IBM CEO Ginni Rometty took the Watson story on the road yesterday when she addressed a crowd of 35.000 at the National Retail Federation's 103rd Annual Convention and EXPO in New York City. Like almost every tech CEO who has stood on a stage in the past thirty-six months, she opened with the “social, mobile, big data, cloud” mantra, calling data the “next generation's natural resource."

But as she spoke, it became clear that Rometty had something to offer that other CEO’s did not, IBM Watson, the technology that beat Ken Jennings at Jeopardy. Until recently many of us have thought of Watson as an Encyclopedia and Search Engine on steroids, but it’s actually much more than that. 

What a Wonder

Constellation Research’s founder R "Ray" Wang pegs IBM’s wonder child as “a culmination of artificial intelligence, natural language processing, dynamic learning, and hypothesis generation to take vast quantities of data to make better decisions. “ We’d add collaborator to his definition.

We say this because Rometty described Watson’s abilities to act as an online shopping concierge during her talk, meaning that it could actually hold a conversation much the way a personal shopper can. Take, for example, an individual who plans to go camping in Patagonia and logs on to North Face to gear-up.

The “conversation” wouldn’t be that different from what happens in a physical store, the concierge might ask the shopper  a little bit about her/himself and what he/she might looking for. Watson would then show him/her some things he/she might enjoy or need. In the case of someone who is about to go winter camping, Watson could suggest a sleeping bag for frigid weather. The shopper would be able to tell Watson things like “I think I’d be too warm in that” and then a new suggestion would be made.

It sure beats shopping on most of today’s retail sites that aren’t much more than on-line catalogs from which you can electronically order.

It’s important to note that Watson doesn’t come “out of the box” knowing how to do this. North Face’s Watson is being trained and implemented by Fluid, a company whose products and services promises to turn shoppers into customers.

Last week, during Watson’s unveiling, Fluid’s CEO Kent Deverell presented a real life example of how today’s online shopping experience doesn’t come close to what you get in a store. He was trying to help his son purchase some equipment on line, they read and read product descriptions, they comparison shopped to find a great price, and, after hours of exploration, they walked away from their computers without buying a thing. Instead they jumped in the car and went to REI.

Why? Because they had questions and the only experts they had to consult with were themselves. (Yelp isn’t interactive). There were no possibilities for warm fuzzies or even a confirmation that they were making a choice with which they’d be satisfied.

Watson is Not Siri for Business

Though we haven’t heard anyone from IBM shout from the roof tops “Watson is not Siri for Business,” trust us, Watson is not Siri for business.

 Siri can’t make recommendations on which medical devices should be purchased based on the outcomes and value they provide. Siri is unlikely to be able to provide answers based on an individual’s situation, preferences, abilities and so on. Given some time and training, Watson can do all this and more.

Answers a Search Engine Can’t

It’s ironic, but Travelocity founder, Terry Jones, uses travel agents when he plans his own vacations. He says that he has found that conversations with experts are needed because they can introduce him to experiences that today’s travel sites can’t. Take a recent trip that Jones took to France as an example. Jones’ travel agent knew that he was a cooking enthusiast, and as a result, was able to hook him up with an opportunity to work side-by-side with a one-star Michelin chef. A travel site wouldn’t have known to put that kind of offer in front of him.

Watson, with some training and some data would.

And if Jones was no longer interested in cooking and now liked cycling, his travel agent might have introduced him to a trip that follows the route of the Tour de France. Watson with some time, data, and training should be able to do so as well.

IBM's Biggest Watson Challenge?

To let its spawn into the wild solo. IBM is wise to form a new division around Watson, to fund it with 1 billion dollars and to give developers the space and incubation they need to build apps and solutions around it. There is not a better place in the world to do this than New York City’s hip Silicon Alley- home of ZocDoc, Tumblr, Etsy, FourSquare ...

Add to that Watson’s cloud for developers and the 100 million of venture funding IBM is making available to aspiring entrepreneurs. The seeds for success are planted here.

Critics will argue that Watson won’t attract developers because it’s not Open Source the way Hadoop and many other Big Data technologies are. Do they know that IBM has received more than 1000 applications for its Watson Incubator program, and this after a soft launch?

Even so, let’s say the critics are right and Watson isn’t “open enough”, IBM can always change its mind. And NYC’s developer community (Hello NYC Tech Meetup) won’t be shy about telling Big Blue to do so, provided IBM has a relationship in place.

IBM Watson’s big boss Michael Rhodin might turn to former NYC Mayor Bloomberg and the city’s Economic Development Corporation for consult, the city’s incubator program rocks. And mind you, the city provides its entrepreneurs with mentors, not bosses.

Good Idea, Time of Disruption, Stakes Are High

IBM may be the only computing company on the planet that has survived three major technological shifts- the company designed some of the first fully electronic computers in the 1940s, they took computing mainstream with the System/360 in the 1960s, they helped transform the personal computer from a hobbyist’s toy to a business machine with the IBM PC in the 1980s, and made the Internet work for the enterprise in the 1990s. Today they’re best known for being a services company.

But that won’t be the busting business it has been in the past.

IBM’s bet for the decade to come is on cognitive computing and on Watson- no holds barred. Their biggest challenge is, and will be, to let Watson behave like a start-up and not IBM.

The big question, in my mind, is whether IBM will be able to do so. Can a public company that’s constantly being held under a microscope, behave like trusting grandparent who has faith in the generation to come and let go?

 Big Blue needs to understand that its biggest job is to attract and inspire the most talented geeks in the world to come Silicon Alley, to invite them to pitch their ideas, and then to give the winners the money and the resources to thrive.

From that point on, IBM should be there for guidance, to provide introductions and sage advice when it’s asked for and nothing more.

The Business Model Will Come

IBM is being chastised for Watson’s lack of revenue. Why aren’t the critics asking what it has for sale? As far as I can tell, there’s not much to buy yet. (Maybe services and SaaS customer service solution.)

And, hey Wall Street Journal, this needn’t be that big a problem. Twitter didn’t have a revenue model for years.

Besides, Watson has some things most other start-ups don’t: extremely rich, wise and experienced grandparents; a household name, thanks to Jeopardy; and a vision that’s pretty impressive. 

Title image by IBM.