IBM: Innovation Strategies And Success Factors

General Overview of Innovation

You are required to create and deliver an oral presentation around the case study provided for the Case Study Report Assessment. In the presentation, you are required to demonstrate an understanding of the case study with critical context and most importantly demonstrate your presentation skills.

IBM stands for International Business Machines Corporation (IBM), which is among the market leaders in the industry of information technology, computers, storage systems and microelectronics. The headquarters of the organization is established in Armonk, New York; however, the business practices are operational all around the world. Engagement of 319,000 employees and 671,610 stakeholders potentially justifies the business orientation of the company in the contemporary market. The company survived this competitive era for approximately 90 years, out of which, 60 years is a period of basic research programs (High, 2012). The central alignment of the company relies on innovation practices due to its belief in innovation as a business model and an organizing principle.

• Defining innovation: According to the policies of IBM, ideas do not facilitate the business practices, it’s the innovative implementation that makes the change (Kline and Rosenberg, 2010).
• The organizational structure for innovation: To promote the attributes of innovation within IBM, the organization has laid special emphasis over employee partaking, who are made in charge to implement and maintain innovative programs within the company (Kline and Rosenberg, 2010).
• Innovation funding: Funding is a crucial factor for every business; however, in IBM innovative funding practices are undertaken to facilitate the profitability of business practices (Kline and Rosenberg, 2010).

• Innovation strategy: Implication of innovative strategies to gain major business opportunities assists IBM in evaluating the policies from a technical perspective (Teece, 2010).
• Key stakeholders of the innovation strategy: Keystone clients, government agencies, venture capitalists, IT analysts, financial analysts, standards bodies, IBM alumni and business partners are the potential stakeholders of the innovation strategy (Zott and Amit, 2010).
• Innovation project selection: The project selection method depends on two factors, which are product development or the research area. Project development method transforms creative ideas to specific projects, whereas, research area is commissioned to planning authorities (Teece, 2010).
• Factoring competitive environment in innovation: In IBM, competitive intelligence is a crucial factor of every business unit’s development policy and thus, it is considered in the corporate planning process (Zott and Amit, 2010).

• Organizational model and innovation: This system was implemented by IBM in three categories, which are reinvestment cycle, governance model and measurement cycle (Schaffers, Komninos, Pallot, Trousse, Nilsson and Oliveira, 2011).
• Role of research in innovation: Comprehensive research over every product development and service implementation facilitates the organization with an integrated solution to business objectives (Nam and Pardo, 2011).
• External partnerships: External partnership in terms of venture capital, university relations, keystone clients and independent software vendors empower the social and environmental innovations of the company (Schaffers, Komninos, Pallot, Trousse, Nilsson and Oliveira, 2011).
• Project management: Practices of project management to effectively utilize the available resources also justifies the process of innovation for IBM (Nam and Pardo, 2011).
• Nourishing creativity and innovation: Innovation in IBM is promoted by encouraging every single employee to work innovatively (Schaffers, Komninos, Pallot, Trousse, Nilsson and Oliveira, 2011).
• IBM research: Practice of IBM research promotes leadership skills, encouragement and sense of responsibility among the employees by charging them with errands and through reward system (Nam and Pardo, 2011).
• Ecosystem (open to external constituencies): Ecosystem to innovation in IBM comprises Global Innovation Outlook (GIO), CEO survey and National Innovation Initiative (Chesbrough, 2011).
• Innovation processes: The innovation process of IBM comprises set of processes, such as ideation, potential impact, strategic fit, financial impact, senior management reviews, capability and capacity reviews and many more (Nam and Pardo, 2011).
• Technology enablers: Intranet, Jams, and ThinkPlace arer considered as the chief technology enablers for IBM (Schaffers, Komninos, Pallot, Trousse, Nilsson and Oliveira, 2011).
• Internal alignment: The administration of IBM believes that successful innovation for a company relies upon the interplay among workplace constituencies (Chesbrough, 2011).

• Innovation culture and environment: In order to promote innovation, IBM focuses on various areas such as idea generation, execution, creative climate, nurture innovation, incentives, reward systems, etc (Gassmann, Enkel, and Chesbrough, 2010).
• Role of learning, training, and education in innovation: Implication of effective learning, training, and education plays an imperative role in fostering the innovation environment within the organization (Clark and Smith, 2008).
• Innovation failure philosophy: The innovation failure and implementation in IBM depend on the part of the company involved due to its integrated approach in recognizing, highlighting, and driving measures for the business (Davila, Epstein and Shelton, 2012).
• Incentive/reward programs: Incentive and rewards for task execution to the employees promote the organizational policy of weaving innovation by aligning it with employee motivation for the job (Gassmann, Enkel, and Chesbrough, 2010).
• Gaining leadership support: Furnishing of leadership support in the organization generates an impending push for innovation through various channels (Clark and Smith, 2008).
• Balancing innovation and efficiency: The balance of innovation and efficiency in IBM is made through stage-gate development processes, sales cadence processes, and quarterly earnings (Davila, Epstein and Shelton, 2012).

• Managing and tracking innovation investments: Regular monitoring over the innovation investment and external funding will make the assessment of innovation policy easy (Christensen and Raynor, 2013).
• Evaluating the success of innovation: Comprehensive evaluation of the input made by the company to the output gained as profitability will facilitate IBM in measuring the success of their innovation (Ahamed, Inohara and Kamoshida, 2013).
• Innovation measures: To evaluate the overall success of the innovative approach, IBM uses a balanced scorecard, which analyzes the scenario from all the legitimate perspectives (Christensen and Raynor, 2013).
• Cycle time: Success of innovative measures is further calculated by considering the time taken to develop a product from phase one to the final launch (Ahamed, Inohara and Kamoshida, 2013).
• Identifying breakthrough innovation: As per IBM’s policies, innovations can be recognized in the initial process by beginning with simple idea generation followed by open collaboration (Christensen and Raynor, 2013).

• Significant success factors for encouraging and sustaining innovation: The policies of IBM strictly relies upon that the culture, which rewards and appreciates innovative thinking is the foremost contributor in the success (Pollard and Cater-Steel, 2009).
• Barriers to innovation: IBM explored various challenges, which acted as a barrier. For instance, no values for strategic business building, inadequate market approach, failed ventures and lack of established disciplines (Olszak and Ziemba, 2012).
• Future plans for innovation: The Company deems that innovation is a collaborative essence of technology, business transformation, education, work/life balance, and environmental protection (Pollard and Cater-Steel, 2009).
• Key advice: The key advice, followed by IBM simply presents that learn the market, gain experience, interact with people and identify the champion (Olszak and Ziemba, 2012).

Conclusion

On the basis of discussion and arguments presented above, it can be inferred that IBM is among the market leaders of the world in terms of computer, software, storage, and microelectronics. The culture of the organization varies extensively due to its firm belief in innovation. According to IBM, incorporation of innovative business ideas to the operational practices of the organization will help in validating the proposed objectives of the business. Therefore, despite being headquartered in New York, the company is effectively functioning in different parts of the world. Overall, the arrangement of innovation to the company has empowered the overall business of IBM in terms of market opportunities, profitability, reliability, and efficiency.

Some prospective recommendations for IBM are presented below:

• In order to exploit the technological integration opportunities, IBM is suggested to enter the alliances with other firms (Field, 2013).
• IBM is also recommended to diversify their business in different sectors to spread and reduce the risk factor (Field, 2013).

Question 1: How IBM became one of the most innovative companies of 2017?

In the year 2016, more than 400 million associations were encountered between the people and IBM’s Watson, which is an artificial intelligence platform developed to facilitate people on various issues. Such implications were further used by giant companies like Hilton, Japan Airlines, and Pfizer in order to use the intelligence aspect of IBM. The latent reasons, which made IBM the most innovative company of 2017, are mentioned below:

• Personal Shopping: The retail outlets started using IBM’s Watson as a processing tool to facilitate the customers in navigating their desired stores. This made a remarkable two-digit percentage boost in the overall sale of the outlets (Fast Company, 2017).
• Teaching Assistants: Integration of IBM’s Watson in the preschool learning curriculums justified its significance in pattern recognition and natural-language-processing skills. Watson’s vocabulary application also acted as a singular assistant in teaching the innovative ways (Fast Company, 2017).
• Union Organizing: IBM’s platform was even used to develop an application named as WorkIt, especially for the labor rights group. This helps in dealing with employment issues such as leave-of-absence and sick-leave procedures (Fast Company, 2017).

Question 2: What are the potential challenges faced by IBM in the contemporary market?

Under the effective leadership of CEO Ginni Rometty, the organization majorly focused on the sectors of cloud computing, security, mobile and data analytics. However, the ventures were successful but not competent enough to facilitate the legacy of the company. This leads to some challenges in the business of IBM, which is discussed below:

• Services: IBM is considered as the largest service provider in the segment of computer and software solutions. Since last few years, services became a cash cow for the company, which materialized as a loophole in the system (Berr, 2015).
• Hardware: Due to the correspondence in the hardware from the competitors, IBM could not justify the customer’s expectation of providing something new. The existing hardware options of IBM, Dell and HP are almost similar for a customer (Berr, 2015).
• Software: Customer not buying IBM hardware will flee from buying the software as well. The overall influence of the brand is reduced in the market (Berr, 2015).
• Cloud Computing: IBM was considered a market leader in this, still, the arrival of Big Blue was late as compared to the rivals such as Amazon (AMZN), Google and Microsoft (Berr, 2015).
• Law of Large Numbers: The market value of the company is approximately $138 billion and therefore, improvisation in the earnings of the company is not possible due to its vast establishment (Berr, 2015).

References

Ahamed, Z., Inohara, T., and Kamoshida, A., 2013. The servitization of manufacturing: An empirical case study of IBM corporation. International Journal of Business Administration, 4(2), p.18.

Berr, J. 2015. 6 toughest challenges for IBM’s Ginni Rometty. (Online). Available at: https://www.cbsnews.com/news/6-toughest-challenges-for-ibms-ginni-rometty/ [Accessed 02 May 2018].

Chesbrough, H.W., 2011. Bringing open innovation to services. MIT Sloan Management Review, 52(2), p.85.

Christensen, C. and Raynor, M., 2013. The innovator’s solution: Creating and sustaining successful growth. Harvard Business Review Press.

Clark, K. and Smith, R., 2008. Unleashing the power of design thinking. Design Management Review, 19(3), pp.8-15.

Davila, T., Epstein, M. and Shelton, R., 2012. Making innovation work: How to manage it, measure it, and profit from it. FT press.

Fast Company. 2017. Why IBM Is One Of The Most Innovative Companies Of 2017. (Online). Available at: https://www.fastcompany.com/3067474/why-ibm-is-one-of-the-most-innovative-companies-of-2017 [Accessed 02 May 2018].

Field, A., 2013. Discovering statistics using IBM SPSS statistics. sage.

Gassmann, O., Enkel, E. and Chesbrough, H., 2010. The future of open innovation. R&d Management, 40(3), pp.213-221.

High, R., 2012. The era of cognitive systems: An inside look at IBM Watson and how it works. IBM Corporation, Redbooks.

Kline, S.J. and Rosenberg, N., 2010. An overview of innovation. In Studies On Science And The Innovation Process: Selected Works of Nathan Rosenberg (pp. 173-203).

Nam, T. and Pardo, T.A., 2011, September. Smart city as urban innovation: Focusing on management, policy, and context. In Proceedings of the 5th international conference on theory and practice of electronic governance (pp. 185-194). ACM.

Olszak, C.M. and Ziemba, E., 2012. Critical success factors for implementing business intelligence systems in small and medium enterprises on the example of upper Silesia, Poland. Interdisciplinary Journal of Information, Knowledge, and Management, 7(12), pp.129-150.

Pollard, C. and Cater-Steel, A., 2009. Justifications, strategies, and critical success factors in successful ITIL implementations in US and Australian companies: an exploratory study. Information systems management, 26(2), pp.164-175.

Schaffers, H., Komninos, N., Pallot, M., Trousse, B., Nilsson, M. and Oliveira, A., 2011. Smart cities and the future internet: Towards cooperation frameworks for open innovation. In The future internet assembly (pp. 431-446). Springer, Berlin, Heidelberg.

Teece, D.J., 2010. Business models, business strategy and innovation. Long range planning, 43(2-3), pp.172-194.

Zott, C. and Amit, R., 2010. Business model design: an activity system perspective. Long range planning, 43(2-3), pp.216-226.