Second day of the 2018 meeting of the nations governors. Yesterday, we had great discussions about how governors are working with our international partners. Advancing that Agricultural Industries in their states and tackling the opioid crisis. I do want to extend my thanks to our a strong and friends, our mates as we affectionately call them and the individual governors who led the sessions yesterday. They were extraordinary. I can speak for the other governors that we have learned so much so far and today promises to be the same. We had a great evening last night of teambuilding during the usa purple party. I hope everyone had a good time with that. We are privileged with attendance from our key domestic partners. Their presence is greatly officiated and we thank you for contribution to our meeting. I will ask some individuals to stand so we can recognize them. With regard to our former governors representing each state. , governor earnie fletcher. Maine governor john mccurn in. Harrisd governor clendenin. Mississippi Governor Haley barbour. Mississippi governor romney musgrove. Pennsylvania governor tom corbett. Pennsylvania governor mark schweiker. South carolina governor jim hodges. Virginia governor george allen. Virginia governor jim gilmore. Wyoming governor jim guarantor. I guess theyll get to sleep in now. They are former governors. [laughter] attending theor meeting. I want to talk about my initiative. Its been about six months since we launched the innovation ahead of the curve, innovation governors. For the gripping discussion with elon musk, i see a lot of people nodding their heads. I know i remember it. Since that time, we have been actively engaging stuff from your states and exchanging ideas on how we can prepare for the predicts or one that is less scary. Weve worked with Innovation Companies around the country and we truly appreciate their support of our week work. We have seen how technology is transforming our daily weight of life. From how wiki and cool our buildings to the cars we drive or the cars that drive themselves. Some of you might of had the opportunity to ride the a thomas vehicle in las vegas to ride in the thomas vehicle Autonomous Vehicle in colorado. Homes that used nonet energy and rode in an aut onomous vehicle that took our breath away. We felt to innovation summits. One in denver that was graciously hosted by my friend governor hickenlooper. Thank you governor hickenlooper for doing that for me. States both blue and red are serving as the laboratories of a novation. I hope you all took the opportunity to visit ces startup alley where we brought some companies. I went and checked it out myself. There. S still a booth i encourage you to take the time to see these on japan or send innovators and what they are doing to see these entrepreneurs and innovators and what theyre doing. We had a total of 156 date officials who heard from industry officials about the latest technology. We heard how states are making the most of opportunities in Economic Development and sustainability. We learned about the policy innovation that goes along with the innovation and how we need to reimagine our Data Networks and retrain our workforce and educate the public. Some storyeased maps. You saw a preview in july in montana. We now have transportation and story maps. That tell the story of innovation. What it is, how it can bring andfits to our states fostering the adoption and how we as governors can act. I am pleased to present to you today a personalized statespecific snapshot of the story maps. I have one with me today. I have my nevada map. You should have your maps as well. It is a twosided flyer that highlights where transportation and Energy Innovation is taking hold in your respective states. To learn more, you can visit the nga booth in startup alley. Meeting, in at our new mexico, and i cannot wait to hear from Governor Martinez and she is going to give us a preview of what we have to expect later. There is one map on transportation, oneonone energy. It will provide a full menu of options to pursue. We innovated a new class of innovation governors. All of these resources, a list of our sponsors and thank you to our sponsors. Highlights of our activities can be found in our initiative website. Ngaahead. Org. Now to the main event of this morning. I promised you a great discussion. I know i can deliver with our next guest. I am very pleased to invite g inni rometty to join me on stage for a fireside chat. Ceo of ibm, one of the nations oldest and leading technology companies. She began her crib back at ibm and 1981. Since then, she is held a series of leadership positions. In addition to her role at ibm, she serves on the council on foreign relations, the board of overseers and managers of sloankettering Cancer Center and on the board of trustees of her alma mater, northwestern university. Ibm is synonymous with automation and innovation. From its early days, transforming business transactions to the creation of watson, the jeopardywinning supercomputer. Fondly. Remember that to its modernday Cloud Platform solutions. Ginni has been a trail blazer introducing cognitive systems that improve business and society. So please join me in welcoming rometti. Inni thank you. Thank you. Good morning, everyone. Too early . Upwe tried to pick them here. We will have to do something else. Excited, proud, pleased, honored, that you took your time to be with all of us. Wellrespectedy and possibly the most wellknown brand in the world. I do not know if anybody your everybody really knows everything that ibm does. And how a centuryyearold company is staying relevant in todays world and into the future. Know, the, you governors and attendees today about ibm and your plans for the , future. Ginni all right. I think that is a gracious way of saying what do you do now . Because governor you are right. , we are 107. That does make us the oldest Technology Company in the world. If i asked everyone here i should probably take a survey. There is usually one to two degrees of separation of someone you know or has worked for ibm around the country. And if i asked you you and i did not talk about this, so i will try you. What percentage of our revenues companye an 80 billion what percentage do you think is hardware . Some sort of product. Gov. Sandoval im supposed to be asking the questions. [laughter] ginni this will be your last question. Gov. Sandoval 50 . Ginni it is 10 . I think im your what every company and every state here is going to go through. It is this reinvention of technology. Answer, we started with scales and tabulating machines. It went to computers over time. It moved into services and into software. And to your comment, most recently we really are an ai and , Cloud Company now. This is the only way. This idea that you have to reinvent. We have repositioned our portfolio. If you wonder what ibm does today think of it this way. , 46 of our products and services are new in the last three years. 46 of that 80 billion. So it is now a top three of the , clouds in the world. Clouds for business. It is the Artificial Intelligence platform but for business. Block chain, we are going to talk a little bit about. We are the number one Security Company for enterprises. We actually if you want to talk a little bit about that manage 40 billion potential incidents a day. Day, 40 billion a day for ourselves and for , others that are out there. We are now the number one Services Company in the world. Think of it as four businesses. In that change, we have had to change our portfolio. Weve had to reinvent how people do that work, everything from Agile Working to location to to new work. You will also find 50 of us are new in the last five years. We will talk more about skill. In all that reinvention, we have done 8 billion of divestitures. 60 acquisitions feared we have now returned the company to growth in the last quarter. I hope one of the topics we talk about, we are really focused on responsible stewardship of new technologies as they come into the world. Gov. Sandoval that is exciting. I look at my phone ginni immediately. Gov. Sandoval it is early. What is the future of technology . I mentioned them in my remarks. Driverless cars. Renewable energy. One of my favorites, the smart copy machine, the internet of things youd things. What is the next big thing . What should all of us as governors be thinking about as we move forward . Ginni i thought you would ask that. I am going to speak mostly about what i hope will link to jobs. I hope its what companies in your state will do good the one thing about us that has never changed, we have always focused on not being a Consumer Company , but we are a enterprise company. We are focused on changing how the world works. I would say there are two technologies that i would Pay Attention to. One is Artificial Intelligence. I know i may have some different views than other guests. Second one is blocking blockchain, and i dont mean recto currency crypto currecncy. Why would i say that . The first one is Artificial Intelligence. Governor, you mentioned jeopardy. Let me go back. Why do we bother to develop Artificial Intelligence . We have an explosion of so much data, you cant deal with it. Its not just numbers and letters, it is pictures, it is from your coffee machine. Everything you own is programmable. Your cell phone, you name it. Somebody had to say, if this, do that inside of this thing. You cant do that with this data. That is what Artificial Intelligence does. It can understand data, reason and learn over and over. That is what we set out to build to build. Bills jeopardy and watson was a very early substantiation. It did catch everyones imagination. We have moved on a long time from then. Artificial intelligence when you think of it for business im not talking about a device at your house that you ask about the weather. That is very simple stuff. What i mean for businesses this kind of Artificial Intelligence can be trained on medicine, tax laws. Regulatory environment. It can learn off of small amounts of data. Peoplere not billions of talking about that on the internet, for example. It learns off of small amounts of data. It can go on a doctors workflow. You have to be able to explain an answer. Professionals never went black never want black boxes. That kind of Artificial Intelligence changes how a government works. Two quick examples that i think bring it to life. One of the big everyone has customer service. Everybody has call centers. Many of them have outsourced call centers to other countries. They said they did it because labor was less expensive. If you could bring it back and the agent could have an assistant one of the banks trained Artificial Intelligence on 60 products. So now when someone calls in, maybe paid more, has to learn faster and can be assisted by this. They are able to bring the work back here. So the person is assisted. The other example that i think is a great one is health care. Hadhad open relates you opioids yesterday. I thought another good example for this group would be in ohio, we are doing work to help caseworkers right recovery plans for juveniles. It is going to help people in so many ways. Its going to find its way assisting people. I think it is going to be the most defining technology of this era. Now block chain gov. Sandoval lets not leave Artificial Intelligence. Block chain, i think i can speak for many of us that we are going to need a good schooling on that. [laughter] gov. Sandoval we talked about some of the former conversations we had in rhode island. The doomsday scenario associated with Artificial Intelligence. Would you mind chatting a little bit more about that . Ginni i absolutely do not agree with it. But let me be clear. I always use the words, this will be the issue of our time and the opportunity of our time. Both of them together. Why do i say that about Artificial Intelligence . Opportunity i can see this already as we roll out watson for oncology. Particularly in less developed countries. The United States has one doctor for every 100 cancer patients. India has one for every 2000. Already we are in 150 households around the world. We will solve issues where they will never have a chance to get worldclass health care. A doctor will be assisted. These are the kinds of things that will get solved. Thats the opportunity of our time. I think it is completely wrong, some of this hype about it. If i had my druthers, i would not call it Artificial Intelligence. I would call it augmented intelligence. In my career early on, i was in Artificial Intelligence specialist. It is decades this has been going on. Let me dispel some of the hype. If you look at the height of where ai will go, you hear about the singularity. There is another one, people call it general ai. Doing what our brains work. Then there is broad ai to do all the business stuff. Most of what you see today is in the Consumer World look at pictures and understand this. Report the weather, tell me this. It is just natural language. Speech to text to search. That is what you have today. This big broad application to business will go on for a decade. This idea of mimicking a human brain, i think that is maybe 2050. Maybe singularity, never. What i do think im not a believer of the big hype. I do believe very strongly that those of us who make these technologies, and i think you as a government a governing body think about this, they do have to be ushered safely into this world. What are some of the egg is to risks . Block chain. Ck to first, the purpose of these technologies. You have to be really clear. We believe strongly these technologies are to augment what man does. It is man and machine. Will there be some technology that will obviously replace what we all do . Yes. But that has happened in every era of technology. You can go back to industrial and farming and you name it. Will it happen faster . Yes. Be clear about its purpose. I think the other thing government will be involved in and i think frankly every institution like my own, and we live by this, data principles. You have to be clear about who owns the data. Now that you have ai, there is intellectual property that comes from the learning. What did i learn from that data . That should belong to the creator. You cannot end up with a world havenots. D think about who owns the data. You have to be clear with every consumer. If i am using ai, i am going to tell you. By the way, im going to tell you who trained it. You may not care who picked the best song in 1970. But if youre looking at cancer treatment, you care that it was the best institution in the world who trained it. You care what data went into it. We are going to enter this world where purpose, transparency, and telling people who owns things, and i think you have to prepare a whole set of workers. We have done all these studies. We have done studies with m. I. T. , what percentage of jobs could be displaced . There are numbers and predictions all over. I am absolutely confident 100 of jobs will change. And i believee, this is my responsibility as a preparetoo, to everyone. Youth, current workers, your Education Systems change. To me, that is responsible stewardship of these technologies. Not just for those of us who make it. But also to help fix the problem. Gov. Sandoval thank you, and we will have those conversations. Lets get to blockchain. This is my initiative ahead of the curve. I have tried and i do not understand block chain. [laughter] if. Sandoval i asked ginni she would have a block chain for dummies. Ginni when i tried in the other room, was it working for you . Ginni gov. Sandoval yes. Ginni ok. Wetelling the governor are such a big proponent of block chain. I think what block chain will do for trusted transactions between people and parties is what the internet did for the exchange of information. Block chain will do for transactions what the internet did for information. The internet let information be exchanged between anybody. Block chain could do that for a trusted transaction. Here is my simple definition. For those of you think that block chain is bitcoin, no. Cryptocurrency, no. That is an application. Under it is something called a block chain technology. That is what you should Pay Attention to. I said, if you dont mind, my simple description of this, all of us that run a government or business, we keep a general ledger. If the governor and i do business, i do not trust him. I keep a version of what i paid him and what he paid me. And he keeps the version. We both have staff that reconciled this all the time. And it isscenario, repeated in every business you know, every government, im going to come to this port, transportation, it is everywhere. All the idea of lock blockchain is, it is the distributed ledger. It says, what if we all had the same copy of that ledger . It could not be tampered with. It was immutable. If i made an entry change, it went to his copy, went to everyone. If i tried to change something in his, i could not unless everybody agreed on it. That is what a block chain is. It is just a distributed ledger. We all have a copy. It is immutable. It cannot be changed. The way it works, is governed by a whole big governing body. Not one guy who owns it can decide how to change it. That, if you think of it, every place you have transactions, you could get a very fast middleman out of the way. Anyplace with a middleman. You may say, this is a lot of efficiency and productivity and it is. And we am seeing probably have 500 projects underway. Here would be three of the big ones. Ports, it is shipping. Any kind of transportation. Decide, this is an example, we have a joint venture with marist, the largest cargo shipper. But it is not just marist, it is the ports of amsterdam and dubai.