Leadership investigate

IBM: The greatest innovator you never hear about?

For innovation, IBM has been the undisputed leader according to one important metric for 18 years straight. Learn how the company does it.

For 18 years in a row, IBM has been granted more patents than any other company. The company was way ahead of the curve in embracing diversity in hiring as a competitive advantage, in expanding its operations globally, and in moving away from the low-margin computer hardware business and into the more innovative and lucrative fields of software and services.

Still when most people think of IBM today, they still think of it as a company of the past (which is fair, since the company turned 100 years old this year). But, IBM continues to do some of the most important work in technology and is rivaled only by Google and Microsoft in the number of engineers and scientists that it hires to do basic research in computer science. And, while Google and Microsoft focus on lots of consumer-oriented whiz-band products, IBM ends to focus on big picture projects that can have a wider impact on society -- in medicine, education business, the social sciences, etc. And, it's to forget that IBM still has more annual revenue ($99 billion) than Microsoft and Apple combined, and more than twice as many employees (420,000) than Microsoft (90,000), Apple (50,000), and Google (30,000) combined.

"We're in the background. Nobody hears about us much," admitted David Barnes, IBM technology evangelist, on Friday at the IdeaFestival 2011 event in Louisville, Kentucky. But, in the IdeaFest session "Deep Innovation," Barnes made the case that IBM is doing some of the most innovative and far-reaching work on the planet. He explained a little bit of how IBM systematically enables innovation and offered some tips to other aspiring innovators.

First and foremost, Barnes cited the IBM Watson computer -- which I wrote about yesterday -- as "the greatest advancement" of our time, "from a computer science perspective." The Watson can process and understand natural language questions better than any computer ever has, and it can even respond in human terms. That's why it has been able to trounce human beings in games of Jeopardy and why it is about to be used by doctors to consume all of the latest medical articles and studies and then allow doctors to question it about diagnosis possibilities.

Barnes emphasized that Watson is the culmination of a lot of research from many different teams at IBM. "This is years and years of research projects that came together," he said. Of course, Watson stands on the shoulders of "Deep Blue," the IBM computer that defeated world chess champion Gary Kasporov in 1997.

How IBM innovates

IBM has done a number of things to enable this kind of innovation, and here's what Barnes cited:

  • Encourage diversity - Hiring lots of different kinds of people from different backgrounds, nationalities, and ethnic groups helps address the fact that there are lots of different kinds of people who are your potential customers. "We had civil rights within IBM for years and years before the U.S. government required it," said Barnes.
  • Create a global company - IBM was early to the game in globalizing its company and opening offices around the world. This has given it a huge advantage in recent decades as most markets evolve to become global markets.
  • Take a practical approach to research - IBM is the world's preeminent technology laboratory, with armies of researchers, scientists, and engineers, who are empowered to work in small teams to invent and innovate. In most cases, this isn't just pure research, though. IBM expects these employees to eventually take the new ideas and effectively pitch them as business possibilities, and teams up the researchers with MBAs to help, when necessary.
  • Give employees time to think - IBM has implemented "Think Fridays" as a way to encourage employees to step away from their normal work environment and spend time each week on creative thinking. IBM refers to this as "free-thinking" time not spent in meetings and other daily obligations, and it is typically taken as a half-day on Fridays. Employees can use this time to develop new ideas, read, learn a new skill (such as a language), and even blog about the things they are learning or thinking about.

Part of the reason that we rarely hear about IBM these days is that it no longer produces consumer technology products like the iconic IBM PC. The company made the strategic decision years ago to get out of the PC hardware business and focus on servers, software and services. This was a puzzling move to the public at the time, but has worked out beautifully for IBM. PCs have become highly commoditized and the profit margin is only about 3%. Meanwhile, nearly all of the innovation in tech is now happening in software and services and the profit margin in software is 51% and it's even higher for services.

If you look at the things IBM is doing in nearly every industry, from health care to banking to retail to energy to public transportation to construction, then it's clear that the company made the right move at the right time in shifting its resources.

Next up: Big data

As for what's next, Barnes was extremely bullish about "big data analytics." We have more data available to us than we've ever had in human history and sorting out all of that data and turning it into useful, meaningful information that can make us more efficient, more effective, and more purposeful is going to be one of the big tasks of the next decade. It's not going to be done by computer scientists alone, it's going to be done by business analysts and social scientists who can ask the right questions and make sense of big data. Barnes said that over 1.2 million new jobs will be needed in big data analytics over the next decade.

He said, "Look at big data and big data analytics because it's going to have fantastic jobs for the United States."

To get an idea of the kind of thing he's talking about in terms of big data, take a look at this 13-minute video that he put together:

About

Jason Hiner is the Global Editor in Chief of TechRepublic and Global Long Form Editor of ZDNet. He is an award-winning journalist who writes about the people, products, and ideas that are revolutionizing the ways we live and work in the 21st century.

7 comments
jayohem
jayohem

I remember in the mid 1950's when IBM had window space on 5th Avenue in NYC displaying its large tape reel storage systems to everybody's amazement. The whole multi-window, many rowed display of devices probably didn't hold as much as one old floppy disk of the 1990's. The first PC I used was an IBM that Farmers Insurance agents could lease. You loaded the OS from a exceedingly large floppy disk. There was a simple word processing program including a merge file for addresses that you printed on the dot matrix printer. It actually was a smart terminal/dumb terminal setup. For the second workwtation to operate the smart terminal had to be on. The insurance info was sent to and from a mainframe in LA, but the word processing could be done off-line, which was just as well. We're talking 1983-84 when 1200 Baud was hot! hot! hot! I was sent round to the various offices to help the agents learn to use. No, I wasn't from IBM just the district manager's office. It's what got me interested in computers. Still on the low end of high tech, but then someone has to be. :-)

Lynn Aeon
Lynn Aeon

I remember the days, if it wasn't an IBM built system, it was still called an "IBM clone". All long before HP or Dell, etc.

bergenfx
bergenfx

that paid Benoit Mandelbrot (RIP) to do nothing more than think in his study, has my sentiments, and has the right approach to innovation. I'm available to think in my study if anyone wants to retain this unique service ... otherwise, you will find me in the back 40 cursing at the mules in a nineteenth century Swedish dialect.

HAL 9000
HAL 9000

I just wonder if it's running on OSX of one of the Propriety IBM Systems. :D Big Sheets is one of the more interesting things that Business can access but it's by no means the most exciting thing that IBM is involved in. ;) Col

Dogcatcher
Dogcatcher

This blog entry reads as though it was lifted from an IBM press release and the 100-Years video IBM released last year. Evangelist Barnes dutifully spouted the company lines, and Jason wrote 'em down. IBM is a very good company, and its survival for a hundred years is a testament to a lot of good management. As such, it deserves more insightful coverage.

alfielee
alfielee

This 32-bit system was average at best & a shame that we followed the path of IBM. Actually at Telecom Oz, in the days when Telecom Oz was not a scum company, we had an IBM-clone, Fujitsu, & these were far more reliable than anything IBM had to offer. Just the same the NEC machine which ran 36-bit hardware never made mistakes, that ninth-bit being a check digit & an incredibly reliable OS & far more sensible to use...

seanferd
seanferd

Of course what Barnes says sounds like a press release. Note also the question mark at the end of the title. But patents are a bad metric. I would guess that IBM generally has better patents than other top patent applicants, though. Unless IBM does thing like patent automatically adding "www" and "com" to text that could be a domain name.