Open Source on a foggy morning – a conversation with a Red Hat

As our tour bus waggled its way out of München and towards the Red Hat European headquarters at Grasbrunn I thought about Cloud Computing.  I glanced out the bus window towards the direction of the sky but saw no clouds.  It was fog, fog and more fog.  After attempts to figure out how clouds compute I suffered a mini brain aneurism and decided to stop thinking because I was certain all would be explained at Red Hat.  The fog was going to break and the day come back with clouds, sky and such.

 A building emerged from the fog.  Upon our arrival at Werner-v-Siemens-Ring 11 a man in a black sweater wearing a red hat greeted us.  The mystery deepened amidst the fog.  Who is this man and why is he wearing a red hat?  I expected to be lead to a smoke-filled room illuminated by nothing but a single hanging light bulb.

 We followed the man in the red hat up three flights of stairs in a monotone building and promptly sat down in a neutral-colored conference room.  The man in the red hat was an energetic and polite fellow: imagine Waldo (from Where’s Waldo?) wearing a black sweater and red hat.  As it turned out, the man was Jan H Wildeboer, the Evangelist of Open Source Affairs with Red Hat.

 Red Hat was founded by Richard Stallman, Lawrence Lessig and Linus Torvalds.  The mission of Red Hat is being both the keeper and collaborator of Open Source code.  Their current market capital is about $8 or $8.5 billion with $1 billion in revenue.  They do not have capital assets but consist of people resources.  They have 25 APAC sites, 35 EMEA sites with the rest in the US.

The process of acquiring Open Source code begins with an open source community of roughly 100,000 projects.  After rounds of selection and stabilizing these projects, selected projects are funneled to Red Hat.

The main advantage of using Open Source is that most of the technologies are well established, mature and proven for enterprise use.  It is easy for an enterprise to expand their use of open source to help them grow.  Open Source technologies are cost-effective because of the low cost of entry across the hardware, administration and software.  Finally, they are both flexible and secure because there are no vendors to lock-in and it’s easy to integrate.

 Red Hat’s business model is to sell “boxes” or available Open Source codes to clients and charge subscription fees.  The subscription fees ensure the clients receive updates when available.  Otherwise the clients are free to terminate the subscription at any time and customers can tailor their own development needs.  Red Hat called this low cost, high value computing.

 Red Hat’s value propositions for the clients include matching the right products for each client’s business needs.  Their product’s level of scalability and availability has been proven across enterprises and enterprise classes.  Most importantly, Red Hat staff provides expert front-end client training followed by continuous support, forming a consultancy relationship with clients.

 Luckily, a brave individual (let’s call him “Satyen” to protect his anonymity) asked Jan, “Wow, this is very cool but what about Cloud Computing?”  Jan shrugged his shoulders and replied, “It’s just a generic term.”  He went on to explain that Cloud Computing is “simply” computation, software, data access, and storage services that do not require end-user knowledge of the physical location and configuration of the system that delivers the services.  Okay the conversation ended with me experiencing a second aneurism with near cardiac arrest. 

 As we silently proceeded down the gray stairwells I again wondered what exactly Cloud Computing was again?  Perhaps it didn’t really matter as Jan had advised.  What really matters are the principles Red Hat was founded upon:  Creating a community where developers and enterprises can share tools.  But this community is nevertheless fragile and can only be maintained as long as there is mutual trust between parties.  Red Hat has vowed to remain true to its calling (like a crime novel detective) and continue to differentiate themselves from other corporations like Microsoft, SunMicro or Oracle (somehow always the villains of an unending story).

 Our tour bus waggled itself back onto the main road.  I turned and looked out the window and the Red Hat HQ was already fading into fog, with the exception of a hint of red still visible in the distance.  Again I looked to the sky in search of a cloud or two but the day turned out to be sunny and blue.

Monday, March 21, 2011

Our day today started with a presentation from Ashoka.  Ashoka is a non-profit organization aimed at enabling social entrepreneurs.  The concept of social entrepreneurship is new for me.  Wikipedia defines a social entrepreneur as some who recognizes a social problem and uses entrepreneurial principles to organize, create and manage a venture to achieve social change (a social venture).

Ashoka was initially formed in 1981 and currently operates in over 70 countries.  The Ashoka model starts with the individual and seeks to address a specific problem:  many ideas that could benefit and change society as a whole are never realized because the individuals behind them lack the time, resources, or connections to make them happen.  Ashoka seeks “fellow” to invest in through small living stipends designed to enable social entrepreneurs to make ends meet while moving their ideas forward – i.e. allow them to stop working and devote their best energies to the idea.  Downstream, Ashoka can provide access to best practices and networks for financial investment and dissemination of ideas.  In an ideal world, Ashoka is try to identify and spread those ideas that can change the systems in which our society operates.

The concept of Ashoka really struck a chord.  Many great ideas – regardless of scope or intent – die on the kitchen table because a person cannot justify quitting to themselves and/or their family.  This is true especially when the scope of change is the social system because the profit potential may be low.  The public sector cannot often justify investment in such high risk ventures, and the private sector may not have incentive to invest in the early stages because of the low profit potential.  A company like Ashoka provides an avenue to resources in the early stages that would normally require an entrepreneur to assume great personal financial risk.

Ashoka does have a predictable problem though: the scope of their vision crosses many industries and geographies and thus requires a diverse range of competencies and experience.  While Ashoka cannot often recruit and retain high quality talent to address all target fields of work, they supplement their internal human resources with a network of professionals/corporation who devote time and resources to supporting the Ashoka “fellows”.  Participation in the network is promoted as a way to give back and often attracts professionals with extensive connections in the business world as well as the public sector that can enable the change in social system(s) envisioned by Ashoka.

Our presentation concluded with a chance to act as part of that network.  Pamphlets providing overviews of several projects Ashoka is supporting and we were asked to provide some feedback on some of the challenges they may face implementing the ideas.  This activity was a distinct reminder that we do not need to be the social entrepreneur nor the experienced professional “giving back” as part of the network to be part of this desired social change; each of us can use what we have learned here at TMMBA to provide guidance and advice to enable those around us to be more.

Knorr Bremse

One of our final company visits of the study tour was of Knorr Bremse (KB).  Although not a household name, KB has made its mark upon the world.  For over a century, Knorr Bremse has been a major supplier of brake systems to trains worldwide.  Since its’ founding in 1905, KB has further expanded its product line into large commercial vehicle brakes (trucks, buses, etc.), and more recently, on-board systems and consulting services.

From the hotel, the ride to Knorr Bremse was a short one, and we passed by a  few notable sites: Olympiapark (Olympic Park) and BMW World, which we would later visit.  Upon arrival at KB, the company was kind enough to provide us with lunch before presenting to us.

We received a total of three (!) separate presentations from KB.  The first one focused on giving us a general overview of Knorr Bremse’s extensive history and the business environments that the company operates in.  The second presentation was more forward looking, giving us some insight of how recent global events are shaping their company.  A couple of interesting insights that they shared include the following:

• Greater Urbanization:  In human history, the majority of people lived in rural areas while the minority lived in cities.  However, recent trends show that more people are moving into condensed urban areas.  As people are consolidated, there will be a larger need for efficient mass transportation systems – clearly, a big opportunity for KB.
• Challenge of Localizing in a Global Market:  Knorr Bremse has found itself looking to do business in developing nations such as China, India, and Russia.  In the process of doing so, KB has discovered many challenges in doing business in these areas, especially in regards to local cultures and regulatory requirements.

The final presentation was actually a short tour of Knorr Bremse’s final assembly plant.  Our tour guide was a very enthusiastic engineer, who showed us some of the company’s brake systems and gave us a general overview of the plant’s structure.  

Given the amount of information they shared, Knorr Bremse was certainly one of the more thorough visits of the entire trip.  As one of the last companies we visited, KB seemed to reinforce the points that the other companies had conveyed – mainly, the many opportunities and challenges of a rapidly globalizing world.

Kordsa Global

After getting our feet wet on Day One of presentations and having spent the evening prior immersing ourselves in an exhibit of cultural handcrafts, we were excited to embark across to bridge to Izmit to visit Kordsa Global, the leading producer of synthetic and polyester nylons. The long and scenic bus ride took us along the beautiful coast of the Sea of Marmara, which on a beautiful warm and sunny day showcased the cultural landmarks and historic mosques that are richly filled with longstanding history. The city of Izmit was the site of Turkey’s largest Earthquake in 1999 and much work had been done to restore the landscape to the pristine and coastal city that it is today. The city itself was quite the contrast to the busy streets of Istanbul and the landscape was peppered with industrial buildings and manufacturing plants, which housed some of the most innovative and technologically advanced development centers in Turkey.

Kordsa Global is one of the largest producers of nylon and polyester yarns, and cord fabrics that are found in mechanical rubber markets for both industrial and commercial applications.  They are member company of Sabanci holdings.  Upon arrival, we were greeted by Tolga Pekel, who is the Global Market Development Director, and his team. The location of their global headquarters was nothing spectacular and was pretty well guarded by the looks of the security around the site.

One would think there was not much involved with the way of nylons and polyester yarn built for tires, but a more in depth presentation revealed that Kordsa was a center to new innovations in their core and R&D technologies. Because their R&D program is accredited by the Turkish government, they are able to receive government subsidies to help fund their research.  This has enabled them develop chemical nano technology and finite element modeling to create a new line of synthetic reinforcements helps Kordsa remain a global leader. 

Kordsa had also recently gone through an organizational change from a regional model with core group functions to a new global management model with shared services.  This new centralized model allows them to achieve operational efficiencies through synergistic collaboration.  Even with the downturn in 2009, engaging the new Operating Model has allowed Kordsa to quickly respond to changing market conditions.  Their continued success relies heavily on their ability to match supply with market demand. Operating in nine different countries has allowed them to fully utilize their resources and still maintain control of their inventory as demand fluctuates. 

Driving their success in organizational change was human resources talent selection an activities that ensure they groom the right leaders for the future. They focus their hiring with people who have the right blend of technical knowledge and background to fit into their culture. Sixteen percent of their employees have masters as well as PhDs to ensure there is no shortage of innovative knowledge. Tolga alone had advanced degrees from Duke, Northwestern, Georgetown and INSEAD.

After the presentation we moved to the cafeteria and got to experience real Turkish cafeteria food which wasn’t too appealing at first site, but turned out to be quite the delicacy.  The fare was comprised of lentil bean soup, a sort of spinach goulash and an extremely rich pastry.

The visit was concluded with a final group picture in front of the building and an escort the bus. The timing of our visit coincided with the Sabanci Board’s visit to the plant, so we were unable to tour the manufacturing and R&D facilities as planned.  However, we were fortunate enough to still listen to an excellent presentation.

 In the end, even though nylon manufacturing didn’t have the romance of the other tech companies we visited, it was probably one of the best presentations we were given on the study tour.  Our hosts were gracious, generous and knowledgeable and the subject matter aligned closely with what we learned in Global Strategy with Kevin Steensma.

Munich Guided City Tour

After already hearing some great stories by our tour guide Michael, the class was ready to see all the sites he had previously mentioned.  We started our tour at the headquarters of the Nazi regime, The Führerbau, and saw the balcony where Hitler used to address the crowd.  You can still see the marks in the building from where the swastika used to hang above the balcony.  Michael went on to explain that the building is now used as a music school because it was the most neutral thing that they could put in there rather than have the building sit empty.  In the past couple of years a memorial path was built inside and outside that shows the path to Dachau, the first concentration camp that was built.  This path was built to remember those that were sent to the camp.  Another interesting piece of furniture that is housed in this building is the table that Hitler sat at when he signed the Munich pact.  I really appreciated the tale that went with this table.  The table is sitting at the back of a hallway unused because they don’t know what to do with it.  They can’t get rid of it because that would look like they are trying to erase the past but it is not something you can put in a museum because that would be almost like glorifying something that was so horrible, so instead it just sits in this hallway like a piece of trash.

From there we went on to Munich University.  Michael told us about this student, Sophie Scholl, a member of the anti-Nazi non-violent student resistance group that used to distribute anti-war leaflets at the university.  In February of 1943, Sophie and her brother were found guilty of treason and were sentenced to death.  Only a few hours after being sentenced they were both beheaded.  As a memorial to these students, they have taken copies of the leaflets and engrained them into the pavement in front of the steps to the university.

After a couple more stops and many more stories, we ended at Marienplatz, the central square in Munich.  Many people walked around the Viktualienmarkt, or the outdoor market, to enjoy lunch.   We also stopped and enjoyed the Rathaus -Glockenspiel at noon.  It has 43 bells and 32 life size figures that move around in a 15 minute show.

The following was submitted by Angie Moe and Chris Rosenquest (TMMBA Class of 2011)

We visited Cisco on the Friday after arriving in Germany.  We were escorted into the Cisco offices, and given name tags.  Ulrike Tegtmeier, the vice president of European Markets gave us a talk about her company and their strategic take in the market.  Ulrike focuses on the consumer products side of the business. Cisco was founded in 1984, and had its first office outside the US in 1992.

They have a collection of brands, some the we recognized:

Flip Video

Linksys

Umi

Scientific Atlanta

A big focus of their attention right now is the Flip video recorder.  She expressed some of the difficulties launching in the EU market.  The EU has many small stores, compared to our large retail stores.  It makes it challenging to have a display box in the a shop that has limited real estate.  Interestingly, 70% of customers who buy video recorders didn’t come in with the intention to buy – the decision is made in the store.  She said that the Flip is a fashion item in the US, but hasn’t made that transition in the EU.

She spoke more indepth about Linksys routers.  She said the’ve consistently used a blue color to differentiate them from the competition. They also found that they had a high return rate on routers – so they put an emphasis on setup wizards.  The setup wizards dropped their retail return rate by 12%.

Interestingly, she said that Europeans aren’t as accent sensitive as the Americans are.  She also that Cisco also has competitors in each country in the EU.  There is an increased sense of national pride, which works against them with their global brand.

We wrapped up with Cisco, and then headed over to the Movenpick Restaurant.  We had a really tasty lunch of chicken breast with ham, green pepper sauce, string beans and potato gratin.  Half of the items were wrapped with bacon (yum).  We were all delighted to see a green vegetable that wasn’t pickled or marinated.  For dessert we had a choice of ice cream. There may have been a few of us that went for seconds, but I’m not naming names.

Visit to BMW World

Submitted by: Subin Mathew, Stephanie Leung (TMMBA Class of 2011)

Our last stop of the Study Tour in Munich was BMW World (translated to “BMW Welt” in German).  Despite a busy day thus far meeting with two other companies, Ashoka and Knorr-Bremse, it was clear that this was a stop that everyone was looking forward to – even Dan Turner!  Ok, maybe just a little bit of anticipation for Dan and a lot of anticipation from everyone else J

Upon stepping into BMW Welt, expectations were immediately surpassed.  The building is beautifully architected.  The cars in the showroom are in pristine condition and look fantastic.  And the robotic floor cleaning robots – so cool!  These robots look like futuristic white space blobs and can detect where people are nearby so they won’t bump into the.  These robots were a huge hit, especially for many of the kids we saw from other groups.

After overcoming our awe of the robots, it was time to start our formal tour of the BMW plant, located across the street from BMW Welt.  This particular BMW plant primarily produced the BMW 3 Series cars.  During the tour, several interesting facts about BMW were shared, including:

• BMW stands for “Bavarian Motor Works”
• BMW originally built aircraft engines, but after World War I, the company was not allowed to as part of post-war restrictions placed on Germany.  As a result, the company focused on building motorcycle engines, and then several years later, automobile engines.
• The BMW logo is comprised of the colors white and blue, which are also the colors of Bavaria.
• The BMW logo consists of a circle split into four quadrants.  The white quadrants represent propellers spinning in the sky, symbolizing BMW’s roots in building aircraft engines.
• The BMW plant is about 5 stories tall. However, unlike many other manufacturing plants of other companies, the BMW plant utilizes most of the available vertical space in its buildings to maximize its production space.  It was very common to see the next station of a car assembly process be above or below the prior process rather than in a straight line on the same level. 
• The BMW plant has a very high rate of automation via robots, in excess of 90% in numerous areas.  The BMW plant can also support producing different types of cars during the same batch.  We often saw a standard 3 Series car being built, followed by a 3 Series Touring Edition car, which was then followed by a standard 3 Series car model again. 
• The BMW plant produces cars at an astounding one car per minute. 

Some of us even got a sneak peak at one of BMW’s latest innovations – a concept car called “Gina”, whose exterior is not made of hard metal or plastic, but instead a special skin that looks like neoprene, that allows the body of the car to change shapes!  The car is not embraces a flexible design, but embodies BMW’s desire to “think flexibly” and apply engineering in creative ways.  Here’s a picture of Gina below.  You can see how the “skin” actually folds when the doors are opened. 

No tour of Germany would have been complete without visiting BMW – one of Germany’s most respected and recognizable brands.  We all left the BMW tour feeling satisfied – learning about an important company in Germany’s history as well as about cutting edge production and innovative ways of thinking – and that Dan Turner lived up to his promise to not key up any of the cars in the showroom .