about first, what do i need to reinvent. And then, mi still capable to do the other things . Our shareholders look for that balance. I feel very good about how we do that and make the decisions to do that. When we need it, we buy it. It is always to move to higher value. Not interested in revenue that does not produce value. We are not about profitless revenue. When people look at us, it is a big company. 21 billion of the tax profit. That tells us this is highvalue what you do. Charlie Warren Buffett is your largest stockholder. He increased his holding. Ginni he is a big shareholder that is right. Charlie what does he expect and what is your counsel from him . Ginni all of our big shareholders, they expect us to be stewards of their capital. Keep moving the company to higher value. Be sure we invest in the right places for the long term. It is that simple. Return to them, stay high value for the long term. That is what my job is. Ok that capital in the right way to get that done. Dont protect your past is what i say. Never define yourself as a product. We are a solution. If you get wed to one thing that will be what you said earlier. A barrier. Charlie you try just be to your researchers. People finding and creating technology. Ibm wants to be a company on the cutting edge of technology. Ginni i am proud of the team. We have the largest commercial resort organization in the world. That is the ibm committee. Research organization in the world. That is the ibm company. Nobel laureates. Not just focused on technology for its own sake. The application. That is what you have seen us open labs. Africa australia. We are the first one to put a commercial research lab on the continent of africa. The problems in society are so big, you cannot bring the problem to the lab radioactive put the lab in the middle of the area. Problem to the lab. You have to put the lab in the middle of the area. How to do Massive Health care. In some places, you have one caregiver for 10,000 people. We are working on tough issues. That is why we put the research lab in the middle of it. Charlie lets talk about you. Northwestern. Your father your mother, when you are very young had the responsibility of raising you. And your three siblings. She is your hero. She did what makes a hero. She realized she had to take care of her family and she did all that was required. Tell me about her. Ginni i have not been shy about that. People always ask about heroes. People who are your idols, who you learned from. Im a big believer of learning all the time. I will learn something from our conversation today, from you. I was think what else can i learn . The one that thinks out is my mom. These are defining moments. She raise my brother and sisters and myself. She found herself with nothing. She did not have a college degree. Her job was in the home. She had not worked outside. We never saw my mom blink or cry. She did everything she had to do. Charlie did you become a kind of parent to your siblings . Ginni i was the oldest. I certainly helped my mom. She would go tonight school. What my mom taught us, it was about us watching her and what she did. She got an education, a great job. She was determined. What i was learned from my mom was, never let anything or someone defined to you are. You are in complete control of that. Charlie you are making a commencement speech. No one defined yourself. Ginni she is living proof of that. And charlie why engineering and Computer Science . Ginni i always loved matt. I was the on the one who would stay after school for extra help for things like talk less. Calculus. Let me tell you why i suggest engineering as a degree. Not just because i believe science for the future. I say, what it taught me to do, to problem solve. This is the essence of engineering. You do that, you will be prepared for wherever you go. I went into engineering, but i did not stay there. It doesnt matter how complex or difficult a problem is, you can find your way through it. Those are the basic skills of leadership. That is why it i am a proponent for kids, particularly women, to go into engineering. It does not dictate you have a stereotype type of job. It is a Great Foundation for marketing, sales, biology, anything you might want to do. Charlie you went to work for ibm. Ginni i he went to work for General Motors and then ibm. It was an early up if any for me. I said, what i am passionate about is the application of technology. Not just one industry. The application of it. I went somewhere where i could take that and apply it to Different Industries versus find myself in one. That is what took me to ibm. Charlie someone said she had the unique ability to make you comfortable in the change while still being uncomfortable. Ginni that is a great complement. I really believe, but i learned it from watching lots of people. There was a quote the leaders job is to paint reality but give hope. In there, you will find that the ability to read if you paint reality, they understand where they start. The hope is where they go. You give them the confidence to go there. That is another trait. Charlie another thing i read about you, you did a kind of assessment to create a sense of openness. So they knew where they were and what the possibilities were. They were aware of it. Where did that come from . Ginni the driving idea is, when the facts are on the table, reasonable people will come up with interesting ideas. When you let the barriers down, they will come up with great ideas. And it comes from a sense we are a big company. When you are a big company, you have to be clear about what you are and what you have to change. Honest with yourself. If you are, you can move it. Charlie thank you. Charlie suzy and jack welch are here. Jack welch is the former chair of the General Electric company. Suzy welch they have coauthored the book, the reallife mba your nobs guide to winning the game, building a team, and growing your career. Sign me up. I am pleased to have them here. Here is what i love about the book. The stated purpose is how to galvanize performance. Unleash growth. Build while teams. Create a fulfilling career. And perhaps more important, have fun. Suzy we were minding our own business. Since then, we build a life we enjoy. Traveling around the world and talking to business people. All kinds of different countries. Jeff was working in private equity. We had no intention of writing another book. Reading a book is hard. Writing a book is hard. Life was moving along. The thought came into our heads as we were in this wonderful life, there was no book that was an nba an mba in a book. Charlie are these things Business Schools should teach you but should not . Jack we are giving you the best you can get from a business school. It is an expensive proposition. You lose your salary promotions. Charlie i got the best of what they are going to do . Jack it is a good supplement. What we dont have here we dont have consultants and Investment Bankers standing out the side the door. Our people are growing and what to do grow more. Wanting to grow more. They are midcareer. Our students. They want to grow in their company. They want tools that will help them get there. Charlie how many online . Jack 100 . Charlie has the idea of Online Education gotten to the point where everybody agrees it is the thing we hoped it would be . Suzy not yet. But it is so much better. When we started creating the institute, there was a little stink on it. It has gotten better. It used to be, like Online Dating nobody admitted it. Now everybody admits they met online. Since technology has helped a lot charlie your values and personal values must be compatible. Suzy imagine if they are not permit imagine you value speed fast pace. Imagine if you value risktaking and work at an old bureaucracy. You have to have compatibility otherwise you will be in a straight jacket. Charlie the idea of the culture at ge was crucial. A jack it was my thing. Get everybodys brain in the game. 60 thousand people had stock options. They became owners. Charlie the other thing you did, in performance cultures actions have to have consequences. Jack if you do it well, you get praise. Charlie psychic income. Jack and you get cash in the wallet. Charlie you said you have to find coachable developments, where you can coach somebody. Make tell and better. There are make talent better. There are others with flaws that will not get better. Jack if youre a manager, and they are developing people every time you make a personal appointment, it is worth 100 speeches. You can talk all you want about values. And the you put a jack asked in the job jackass in the job. Charlie versus putting the right person any job. In the job. Jack people lose sight of that. It is really about talent. You are the last person to know what the scoop is at the organization. Charlie were you . Jack i tried it not to be. Charlie you are a gossip, in the best sense. You knew what was going on and people wanted to tell you . Focus communication. It travels faster and is understood better. Suzy people put spin on things to read the worst crime in communication, leaders managers even a small team, you think you can say it once and it is heard. You have to say it until you gag on and. You say it and five from people five different people here at five different ways. You have to say it again and again. Invite people to try out on you what theyve heard. Push back. Say, are you hearing me right . Charlie what is a generosity gene . Jack a characteristic you will find in most leaders. Charlie generous with . Jack praise, spirit. It raises. Mrs. They love to give raises and bonuses. They never steal an idea. When you see people like that. Who have met and done well. They have that spirit. You think about the Person Holding back, taking ideas, they dont go that far. Some of them sneak through. In general, they do not. Charlie Continuous Learning is critical. Suzy especially today. The world is changing quickly. Industries are forming and informing. The internet of things. If you dont keep up, you are let i a luddite. You have to be learning. Otherwise, you lose your head and also your values. Your organization. Charlie we talk about finance and marketing. Some people, when they think about finance, they get scared. It is magic. Jack letters. The acronyms. Charlie you have to be familiar with finance. Jack you need a working understanding. We think variance analysis is a tool that get you there. Charlie building a team. Creating a place that the best one to come. Suzy you have to have a wow team. Sometimes a great team happens spontaneously. It is rare. You have to work on the right team. Today, it is hard to get people onto a team because you have other wonderful things going their way. Sometimes the entrepreneurial world the chance to be owners, pull away some of your best people. We want to give you thoughts about getting these great people together and building the chemistry. Jack we talked to over a Million People around the world. Every audience gave us the same feedback. Where do you stand in your company . Do you know where you stand . 10 of the crowd where their career is going. It is frightening. How can you build a great team if people say we have kids that go to work. They live and die on the handshake of their boss. Charlie you thought you would be at ge until you had the top job. Jack i quit once. Came close to quitting three times. Always evaluating the situation. Charlie why did you come close to quitting . Jack the first time, i was in my first year. I got a raise. I went back to my bullpen, and i was pleased with my raise until i found out a got the same one. I thought i was better. That is socialistic hater, spreading it equally. Behavior spreading it equally. I resigned. My bosss boss came up to me. Said, state. Here is what i will do for you. Charlie do you think most people go in and say, i want to know where i stand . Or are these shared it will be held against them . Jack we have a way of doing it. I want to talk to about how i can do better. Tell me, if i can. I really want to shine here. I know i might not be doing all you want. One of the things an employee has to do is make the loss smarter. . Boss smarter. They have to feel that they have found something out. When they are off to their races, you come in like this. Charlie another way is to say, how can i help you do your job better . Jack that is what im saying in another way. Charlie most people dont know how to go about that. If in fact you feel like you are not being paid enough what you do you do . Jack pay is not what you go in on. If you talk about performance. But you dont go in with, i got this. We want you to be authentic. We want you to have the selfconfidence to be willing to pick up stakes and move on. If it is not the right place for you. Dont be afraid. Charlie somewhere else may be better for you. Jack most of the time, it is. I cant tell you how many people have left ge. Ithey said, thank god this happened to me. Charlie they found a place that is a better receptacle for their skills. Jack they brought them a knowledge of what happened there. Charlie you talked about the magic of the relationship. Which i sought early on. You have never heard the story. Suzy i was there. Charlie he keeps going back to the back of the plane. He finally realized, he had gone back for another phone call. He says on monday, there will be a piece in the wall street journal about you. How have you built from that . Jack we went through a fire. A firestorm. What a juicy story. The ceo of ge and the editor of the Harvard Business review. We laid it out. Charlie you knew you had to write it out. Ride it out. Suzy most relationships dont start in an explosion. Our state it was quite a way to begin. Charlie hold on. Jack i was asked about that today. Brian williams is a great guy. I have known him for many years. Charlie the ge owned nbc at the time. Jack when tom brokaw was in the seat and Brian Williams was at ms nbc, we talked for days about is there a place for brian in latenight . Some form of latenight . Brian he is funny. Clever. He is good. This is a tragedy. I feel terrible. I really like the guy. Suzy there is a second act for Brian Williams. Jack he has too much talent. Charlie ge. You have said, you would have done the same thing today because of the new regulations affecting the Financial Sector that came out of doddfrank. Before doddfrank, would you have disbanded . Jack no. We had 27 years of enormous growth, great people and businesses. Jeff built it more than i did. 40 last year. This was a great and just guess what, he chose the right time. These assets in Steve Schwarzmans hands. There are other great leasing businesses. They are going to get good prices for these deals and be able to buy back stock. Create the same eps by buying back stock. Have a concentrated they will be back doing other things. Ge is the only company left in the dow jones. When i got the job for my predecessor i inherited utah international. That was ge and mining. 21 . Charlie looking at ge today, no itit was, the house that tech built. They are going back now, for some of the reasons we said, to the core business. Jack going back to what jack built. The engine business. The Number One Health care business. The number one railroad business. The first acquisition we made in 2000 in the oil and gas business which he has done a great job of building up. Where are we going back to . All those businesses we made number one. Charlie if you were to come in out of business school, what do you think you would like to do. Suzy i would love to have worked in a kind of industry. I often talk to jack, what if he had hired me out of business school. I would have liked to have sold jet engines. I like to sell. I like Big Industrial products. I was scared because i had been a journalist. I didnt the guy had the street credit to go into business, so i went to consulting. It was a great run and i learned a couple of things. If i knew now charlie rather than writing about it, you wanted to do it. You have been identified with the idea of quarterly performance. Some people say there is too much emphasis on quarterly performance. Jack quarterly earnings, i was not there for the average tenure of the ceo. 20 that is 80 quarters. If you are squeezing the business, you could not squeeze for 20 years and still grow the company. Charlie what makes you angry about this . Jack get out of here. Charlie it is ok with you. There is nothing in your mind that is not good about the heavy focus on the part of wall street on quarter performance. Jack let me tell you what your job is as ceo. It is to manage short and long. Anybody can squeeze the place for two quarters, but not for 20 years. Any jerk can say, that is next quarter. I cant talk about that. Come back in five years and we will talk about where im going. Charlie on the other hand there are people who say, they are simply squeezing for the quarterly profits. There are people who say, if you dont worry about that and do more planning for the future you will have an contribute more to the longterm growth of the committee. Jack of course you well, but you have to do both. At the same time. That is why you got the job. The why you are management. That is it. Charlie what is the toughest call you made at ge . Jack i see my biggest mistake charlie other people had trouble buying investment companies. Jack it is not the easiest game in the world. We got out of that. Charlie it was a mistake because jack too much hubris. Charlie you look more lowly than other. Lovely than ever. You chose well, young man. Check love you charlie. Jack love you, charlie. Mark Mark Halperin here at the grand plaza hotel which is the center of the political universe in nashua. 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