Introduction
Entrepreneurs all over the world have celebrated success stories of their firms. Entrepreneurship has defined the 21st century. It has reduced bureaucratic processes and introduced creativity. Therefore, innovation has been responsible for marvellous achievements of the century. Drucker defined innovation as “the effort to create purposeful change in an enterprise’s economic or social potential” (Drucker, 2007, p. 2). Still, others view innovation as a process of creating, accepting, and implementing new ideas, services, products, and processes. All these definitions reflect the aim to introduce new ways of production in new products and services for different markets.
Rapid changes in the 21st century have created open-market economies. However, starting a business does not guarantee a success. This is where strengths of technological innovations have transformed entrepreneurship across the globe. We have experienced how innovations have influenced various industries and countries. However, such influences originated from entrepreneurial activities of innovative companies. Entrepreneurship and innovations have become global issues. In this article, we shall look at entrepreneurial activities as drivers of innovations.
Drucker believes that entrepreneurs are innovators (Drucker, 2007). Therefore, innovation has become a fundamental tool for entrepreneurship. However, such generalisation makes it difficult for us to understand innovation. Several firms have focused on innovations, but their results are not impressive (Kelley and Littman, 2002). On the other hand, others have succeeded. In this article, we look at how IBM has used innovation to enhance its position in the global business and transformed other businesses.
IBM
IBM has one of the world’s largest IT research centre with nearly 3,000 engineers and scientist. The company has invested an average of $5 billion annually in its research and development programmes since 1996. As a result, it has more than 40,000 patents. The company has researchers from various disciplines who innovate in various fields like:
- Deep computing
- E-commerce
- Communication technologies
- Personal systems
- Storage and server devices
In the recent past, IBM introduced On Demand Innovation Services (ODIS). In this case, the company works with its research team and clients in order to solve business issues innovatively.
The company has revolutionised entrepreneurship and innovation for the past 50 years. IBM does not display most of its innovative ideas, but a thorough search reveals innovative processes at IBM (Rao, Wilson and Watkinson, 2009).
People know IBM as the ‘Innovative Company’. This is true if we consider various areas the company has conducted research on and produced innovative solutions for businesses across the globe. IBM views innovation as a process that is definable and open to collaboration with both internal and external parties. As a result, the company refers to its innovative team as ‘an ecosystem of innovators’.
IBM believes that innovation has significantly changed in the last few decades. In fact, the company notes:
“The very nature of innovation has changed in the early days of the 21st century. It is increasingly open, collaborative, multidisciplinary, and global. This shift means that the truly revolutionary innovations of our time — the ones that will create new markets, redefine old ones, and maybe even change the world for the better — require participation and investment across multiple constituencies” (see Rao et al., 2009).
Therefore, it must adopt a different approach to innovation.
IBM has different platforms that reach out to various partners across the world for collaboration in innovative processes. For instance, IBM has a Global Innovation Outlook (GIO) for innovators across the world. This platform enables the company and other partners to extend learning of new ideas for innovative purposes.
GIO relies on the company and other stakeholders through periodic journals, reports, video conferences, and blog contributions, which focus on innovative ideas of the time. It is imperative to note that IBM innovation approach includes several external parties. Consequently, the company has decided to clarify what constitute innovative ideas. The criteria for innovative ideas are:
- The idea must be capable of generating substantial revenues from economic activities
- The idea must have long-term impacts on society
- The idea must be about an area of enterprise that is ready for innovation
IBM notes the gap that exists between a great new idea and developing the idea for success. As a result, IBM has a ThinkPlace, which facilitates the culture of innovation in the company. This site enables innovators to contribute and collaborate on “new ideas, add inputs to existing ideas, and look for possible solutions to their cases” (Rao, et al., 2009). The company also has an annual innovation jam session. In this case, people have an open forum to engage each other for new ideas from different industries.
IBM has various ranges of activities for supporting such ideas. As a result, the company can widen innovative approaches and extend various ideas into reality. Once the company discovers a new idea, it enacts process for evaluating and commercialising such ideas.
What is Innovation to IBM?
IBM has a clear sense of what it promotes as innovation. The company shows achievements as well as areas for future consideration. The company also acknowledges that innovation has changed. Therefore, it allows its employees from all over 170 countries to bring their unique ideas for consideration. At the same time, IBM also works with various clients when developing new business solutions and models. This is a form of differentiation from competitors. Still, the company’s innovation approaches go beyond itself and customer. Therefore, IBM extends innovation to solve different problems in society under an ‘ecosystem of innovators’.
IBM also engages in regular developments and improvement of its innovation platforms on the Web. This is significant for growths because innovation is a continuous process and changes within a short time.
IBM’s i-team
IBM has effectively developed an innovation team known as i-team or value creation centre. The team includes IBM innovators and business partners, who conduct several workshops in order to discover and initiate innovative solutions for competitive strategies. The team relies on priorities from senior management to define and initiate solutions. After this, it then conducts risk assessments and starts a full business solution development.
IBM uses its specialists with various capabilities for implementing a project throughout its life cycle as its business partners need. I-team is a successful approach because it allows the company to leverage on its innovative experts and enhance clients’ needs. This strategy enables IBM innovation team to understand the required business solution from a client’s perspective because it is a joint innovation. IBM has capabilities of creating virtual teams or physical ones at their innovation centres.
IBM has chances of developing a portfolio for the client’s business team to evaluate. In this process, both teams consider the scope and possible impacts of the idea. However, these solutions depend on the client’s needs:
- Innovations with direct impacts
- New capabilities
- Cost-cutting solutions
- Support after purchase
- Need for outsourcing
After decades of applying technologies in its works, IBM has developed a model for innovation that aids in selection, review, and validation of new ideas (IBM, 2013).
The first stage involves attracting new technologies. This process of launching innovative idea involves searching for a suitable idea that can pass all stages of innovation (Christensen, 1997). The company only selects advanced innovative ideas, which must also fit within an existing service or a product (Bessant and Tidd, 2008).
For instance, IBM introduced autonomic computing in order to help businesses improve efficiency without frequent human interventions. Autonomic computing involves various sets of technological applications, systems, and the whole networks. Such innovations enable businesses to be self-managing. The idea of autonomic computing has become pervasive because other software tools from IBM innovative approaches. Consequently, we can see how the search for opportunities for innovation has transformed complicated business processes into practical applications for improving business environments. IBM innovative solutions demonstrate six main ideas.
- Cost flexibility; this eliminates the need for fixed costs and allows firms to pay for solutions they need.
- Business scalability; the solution must offer flexibility and cost-effective approaches and allow capacities to support growths later.
- Market adaptability; the solution should support experimentation and allows for fast adoption.
- Context-driven solution; this enables innovations to have user-defined contents and enhance relevance of such products in the market.
- Value-driven solution; the solution should drive new values and drive potential new businesses.
- Low complexity; the solution should allow for general simplicity and eliminate complexity for users.
Select: What to do and why
Second, IBM develops the business case for innovative ideas. However, the company warns that innovation does not just happen. At the same time, it argues that we cannot merely buy innovation. IBM notes that innovation is a creative process that has unpredictable results. Therefore, it must have the right multidisciplinary teams within a favourable environment.
Before IBM enacts any innovative solution to its clients, it must guide them on selecting the best solutions for their businesses. In the respect, it has three approaches:
- The innovation must align with the business strategy of the organisation. In this cases, IT and business people share ideas on the best solution.
- IBM also allows clients to determine how new solutions should change their business environment. For instance, such solutions should be able to attract new partners, new customers, market segments, and enhance efficiency.
- Innovative team also allows clients to determine where the solution should take the business to within a given time. Therefore, IBM considers rapid changes in the market and helps clients have innovative solutions, which can help them match changes in the market.
IBM collects several innovative solutions from various sources in a year because of its collaborative approach to innovation. As a result, the company insists that the idea must be an emerging technology solution. The selection process of innovative ideas in technologies must:
- Target early entry marketplaces
- Introduce new standards or specifications
- Must be appealing to end users or early adopters
In this process, the team drops any innovative ideas, which do not meet the above criteria. This implies that IBM rejects several innovative ideas, which may be useful in other fields.
IBM rewards creative and unique ideas. It also manages its portfolio of innovative ideas and prioritises innovation in terms of short-term and long-term benefits.
IBM claims that its innovation processes do not purely take place at the technical level of the organisation, but it focuses on original business ideas. For this reason, IBM conducts most of its innovative ideas with partners and clients (IBM, 2006). This provides a practical evaluation of the process. For instance, in B2B Integration, the company realised that companies suffered losses and experienced inefficiency due to manual processes. Consequently, IBM noticed that B2B Integration could eliminate human errors because it was an automated invention. The idea eliminated human errors that disrupted the supply chain in midsize organisations.
Firms usually have several innovative options to choose from when they tackle their business issues. Midsize firms must consider costs of such solutions. However, it is important for such companies to account for scalability of their choices. The aim should be to choose a solution that solves the company’s problems and expandable for future changes.
IBM also notes that successful projects require trusted partners, who are capable of formulating plans for success. At the same time, such partners must understand unique needs and integration requirements of small businesses. In this regard, IBM has recognised that various firms have different sets of challenges. Thus, no single solution can solve their problems. As a result, a strategic approach to B2B integration can solve various issues affecting supply chain processes (IBM, 2012).
Implement: How are we going to make it happen?
The third stage involves surfacing new technologies. IBM selects various technologies for implementation. Before this process, the company displays its new ideas on its various Web platforms. In addition, it also engages in strategic marketing in order to raise awareness regarding new ideas.
This process enables IBM team to forecast demands for such innovations, particularly in situations where markets expect such new solutions. IBM has recognised that growths in businesses have led to high numbers of partnership and associations, as well as customers and suppliers. In this sense, the company recognised that various customers, partners, suppliers, and other associations have different needs from the company (Goffin and Rick, 2010). As a result, business processes increase and become complex. Therefore, B2B Integration is imperative for midsize organisations, which may not have strong supply chain. Such challenges can reveal their weaknesses.
Therefore, IBM seeks to understand the complexity of business-to-business processes before implementing any innovative solution to its partners. Before IBM implemented B2B Integration platform, it conducted a survey in order to determine the market condition. In B2B Integration, IBM found out that many midsize businesses were “under pressure due to the lack of business process integration, which led to poor customer, supplier, and trading partner communications” (IBM, 2012). It also established that many companies lacked back end systems to link them with their suppliers. This implied that business communications could not flow from suppliers to businesses without human and manual intervention.
At this stage, IBM matches new ideas or technologies with existing opportunities. The selected idea in IBM passes through several stages before implementation. The technology or new idea must be a new service or product for the future market. This process also involves free testing of new developments. Therefore, the company offers free limited trial periods. This period enables customers to evaluate products and send their feedback. Later, interested customers may purchase commercial licenses for such products.
In some instances, IBM places such innovations on open sources for members’ feedback. At this point, some innovations may not evolve into useful products. However, IBM has an Emerging Business Opportunity (EBO) to ensure that most of its innovative ideas make transitions to the main business solutions. EBO teams usually cooperate with IBM’s business groups when developing models and implement projects for flagship customers and other early users.
Capture: How are we going to get benefits from it?
The fourth stage involves getting and measuring real-time evaluation results. This stage provides opportunities for products or service developers, consultants, businesses, administrators, architects and other interested parties to review the suitability of innovations for users (Davila, Epstein and Shelton, 2005). This enables IBM to know developers’ opinion about the technology and review if the product or service is viable for the market. The company reviews if the product is:
- Useful
- Able to solve the problem
- Requires support after purchase
- if the product concept is ahead of the market
The company finds some innovative solutions to be popular than others. Over the years, IBM has noted that clients have positive feedback regarding their innovative solutions. As a result, the company has noted that the main drivers of success were in support from all members of the organisation.
IBM’s B2B Integration solution has been effective in enhancing automation within midsize companies. Consequently, such firms can improve their internal processes and extend such advantages to suppliers and customers. Companies that have adopted IBM’s B2B Integration have realised significant changes in terms of business results. Such firms have increased productivity, reduced human errors, manual processes, and obtained exceptional firms’ data on supply chain stages.
IBM noted that midsize firms, which adopted B2B Integrator, had a significant reduction in administrative costs by 30 to 60 percent. It argued that such savings were substantial for midsize companies with limited resources. The innovative solutions were holistic and provided inexpensive solutions to firms’ supply chain and back end systems. Such innovative solutions should reduce costs and enhance communications with other partners. IBM provides such integrated solutions to help small firms integrate their processes for accuracy and efficiency, and help businesses conduct their transactions in secure platforms.
Conclusion
Innovation has always defined IBM’s business strategies because it has become a part of IBM’s daily operation. The company believes that the significant part of innovation involves turning concepts and experiments into commercial solutions. IBM has cultivated a culture of innovation its processes. IBM materials show that innovation efforts are results of defined processes, which involve many contributors from the company and outside the firm. This implies that innovation requires insight and careful nurturing.
We have noticed how innovations have transformed the 21st century entrepreneurship. However, we have to note that innovative organisations like IBM have dedicated extensive resources in order to pursue and develop a culture of innovation. As a result, the company has created specific roles for innovators. IBM understands that innovation goes beyond invention and technology usages. As a result, the company enhances innovation with employees’ discipline in order to support investments, tools, and resources for success.
IBM has also established minimum value criteria for what it considers as innovation in order to eliminate ideas, which do not have economic potential. Such criteria have raised issues about the future market potential and elimination of small ideas, which might have huge potential in other industries or in the future.
IBM believes that innovation has a significant role to play among its current and potential customers. It is also important to note that IBM’s innovative solutions go beyond its IT business. For instance, the company works with ‘ecosystem of innovators’ to explore water and environmental issues in other parts of the globe. This implies that IBM uses innovation for revolution apart from promoting entrepreneurship.
The B2B integrator of IBM shows that the company uses visible and predictable market needs in order to develop new solutions. This shows that innovation may present challenges to many firms because they may not know what market requirements shall be viable in the future. This explains why IBM’s approach to innovation is collaborative and involves teamwork.
Recommendations
Innovation should address challenges facing entrepreneurship and society. Therefore, IBM should focus on an ecosystem of innovation, changes in innovation, global issues, and address needs of society and entrepreneurs based on their uniqueness. Most entrepreneurs and societies face various challenges from globe competitions and emerging forms of innovations. These changes show that innovation requires multidisciplinary approach because major changes shall transform society in the next century. Therefore, innovative approaches of firms like IBM will determine the future of society and entrepreneurship.
IBM’s approach to innovation aims at solving problems in society among entrepreneurs. However, the company has set high standards when selecting innovative ideas. This tendency eliminates useful ideas, which do not match such standards. Therefore, IBM should review its criteria based on the uniqueness of ideas and areas of interests or geographical locations for such ideas.
IBM must also focus on cost reduction for all its innovative approaches. However, firms find it difficult to save costs and invest in innovation. Effective implementation of an innovative idea requires collaboration across the entire organisation. Therefore, firms must change their approaches in order to develop new solutions for their partners and customers.
References
Bessant, J., and Tidd, J. (2008). Innovation and Entrepreneurship. London: John Wiley & Sons Ltd.
Christensen, C. (1997). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Cambridge: Harvard Business School Press.
Davila, T., Epstein, M., and Shelton, R. (2005). Making Innovation Work: How to Manage it, Measure it, and Profit from it. New York: Prentice Hall.
Drucker, P. (2007). Innovation and Entrepreneurship. Oxford: Butterworth-Heinemann.
Goffin, K., and Mitchell, R. (2010). Innovation Management: Strategy and Implementation using the Pentathlon Framework (2nd ed.). London: Palgrave Macmillan.
IBM. (2013). A model for innovation at IBM. Web.
IBM. (2012). B2B Integration: Automation for growth. Web.
IBM. (2006). Innovation Sourcing: Increasing business value within outsourcing relationships. Basingstoke, UK: Marketing and Publishing Services.
Kelley, T., and Littman, J. (2002). The Art Of Innovation: Success Through Innovation. London: Profile Books.
Rao, J., Wilson, J., and Watkinson, J. (2009). What is Innovation? Part 2: A Web View of How IBM Approaches Innovation. Web.