Congress and trump to administration will repeal and replace the a. C. A. And key players to watch in the months ahead. Be sure to watch washington journal beginning monday, december 26, at 7 00 a. M. Eastern. This is one of the things i think the American Public often gets impatient about. They believe they have this trump card, this great military that can defeat anyone. But its not true. It is an extraordinary military, its very powerful, but it can only win in certain situations and can only really destroy things. It cant build a new order in its place. Sunday night on q a, mark danner talks about his career and the challenges facing the u. S. War on terrorism in his latest book spiral trapped in forever war. We dont want to produce more militants. They want us to overreact. They want us to occupy muslim countries so they can build recruitment. They want us to torture people. They want us to do things thats going to allow them to take their case against us. Sunday night at 8 00 eastern on cspans q a. Virginia rommetty was the eaker at this years churchill club. This is a Silicon Valley business and technology forum. It begins with the ceo karen ucker. Ladies and gentlemen, please join me in welcoming ceo of the churchill club, karen tucker. [applause] karen tucker hello. Thank you, thank you very, very much. My name is karen tucker, and i am ceo at the churchill club. Welcome to the 2016 annual dinner as we proudly present virginia rometty, chairman and president of ibm, and promod haque. Senior managing partner at northwest venture partners. Theyll exchange views on a range of topics from cognitive computing to business transformation to other things that they see as very important for future innovation and economic growth. After their discussion, we will have a few moments to take questions from the audience. We wish to thank ibm for their partnership making this possible. Lets give them a hand. [applause] karen tucker if you are tweeting, please use the churchillclub so that everyone can follow along, and there are other Twitter Codes in the ulletin. So she is a major force in the Venture Capital industry, having invested in over 70 companies, over 40 billion ver that time. Early in his career after earning a phd and mba, he went to work for a Large Company called bmi medical, which pioneered cat scanners, ct scan. And he put in time at a startup, recruiting as a coo and ceo. That gave him a very special insight into what companies and start having locked into hose issues himself. And though they attended at different times, they both went to Northwestern University in illinois. [cheers and applause] karen tucker the two first met before virginia took the helm as ceo, and promod has followed her since that time. Please welcome virginia rometty and promod haque. [applause] virginia rometty i very much appreciate that you pointed out we were at northwestern at different times. [laughter] virginia rometty t virginia rometty i very much appreciate that you pointed out we were at northwestern at different times. To, you know, n interesting evening here as we talk about, you know, some interesting things that are transpiring in the tech industry, and you know, new kind of innovations we have made. It is my pleasure to, you know, be in conversation with virginia rometty here. Virginia, as you know, has had a great career and accomplished a lot of fascinating things at ibm , and in fact, you know, i was looking at your bio a little bit. He started in 1981 you started in 1981. [laughter] virginia rometty we are getting off on a good foot. To 35 haque so close years. Virginia rometty it will be just early five last year. Promod haque what a remarkable career that ginny has been able to accomplish, just fascinating. Ceo inknow, appointed january 2012, correct . So prior to that, ginny was as, you know, the Group Executive for all the sales and marketing and strategies. I think i met you at that time. I think it was some event happening in new york, and you and i ran into each other and began to talk about virginia rometty it might have been our centennial. Promod haque i think it was. So i think a lot of fascinating things that jenny is involved with, and then especially since being ceo, you know, sort of a pioneer so to speak in the area of cognitive computing and utilizing the ibm workman program and technology to apply it to a lot of different vehicles and also, you know, sort of really do some fascinating things in the area of security as well as transformation of businesses, and a whole host of other things we will talk about. Ginny, it is my pleasure to be in conversation with you here. Virginia rometty thank you, promod. Promod just landed from india a few minutes ago . Promod haque a couple of hours ago. A few board meetings, and then a Company Involved in Artificial Intelligence and analytics. Virginia rometty you could have your shopping cart out telling me about his companies. Promod haque so ginny, you have been doing a lot of stuff in the area of cognitive computing, and you know, as the street says, you bet the company or the future of the Company Going forward on watson and on cognitive computing in particular. It would be interesting to get perspectives on how you see that impacting society, the use of cognitive computing. Virginia rometty i will provide you some context. It is a big bats, but it is not a risky that. This goes back a risky bet. This goes back, oh, we started almost two decades ago. It is something we can identify with. We got going down this path, and we dont think of it as a product. It was a time when we said, we look out and see a world where we would need all this data, whether it is maybe it was sensors or images, something that will grow and grow and grow. We had a lot of discussion over, the systems of today cannot deal with it, but and this is where the word cognitive came from. We do have carpeted cognitive overload. People will not be able to deal with this. Important. Ved i believe this is what will happen. The cognitive overload, you have got to develop something that would never program. You have to have them understand and learn and come up with their own answers. They would learn over time, which i would say, if this is one Technology Worth more in time that less in time, it would be the first. It would not be a product. We see it as an era. That work went up until the time we did jeopardy, which some people might be familiar with, when we had watson do jeopardy. Watson was our manifestation of the technology. But it was a believe this would be an era, you would have these systems, because you would have no choice to deal with all of this data, and more important, to resolve the tough problems, and you asked for context, you have to be able to solve things, you need this technology to solve it. It is why it is one of the first things you started with on health care, which is we undoubtedly picked one of the most difficult areas, but i absolutely believe the time is right. I did not know you worked for a Health Care Company back in time. Now i know why you are always asking me about this. Now this all makes sense. So health care, but i must say, and i just noticed it on the program, i think in the front, i really believe that if it is digital today, it will be cognitive tomorrow. It will be pervasive. You can become a cognitive business, in the technology era. We can talk about hydraulic processes of ibm and where we apply this and where we change what we do. Society, we will, with these technologies, there is not a doubt in my mind that we will impact things like health care, the environment and jobs. We will talk more about that. He just go through a whole list. It will be an era of man and , and another reason why we call it cognitive, ai has got some sometimes negative baggage associated with it. We think of it as augmenting intelligence. I have given all of the experience in what we have seen, we actually did a bit of account now. 100 Million Consumers are being touched by watson, going to a billion next year. It is a twoway relationship. I am very optimistic about this, and for good reason. Promod haque you know, there is a lot of talk about ai and Machine Learning and, you know, a lot of companies are being seen from time to time, developing, you know, ai is the platform they are building and someone. So on. You also see Larger Companies building it. How is watsons approach and ibms approach and cognitive computing different from, you know, what Microsoft Might be doing or what alphabet might be doing . There is noetty doubt if we go back in time even when jeopardy unleashed again, ai has been around for decades. I think at one time, i was in Artificial Intelligence i dont think i was a specialist. In my early, early career years. I would go to parties, and my husband who does not work for shouldwould say what i say . I said, just say you are an ad specialist. To today,tforward some people call it the ai winter coming out. You have got everybody talking about, because it is the same problem, all this data, how to make something out of it. Everyone has approached it. As a company, fastforward to today, every client, we get the privilege of seeing so many, but if you think about what will be the competitive differentiation, and i will come to us in a minute, but every one of you still saves data. It will be the basis of competitive advantage in some way. So we looked at that and said, where can we separate from some of the others out there . We separate in three ways. One is this point about the goal being cognitive what man does. This is about helping you do your best, or it is about taking care of things so you can do what you are meant to do, which we say is fascinating through doctors. We are pushing through a million patients. We are watching how doctors interact with this technology. Originally, anyone who ever works with technology with doctors, have you ever does it always work . No, it is difficult. I have always patients, i have number of patients x number of patients. They are coming into a world where some of the medical data will double every 75 days. What will you do . That is impossible, but what i watched we have been for many runs on this in history, Technology Comes in, they are like, i cant change what i do, i dont have time, but what watson said was almost like a collegial relationship between the man or woman and this. Has shown us. T i have watched this with lawyers, doctors, underwriters, engineers, it is the same even callcenter people. The same kind of thing. This goal, that is what this era will do, man and machine. These are not just machines you jump dump data on them and say, oh, i am a doctor now. They have to learn. As a child, you would start, are these related . No, then you keep going. Man and machine is where we differ with others. The goal that we are augmenting what each of us does in our life. The second is the biggest business thing that differentiates us from others, and we have i have to tell you, it took us time to get this right. If you really believe this is your basis of competitive advantage in your businesses, how can i be sure that the insight you have belongs to you and not someone else . We have architected the cloud system, but it is such that, by the way, your most voluble data, everyone has access to what is public. Comes with what marrying it. This is like accumulative business, and you will see the resurgence of companies that take advantage of this. If i am a company, i bring in my data, analytics, we bring in watson and data, but the insight, we can guarantee the insight goes to you, they dont train this data for someone else to use. Part of why that is, i dont have a search legacy background. Some companies have a search, and is like a big pool of data that is a knowledge database. This is not what this is. I think it is an important business but model difference. Business model difference. I know how it ends, if that is not a good ending, i trained the data with mine for someone else to use it, i want the value of all that accumulated years of my data. The second big thing i do think this is, you will think what decisions you make and how you do it, knowing who owns the data and who owns the insight is a really big point and where you can do with this. The third one is, i also think we are in an era where so much of this is about an ecosystem. A big, you open ecosystem. This morning we did a developer conference, i cannot remember where i was. Innovation hager does that remind anyone . Did i make up that name . I was thinking i was an innovation hager. But we had 1500 developers there. The open ecosystem says you make what the consumable, breaks it up into pieces so they i met people, and that i had not built things with. You do not have control and an open system like that in an open system like that. One man was 19 from stanford, and he built something called do not pay. . , so i said, what does it do he said, using watson, it is a form of a robo lawyer. When i came to the United States from the u. K. , i kept getting parking tickets. My parents called and said they would quit paying for these parking tickets. Tohe had to figure out what do about this. I am thinking to myself, dont park where you are getting parking tickets. I am sure thats what the parents said. He put together cognitive intelligence on how to fight parking tickets, and it has gone viral. Said, got, i think he 250,000 customers, and his rate is 50 of winning, fighting on these tickets. He asks you a few simple questions, and then you fill out your legal document. He started with parking tickets, he has now moved on to fire your landlord and he has got a whole set of these things. These are all legal, correct . He said yeah, because you do not believe you part illegally. Parked illegally. Now he is working, he has got another big group around refugees and how to have them get legal documentation. I think it is an excellent, great example. Promod haque that leads me to my question on that. Talk about this entrepreneur using watson you know, as you watson,life with cognitive computing platform, youan start ups utilize know, some of the capabilities of watson and then actually build apps and other applications and solutions . Virginia rometty i am going to answer it in a broader context, because this is not a commercial on watson for anything. Subliminal, but did not mean it that way. I think everybody in your own business is here, you are thinking about, how do you form an ecosystem . This is true whether you are a bank, you could fight or embrace tech. Many people are choosing to embrace and a good way. Everybody has got this point of view of some platforms whether it is micro level or big. If you are going to build a platform, it should do a couple of things. One, you need to give them access to something they cannot get access to anywhere else. Sciencease, we use the of watson, the science of the cloud, we have invested the past 12 months, or even the past nine months, 12 billion. You cannot get it elsewhere. So give them access to science. The second thing you have to do for any kind of a platform here is, you have got to help people be better than not working with you. We are offering them all sorts of ways to certify as a cognitive developer. They have got to be top coder. You would know some of these things. You can get a nano degree in it. The new concept is all out in this. The 30th, help make them commercially third is help make them personally successful. And we have got the Worlds Largest service company, they bring hundreds of partners out for solutions. Channels are what people are looking for when they are looking for innovation. Those rules fit on how to help a startup. Bitesize junk, and of course free. That is the thing they all want is free for some period of time. [laughter] promod haque any other thoughts . Virginia rometty on startups . Promod haque or the whole cognitive thing . Virginia rometty this point about being able to solve problems i do not think we could solve today. The stand between basic everyday, because i believe every decision you make in the next five years in personal are really big, you will be assisted by some kind of technology, i believe for all of us, that will be true. I look at some of the basic stuff where we are doing work on right now with sesame street and United States teachers association, the first wave is rolling out of lessons plans for kids. On the everyday side. I dont know if you have ever looked at third grade math lessons anybody have a third grader . Anybody remember her grade math . I did it, that is atrocious. You would never know how to match a learning plan to how this kid learns or even if it was a good plan. So we set watson on a third grade math. Started with thirdgrade math. It was to match your child learning style to the lesson, the right lesson plan, so throwing 500 years by all teachers next year, then we run into other subjects. On the other side, i would say that point on health care, i really, we will probably do [indiscernible] do anyone in health care, one or two, 34, five. Promod haque 20 of gdp is sent spent on health care, 3 trillion a year. Virginia rometty it is the waste and inefficiency, but it is the outcomes, 60 minutes did a segment on washington three weeks ago. Unbeknownst to us, we doubt and interviewed different hospitals and the like, and it was for genomic sequencing. For us, it is an amazing sequence segment. Doctors that work with professionals, any professional, technology. They said, we went through the genomic sequencing, and ,housands of cases, patients watson came up with exactly what my doctors did at the tumor board. So when you know about complex cancer cases, you do general mixed sequencing, they do the termer tumor board and read your possible treatments, but in 30 , we found more. That was the ability to match. We are now treating more patients outside of the u. S. Than in on college advising. Cancer all of the breast matching with watson, and we announced quest who has announced 50 of the doctors, cancer cases in the country if you want to genomic sequencing done, it will be done. This is really moving quick. [speaking simultaneously] virginia rometty both for cost and for outcome. Promod haque in the venture community, we are seeing lots of startups with Machine Intelligence, learning space, cognitive computing virginia rometty but you do need data. Promod haque this is right. When you think about it virginia rometty not just publicly available. Promod haque when you look at