Governance

It was an educational week at the Leadership Conference for Trustees, Physicians, Executives, & Nurse Executives at The Greenbrier in White Sulphur Springs, West Virginia. The conference, which focused on the subject of governance, was organized by The Governance Institute. Although not a new term, governance has taken a much higher profile in both for profit and not for profit organizations. At a very high level governance aims to assure that an organization produces a pattern of good results while avoiding an undesirable pattern of bad circumstances. The Governance Institute focuses on helping hospitals achieve best practices among the leading healthcare boards across the country.

The conference included three days of speeches, Q&A, and breakout sessions that covered many topics including clarification of a hospital board’s basic fiduciary duties and core responsibilities, exploration of "best practices" of high-performing boards, understanding of various hospital-physican relationships and complexities of physician credentialing and privileging, approaches to hospital financial planning and capital allocation, and an analysis of the healthcare reform (and cost) being advocated by the various political candidates.

Governance can be a complex topic but at a high level it is mostly common sense. The way I think about it, good governance means being financially efficient but not pushing so hard on the numbers as to cause people to do unnatural things in order to "make" the numbers, focusing on how the leadership of the organization is selected and how they are paid, being transparent with the various stakeholders so they understand the decisions that are made and the rationale behind them, and insuring personal accountability is in place at all levels.

Although governance was the main focus of the conference, all of the speakers had some predictions about where things are headed with American healthcare. It was not a pretty picture. Costs are going to cointinue to escalate to the point where they are a huge part of the economy and exceed the cost of primary and secondary education at the state level. As costs rise they will be pushed toward hospitals and pressures will continue between payers (insurers) and providers. Primary care physicians, already in short supply in many areas, will be in even shorter supply as new graduates seek out speciality areas with more economic potential. As the cost of running a medical practice continues to increase many doctors will choose to become employees of hospitals. Hospitals will consolidate and as they gain economy of scale they will implement electronic medical records and become highly efficient providers of high quality care. Although America does not today offer the highest quality health care in the world, there is significant progress being made toward curing cancer and heart disease. The glass is half full, not half empty.

There was not a lot of spare time but enough to get in a look around the Greenbrier’s spectacular 3,500+ acres, have a good hike up Kates Mountain Road, and also locate a benchmark near the old White Sulphur Springs train station (a few pictures in the photo gallery). That brings cumulative benchmarks found to eighty-eight. Some of my colleagues took a tour of the Bunker but we had been there before.

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Pictures from 2002 trip to the Bunker

iPhone – Update No. 9

The most encouraging thing about the iPhone is that Apple seems to be listening to the feedback of customers. The price cut rebate was handled well — and expeditiously — but compared to the other issues it was an easy fix. Other than various functionality, which I am sure will be continuously improved, the two big issues remain the applications and the network.

There are four kinds of applications. First are the "standalone" applications such as the calculator, calendar, photo gallery, clock, and offline email. No network required. A second type could be classified as "networked" applications. Examples would be stocks, weather, over the air email, and YouTube. Each of these is a combination of a standalone application plus a network connection — either via AT&T’s network or from a WiFi hotspot. A third type of application is a networked application which works only with WiFi. Example being iTunes. The fourth type is the "webapp" or as described by Steve Jobs "Web 2.0" applications. The webapps work through the Safari browser. There will surely be many useful webapps but there are two important limitations.

First is that webapps are most useful when they are connected to the network, preferably a fast one. The presumption with webapps is that the data — travel itineraries, frequent flier numbers, healthcare information, personal financial information, etc. — is on the server. That model only works if you can get to the server. Some people 8 gigabytes is not enough to have local data in addition to music and pictures. I think many people would happily make the tradeoff to have a bit fewer songs and have some accessible local data. the 8 gig limitation is only temporary as we will have a terabyte of local storage before long.

The other limitation of webapps is the interface. In theory you can do anything in a web browser but the human interface is not always ideal. That is why millions of people use Quicken instead of quicken.com. This will change over time as web standards evolve but in the short term I believe there is a rational need for local applications. A perfect example is Navizon which is a software-only wireless positioning system that triangulates signals broadcasted from WiFi access points and cellular towers which pinpoints your location and then launches a Google Map to show you where you are. (This is one of the third party applications that Apple erased with their recent firmware update). There are many applications that could be local applications with local storage on the iPhone. Both the app and data could be synchronized (backed up) through iTunes.

There is no doubt in my mind that enabling third party local applications on the iPhone as a supplement to webapps would be a great thing for Apple. I also have no doubt that Steve Jobs thinks so too. Apple announced this week that they will have a development kit available in the first quarter. This will spawn a flood of new iPhone applications. If anything, I believe Apple underestimated how many developers, in addition to the high-end personal digital assistant users, would take quickly to the iPhone and start building third party applications. Mr. Jobs says they need the time to make sure there are tools to enable the local applications to be built in a way that protects against viruses and other malware. The hubris of wiping out the third party applications was not a good move, but as I started this story I do believe Apple is listening and I am optimistic that in a matter of months we will see a lot of very useful and exciting applications emerge for the iPhone.

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Rhinebeck Aerodrome

Aviation has been a hobby for me since I first learned to fly in a Cessna 150 in 1970. Later earning a commercial ticket and an instrument rating made flying not only fun but practical. After moving away from the Philadelphia area to Connecticut in 1981, flying became less practical for a number of reasons and the Cessna 172 was sold. (See “I really prefer having an engine!”). In the last few years I have gotten a renewed interest in aviation.

An Indian Summer motorcycle ride up the Hudson to the Old Rhinebeck Aerodrome showed us a “living” museum of antique aviation. They have one of the largest collections of early aeroplanes in the world, many of which regularly take to the air in all their glory during weekend air shows. The Aerodrome features airplanes, cars, motorcycles, tractors and memorabilia from 1900-1935. The days of early aviation come to life with the roar of rotary engines and a World War I dogfight. The most amazing part of the day was watching world-renowned pilot, Stan Segalla, The Flying Farmer, performed things that seemed impossible. At the end of his Piper Cub feats he shut off the engine, did some fancy turns and landed in the center of the runway. Mr. Segalla is 82 years old.

There are many ways to follow what is going on in general aviation. America’s 20,000 airports are a great place watch airplanes in action — community airports are also a catalyst for economic growth. A good place to keep an eye on what is going on in general aviation is the AOPA. I attended their annual expo in Hartford, Connecticut last week and saw many exciting new aircraft and attended a seminar about the emerging very light jets. The VLJ’s will surely have a major impact on the economics of air transportation. There are pictures from Rhinebeck and the AOPA Expo in the photo gallery.

Big Blue Going Green

When you click on a link, a server in a datacenter somewhere gets the job of finding the web page or process you requested and delivering it to your browser over the Internet. One user on the Internet and one server at the other end serving one web page is quite trivial. With millions of users around the world visiting the web site at unpredictable times and making unpredictable requests for millions of documents, pictures, music, videos, processes and transactions, it can become a nightmare for the people who are managing the datacenter. In the last five years there has been a six-fold increase in computing capacity and a 160 fold increase in storage. Along with the increase in capacity comes a huge increase in complexity and in electrical power usage.

Imagine looking through a window into a corporate datacenter (even though many of them are underground and have no windows) and you would see thousands of steel boxes mounted in six-foot-high racks with cables everywhere. This part of the problem has been addressed by new technology called virtualization, pioneered by IBM decades ago but greatly refined in recent years. (See "Virtually Real or Really Virtual"). Imagine a virtual datacenter. When you peer through the window you see three boxes — a server, a disk storage device, and a network card. There is a person at a large video console who is looking at what appears to be a dashboard. It shows a pictorial diagram of all the things going on in the datacenter. When one application area needs more server, storage, or network capacity the virtual datacenter automatically re-allocates capacity from another application area that currently has excess capacity. The virtual datacenter keeps resources balanced, and when a component fails, the virtual datacenter automatically allocates a spare or underutilized component to take over. Virtual environments allow a big reduction in complexity but the even bigger problem is the huge growth in electrical power. In many cases companies are not able to get the additional power they need either because the power company does not have the capacity or because the datacenter is not designed to accommodate the physical changes necessary. Even if the power was readily available there is a negative impact on the environment. Hence, Big Green.

IBM is redirecting $1 billion per year across its businesses, mobilizing the company’s resources to dramatically increase the level of energy efficiency in IT. The plan includes new products and services to enable IBM clients to sharply reduce data center energy consumption and make them more “green”. The problem is sizable. Big companies spend tons of money on power. In IBM’s case it is a half billion dollars per year. The priority has been on getting the servers and storage that are needed to achieve various business results — need another feature for the web site, throw in another server. Have growth in web visitors — throw some more servers at it.

IBM is leading by example. One of their "green" projects is consolidating 3,900 servers onto 30 new top of the line mainframe servers. The result is not only more compute power but dramatically less use of electrical power and space. One of IBM’s customers went from 300 servers to six. The University of Pittsburgh Medical Center consolidated 1,000 servers onto 300 and saved $20m in costs while freeing up datacenter space for more hospital beds.

Datacenters have been popping up everywhere — most of them built before 2001. The datacenters are very large rooms full of many different kinds of equipment — designed in the same way they were decades ago — like a kitchen where the stove puts out more heat so you turn on the air conditioning to cool down the entire room. The chef is comfortable and others in the room are freezing. IBM is designing datacenters for customers where cooling "zones" are specific to the type of equipment in each zone. Green datacenters not only save space and energy but also benefits the environment overall. In the past the electric bill has been allocated as overhead to all parts of the company. Redesigns are saving many millions of dollars. With the huge growth of energy for the IT infrastructure the CFO is reallocating energy expenditures from general overhead to the CIO so they can see what IT is really costing.

IBM has made a sizeable consulting business out of helping customers understand their energy usage and then designing and supervising the building of new Datacenters and cooling equipment. Having overseen the construction of thirty million square feet of advanced space, IBM has learned a lot. The virtualization is helping a lot too. It can now optimize the use of servers around energy use. For example, as workload declines, perhaps at night, servers can be virtualized and "moved" to underutilized servers and then automatically turn off the servers that are not needed for a few hours.

(See other IBM Happenings)

IBM Happenings: September 2007

The month of September set a face pace for the last third of the year. The month was filled with a slew of announcements in hardware, software, services, acquisitions, and strategic alliances. One of the most interesting announcements to me was that IBM unveiled innovations for healthcare that will have a dramatic impact on patients, hospitals and the general public. The key trends IBM pointed out were in secure sharing of patient data, fully-informed diagnosis from doctors, healthcare providers and hospitals, speeding drugs to market, and stemming the spread of pandemics.

Here are all the other announcements made by IBM during the month. The complete index of prior IBM Happenings is here.

iPhone – Update No. 8

The price cut is understandable. It is not unprecedented by any means and the rebate was handled well by Apple. Nobody was forced to be an early adopter. People were forced to sign up for AT&T but it was no secret. It was announced that way, promoted that way, and is somewhat understandable even though I don’t personally like it because of poor network coverage where I live and poor network performance when there is coverage. I can also understand why a warranty would be voided if people physically break in to the iPhone and modify it. That is a standard warranty provision with cars and most everything. A software modification is a different issue from my point of view.

I need to clarify my comment that I got "bricked" last week. Walt Mossberg properly corrected me that getting bricked means that your iPhone is not functioning at all — it is like a brick. That is not what happened to me. I believe in most all cases where someone got bricked it was because they had tampered with the iPhone or somehow bypassed AT&T and enabled the phone to work with T-Mobile or someone else. I can understand why Apple would not like that because of their deal with AT&T and the fact that it has always been marketed as an Apple – AT&T exclusive arrangement. In my case, I made no attempt to change out AT&T. I just added the "installer" from AppTapp from Nullriver. This enabled me to add a bunch of third party applications that added a great deal of missing functions and new capabilities. I was really happy with the new applications.

I can understand that neither Apple nor AT&T would offer technical support for third party applications that they have not certified. I could even understand that they may require them to be uninstalled if suspected of causing a problem with the iPhone or the AT&T service for which I requested assistance. The issue I made in my last update was not of that nature. The issue was that Apple unilaterally *deleted* all the third party applications, including any data that may have been created by the apps, and also deleted the launcher and installer. An industry colleague described this unprecedented move by Apple as "hostile". I have to agree. Another colleague called it hubris. Some might describe it as arrogance.

I remember in the 1970′s when IBM was accused of such an attitude. If a customer had a mainframe maintenance problem and they also had "third party" memory or peripheral devices attached to the mainframe, IBM would refuse to work on the mainframe or even diagnose the problem. Later they loosened up and agreed to "take a look" at the problem but only if someone was present from the maintenance department of the "other" company. IBM had a significant comeuppance as a result of the unwarranted attitude. Eventually — in the late 1980′s — IBM saw a services opportunity in working on *all* of the customer’s equipment, no matter who manufactured it.

A similar situation may be at hand for Apple. What could be better than having thousands of developers around the world creating useful applications for the iPhone? That is how Palm got established. Apple is now gaining on Palm but if they don’t watch their hubris they may have a comeuppance.

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iPhone – Update No. 7

The $100 rebate was a good move by Apple. I was impressed that within a couple of weeks they had a rock solid online application to actually get the rebate coupon. Considering the testing needed to put out a public web application it was very timely. Big companies often take months to do something like this. I took the coupon into the local Apple store and bought a VModa Vibe Duo noise-isolating hi-definition headset for the iPhone. The sleek “hands-free” microphone and amazing high-definition sound are quite impressive.  The discrete microphone blends seamlessly with the black fabric cable. It comes with a black leather pouch and is remarkably lightweight. The store rep offered to send my purchase receipt via email. I was impressed.

From a business point of view the rebate not only took the sting out of the big price cut impacting the early adopters but will ultimately be the sleeves out of Apple’s vest. One of the financial analysts said the cost of the rebate to Apple would be $100 million. I don’t believe that for a second. First of all, some percentage of those who are eligible will never bother to pursue the rebate. Others will follow the (simple) online procedure and print out the coupon and leave it on their desk to get lost. Some of those who do take the initiative to use the rebate will go to an Apple store and see a host of goodies for sale which will leave an impression with them. When it comes to spending the $100, I suspect most will spend more than $100 rather than leave money on the table. Some may buy a Mac Mini or a big monitor or some software. Whatever they walk out with it will add to the amount of Apple computing and accessories that are in people’s hands and will lead to more purchases in the future and continued increases in market share for Apple.

That’s the good news. Now the bad news. Like many others, I got bricked on Thursday night — the Net is buzzing with commentary about it. As previously reported, one of the two major shortcomings of the iPhone is the availability of applications (the other being the AT&T network). Skeptics were pessimistic about the speed of introduction of improvements and believed that Apple and AT&T would operate an approval and collection gate for anything new. I was more optimistic. I turned out to be wrong — so far. When Steve Jobs said the iPhone would be open to Web applications he meant applications that worked through the Apple Safari browser, not applications that worked natively as part of the iPhone menu. Then along came AppTapp from a company called Nullriver in Burlington, Ontario, Canada. Someone at Demo showed me a link where you can download an "installer" that puts a new icon on the iPhone. When you click the icon the iPhone shows a list of dozens (maybe hundreds) of third party applications that work on the iPhone. These are not web apps but native iPhone apps. Apps that do not require being connected to the AT&T network. These are apps that have nothing to do with who the network provider is and do not involved cracking open the case and using a soldering iron. They are just apps that use the iPhone as a platform to run. The first app I installed was a launcher. This icon displays a menu of the iPhone third party apps that you have installed. I installed a dozen or so very useful new things.

The first app I chose was Navizon, a software-only wireless positioning system that triangulates signals broadcasted from WiFi access points and cell towers and then displays a Google Map of where you are. You can then click "Directions to here" or "Directions from here". By using the incredible squeeze magnification feature of the iPhone you can zoom in on either the map or satellite images of where you are. This is a really great value-added application for the iPhone. I also installed an instant messaging program that let me IM through AOL IM and pedometer app that uses the iPhone accelerometer to measure how far you have walked.. Other applications include dictionaries of various kinds, games, and programs that allow you to see all the files on your iPhone and more importantly allow you to create files and exchange them with your PC. This could solve my problem of not being able to display my frequent flier and hotel account numbers like I could on the Treo. In summary I found the initial set of third party applications empowering and exciting. That was until I got home late Thursday night and put the iPhone in the dock and got the latest iPhone "update" from Apple. The update added iTunes to the iPhone, a very nice addition indeed, but it also *deleted* all the third party applications including the launcher and installer. An industry colleague described this unprecedented move by Apple as "hostile".

Apple has now created the iBrick — an iPhone that doesn’t do nearly what it can do. Ironically, third party apps are the heart and soul of the Mac. Microsoft and Apple both have their office suites and various applications but without third party applications we would not have a fraction of what we have as users. Apple has basically said that the iPhone is theirPhone. You can install only the applications that they (and AT&T) decide are good for you and for which they will decide how much you will pay. Imagine turning on your computer one day and seeing a message saying that Windows (or Mac OS X) has "been updated" and then you find that Quicken, Dreamweaver, OpenOffice, Adobe Photoshop, Google Desktop, AOL Instant Messenger, Skype, and dozens of other things you are dependent on have been *deleted* and a modification was installed that will prevent any further additions of third party software on your computer. That is what we have here.

The important letter in PC is the P, for personal. I think of my PC as *my* PC. Millions of people use only what Microsoft or Apple provide and don’t take the risk of downloading and installing third party software. They may consider it rogue software, be concerned about the possibility of the software containing a virus or crashing the computer — all of which are risks. Millions of others, like me, accept some risk and like to experiment with new software and capitalize on the infinite creativity of software developers. I have a ThinkPad that came with Windows XP on it. I erased that and put Ubuntu Linux and VMWare on it. Millions of people use OpenOffice instead of Microsoft Office, partly because OO is free and partly because they just choose to. That is the great thing about the Internet and PC’s — they give us choice.

What is next? I am sure people are hard at work to figure out how to make third party software work on iPhone again. Many iPhone users are going to Hackintosh for instructions on how to downgrade their iPhone to the prior version of firmware so they can reinstall the third party software. What is the prognosis? I am not politically liberal but when it comes to the Internet and personal computers I guess I would be called a libertarian. The question to me is whether mobile computing is going to be a locked-down proprietary world controlled by Apple, AT&T, Verizon, Qualcomm, and a few others or whether it is going to be an open highly creative and collaborative world like the Internet and PC’s have been. I would never bet against the grass roots.

Apple did listen when the mass market said it wanted downloadable ringtones for the iPhone but their implementation is not as brilliant as other aspects of the iPhone. Apple is charging 99 cents to make a song you already paid 99 cents for into a ringtone. I purchased an album called "Crazy Ringtone #2". It contains some really good tracks. When I tried to add the ringtones to my iPhone I got an error message saying that these particular ringtones do not qualify to be iPhone ringtones, even though I had purchased them through iTunes. Meanwhile we are stuck with the sparse and weak AT&T network. The iPhone is an ingenious and elegant piece of hardware — it is a very powerful and well designed mobile computer. The iBricking of the iPhone has really soured me on Apple. I haven’t given up but now that I see how powerful iPhone applications can be I will be more impatient to see the platform open up more.

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