Ginni Rometty, IBM Chairman, President & CEO, gave a speech on the topic of “Transformation in the era of Cognitive Business” at Tsinghua SEM

This is a wonderful opportunity for us and it’s a great opportunity for me. Let me start the evening off and I should first tell you that I’m a proud member of the Tsinghua SEM Advisory Board. So I have another connection with you as well and I have hundreds of alumni from this school that work for IBM. So we are very proud of that. Thank you for that.

I am personally a great fan of China and very committed to China. I’ve come to this country for 2-4 times a year for as long as I can remember. Just three weeks ago, when Premier LI Keqiang was in New York, I met with him there too. It was to talk about innovation-based society. I thought I would start this evening talk about what I considered to be the promise of this moment in time. Because, as all of you in school you know, we are in the middle of many technology shifts. But I do think they bring great promise.

And so I thought I’d do three things, I want to talk about digital transformation where are we right now. The second, I do want to introduce the cognitive era in front of us. And then, third, I’d like to just share with you a little brief summary of IBM’s partnership and relationship with this great country of China.

So my first is digital transformation.

What is to digitalize a company? If I asked how many of you want to be a digital company, everybody raises their hands. In fact, that’s been a lot of how IBM has reinvented itself. We have built capabilities around cloud, around big data, mobility. But really what I wanted to say is that this idea of a digital foundation it’s going to keep changing. And there’s new technologies, things like Blockchain and maybe, dean and I will talk a little bit about Blockchain during the Question & Answer. I think it’s another technology that absolutely has the chance to do for transactions, trusted transactions with the internet did for communications and information. So what I say to myself and all of my clients, when everyone’s digital, then what’s going to distinguish a company? Take the idea of digital businesses, add digital intelligence, and you’ll come up with what we call a cognitive business, the cognitive era. And I call it an era cause what I’m going to talk to you about, I think it will play itself out for multiple decades to come. The world, you hear and see it everywhere, is big data, big data, big data… In fact, 90% of the world’s data has been created in the last two years, so 90% of all information that ever existed was created in the last two years. However, 80% of it is what the world calls unstructured, meaning it’s video, it’s image, it’s pictures, it’s tweets, it’s sensors, it’s things that computers can store but they don’t really know what they are, until now. Now, cognitive, the systems that you do not program, they learn, they can understand that kind of information and it is going to change your life and it will solve some of the world’s most difficult problems.

So, cognitive is this idea of a system that, as I said, you do not program it. It looks at data, all kinds, image, insight, sound, and it starts to understand, reason and learn, like your brain does. If someone asks you a question, your brain automatically forms a hypothesis, thinks about all the data you know to support the answer. And if you are confident, you speak. Well, sometimes, you speak even if you are not confident. And, then, you can line up all the evidences if someone asks you a question. That’s how these systems work. Now, some people call that artificial intelligence. There’s a really, really important reason this is not just artificial intelligence. That’s not the world we envision. Artificial intelligence is part of it, but there’s 50 more different engines that look at this data. Also, you interact with this data in language, natural language. You speak, you can speak with it. As well, domain, you can train these systems to know healthcare, finance, insurance, education, fashion. And, these systems deal with what I call the grey area. When there are not exactly a right or wrong answer, they help you. And more important, instead of being artificial intelligence, this is about augmenting your intelligence. That’s the world we envisioned with the system called Watson. Watson was named after IBM’s founder. We worked on it for decades. It debuted to the world in a game show called Jeopardy where it had to, it had to come up with what was the question for that answer. That was five years ago and since that time, the first thing we do was to train Watson on oncology and cancer. And then, since then, we’ve gone on add many industries, 20 industries, 45 countries, 8 languages. And it’s all about helping you make better decisions.

This is why it’s cognitive, harder to say that aren’t artificial intelligence, but a way different purpose. It’s about augmenting intelligence and solving problems. So, as an example, you’ve heard of Macy’s, a department store. They’ve got Watson in the palm of your hand as a shopper, who knows you and as you walking through the store, helps you with what exactly fits your personality and what you are looking for. Or you may be heard of Sesame Street for children. Watson has now looked at every video for Sesame Street and can understand how a child learns and matches the video up to help the child learn better. Or a food & beverage company we are working with, tells it you would like chicken soup and you want soup that makes you feel happy. Watson knows all the chemical compounds that makes a brain more euphoric and helps you with what is the right soup recipe. To the other end of the spectrum, the work we are doing in banking risk and money laundering, or two of the most profound area of healthcare. So as an example, you may have heard of a company named Medtronic, they work on one of chronic disease, diabetes. And with the ability to learn from all this data, we’ve been able to predict a hypoglycemia event three hours in advance. That’s a medical breakthrough. I also mentioned cancer, what Watson has done is it reads every textbook on cancer, every journal, 25 million pages of articles. It is then being trained for the last 5 years by the best cancer doctors from 5 major institutes in the United States, the most elite cancer institutes, Memorial Sloan Kettering Cancer Center, MD Anderson, the Mayo Clinic, the Cleveland Clinic have all trained Watson. And what it’s able to do is to read a medical record, hundreds of pages, look at X-rays and then prioritize diagnosis and treatment and tell the doctor, interact with the doctor in a very collegial way, … what more tests should the doctor run and what might be the possible solutions. This is the world, it’s impossible for a doctor to keep up. It’s impossible. And that would be true for almost any field. So that era of cognitive.

So, this kind of technology will in fact change everything. And I’ve made my own prediction, in the next five years, every important decision will be aided by something like this, every important decision and even not so important decisions will be aided by this.

Let me wrap up with just I said, I make a couple comments, I started with my commitment to China and about IBM’s commitment to China. We’ve been here 32 years. We are both talking about this, the same amount of time Tsinghua SEM has existed. Actually, IBM and Tsinghua University are the same age. We are 105 years old. I’m very proud of this time. Our two histories are very intertwined in this country. And if you go back in time, it is IBM that brought the PC industry to China. We formed the joint venture here at the time, it was called China Great Wall Computer Company. And it was the world’s introduction to modern day supply chains. That happened here in China. And now comes this next generation that we are working on together. And so, I was very proud to see some of projects we are doing jointly with this country. They range from something called Green Horizon, it’s a tenure project with the country that has to do with being able to predict the pollutants in the air and in fact already, the team can do it 72 hours in advance so you can find the source of the pollutant and then you can try to improve that environment.

Or, on the other hand, I’m happy to tell you what you just saw there on cancer, we are now rolling out with a local partner in Hangzhou an initiative, in 21 Chinese hospitals, to help doctors there diagnose and treat cancer. So this is just another step in what I know would be a great future between IBM and China, and there’ll be many more things accomplished and I believe, in this cognitive era as we go forward, and I hope from the dean, many more students we will hire here to add to our thousands and thousands of what we have already.