Mad Dog 21/21: Where Icarus Is Bliss
November 26, 2018 Hesh Wiener
IBM got a lot of public attention in 2011 when its Watson system beat two outstanding human competitors at the widely televised quiz game Jeopardy. Since then IBM’s revenue has declined by about 25 percent and its profits have fallen even more dramatically, although intake did improve during three of the most recent four quarters. Regardless, IBM’s Watson project didn’t translate into a big boost to its financial returns, neither in new activities nor by reinvigorating legacy businesses. Seven years after the event, the company’s Jeopardy coup, however memorable, has failed to add significant value. What went wrong?
IBM has been waiting for Watson to deliver revenue and profit for a very long time, but possibly not yet long enough. IBM can be patient. Like Telemachus, who spent two decades searching for Odysseus, Big Blue may yet get the results it seeks. And, if IBM turns out to be right about the power and potential of its Watson technologies, it will achieve a gratifying ending to its Odyssey. What IBM wants, of course, is to vanquish the rival companies seeking prominent in the enterprise and big government user bases, much the way dozens of suitors sought the hand of Penelope when they come to believe Odysseus would never return from Troy.
In the meantime, however, IBM must reinvigorate sagging portions of its legacy business, including mainframe and Power systems along with its huge services operations. IBM must improve, if possible, its returns from activities it does not list as part of the collection if calls “strategic imperatives” as well as the results of growth in areas it believes have a particularly bright future.
IBM is often vague about the classification and reclassification of its many diverse activities. During the past several months, the company rediscovered the value of its mainframe business, including not only hardware but also software, maintenance and services. After years of treating this iconic portion of the IBM empire with indifference if not disdain, IBM had to acknowledge the obvious: In the wake of its shipping the most recent generation of big iron processors with its huge coattails, IBM’s revenue decline ended and growth resumed. The sales upturn brought with it sorely needed profit, showing hungry investors, worried employees, and wavering customers that the company’s manufacturing capabilities were capable of renewed success.
Despite the improvement in IBM’s position and prospects during the past year and the persistent possibility Watson will yet become one of Big Blue’s booster engines, one part of the effort, Watson Health and related endeavors, has proved disappointing to IBM and its client organizations. IBM would like to keep a lid on public comments by its dissatisfied partners, but cannot do so. In medical services organizations, patient data may be confidential but organizational efforts, expenditures, and outcomes are often made public. This transparency is inherent in the way such organizations are structured, funded and governed. In the case of IBM’s forays into cancer-related medicine with Watson, criticism of the effort’s suggestions and the way this advice disappointed the medical professionals involved in the experiment become known. The result was the publications of some skeptical and even critical press reports. IBM responded by trimming and otherwise adjusting its Watson Health operations.
Watson Health was built largely on a foundation acquired by IBM during 2015 and 2016. The acquisitions were combined to create a group that IBM felt had the resources to make real progress in the application of artificial intelligence and other Watson technologies to the difficult medical problems associated with the fight against cancer. The intention was to provide advice that was more complete, more effective, less costly and more rapid than the judgment of medical professionals. The advice did not dictate medical procedures, but rather helped medical professionals examine various options from a new perspective. But in the end, it appeared that the Watson approach was not all that helpful. It is unclear whether IBM’s effort was faulty or whether it just needed more refinement to improve its viability. In the end, some key users of the Watson Health services decided to drop the effort. No patients were reported as harmed by the experiment, but neither was there much publicity about those who may have been helped. Watson Health was simply seen as an inappropriate use of medical resources, resources that are always scarce compared to the needs of patients with severe illnesses.
IBM is under a lot of pressure to show improvement. Of all its many efforts to become a renewed company, none is a prominent as the Watson push. The evidence that Watson is extremely important to IBM began piling up from the moment the concept was made public. Watson is the holiest name in the IBM panoply of important persons. The Jeopardy application of Watson got a lot of effort by IBM’s advertising and public relations groups. It was mentioned time and again in speeches by IBM executives, speeches that spanned appearances before professional groups, briefings for financial analysts, and presentations to enterprise executives. IBM has rarely if ever used celebrities in its television commercials before Watson, but brought in some big name stars, including Bob Dylan, to promote its Watson skills and ambitions.
IBM’s effort to escape its past and traditions, to show it has aspects that are lively, innovative and aimed at a very high tech future are embodied by the Watson campaign. The company’s executives, up to and including CEO Ginni Rometty, may feel entrapped the way Daedalus and his son Icarus were held by King Minos of Crete. Daedalus, a craftsman an inventor like so many of IBM’s top scientists and engineers, figured out how to make two sets of wings from wax and feathers. With these wings, Daedalus and Icarus believed they could escape from Minos. Daedalus taught Icarus to wear and use the wings and gave him very careful instructions. Daedalus warned Icarus not to fly too low because moisture from the sea would make the wings too heavy and they would fail. Daedalus also warned Icarus not to fly too high, because heat from the sun would melt the wax and the wings might fall apart.
Daedalus and Icarus managed to put on their wings and escape their prison on Crete. But as they flew across the sea toward freedom Icarus became overly confident in the wings and lost the caution with which he began his flight. He let his flying skill go to his head. His pride grew into hubris. And the hubris proved fatal. Icarus soared very high in the sky and the hot Mediterranean sun melted the wax wings, plunging Icarus to his death in the sea.
IBM touting Watson under Rometty resembles Icarus with his wax wings. The company is entitled to pride in its Watson technologies and the dramatic way it was able to demonstrate its powers in Jeopardy. But IBM may have moved beyond pride toward hubris, touting expectations for its Watson Health group that turned out to be excessive if not downright incorrect. In health care, as in flying on wax wings, excessive pride is very poorly received. Medicine is a science best presented with humility. There is so much that can go wrong, and so many ways the good is nevertheless imperfect. This isn’t a posture that fits with IBM’s policies regarding advertising and public relations. Using Bob Dylan to tout Watson, in retrospect, might have been excessive – at least in the way IBM’s ads were written and presented.
The consequences of IBM’s excesses in the promotion of Watson may cost the company dearly, undermining its sincerity and credibility. Still, IBM has a lot of history showing its sincerity and solidity. It might even end up better off, learning lessons that it will apply as it absorbs Red Hat and embarks on other extensions of its corporate empire. With the right attitude (and altitude) it can succeed.