FedEx jumps on the "smart" wagon with a new web-based service.

Shipping gets smart, says CIO Carter. Photo: FedEx

FedEx Corp. (FDX) today is announcing a sensor-enabled device that can wirelessly feed real-time data about a package's whereabouts, condition and other metrics to the Internet.

The service, called SenseAware, will launch this spring. Its initial target markets are the health-care and life-sciences businesses, industries that often need to know the precise location of the products (drugs, test results, samples) they ship.

The new device, when attached to a parcel, contains sensors that can provide temperature readings, data on whether a shipment has been opened or exposed to light, and precise data about a package's location.

"We think there’s an emergence of personalized medicine that has the highest levels of consequences," says Rob Carter, CIO of FedEx. Many health and life sciences items "have journeys that they have to make, and there are time constraints."

But FedEx says the new service will allow shippers and recipients to do more than merely track a package and its condition. The platform will help customers compile and aggregate data about shipments that will help them monitor quality or make better decisions about how to deploy their resources.

And so FedEx joins the ranks of companies building so-called "smart" products and services that apply computer networks and intelligence to various problems. (For a fuller explanation of various "smart" systems, see Fortune's Jeffrey M. O'Brien's story on "IBM's Grand Plan to Save the Planet.")

Mark Hamm, vice president of innovation at FedEx, says the company aims to create an interactive platform that suppliers, customers, and others can – with permission – securely access in order to improve the efficiency of their operations. It's a bit like a more sophisticated, richer version of online package tracking, an innovation FedEx pioneered. Users will be able to get more data than just whereabouts – they can monitor, say, product temperature, or the kind of lighting a box is exposed to – and multiple parties could use the platform to electronically chat about the shipment or even add information to the data being collected.

"There's going to be a high level of interaction," Hamm says. "You are going to have large player and small players plugging into the platform. That’s going to be revolutionary."

How social networking can transform the CIO into a superhero

By Alan S. Cohen, vice president enterprise, Cisco

Workers unite! Cohen says social networks can empower employees. Photo: Cisco

I recently spent a few days with 100 of Cisco’s (CSCO)  top customers, Chief Information Officers (CIOs), representing a range of industries – private and public and geographies. These folks are often the unsung heroes of  their organizations, enabling employees to perform great technological feats while helping management wring huge cost savings from their budgets.

During our time together, the conversations focused on how work has changed: from local to global, from centralized to decentralized, and increasingly, from live to asynchronous or even virtual.

In the past 20 to 30 years, our customers’ organizations have invested tens of billions of dollars in transaction systems – from ERP to email – to reduce latency and inefficiency in value chains. This considerable investment underpins the heart of the “Six Sigma,” process-driven revolution that became the ultimate strategy for operational excellence. However, today we’ve reached the zenith of transactional gains.

So, from where is the next wave of innovation and productivity emerging? Allow me to posit a simple answer: from people.

For most companies, people represent an untapped asset – a resource that becomes especially important for companies that must grow their business without adding personnel.

This means that corporations must design a cognitive stimulus plan based on employee contributions, and business must embrace some admittedly unusual notions about how, where and when work occurs, and how employees collaborate. Some of these notions recently arrived from the Web 2.0, social networking realm.

There is definitely something going on at Facebook: you do not add a subscriber base the size of the United States in a few years unless there are benefits to the community (Facebook added over 50 thousand new users in the time it took me to write this blog).

The sea of changing perspective on social networking struck me during our CIO conclave. Some call it social computing. We at Cisco simply call it collaboration.  Our customers recognize the critical nature of social networking as a component of collaborative business processes.

But collaboration in the workplace also requires careful integration and regulation to enable success.

No one advocates that employees post personal pictures of weekend activities in lieu of working. It is time, though, to recognize that community is at the heart of teaming and teaming is at the heart of workplace collaboration.  And collaboration is where we find innovation and operational excellence, by tapping into knowledge at the source: from one functional group to another; from one business unit to another; and from one company to another – as partners in a distributed valued chain.

We need variety, a notion at odds with the predictability advocated by Six Sigma.  Actually, in his speech on “consistency,” Mark Twain effectively made this case:

“I am persuaded that the word has been tricked into adopting some false and most pernicious notions about consistency – and to such a degree that the average man has turned the rights and wrongs of things entirely around and is proud to be “consistent,” unchanging, immovable, fossilized, where is should be his humiliation.”

To be sure, for social networks to become the next great tool in the CIO’s daring arsenal, they need to evolve. They need to be secure. They need to integrate into corporate information systems. They need to support work processes that deliver business results.

Collaborative social networking would benefit from rich voice and video systems, something that current consumer offerings lack. Often, a text message does not contain enough context.

Finally, management needs to view collaborative social networking differently.  As Morten T. Hansen notes, in his excellent new book, Collaboration, they must oversee the adoption process and change culture to achieve positive results.

To some degree, every aspect of information technology is in transition: cloud, virtualization, collaboration, and consumerization. CEOs want more and CFOs want to spend less. I could go on and on with challenges for the CIO. But what about the people who actually use all this technology, day after day, to get their jobs done?  What are they telling us about how they want to work?

The millennials, the largest presence in the workforce, are already “black belts” in virtual communications and collaboration.

Is the new CIO super power enterprise social networking? Or is social networking the kryptonite? I see a cape in the sky. (A bird? A plane? A CIO!)

Cohen is vice president, enterprise, at Cisco Systems, the San Jose, Calif.-based maker of networking equipment.

The trouble with being number one in any industry is that you have nowhere to move but down. Few companies know this better than Nokia (NOK), the Finnish telecommunications giant that has dominated cell phones for so long that in some parts of the globe the brand itself has become synonymous with the device.

Nokia has long excelled at making beautiful phones, but in today’s competitive smartphone market, beauty is just a start. The devices that make consumers salivate are the ones that have great software, offer the most games and social networking features, get great service, and come attached to fast networks. Oh, and they have to be cheap.

One company has shaped this new competitive environment, and it’s not Nokia—nor was it even a telecommunications company until 2007 when it debuted the iPhone.

Apple (AAPL) is eating Nokia’s lunch.

With the iPhone, Apple created a consumer lust for smartphones by showing us we could browse the web from our palms and enjoy it. It launched a device so perfect in form that it has become the gold standard by which all other devices are measured. And it moved the global hub of telecommunications innovation from Asia, where form factors had previously trumped all else, to Silicon Valley, where software makers now race each other to come up with the coolest applications.

None of this has been good for Nokia, which had already lost substantial ground in the North American cell phone market (see “Nokia’s North America Problem”). Their struggle for market dominance in the age of the iPhone has been less about nailing an innovation strategy than playing a hardcore game of block and tackle.  Enter the latest move: on October 22, Nokia filed suit against Apple in a Delaware federal court claiming infringement on 10 patents it holds on the integration of several technologies at the heart of Apple’s iPhone.

As my colleague Philip Elmer-deWitt points out, you can’t blame Nokia for having its nose out of joint.  Apple, according to Nokia, has gotten a free ride since the iPhone launched—a very fast ride. Apple commands 22% of the smartphone market in the US, according to IDC. Globally, it holds 12% of the market, more than doubling its share from last year.

Meanwhile, despite its best efforts, Nokia has steadily lost ground. It holds 40% of the market, down from 43% last year, according to IDC. And in the competitive North American market, Nokia is barely holding its own with just 3%.

Recognizing that the North American market is more crucial than ever, Nokia has spent the last couple years retooling its strategy. It installed its chief financial officer in the U.S. It opened new offices in Atlanta to be close to AT&T Mobility (AT&T) and in Parsippany, N.J., to be near Verizon Wireless (VZ). And it put several hundred product developers in its San Diego design center to work in collaboration with AT&T and Verizon Wireless on some new products.

The efforts have begun to yield dividends as North American carriers have started to support a slew of new cell phones—and even a couple of smartphones—but progress is slow going. “We’ve not been good at delivering promises in the past,” Niklas Savander, who heads up Nokia’s services division, told me recently, in describing Nokia’s relationships with the carriers. “It’s a trust thing and it doesn’t go away easily.”

Savander said he's also stepping up the company’s efforts with its Ovi store by making strategic acquisitions, mostly as a way to hire new software development talent. In September, Nokia bought social networking company Plum Ventures and traveling startup Dopplr.

So far, these changes have not been enough to jumpstart Nokia’s smartphone growth. On October 15, the company reported a third-quarter loss of $836 million as sales fell 20% from a year earlier (in North America, sales dropped 25%). And as the Christmas season approaches, bringing a gaggle of gadgets for Santa to deliver, Nokia has a paltry smartphone offeri. It’s easy to understand why the telecommunications giant, explaining that it has sunk $60 billion into the research and development that has helped enable the devices to take off, might at least want Apple to share the wealth.

Corporations need to stop looking for the silver bullet –and to start listening to outsiders.

Hagel: U.S. executives may need to shift their mindsets. Photo: Deloitte

New research by the Deloitte Center for the Edge, part of tax and consulting firm Deloitte, paints an ominous picture: The return on assets for U.S. firms has fallen to almost a quarter of 1965 levels despite continued improvements in labor productivity. 

And according to John Hagel III,  co-chair of the center and one of the study's authors, the declines are taking place in all sectors of business — not just in maturing corporations. "The bottom line," he tells Fortune, "is that in every industry there has been erosion of return on assets."

Hagel and his fellow researchers are in the process of writing a follow-up study that will offer some detailed prescriptions for reversing the trend, but he shared some early insights with us. Two of his observations in particular stood out: 1) He says corporations need to move away from the idea of breakthrough innovation and 2) companies need to find a way to harness new kinds of information flows.

Hagel contends that U.S. companies' innovation efforts tend to focus on home runs — big, honking inventions that can, out of the gate, produce hundreds of millions of dollars in revenue and transform entire industries. In other words, products such as Apple's iPod.

But Hagel is fond of pointing out that even the iPod wasn't exactly an overnight breakthrough for Apple. Rather, he notes, the device has its roots in a company called PortalPlayer, which had been developing an operating system for digital music players for several years before it ultimately teamed with Apple on the iPod.

He offers one explanation for the home-run oriented mindset: 20th century corporations have operating and cost structures that need their products and innovations to succeed at a large scale, and so there's great pressure to produce big breakthroughs. 

But Hagel feels a shift to high-velocity but smaller breakthroughs may ultimately produce the same result:  "We tend to underestimate the value of rapid, incremental innovations, which actually begin to look like breakthroughs over time," he suggests.

New source of information

Hagel's other prescription — culling information from new and different sources –also calls for a shift in corporate thinking.  

Deloitte's study, "The 2009 Shift Index," is actually a look at three different indices that help measure business change. The "flow index" is an effort to capture the value of so-called knowledge flows – information flowing into and out of the organization.

Hagel maintains that companies tend to be focused on internal and adjacent flows: information from within their organization, and knowledge gleaned from those closest to the company, such as suppliers and customers.

But to stay competitive, U.S. companies are going to have to adopt new ways of gathering information – a big shift that will itself require companies to innovate.  For example, companies are simply going to have to figure out what information is valuable to track, and which flows are not helpful, Hagel says. 

Hagel has done extensive work with Indian and Chinese organizations, and he believes U.S. executives can learn from the way companies in these emerging markets operate. He points to Chinese conglomerate Li & Fung Group as an example of a company that effectively tracks and applies knowledge from a variety of sources.

One of Li & Fung's businesses is garment manufacturing. Rather than act as an integrated one-stop-shop for its retail customers, Li & Fung uses multiple contractors who come together for certain projects, then disband after the task is completed.

By tapping into its various contractors – including those who aren't currently employed on a job – the company is able to get perhaps a more complete view of the world than competitors who only listen to direct suppliers.

When Li & Fung launched in the 70s, Hagel says,  it gleaned knowledge from, say, materials manufacturers, and passed that information on to its apparel designer customers. 

Today, Hagel says, companies have to rethink the way they gather information – and from where – in order to tap all the most important direct and indirect sources of information.  

But they probably don't need a breakthrough innovation to do it.

At Dreamworks Animation, CTO Ed Leonard has to play well with others.

Globe (left) and CTO Leonard play for the same team. Photo: Dan Monick

Top technology executives are no longer sitting at the corporate equivalent of the kids’ table. The information technology leaders who gathered at Fortune’s Infotech 40 forum at Brainstorm Tech have moved from supporting roles to star billing when it comes to helping their companies cut costs and execute strategy.

Ed Leonard, chief technology officer of DreamWorks Animation, (DWA) gets involved in everything from buying servers to promoting movies. When Anne Globe, the studio’s head of worldwide marketing and consumer products, wanted to run an advertisement for the film Monsters vs. Aliens in 3-D during the 2009 Super Bowl, she called Leonard.

There was a technical issue: DreamWorks produces animated films in stereoscopic 3-D, a technique whose images need the proper display equipment to look their best. Most in-home TVs are not set up to handle stereoscopic images. The only way to deliver a 3-D experience to a television audience would be through the use of anaglyph images, which produce a 3-D effect when users wear old-fashioned two-colored glasses.

Anaglyph images aren’t as immersive as their stereoscopic counterparts, but Leonard’s group “went back to the drawing board,” and by testing and tweaking the colors found a way to maximize the anaglyph experience. “The result was better than I expected,” Leonard says of the 90-second Super Bowl spot. The ad let people experience 3-D at home (wearing pre-distributed glasses) and, he says, “It made you want to see the movie.”

Leonard has a fan in CEO Jeffrey Katzenberg. “Technology and technology innovation are of the essence to us at DreamWorks Animation. It is what empowers our artists and their creativity,"says  Katzenberg in a written response to our questions. "Ed Leonard, as our CTO, understands this better than anyone and in our organization is the bridge that marries them together. He’s a filmmaker who understands technology and he is a technologist who understands filmmaking.”

Leonard stresses that his experience isn’t unusual: CTOs today need to be comfortable working with others—even animated characters.

From Pattie Sellers' Postcards column: Our 10 favorites from the mouths of media moguls, tech titans, Tweeters and more.

The departure of outsized NBC chief Ben Silverman is the third time that the producer will team up with IAC’s Diller.

By Richard Siklos, Editor at large

Silverman, shown at Fortune Brainstorm Tech, days before leaving NBC. Photo: Robin Twomey

Ben Silverman’s  departure from NBC this morning comes as no huge surprise: he was an out-of-the-box choice to head programming at major broadcast network and his two-year-plus tenure was marked by lots of attention on Silverman’s outsized persona but little yet in terms of new prime time hits for the long-struggling Peacock Network. (For more on Silverman see our story, The Player.)

It also makes perfect sense that Silverman’s exit  involves the creation of a new and as yet unnamed production company in partnership with IAC Interactive Corp., (IACI) the Internet company led by mogul Barry Diller. This will actually be the third time that Silverman and Diller have teamed up to produce ventures aimed at melding conventional TV advertising, programming and Web—and both other times yielded the men handsome returns.

“Barry stirs the pot and he sees the future,” Silverman said in an interview today. 

Diller, on stage at Brainstorm Tech, bets on Silverman. Photo: Amy Crilly

The history here is that Diller backed Silverman with $10 million in the creation of his production company, Reveille, back in 2002.  Silverman had made a name for himself at the William Morris Agency in London for importing foreign show concepts like Who Wants to Be a Millionaire for the U.S. audience and re-selling formats around the world.

And when Silverman set up a second fund at Reveille before joining NBC in 2007, Diller backed him again with another $15 million (quietly—you find no mention of these investments in the financial statements of IAC, better known for Web sites like Match.com and Citysearch.). Indeed, Diller and Silverman were talking about a third and larger Reveille fund when Silverman decided to take the NBC job in 2007, a move that led to him selling Reveille a year or so later to Elisabeth Murdoch’s Shine Group for some $120 million. (NBC is part of NBC Universal, a joint venture of GE (GE) and France's Vivendi (VIVDY).

The size of the new venture, nor its name, have not been disclosed. One thing that is clear is that Silverman may be more comfortable and adroit as a seller rather than a buyer of programming–NBC said it could also be a backer or partner of Silverman’s new venture, and it seems likely that both Shine and Sony (who also looked at backing the old Reveille) would look at being involved.

At Reveille, Silverman made a  name with such shows as ABC’s Ugly Betty (originally a Columbian telenovela) and NBC’s The Office (derived from the British sitcom hit.).  A frenetic character, Silverman had also developed and sold the original show The Tudors to Showtime and done deals with Microsoft.  But where Silverman and Reveille really made a name was in the packaging of product-placement laden and sometimes shlocky reality fare like The Biggest Loser. And Silverman prides himself on being a “360” media executive who understands not just the creative end but the marketing, technological and international ends of the business at a time when the conventional TV advertising spot is in serious decline.

Silverman/Diller 3.0 will differ from past iterations by focusing on providing the international, digital and advertiser relationships for established producers who Silverman has done business with – a group that might includes Office co-producer Greg Daniels or TV host/producer Ryan Seacrest, a close Silverman pal.

Silverman’s marketer-first approach to network programming may be the future of television but Hollywood traditionalists bristled at his approach at a time when the downturn compounded the network’s challenges: Two of NBC's dramas last  featured Ford and General Motors products as de facto characters in the shows, but both were soon off the air. Silverman’s  biggest legacy at NBC, along with that of NBC Universal CEO Jeff Zucker, who hired him, may be the decision to give Jay Leno a weeknight live variety show at 10 p.m. starting this fall, on the argument that such shows are less expensive to air than conventional dramatic series and live TV is less prone to recording and ad-skipping. (Plus Leno may have gone to a rival network).

Silverman said that his tenure at NBC can’t be judged until at least November, when the first true slate of shows he developed at the network will air—and once the dust settles from the Leno move.  But he did concede that corporate life in a megalith like General Electric  may not have been the perfect fit  for him. “I want to build a culture, I don’t want to try and change a culture,” he said. “And that did hit me.”

Both Silverman and Diller were at Fortune Brainstorm TECH last week in Pasadena, albeit on different days.  Tellingly, Diller spoke about how the production of video was fundamentally changing and how shows can be produced more cheaply by a new generation of talent that is adept both in front of and behind the camera. For his part, Silverman – who arrived with a retinue of NBC PR folks—was his usual ebullient self, and spoke mainly of relationships that NBC is forming with advertisers rather than specific programs. The pair sewed up their new arrangement after Diller spoke at the conference on Friday.  Zucker replaced Silverman with broadcasting veteran Jeff Gaspin, who will oversee not just the network but NBC’s profit-spinning cable channels.

For Ashton Kutcher, winning the race to 1 million followers on Twitter before CNN was not about being victorious in a popularity contest.

Instead, it illustrated that “one individual could have as much influence on a social network as a media conglomerate,” he said at Fortune’s Brainstorm: Tech conference.

He also noted that it signifies a shift in turning media back over to consumers, who are now also content creators and editors. This dynamic “has and will forever change media,” Kutcher said.

Now more than three months after hitting the 1 million mark, followers of his Twitter handle “aplusk” come in at 2.9 million. He said he Tweets to stay close to his fans, to raise awareness about causes that interest him, and simply because it’s fun.

It also allows him to engage his fans even more directly by involving them in the creative process. During the making of “Five Killers” (due out next year), Kutcher was looking for a joke to tell during a scene. After Tweeting about it, hundreds came pouring in and one got plugged into the movie. “We’ll see if it makes the cut,” he said.

It’s a smart marketing tool as well. Kutcher said that movie studios spend half their budget for a film just trying to let a potential audience know it’s being released. “I can do it for free by pushing a button,” he said.

Responding to the notion that movie stars are becoming less important, Kutcher said, “I don’t have three million followers because I’m really good at putting up content.” He noted that he shuts down a website every day because he sends too much traffic to it from his Twitter feed.

But he did acknowledge that people in the entertainment business are going to have to start to embrace the web and leverage the platform or they won’t be able to demand the same fees.

Kutcher said that he’s starting to see the convergence of television and digital media, and his company, Katalyst Media, is trying to capitalize off of that by working across multiple platforms and finding the intersection between them.

“If we can have our foot in that arena and understand that space…we’ll have a leg up when convergence actually does take place,” he said.

While Kutcher is currently a Twitter devotee, he said that it’s likely that someone else might create a  microblogging tool that has a better search and syndication function. But right now he’s happy to Tweet anywhere from zero to 20 times a day to lift the “curtain” between him and his fans.

He's also not above poking some fun at himself. In the run up to the conference, Kutcher Tweeted: “Headed to the Fortune tech Brainstorm in Pasadena. Gonna do an onstage interview. Quick someone invent me [an intelligence] pill.”

But when it comes to Twitter, the world’s most popular Tweeter knows what he's talking about.

by Patricia Sellers

On Tuesday night, during a dinner conversation about the growth of Facebook and the potential of Twitter, I tossed out a phrase that I can”t get out of my head these past three days at FortuneBrainstorm Tech in California. The conversation was with a dozen or so Silicon Valley execs, from companies like Google (GOOG) and eBay (EBAY) and Palm (PALM), and they were noting that Twitter hasn’t invested much in talent — given its global prominence as a communications platform and its need to become a sustainable profit-making company.

So what, it doesn’t matter, said one smart executive at the dinner, contending that “virality” will propel Twitter’s success, at least for a while. “Virality is virility,” I replied. More in Pattie Sellers’ Postcards blog.