Plus: her two worst career mistakes.
JOHN HUEY: I came to the first Most Powerful Women’s conference, and I skipped the next 13. (Laughter.) I thought I’d drop in and see how we’re doing, pretty amazing.
I hope at least some of you are asking, “Why did they get a guy to introduce the most powerful woman in business?” And the answer is because I spent the better part of 40 years covering CEOs and power in business and I have a strong personal belief that there’s something really historic about this particular person and her role, and that this is not just another magazine’s most-powerful list. I mean, I know there are magazines that have all kinds of lists of women. I think we were the first, and I know we’re the best.
But 14 years ago when we started this franchise, there was no Fortune 500 CEO to put on the list, and there was no one to put on the cover of the magazine, and it was really — people like Patty sort of raked around in the ranks of corporate America looking for leaders of the future. You know, I think the first most powerful women in business cover was Carly Fiorina who at the time might have even been number three at Lucent, maybe number two, but she was relatively unknown. Time, Inc., even in those days had a male CEO, which is hard to imagine. (Laughter.)
The glass ceiling in those days wasn’t really glass, it was more like a Gorilla Glass ceiling. There weren’t a lot of women at the top.
Today, obviously, we’ve come a long way. Although they’re still only 4 percent of the CEOs of the Fortune 500 who are women, only 4 percent. But if you look at some of the companies they preside over, names like Xerox, Archer Daniels Midland, Yahoo, HP, DuPont, these are not little outliers on the Fortune 500. These are big players.
Having said that, I would argue that something profound happened to the glass ceiling in January of this year when Ginni Rometty was named CEO of IBM. It’s the 19th largest company in the world with revenues of $107 billion last year. And just yesterday, within Ginni’s — in her 9th month, it had the highest — it registered the highest stock price in its 101-year history. (Applause.) It’s the 5th most valuable public company in the world today, IBM, and that’s in an era when you have all kinds of psychological inflation and you have a lot of — I mean, they’re in the ranks now with Google, Apple, Microsoft — and that’s old big blue.
But beyond that, there’s something especially symbolic about IBM, and this is what drew you here. As you know, Fortune has a proud, long tradition of covering powerful women. And we also have a long history of covering IBM. But until recently, those subjects were rarely in the same article. In fact, someone found for me a 1940 Fortune article featuring a photo of IBM’s first class of college students who were learning to be, quote, “systems service girls.” And this was one of those typical Fortune pictures of happy girl workers. And the caption included, get ready for this, “Uni girls finally marry IBM men.” (Laughter.) I was expecting more hostility. That shows how far we’ve come.
So, many years later, I was editor of Fortune when we ran a glowing account of Lou Gerstner’s performance as IBM CEO. The article praised his strategic and management prowess, but we called into question some of his manners on the golf course. And Gerstner, being a flexible, easygoing guy (laughter) quickly broke off all relations with Fortune, commercially and journalistically, a ban that lasted for most of a decade. So, I have a few IBM rope burns on me. (Laughter.)
No one will ever accuse Ginni Rometty of having bad manners on the golf course or anywhere else. In fact, speaking of golf, it’s my firm opinion and I’m sure many of yours that her very appointment to this very job is what finally broke down the barrier at Augusta National. (Applause.) Of course they didn’t extend her an invitation, they very cleverly extended it to other people, but we know that they did it because they were forced to by her appointment. And the only explanation I can come up for why they did that is three words: “old white men.”
If you haven’t read the current profile in Fortune by Jessi Hempel of Ginni Rometty, you really should. It is an extraordinary portrait of an extraordinary leader. Her career and her personal profile are both models of probity filled with achievement, grace, and most of you already know her from previous appearances here. And I really want you to read that article if you haven’t.
I’ll leave most of the details of her stunning career to the article and to the interview you’re about to see, but just a few highlights. She was raised by a single mother, scholarship student at Northwestern. Studied computer science and electrical engineering at a time when few women chose those subjects. Graduated with high honors in both. Joined IBM, worked her way up through all the ranks including sales, and then presided over a huge, multi-billion-dollar, extremely complicated cultural merger with Pricewaterhouse Coopers tech consulting. Came out of it successfully, and not only that, well liked and respected and kept a surprising number of those people in the fold.
She survived an intense heir apparent trial, which as you all know is one of the worst things to go through, and she’s now rolling ahead at IBM, as I mentioned, the 5th-largest, highest stock price.
But this is a woman who when she sets targets, she sets targets. Think about this: Her three-year revenue growth target — her target for the next three years is $20 billion. And the record would suggest that she will meet it. You get the idea, Ginni Rometty is the real deal. I think her appointment to IBM leaves only one position in the world left to be filled by a woman that will make a difference in the glass ceiling, and I guess that’s the President of the United States, and I doubt that’s very far behind either. (Applause.)
So, please join me in welcoming Jessi Hempel and Fortune’s number-one most powerful woman in business, IBM’s Chairman and CEO Ginni Rometty. Thank you. (Applause, music.)
JESSI HEMPEL: Good morning.
GINNI ROMETTY: Good morning.
JESSI HEMPEL: So those of you who have been joining us every year for a long time know that Ginni and I actually sat on this stage together a year ago. It was a few weeks before you were named CEO of IBM. And of course a lot has changed in that last year. First, you were named CEO, and then yesterday you started this new job as chairman. So, congratulations. (Applause.)
GINNI ROMETTY: Thank you.
JESSI HEMPEL: So, Ginni, tell us a little bit about that first year. How’s it going?
GINNI ROMETTY: I’m sorry, I laugh at little bit, Jessi. You’ve got interesting timing because, obviously, when I was here last year, I didn’t have a clue, right? Nor did I have a clue I’d be chairman when I was here today. So, I would say Fortune has brought me good luck.
JESSI HEMPEL: Well, what’s ahead for next year, then?
GINNI ROMETTY: I know, this is a problem. (Laughter.) You know, I get that question, people will say, “Well, what’s it been like?” Actually, most people say to me, “What’s the biggest surprise?” is often what people say. And I have to say, this last year — as John said, I’m a lifetime, for the most part, IBM’er. I worked at General Motors a few years before, but I’m really for the most part 31 years with IBM.
So, of course I’m proud, just like all of you are, the companies you work for. But the last year, I’ve often tried to find a word to describe it. And the only word I can think of is “energizing.” You know, I had energy before — even if you could imagine that, even more because as John was telling you some of what IBM has become, talk about an honor and a privilege. And I guess it’s the access that you have that I just never take for granted.
So, in that first year, I can’t even sum up all the things, but the honor we’ve had in things like — I was just in Kenya several weeks ago to open up our first research lab on that continent. And so we’re the first big tech company to open true research in Kenya. (Applause.) And hopefully more to come on the continent of Africa. I’ll come back to that maybe. But one day, it could be with a country like that, another day work we’ve done with cities like Rio de Janeiro, another day many of you are great global clients or clients from any part of the world or helping IBM’ers become global citizens. I mean, there’s a really long list. So, energizing.
JESSI HEMPEL: So, Ginni, we’re going to come back to your strategies, but I’d love to hear a little bit about the actual experience of becoming the CEO of this company. What’s surprised you most about this last year?
GINNI ROMETTY: As I said, surprise. You know, the thing that probably — I’m not sure if it’s surprise, but I will tell you a little story, and I think the word — and maybe many of you can identify with me, is very humbling in many different ways. And I can remember — and many of you that have sent notes and the like, which is quite encouraging.
But I always remember a note I got from a client, a chief marketing officer, actually. He sent me an e-mail with an attachment. And I sometimes wonder, should I open up an attachment? (Laughter.) What is this? But it was a letter she sent to me. And she said, “I wanted you to see this, it’s from my mother.” And her mother had sent it, and attached to it was a scanned image of a 1928 IBM 100-percent club, and it was her mother’s father at the 100-percent club sitting with our founder being interviewed.
And in those moments, you realize how many lives you touch. And I couldn’t — you know, 1928, her mother’s father, and she had kept this all these years and was so proud of it.
So, that probably, as proud as I was before of IBM, I think that — to me, I said the word is “humbling.” You don’t even realize it until you see how broad that has been. And with that then comes really quite a recognition of an obligation that you have in front of you. As I think John said, this starts our second century, so we are 101 this year.
JESSI HEMPEL: So, Ginni, and to that point that you made, you have such a reputation for thinking long term. You, IBM, the company, right? And a lot of people start their careers at IBM and they work there their entire career. You nearly did that. You’re a company that has had — and you’re the 9th CEO.
GINNI ROMETTY: Is that a lot or a little?
JESSI HEMPEL: In 100 years?
GINNI ROMETTY: Good, a little. (Laughter.)
JESSI HEMPEL: I think the average tenure is something like seven times the average tenure of a typical CEO. So, how do you think about keeping that long-term thinking sort of front of mind going forward?
GINNI ROMETTY: This is something — I’ve sat in your shoes in these conferences before. And I’ve often thought when I listen to somebody, is there anything they could share that maybe I could take away? And I will give you maybe one thought that I think is crystallized in my mind on this topic about the long term. Because part of it is I get the honor of taking over a company that is a strong company. So, a clear way forward, we’ve talked about markets we’re making around cloud, analytics, the growth market. So, very clear.
But I think for those of you that might have been here — how many people were here last year? Everybody? Oh, my goodness. (Laughter.) Oh, my, I can’t repeat anything.
But what you think about — I think, as you said, what I said last year was one of the great things that I thought I learned from both Sam and Lou was this point that no matter what, you’ve always got to focus on reinvention, right? Never love something so much that you can’t let go of it. And you have to reinvent.
So, to this point, so easy words to say, but I did I think over this year — something crystallized in my mind about a way to reinvent the company. And it’s this idea of something called strategic belief. And I actually think strategic belief could end up being more important than strategic planning in this day and age about how do you keep the long view sort of in your mind.
And just sort of in a nutshell, you know, clients would often say to me, “What’s your strategy?” And I would say, “Ask me what I believe first, that’s a way more enduring answer.” And in the world you and I live in now where everything’s changing so quickly, can’t predict everything, and — and this is probably the most important “and” — and most of us have workforces that are very bright, very intelligent, want to be engaged in a broad way. This idea of a strategic belief saying if you can agree amongst the firm for the future, some really big arcs of change, I would call them.
So, you know, for us, one of them is this era of cognitive computing about to start. You could believe that, and then with really smart people, they try things, they experiment. Some of them work, you codify them, put them in management systems, you react to what happens. And if you can align everyone around a couple of those, it’s a very, I think, energizing and inclusive way to create a long-term strategy without having to worry that you’ve exactly called every specific point right here. But sort of these directional arcs.
And that’s probably one of the biggest things I think all of us as a team have learned over this year about how do you keep reinventing, right? And don’t take for granted where you’re at, but keep kind of a long-term view is that thought.
JESSI HEMPEL: So the reinvention aspect. You’ve always championed having that happen and happen fast. And one thing that really struck me when I was reporting this story was thinking about the size of IBM’s workforce. You employ 400,000 people across the world. People are constantly coming. How do you keep everybody in line with your ideas, with your strategic beliefs, as it were?
GINNI ROMETTY: Yeah. And this is, I think, again, I think this is about sort of the future of most companies, this idea of you’re going to get some of your best ideas from inside, inclusion, everybody sort of aligning, giving input, arguing with each other, and you do coalesce. It doesn’t mean you sort of let every flower bloom and things go wild, they’re channeled down certain directions.
And so with that number of people, two challenges: So one is how do you keep people vested in that and that they really feel like they have some input? So we have used within IBM social business in our way, and it has been a wonderful way to integrate people and have them both have a say, a debate, and an alignment across these waves. And IBM’ers have participated in hundreds of thousands in this kind of idea and are used to it.
JESSI HEMPEL: By social business, you mean a lot of the social networking software that we use —
GINNI ROMETTY: Enterprise wide. Enterprise strength. Of course we make products for that, Connections and the like, and we use them internally and to connect with clients and suppliers and the like. So, that idea about how to bring the troops together with one other thought, the other thing is most, I think, or what I see in our workforce now, people really do want to work for a higher purpose in addition to what they do every day. So, this clarity about what is your higher purpose about what you do I think is the other thing that is a very enduring thought. And for our team, they’re clear about that. It is very motivating. I always say to them, “You don’t always come here for money.” (Laughter.) There are bigger things, and your ability to impact. And that’s where I think between that higher purpose and then everybody engaged.
JESSI HEMPEL: So we’re going to cut to the audience for questions in just a few minutes — prepare, guys — prepare, women. (Laughter.) But I want to take a step back and just talk about character for a second, Ginni. I mean, you have established yourself as a leader that we all admire. And I’d love to hear a little bit about what shaped your earliest character.
GINNI ROMETTY: Well, I am probably not too different than lots of ladies in the room. And Jessi had put this in the article, it’s my mom. And I suspect if I asked — how many, if I asked you to raise your hands, how many of you feel your moms have had a tremendous — that’s right. So, we all — maybe a tribute to all our moms, right? Because she mentioned my mom was a single mom. And I always say the three things my mom taught all of us, she never said any of them. And it was, you know, she had to have a job, she hadn’t finished college, she had four of us and people make a decision what to do at that point.
And what we watched her do, she worked night because she could then go to school so she could get us to be safe and go forward. And it’s my brother who always says, “Mom taught us by her actions.” You know, she never said anything. So, I think actions speak louder than words is one thing I think I always took from my mom. And to this day, I think about that in everything I do.
The second thing, you know, I think about that, she did some things that were unbelievable. So, nothing is insurmountable after that. You come to believe nothing is insurmountable. And I think the third thing she taught us was you define yourself. Don’t let others define you. You define yourself. But I will be forever thankful to my mom, and also it’s turned out okay. (Laughter.)
JESSI HEMPEL: I would say you all four turned out better than okay.
GINNI ROMETTY: Yeah.
JESSI HEMPEL: Let’s open this up to the audience. Do you have any questions? We’ll start right over here?
QUESTION: What’s the worst mistake you’ve made in your career?
JESSI HEMPEL: So the worst mistake you’ve made in your career. May I get your name?
QUESTION: (Inaudible, off-mike.)
GINNI ROMETTY: Well, I’ve made lots of mistakes. Probably the worst one — I would say they tie. It’s either when I didn’t move fast enough on something, or I didn’t take a big enough risk. And I can think of multiple times — I mean, the worst mistakes to me, though, is you don’t learn from your mistake. There is no greater sin than to not learn from it. And so I would say that has been the worst mistakes. When there have been times, either it’s a market or something we were building or creating that I either was slow or that for some reason the way I didn’t take enough risk on it. So, that’s always sort of in the forefront of my mind.
The recommendation when I’m mentoring folks, I always tell them — and we talked about this last year — take a risk. You know? Or the almost mistakes are when I didn’t take a big enough risk.
JESSI HEMPEL: Ginni, to move that forward a bit, when you make a mistake, how do you personally react to that? How do you integrate it?
GINNI ROMETTY: I am big on — even with our whole team — it’s always about, well, what were the lessons learned? Something didn’t work out? What are the lessons learned? What are the lessons learned? And if I’m sitting in the audience listening, it’s always what lesson learned can I take away, what can I take away? And I think it’s that idea of if you are very confident to admit you always have something to learn. If you are confident to admit that, it will help clear your way.
JESSI HEMPEL: Anybody else in our audience? All the way back there.
QUESTION: Ginni, one of my favorite business documents is Policy Letter Number Four by Tom Watson, Jr., in ’52, six months before Brown vs. Board where he said all people of all abilities belong in this company. And I think you guys are such pioneers. We look at IBM and talk about IBM at Google, the things you’ve done with diversity. Can you talk a little bit about the work you do with customers and get everyone thriving and how you do that?
GINNI ROMETTY: Well, you know what? If I could take this one path, maybe an idea here. Today when I think about diversity, I actually think about the word “inclusion.” And I think this is a time of great inclusion. It’s not men, it’s not women alone. Whether it’s geographic, it’s approach, it’s your style, it’s your way of learning, the way you want to contribute, it’s your age — it is really broad.
So, to me — and it’s global in scale. This is a really important difference. So, one of the things that we have done to help build what I call global citizens, and I think that many of you have to do this, and it has been a great success, so I’ll just throw it out here as an idea.
We have started something called the Corporate Services Corps. Now, it was modeled after the Peace Corps from long ago, the 1960s. And the idea was in this modern day and age, how do you get IBM’ers around the world to be global citizens? You know, globally aware, contribute, understand how to work in that environment, but do it on scale. And this program we formed teams, they’re multi-disciplinary, and actually, by the way, now clients join us on this too. Six, seven people, and we’ve done well over a hundred of these.
As an example, it could be something like infant mortality in Nigeria. We have worked on the food supply in Thailand. I mean, these are very broad things that you go work on. And they have to do their real jobs at the same time. But these have probably been the most life-defining experiences that most IBM’ers ever have, and their recognition — if someone had told me, you know, I thought I’d discover a lot about the world, and I discovered a lot about myself.
And this idea, to me, is what drives inclusion is people’s awareness. And so it’s an easily replicable program. I’d offer anybody interested in it, we’d be happy to share it with you as a way to both give back and get your people skilled.
JESSI HEMPEL: I think we have time for one more question. All the way in the back room.
QUESTION: My question is: How do you actually reward and recognize both risk and innovation? You say take risks, but it’s interesting in a company of your size, how do you know people are taking those risks? And then how do you reward and recognize them for doing so?
GINNI ROMETTY: Yeah. That is a great question because the biggest — here’s my biggest piece of advice on that: I think one of the most valuable things anybody can do in reinvention is make markets. And this idea of getting the team to make markets and test them, fail fast, or move on, right? And so you reward people for — even if it failed, what did you learn? What did you move on? And so that idea, making, fail fast, go forward is I think one of the biggest ways we’ve been able to advance that.
Some of the great — you know, I always listen to all the ladies’ introductions. One of the big markets we think out there is around chief marketing officers. As an example, with the future here and what I call cognitive computing, it’s about — big data is one thing, you’ll never be able to get through it all. It’s going to be a whole era that’s going to help you get through this. And everybody’s job in a front office, chief marketing officer, a mayor, chief if police — their jobs are going to be redefined by this. These are the kinds of markets we want people testing, try them, move them. And that would be my biggest recommendation on that.
JESSI HEMPEL: So, Ginni, we’ve talked a lot about this idea of cognitive computing. I don’t want to let us leave the stage without you giving us a little bit more about what you mean when you say that because you refer to it as a third era, a really big deal.
GINNI ROMETTY: Yes. I think this is critical for all of us. And it allows me to give you a quick thing on Watson. I said, well, maybe I’ll learn what happened to Watson after that Jeopardy show. (Laughter.) Watson has been in medical school.
So, in a nutshell, you and I in our lifetimes, this would be the third era of computing. The first is machines that just tabulated and counted. The second is programs, get this, do that — everything you guys — everything we use today to get machines to do it faster.
The third era is because in this world of huge and big data, you won’t be able to program machines — you’ll never be able to program them for everything that they should know, and data will be uncertain out there. These machines will have to learn. They will have to be able to learn what is right, what is wrong, what are the patterns. They learn. That is cognitive, a machine that learns.
These eras, by the way, they’re 20, 30, 50 years each. So, this isn’t like it’s here this week, but this machine, Watson, was the first one we saw. I shouldn’t even call it a machine. What does it do? It’s capable of discovering learning. It’s not a search engine. And so what we’ve done since we played Jeopardy with that is we have dedicated it to medicine. And we are working with Memorial Sloan Kettering Cancer Center, Cleveland Clinic, MD Anderson, WellPoint, and others. I would say right now it’s probably, if I can use the word “ingested” 80 percent of the world’s medical data. The first area we picked was oncology. And for certain cancers, it is a diagnostic tool for the doctor.
And if you would watch it work with these doctors, we’ve done into production. It is almost as if he’s talking to a colleague. And the beauty of a learning system is it can tell you the percentage I think I’m right or I’m wrong. If you told me something else, I would be perhaps more confident. And it can tell you why on earth I believe all of this.
And when you think of things like for cancer, some of you are involved in different areas, that is something that your first treatment, diagnosis makes all the difference in the world. And if you could impact that around the world on how gold standards are applied or where these diseases are diagnosed, just one example, that’s to me — this word “cognitive” is a way better description of the world I think we’re going to live in.
So, on one hand, we’re doing oncology. On the other hand, we’re working with some banks and call centers. So, two sides here.
JESSI HEMPEL: So, Ginni, that’s our teaser for next year. That’s a big topic.
GINNI ROMETTY: Yes, well, he should be through medical school. Yes. (Laughter.)
JESSI HEMPEL: Well, and who knows what’s going to be happening for you next year given our track record. We look forward to it. Thank you so much, Ginni.
GINNI ROMETTY: Yes, thank you. (Applause.) Thank you.