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RomeThe final afternoon of the Business Leadership Forum focused on the big picture — of both global political factors and technology. A panel included Karl-Heinz Grasser, Federal Minister of Finance for the Republic of Austria. He spoke about how governments can not only avoid being an obstacle to innovation and growth but also encourage competition thereby creating more jobs. The panel was bullish about how the information revolution — ushered in by the microprocessor in the early 1970’s and the Internet of the 1990’s — has led to an explosion of new products and new business models, However, there was a consensus that retaliation from poor economies and over-regulation by some countries could stymie the growth.
Mario Monti, President of Bocconi University and commissioner in the European Union for ten years, was quite optimistic about the EU — a market of 480 million people — and said that the EU itself is an innovation. He said that Europe is much more like the U.S. than it was. It is now a single market, has a single currency, and has been expanding market reach around the world. The shortcoming is that Europe, unlike America, does not yet have a constitution. This results in an economic disadvantage because the European community can not make a decision for the total. The European economy is not innovating quickly enough and in fact some countries are protecting the past at the expense of the future. Mario says it is time for “naming and shaming” the laggards through peer reviews. Then he got more specific — “Germany, France, and Italy are behind on liberalization of service markets and have resisted initiatives to increase competition”. These three countries will have a negative impact on the Euro which in turn will hurt the rest of Europe. Mr. Monti’s presentation was sobering but hopeful. He said the EU has a lot of good features, that it can protect intellectual property but also move against monopolies such as Microsoft. The key to get innovation going in Europe is for the EU to innovate itself by completing it’s constitution.

Irving Wladawsky-Berger kicked off the final segment of the forum, which focused on the future.
IBM supports Linux because it is a great operating system for computers. Irving introduced Linus Torvalds the developer of Linux which he published as a student in 1991. Don Tapscott, a widely acclaimed author, who invented the term “paradigm shift”, then moderated the final panel which included Linus,
Nick Donofrio, executive vice president for innovation and technology at IBM, and Ann Mettler, executive director and co-founder of The Lisbon Council. It was a wide-ranging discussion. Linus is an incredibly humble guy. He said he has no vision, just looks 5 cm ahead before each step, and loves to solve technical problems. Linux is successful, he says, because both the development and the decision making are distributed — a “built-in meritocracy”. Don asked why volunteers worked on Linux for no economic return. Linus said, “if you were all engineers, you would not be asking that question”. Open source software is viable in most all software areas, with the only exception being niche markets which are too small to get adequate collaboration. “Open source will take over most all infrastructure”.
Ann said there is a huge gap between businesses which are moving ahead rapidly and societies which feel left behind. The key problem is that the economy is 70% services but the regulations and governance are still based on an industrial model. She believes that government should learn how to innovate from businesses. “Politicians are clueless about the discussion of the past day and a half”. She says that businesses need to share their leanings with society. The labor market in Europe is flat because companies do not want to hire and that is because the laws are so onerous. “You can hire but you can’t fire”. Labor reform is needed desperately.
Nick says’ It’ s all about change”. IBM is doing a balancing act by supporting both open things and proprietary things. The company is generating a lot of patents but also giving away a lot of patents to move the ball forward in key markets such as healthcare and education. “The world can move ahead faster if the OS is Linux — it is good enough and a “blow for freedom”. A California venture capitalist asked about business ethics and Nick was very aggressive in his response saying it was not optional for companies to be totally and completely ethical in every respect. (Having been at IBM for 38 years, I can say I never ever had a  concern about ethics at the company). Nick summarized that anyone can innovate if they are willing to change. “If nothing changes, nothing changes”.
Sam wrapped up the conference by saying corporations need to be transparent. Their ultimate responsibility is to create value for the constituencies: stockholders, customers, employees.
He walks the talk.