What Does the Future of Sustainability Look Like For Your Company and Your Customers
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Hello, hello. Malcolm Gladwell here. I want to tell you about a new series we're launching at Pushkin Industries on the 1936 Olympic Games. Adolf Hitler's Games. Fascism, anti-Semitism, racism, high Olympic ideals, craven self-interest, naked ambition, illusion, delusion, all collide in the long, contentious lead-up to the most controversial Olympics in history. The Germans put on a propaganda show, and America went along with all of it. Why?

This season on Revisionist History, the story of the games behind the games. Listen to this season of Revisionist History wherever you get your podcasts. If you want to hear episodes before they're released to the public, subscribe to Pushkin Plus on Apple Podcasts or at pushkin.fm slash plus.

Hello, hello. This is Smart Talks with IBM, a podcast from Pushkin Industries, iHeartRadio, and IBM about what it means to look at today's most challenging problems in a new way. I'm Malcolm Gladwell.

In this episode, we're going to dive into sustainability and specifically how customers and businesses want to decrease their carbon footprint and verify that their efforts are accurately calculated. I'll be digging into this topic with Jason Kelly, General Manager, IBM Strategic Partners. It's the data that's in the system. It's the data that's in our partners' capabilities, such as SAP. It's from the source all the way to consumption.

And where there's more data, which there always will be, there's more insight and there's more progress. You may remember Jason Kelly from his conversations with Jonathan Strickland of Tech Stuff in earlier episodes of Smart Talks. Jason is working closely with IBM partners like SAP to think of creative solutions for businesses to measure and offset their environmental impact.

I will also be speaking with Mark Rolfe, Senior Vice President, Head of Strategic Partners, Partner Ecosystem Success at SAP. People are making progress from a manufacturing perspective, and our applications and services from SAP and IBM help make that much more transparent. Prior to his current role, Mark served as Global Vice President responsible for ecosystem innovation and once worked as the Global Account Director for IBM.

Together, we'll discuss the ways businesses can work together and use technology like blockchain to create more sustainable operations with more certainty about their actual impact and footprint. Let's dive in.

You mentioned your partnership. I'm an outsider to your world. Naively, I would have thought, aren't you guys competitors? What's going on here? I would have thought that you two would be at each other's throats, and instead you're talking like you're old friends. Can you talk a little bit about the role of these kinds of strategic partnerships? So there's a long heritage here of collaboration between the two companies.

But to your question, I think, you know, I think what the realization, at least in our industry, is, you know, there's the amount of collaboration that needs to exist today. Everyone cannot do everything. And you need to focus.

And so SAP, just taking the example of IBM and SAP, the biggest part of the collaboration from my perspective is having the ability to run our platform and our applications for specific industries like we've been talking about. SAP has a very good technology basis for many industries, over 27 industries.

But the special sauce comes in from companies like IBM that have the expertise from their services divisions around enhancing and best of class implementations of our technology in those industries. So bringing that know-how, bringing that subject matter expertise and making it very relevant from an industry perspective and building on top of SAP platforms with that expertise, it's a huge piece of our business. We will never invest in

That type of expertise, we rely on our ecosystem. And in this example, IBM. And that's been the basis of the success we've had at well over 50 years now between the two organizations. What does that collaboration look like?

Like, I mean, is there literally an office from both organizations where people go together? And like we were talking about utilities, is there a team made up of people from both organizations that are traveling together to see the customer? Quick answer is yes. Think of a couple clients, right?

IBM and SAP sitting down around the table, actively saying, how do we work with where you are to get to where you want to be? And what are the best and best prioritized steps you can take to get there?

Yeah, I think that the best way to explain it, Malcolm, is that we have teams that come together and look at what the market really needs, what our customer is really asking for, and actually working together between IBM and SAP with customers to build solutions, number one.

and then take them to market and go talk to the larger set of customers in a particular industry or a particular region together. So we actually look at the whole life cycle between how we innovate together and build new solutions with input from actual customers all the way through to scaling that in a global fashion. So it is a very collaborative setting that we really have. And I think that's part of what

From a technology perspective, many technology companies are really understanding that the ecosystem is the real power out there. Working with partners, working and collaborating together to really advance goals, whether it's sustainability or other initiatives. Jason, can you talk about how many partnerships in the sustainability world does IBM have?

So we look across ours, we have up to 12 active partnerships across our strategic partners. But that would be limiting just to look at our largest clients, because within those, there are other ecosystem players specific to where they are in a geography and by industry. And so we're only limited.

to the extent that we can be inclusive to that number of players in that ecosystem. So that's why it does demand an open type of platform that allows these players to come together because you can't do it on one type of technology. You can't do it in one cloud. And this is where your question about, don't you compete? It's like, well, of course we do. And times there's things that we, but the opportunity is,

For the tides to rise, all boats is bigger than us fighting in what would be perceived as a zero sum game because it's not. In fact, the challenges now, Malcolm, are so complex that one company by itself can't solve that problem. So when you hear us say, you know, yes, sustainability is a team sport, it's not just because it's a cool way to say it. It's the truth. It requires all of us.

We want to talk today about sustainability. And I, you know, it's a word that gets bandied about a lot. And I wanted to start with the two of you telling me what is your definition of that word? I'll jump right in. You know, when I think of sustainability, I believe that is real trust and transparency in making sure that we as humans have a planet that's going to be there now and in the future.

by employing methods that can be practiced by everyone in a way that is self-sustaining. When I think of sustainability, I think of organizations trying to make a better place for the future generations of our planet. What I think about is how do we make it better now? How do we start progressing towards a better planet and making the world better? This is a naive question, but when I think of that word, the first people who come to mind would be

you know, airlines, automakers, people who have obvious large carbon footprints, who are making things that are highly energy intensive, that, you know, you could all give the reasons. Tell me why tech companies such as yours also need to be as mindful of that. Well, I tell you, Malcolm, your question started with, you think of people, and then your example went straight to airlines.

And I think in there is part of what we see as important is that it's a B to P relationship.

type of operation business to people. We're people, all of us. And so that's the first thought is we were trying to make sure that we're taking care of each other. And so if we think of people being the center, you know, we formalized our efforts at IBM in the 70s to say, look, we want to be forward thinking and environmental management for decades to come. And we have.

And that's where we see the commitment being made is it look, if we can do it together and not alone. And that's as I'm here with Mark, I'm proud to say we see it the same way with regards to an ecosystem. And it takes all of us working together because sustainability is truly a team sport.

I think what we see from SAP, from our side, we are very focused on supporting transactions across most of the enterprise business in the world. 70% of the world's transactions run through our systems. Those are transactions that support product, the manufacturing of product,

and the rollout of product. So if we think about it from that perspective, we are very interested in making sure that those manufacturing practices, the design practices around those products are efficient, are transparent, and are ethically progressive in the way that these companies are manufacturing or running their businesses. So that from our perspective, it does tie back to people,

But we take a step back and look at the products that are being manufactured or the services being offered to people and how we can be more transparent around that from a sustainability perspective. Can you give me an example, Mark, of what you're talking about? Yeah. So if we think about a manufacturing floor and all of the data that goes into designing a product to actually building a product and then actually distributing a product,

SAP Systems, along with our partners like IBM, we put together applications and overall systems that monitor that data that allows the companies to build, manufacture, and distribute those systems.

So if we have visibility into how companies are actually distributing, manufacturing these products, we can make that much more transparent. We can start to measure the progress they're making against certain sustainability goals and start to really drive a conversation around sustainability around a product or an area. So I think that's key to what we see around whether it's circular economy in terms of

understanding greenhouse effect on manufacturing abilities of certain customers of ours, or if we look at overall carbon neutrality goals, et cetera, people are making progress from a manufacturing perspective, and our applications and services from SAP and IBM help make that much more transparent.

If I'm a client, a customer of yours, and I'm interested in addressing this issue, one place I might look for guidance would be the kind of data that would come from your software, is what you're saying.

Yeah, if you think about the overall value chain of what we deal with in it from the customers, there's manufacturers, there's end consumers, etc. Where along that value chain can we impact sustainable goals and drive towards more transparencies to improve upon those? So that's really what we're looking at from our perspective. Yeah.

Jason, can you talk a little bit about IBM's position in all of this? When does IBM as a company start thinking seriously about this issue? And how big of a transition is it in the priorities of the company?

We've been doing this for decades with regards to making sure that we're focused on the environment, the returns that we get, our clients get, and working across that ecosystem. As I said, we formalized it in 1971 saying, look, this is a priority for our company. And we just announced our latest commitment, which is to have zero greenhouse gas emissions by 2030.

We did this just at the beginning of this year. So that's the commitment that we've recently made. But you called out something here that's key and Mark echoed it, is this thought of data. It's the data that's in the system. It's the data that's in our partners capabilities, such as SAP, that's from the source all the way to consumption. And where there's more data, which there always will be, there's more insight.

and there's more progress. If you think more data, more collaboration, there's even more insight which gets faster progress. And so our position in this is to say, look, can we create open platforms of innovation?

Because, and I'll borrow from you, Malcolm, that's where innovation comes in desperate situations from the David and Goliath examples. You're desperate, so you reach out and you're saying, look, how can I find that innovation? And it's through this collaborative technology. Because ultimately, it is the consumer that is asking for this. We know this because consumers now, you know, 40%,

of the consumers were purpose-driven before the pandemic, and now that's 57%. And they're purpose-driven, meaning companies with a purpose that are driving after things such as sustainability. Can you talk a little bit more on this in concrete terms?

What does a focus on sustainability mean for IBM? You've said it's not a new focus, but is it fair to call it a renewed focus? I would say that's fair, Malcolm. And I would say that a renewed focus in a new era of capability. And so one place where we're spending a lot of time and effort, and it's along with our partners like SAP and Microsoft and others, where we're saying, let's invest in the World Business Council for Sustainable Development.

as they pull together many of our partners. And those are other clients, such as the DOWs, the Nestle shells of the world, who are also raising their hand in this renewed, as you said, sense of sustainability. And what's really key now is, okay, if we're going to pay attention to

carbon emissions and carbon footprint? How do we document it? How do we do that with trust and transparency in that ecosystem of value chain? It's not just that linear supply chain, but how do we account for all of that data in that value chain? And so companies like the Shells and Exxons, the Dows, the BASFs of the world are saying, how do I account for that with trust and transparency? And

And we're investing that with new technologies that are on the edge, such as AI or even blockchain that says, listen, how can I share data with trust? And this is where it comes in. If you can't trust the data, how can you make sure that we're accounting for carbon credits? How do you know those are real credits? How do you know those credits are accountable for IBM or for SAP? So I'm an airline investor.

I want to buy carbon credits to offset my footprint. And the question arises, how can I be sure that I am accurately accounting for my own consumption and the marketplace is correctly measuring what the offset looks like, how it's priced, whatever it is. What you're saying is,

Someone has to produce that data, verify that data, exchange that data. And that's what you guys are thinking about. Is that a fair summary? That's what we're doing. That's exactly it. I think that's a very important point. A lot of what I hear out in the marketplace is it's about goals, right?

sustainability goals in the future. I think there needs to be a kind of a shift in mentality that we can do this now. We are doing this now. We have applications that are tracking this data. You mentioned the airline industry. If you think about the airline industry and the supplier side of that or the procurement side of that,

Companies need to start putting together procurement goals related to sustainability and have applications and systems that track progress against those procurement goals that are able to monitor and measure that progress. So that's happening today. And that will get much stronger, as Jason mentioned, when you bring in

smart technologies like AI and other technologies that will make that even more progressive. So it is happening today. So I would say goals are important, but we can actually start doing something today, which I think is even more important. Can you give me an example, a concrete example? I'm interested in sort of the nuts and bolts. So this is actually kind of fascinating question. Can you pick a kind of particularly either hard or interesting case study

And tell me about what are some of the challenges from your end in providing this kind of data, coming up with it, verifying it, providing it? Well, I think for Marston, I'll give one example. If you think about a utility company,

And their legacy way of managing their suppliers versus where they need to be, very much a siloed view from providing information to and from those suppliers, a closed system that does not allow much transparency or even accuracy in what they're able to actually provide to measure a goal.

There's nothing in place that has done that before, right? So now we're putting out applications that actually, you know, take a look at those suppliers, understand where things are coming from, have they been ethically manufactured, you know, and be able, again, to trace that through the value chain that Jason and I have been talking about and be able to understand every step of the way and be able to track that data and track that process throughout that entire value chain.

And I think that's something very concrete, especially it enables the purchasing teams and the suppliers quite honestly to improve on efficiency and visibility around the procurement supply chain operations.

and serves as a foundation for those procurement goals. So it's a new way of driving transparency for these utility companies that have tons of suppliers for their manufacturing plants, for their energy plants, et cetera, and be able to report publicly that those are sustainable practices that they're leveraging to improve the overall operations, overall supply chain capabilities, et cetera, against that. That sounds like a really...

complex problem. Somebody's got a power plant which might be 50 years old. I'm making that up, but conceived of and built in an era when we weren't thinking about computers in everyone's pocket. You've got hundreds of thousands of customers. You've got

I mean, I don't even know what kind of on the other end of it, the number of suppliers they're going to have in every corner of the world. Someone could spend an entire life trying to figure out that problem. Some have, right? That's exactly it.

That's the power of what I think a technology company, an application technology company, an innovation company like SAP and IBM bring to the table, the expertise around an industry like utilities.

that an IBM brings to the table, you know, it's something that we are trying to reinvent business models based on new technology and take those 50-year-old plants, those 50-year-old systems, and modernize them. And I think that all starts with leveraging things that we didn't have

And applying technology to that to have much more of a transparent and overall view of the data, of the systems, of how that thing is built, of those parts. And again, that's what companies like IBM, SAP, and others are trying to do in these very old industries that need to have a reinvention. Yeah. And Malcolm? Yeah.

I was going to hit on your example there because you asked for something concrete. You know, there's cities upon cities you can point at, U.S. or international. You can look at a Chattanooga in the U.S., dirtiest cities, 1969, and then all the way, you know, 20 years later, it was the cleanest city. Okay, so it can happen. But how does it happen at scale? And we think concrete. To give one example, we're starting to see the other side of a pandemic happening.

And here we had a challenge across industries of just coming up with something we can address it with, a vaccine, and try and figure out how could we do it quicker, better, faster in any way that we've ever done before.

And it took a lot of time and effort to sit down and say with the likes of Fives or along with SAP on the back end, by the way, working with IBM, how do you change the way this is going to be developed and pushed through the supply chain? And we had the challenge of then going through multiple levels of, and we'll stick with the U.S., federal, state, local governments to get dispersed. And then we had the challenge of saying who's tested and who's received the shot.

And how do you prove that you've received a shot? In that example, I've crossed industries. I've crossed multiple lines of private, public situations. And that was to keep people alive. Now we're talking carbon credits. Does anyone have a sense of urgency that they...

would with a vaccine, some do, some don't. But if it's that challenging with a vaccine and a global pandemic, how do we do it with something that's called sustainability? Well, it starts with data. What are we seeing with the data? Data tells us this. What do we address? We address it with the carbon credits and carbon emissions. And then who's accountable for what? Based on trusted data.

Yeah. Those two examples you're talking about, one, COVID vaccine, two, utilities. Utilities is hard a problem.

From your end, it's not a technology forward industry. You've got state regulators that you're dealing with. So you've got 50 some odd different, depending on which state you're in, you have a whole different maze you've got to work through. I mean, with the vaccine, you're talking about three multinational, 21st century companies using a brand new, the best platform known to man versus 70 year old, whatever,

Bingo. In 50 different states chasing an elusive goal that they may not even be on board on. Bingo. Not only is it behind in times in many cases and in need of diversification as well as modernization.

Now you also have competing platforms saying, how do I leapfrog some things that are old or new? And we're ready to celebrate a 50-year relationship with SAP. Why? It's because SAP continues to evolve. And that's what, in your example, Malcolm, you know,

How else to evolve and get to where you're going than with trusted partners? This part, now I do feel like it's a commercial, but I know that it takes more than just the SAPs and IBMs. It takes the others in the ecosystem to make that leapfrog from where they are to where they have to go. And I think it's not just about the companies we're talking about here.

it's the technologies that are allowing this and enabling this. Because, you know, if you really, I mean, the pace of innovation that's happening out of there with things like AI and machine learning and all of that are enabling a lot of things that we couldn't do five years ago. So I think that the technology piece of this, and it's a much longer discussion, but you can't understate that. It's a huge enabler that

wasn't there five years ago, as I said. And it's going to continue to increase the innovation pace here and unlock opportunities in the very complex industries, like you mentioned, around utilities. I mean, you're actually right. It's a tough one. Yeah, I want to talk a little bit about blockchain and AI and its role in all of this. What do those two particular technologies bring to the table here?

blockchain, the bottom line, it's a trusted platform to share data amongst many players in real time. That's it. Share data in a trusted way. And if you can do that in this, this thought of whose carbon credit is it and where does it sit on the ledger of carbon credits? Now you can do that. So that's it. AI, the insight.

So we started thinking about augmented intelligence or as some like to call it artificial intelligence. Now you can use that to process and look at all of this data that we couldn't before. It took a lot of time and effort. So it was just too high of a hurdle to jump over. Not only that, but now we can sense and predict ahead of time before something happens. So if you put those two together, trusted data, which is the fuel for AI and doing it at scale,

That's when you say, okay, we are in a new place to play. And you have some place you can pull that data from. If you could just have someone that was touching those companies from the source all the way to consumption. So it sounds to me, though, that what you're saying is this kind of thing you're envisioning now would have been all but impossible.

five or six years ago. I mean, you're nodding, Mark. Yeah, no, that's what I mentioned before. I mean, again, going back to the utilities industry, we couldn't do this five or six years ago. And I think that's why I think technology is enabler than things like blockchain, like AI, like machine learning. This is all changing the landscape of the art of the possibility. If we don't transform what we're doing by leveraging these technologies as enablers,

we're not going to make it. I mean, so I think that's the key thing here is that, and that's where I come from, a technology background where these things are real, they're happening now, they weren't here five years ago, and they are making a big difference. So if we really want to accelerate this,

We need to go past the vision of goal setting and really start to implement and see change in some of these things because it is possible today. And you're absolutely right. It wasn't around five years ago. It wasn't possible five years ago. And I just think in another five years, what is this really going to advance into? So, I mean, I think there's huge opportunity here. Yeah. So looking ahead five years, I give you a magic wand. You could change one thing to make your life easier. What would it be? What's the biggest impediment that you could

in a perfect world would remove? I don't, I mean, I think from my perspective and Jason, I'd love to hear your side. I mean, it's not the technology. I mean, I think we know where the technology is going to lead us.

It's people. How can people open up and be more open-minded to think differently? Because even in some of these industries, and again, we talked a lot about utilities, they're not thinking differently. They're just trying to operate their businesses in the way they have been for years. We need its culture and its people to change. And I guess that brings us back to the beginning of our conversation. This really is about people and making sure that people, changing the way people think about these things and seeing the opportunity. And I would agree. It's the trust, the

and culture change. It would be like you trying to head out from wherever you are today, Malcolm, and saying, oh, I'm going to get a ride share, but you call a dispatcher. It's like, are you kidding me? You don't use it. You just click on your phone. So it's changing the process and doing it with trust. Yeah.

On the flip side, what's been unexpectedly the easiest part of this campaign, if you want to call it that? Jason? Is anything easy? Wow, that was a loaded question. The easiest part? Uh-huh.

is acknowledging that there's a challenge, I think, in bringing together the different players that have to play. I don't know from my end if it's the easiest part, but the most exciting part is to see the passion behind this. I mean, at least in our organization, I know in IBM, because it's very, very similar in the way we think about this, there's so much passion behind this and people that understand what these technologies can do.

are really pushing the envelope. So I think that's, you don't have to convince anybody it's the right thing to do. They see the art of the possibility and I think that's a very strong opportunity.

Well, thank you so much. This has been like so many of these conversations I've had with IBM and IBM and friends, which is basically what this has been. This has been fascinating. And and I really thank you for your time. All right. Well, thanks a lot, Malcolm. And and always, Mark. Thank you both. It was great conversation. I really appreciate it. Thank you.

Thank you again to Jason Kelly and Mark Rolfe for joining me. It feels promising to hear about these efforts from IBM and SAP and how these partnerships create a larger industry shift towards sustainability. Smart Talks with IBM is produced by Emily Rostock with Carly Migliore and Catherine Giraudoux. Edited by Karen Shakerji. Mixed and mastered by Jason Gambrell. Music by Gramascope.

Special thanks to Molly Socia, Andy Kelly, Mia LaBelle, Jacob Weisberg, Hedda Fane, Eric Sandler, Maggie Taylor, and the teams at 8 Bar and IBM. Smart Talks with IBM is a production of Pushkin Industries and iHeartRadio. This is a paid advertisement from IBM. You can find more episodes at ibm.com slash smart talks. You'll find more Pushkin podcasts on the iHeartRadio app, Apple Podcasts, or wherever you like to listen.

I'm Malcolm Gladwell. See you next time.

Hello, hello. Malcolm Gladwell here. I want to tell you about a new series we're launching at Pushkin Industries on the 1936 Olympic Games. Adolf Hitler's Games. Fascism, anti-Semitism, racism, high Olympic ideals, craven self-interest, naked ambition, illusion, delusion, all collide in the long, contentious lead-up to the most controversial Olympics in history. The Germans put on a propaganda show, and America went along with all of it.

This season on Revisionist History, the story of the games behind the games. Listen to this season of Revisionist History wherever you get your podcasts. If you want to hear episodes before they're released to the public, subscribe to Pushkin Plus on Apple Podcasts or at pushkin.fm slash plus.