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Critical Issues and Grand Challenges

Moderator: James A. Champy '63, SM '65
John Reed SM '65 Denis Cortese Steven E. Koonin PhD '75 Irving Wladawsky-Berger: June 15, 2009; Running Time: 2:00:10

About the Lecture

About the Lecture

These panelists use the lens of systems engineering to focus sharply on some signature global challenges in finance, healthcare, energy and IT.

The system failure that undid the small but influential financial services industry was a few decades in the making, says John Reed. In the ‘80s, a sea change swept over firms trading hundreds of billions of dollars each day. The new mantra was “shareholder value.” Firms ditched time-honored rules of capitalizing trades and guaranteeing risk in order to build investor profits. The crystallization of this philosophy was the mortgage-backed security. Trillions of dollars went into “off-balance-sheet investment vehicles.” When the nation’s mortgage portfolio deteriorated, not just one node in the system collapsed, but all of them. To fix the financial sector, says Reed, “A systems view will be essential, including behavioral considerations, not just economics.”

There’s no point in saying U.S.healthcare is broken unless you can offer a vision. For Denis Cortese, this means designing a “learning organization.” Cortese maps out this organization’s goals: simple value, with “better outcomes, better safety, and better service at a lower cost over time.” His proposed system would focus on the patient’s needs in order to “raise the health of the entire population.”

Cortese doesn’t see a role for the government in his ideal organization. But there must be better metrics for determining value, coordination among large and small healthcare organizations, and “common principles in the payer domain.” Ultimately, we’ll need to define quality healthcare and set outcomes: “It won’t be perfect, but it will be better than where we are today.”

Nine billion people will inhabit the planet by 2100, and many of them will either be acquiring energy for the first time, or wanting more. This has “unpleasant if not catastrophic” implications for greenhouse gas emissions, says Steven Koonin. Powering up while securing affordable energy and minimizing emissions involves better modeling of the physical and biological climate system; overcoming the inertia of our current transportation and building industries; and improving the “patchwork” of our current energy grid. Koonin sees immediate opportunities to cut energy use in half in cities, but we “must bring policy up to speed” to make this happen.

Tackling global problems won’t be possible without an improvement in complex organizational systems, says Irving Wladawsky-Berger, which in contrast to physically engineered systems, haven’t progressed in the past century or so. Change is creeping in, though, as organizations manage increasing amounts of data with more integrated instrumentation and swelling computer capacity. Wladawsky-Berger sees new tools emerging such as cloud computing and networked data centers, leading to the standardization and customization of services for producers and consumers. He believes that the “merging of the digital infrastructure with the physical infrastructure” will lead to new ways of life, including smarter cities with smart traffic systems that reduce congestion and pollution.

Lecture Details

Location: Wong Auditorium

“We ought to design a learning health care system....We need better outcomes, better safety, better service at lower cost over time. That’s what we mean by value. Until the country stands up and says we want value, you can’t design anything.”

Denis Cortese

About the Speakers

Moderator: James A. Champy '63, SM '65

Chairman of Consulting
Perot Systems Corporation
Life Member, MIT Corporation

James A. Champy is an authority on the management issues surrounding business reengineering and organizational change. Prior to joining Perot Systems, Champy was chairman and CEO of CSC Index, the management consulting arm of Computer Science Corporation. He was one of the original founders of Index, a $200-million consulting practice that was acquired by CSC in 1988.

Champy has also authored such well-received books as Reengineering the Corporation: A Manifesto for Business Revolution, which sold more than 2,500,000 copies and spent more than a year on The New York Times bestseller list. His articles appear in major newspapers and magazines throughout the world.

Champy earned his B.S. and his M.S. in Civil Engineering from MIT, and his J.D. from Boston College Law School. Champy serves on the board of Analog Devices, Inc., on MIT’s Board of Trustees, and on the Board of Overseers of the Boston College Law School.

John Reed SM '65

Former Chairman and CEO, Citicorp, Citibank, Citigroup Former CEO, New York Stock Exchange

John S. Reed is known for such banking innovations as the national marketing of credit cards, disseminating ATMs worldwide, and extending Citibank's credit card and consumer banking expertise to emerging Asian and Latin American markets. He served with Citicorp and its descendants for more than three decades. He then stepped in as leader of the New York Stock Exchange after the compensation scandals during predecessor Richard Grasso's tenure, establishing new governance rules as the NYSE became a public corporation. He is currently a member of the MIT Corporation, and is on the board of directors at Altria Group.

Reed earned his undergraduate degrees from Washington and Jefferson College and MIT. Reed served in the U.S. Army, then earned his master's degree in management from the MIT Sloan School of Management in 1965.

Denis Cortese

President and CEO, Mayo Clinic

Denis Cortese also chairs the Mayo Clinic Board of Governors. He has been a member of the Board of Trustees since 1997, and previously served on that Board from 1990-1993.

Cortese graduated from Temple University Medical School and completed his residency training in Internal Medicine and Pulmonary Diseases at Mayo Clinic. After service in the U.S. Navy he joined the Mayo Clinic staff in late 1976. He is a professor of medicine and was director of the Pulmonary Disease subspecialty training program from 1979-1987.

He was a chair of the Clinical Practice and a member of the Board of Governors in Rochester before moving to Mayo Clinic in Jacksonville, Florida, in 1993. From 1999-2002 he served as CEO of the Mayo Clinic and Chair of the Board of Directors at St. Luke’s Hospital, both in Jacksonville.

Among Cortese's research interests are interventional bronchoscopy including the appropriate use of photodynamic therapy, endobronchial laser therapy and endobronchial stents. He is a member of the Institute of Medicine of The National Academy of Sciences, Chair of the Institute of Medicine’s Roundtable on Evidence Based Medicine, a member of the Healthcare Leadership Council and of the Harvard/Kennedy School of Healthcare Policy Group.

Steven E. Koonin PhD '75

Under Secretary for Science, Department of Energy

Steven Koonin was nominated to his current post in March 2009. Previously, Koonin served as chief scientist at BP, after three decades serving on the Faculty and as Provost at the California Institute of Technology. Among Koonin's responsibilities at BP was formulating the company's long-term technology strategy.

Koonin received his B.S. in Physics in 1972 at Caltech and his Ph.D. in Theoretical Physics in 1975 at MIT, after which he joined the Caltech faculty. His research interests have included global environmental science, nuclear astrophysics and theoretical nuclear, many-body, and computational physics. In 1998, he received the E.O. Lawrence Award in Physics from the Department of Energy (DOE).

Irving Wladawsky-Berger

Visiting Professor, Engineering Systems Division Vice President, Technical Strategy and Innovation, IBM

Irving Wladawsky-Berger is responsible for identifying emerging technologies and marketplace developments critical to the future of the IT industry, and organizing appropriate activities in and outside IBM in order to capitalize on them.

He began his IBM career in 1970 at the Company’s Thomas J. Watson Research Center. After joining IBM’s product development organization in 1985, he continued his efforts to bring advanced technologies to the marketplace, leading IBM’s initiatives in supercomputing and parallel computing. He has managed a number of IBM’s businesses, including the large systems software and the UNIX systems divisions.

He is a member of the University of Chicago Board of Governors for Argonne National Laboratories and of the Technology Advisory Council for BP International. He was co-chair of the President’s Information Technology Advisory Committee, as well as a founding member of the Computer Sciences and Telecommunications Board of the National Research Council. He is a Fellow of the American Academy of Arts and Sciences. A native of Cuba, he was named the 2001 Hispanic Engineer of the Year.

Wladawsky-Berger received an M.S. and a Ph. D. in Physics from the University of Chicago.