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© 2013 IBM Corporation Innovation @ IBM - Anders Quitzau, innovation Executive 1 Dec 2013
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How IBM innovates dec 2013 - the front end of innovation in IBM

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Overview of major IBM internal and external innovation programs,, models of innovation, transformation, innovation culture enabler etc.
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Page 1: How IBM innovates   dec 2013 - the front end of innovation in IBM

© 2013 IBM Corporation

Innovation @ IBM !- Anders Quitzau, innovation Executive

!1

Dec 2013

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© 2013 IBM Corporation

Innovation@IBM

!2

What is innovation?

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© 2013 IBM Corporation

Innovation@IBM

IBM’s definition of innovation

§ Intersection of invention and insight § Creates value

§ Holistic view – Business model – Products & services – Operations

!“Innovation is a societal -- not a

technological -- phenomenon, Sam Palmisano, CEO, IBM Corporation

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© 2013 IBM Corporation

Innovation@IBM

!4

Why Innovate?

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IBM Do not Distribute ©2012 IBM Corporation © 2013 IBM Corporation3

1984 1992 2004 2005 2006

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© 2013 IBM Corporation

Innovation@IBM

Some IBM inventions.....

!6

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IBM Do not Distribute ©2012 IBM Corporation © 2013 IBM Corporation

§ Highlights since 2000 … – Added $10B in growth market revenue – Tripled SW profits

§ Exited commoditized businesses: –PCs –Hard disk drives –Printing Systems –Network

§ Created a partner world of more than 100K partners: ISVs, VARs, resellers, developers, CSIs

§ Strengthened position in: –Business Consulting –Service-Oriented Architecture –Analytics & cloud computing –Virtualization –Open, modular systems !

§ Acquired 127 companies in last 12 years –to complement and scale our portfolio of products and offerings

§ 8th consecutive year of double-digit EPS growth § Revenue of $99.9B – up 4% § Record net income of $14.8B – up 10% § Growth markets accounted for 21% of IBM’s total

geographic revenue § More than 6.300 US-patents

– EPS nearly tripled to almost 15$ in 2011 – $109B in Free Cash Flow – Returned $107B to shareholders

IBM’s Ongoing Transformation JourneyRemixed our portfolio toward services, software, and integrated solutions…

2011 another record year…

4

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© 2013 IBM Corporation

Innovation@IBM

We Embrace Collaborative & Open Innovation

Enabling culture change

§ Established an innovation agenda that spans multiple dimensions: – Product – Services – Business process – Business model – Management and culture – Policy and society !

§ Enabled global collaboration – Culture of collaboration – Innovation ecosystem

Why? What we’ve done

§ Become our clients’ “innovation partner” – Address client priorities – Build deeper client relationships !

§ Respond to changing nature of innovation !§ Organizations need each other to be

successful – Pace of innovation outstrips an

organization’s ability to “go it alone” !§ Changing workforce dynamics

– Globalization – “Millennials”

Venture Capitalists ISVs Business

Partners

Universities§ Technical § Business

Community Leaders

CompetitorsEmployees

Regulatory Bodies

Investors IT Analysts

Alumni

StandardsBodies

Policy- makers

ClientsInnovation Ecosystem

“We opened up our labs, said to the world, ‘Here are our crown jewels, have at them’. The Jam -- and programs like it – are greatly accelerating our ability to innovate in meaningful ways for business and society.” - Sam Palmisano, IBM CEO

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© 2013 IBM Corporation

Innovation@IBM

Innovation is about people – Getting ideas on the table – and implementing the best

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© 2013 IBM Corporation

Innovation@IBM

Manufacturing Customer FulfilmentMajor Employee Sites

IBM Research Centers

Employee Service Centers

• 190 countries • 2,000 locations • More than 100

acquisitions since 2003

• 50% employees have < 5 years experience

IBM location Mobile employees

IBM has a workforce of over 500,000 of which almost 50% are mobile

LC

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© 2013 IBM Corporation

Innovation@IBM

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IBM Institute for Business Value, CEO Study 2006

Where does innovation come from?

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© 2013 IBM Corporation

Innovation@IBM

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Innovation Enablers

§ Permission and alignment

§ Open & transparent business strategy !§ Collaboration tools § Communities of adopters !§ Employee awareness & education !§ Social networks

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© 2013 IBM Corporation

Innovation@IBM

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© 2013 IBM Corporation

IBM CIO lab - making innovation real in IBM

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© 2013 IBM Corporation!15

Mission

We discover, create and

incubate emerging technology solutions

and nurture innovation, to accelerate

IBM’s transformation

Demonstrate what “the future of

work” can be

Innovate to accelerate CIO

initiatives

Develop alternate application

management paradigms

Transform Innovation Programs to

support the Smarter Enterprise

We discover, create and

incubate emerging technology solutions

and nurture innovation, to accelerate

IBM’s transformation

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© 2013 IBM Corporation

Innovation@IBM

Ideas source: Internal, partners and customers

Weeks to m

onths

Breadth

Today – As is

Service Service Service

Our philosophy of innovation is: Fail many, but fail cheap - A new paradigme in innovation enabled by Web 2.0:

Yesterday – as was

idea

Service

18 months to 2 years

Ideas source: Internal

§Use of exposed common capabilities to enable rapid service assembly

2§Larger variety of

compelling offerings to offer customers

3

idea idea

idea

ideaidea idea

idea

idea

ideaidea ideaidea idea ideaideaidea

§ Ideation and Product Inception from the expanding source for innovation !

§Use Collaborative tools to solicit interactive feedback.

1

§Limited community to foster new innovation

§Little user interaction and market feedback

§Service silos §Limited reuse

§ “Build it and they will come” approach

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Innovation@IBM

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Idea management models

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© 2013 IBM Corporation

Innovation@IBM

© 2013 IBM Corporation!18

IBM-led Innovation

External-ledInnovation

Involvement ofExternal Partners

l IBM Applied Research Projects

l Emerging Business Opportunities

l TAP / BizTech

l Seed-stage Startupsl First Of A Kind

l IBM IndustrySolutions

l IBM BusinessPartner Solutions

l IBM Research Services

l Ideahub

l Product & Service Offerings

l Idealabs, Jams

“Bleeding Edge”

GenerallyAvailable

l University Programs

l Extreme Bluel Startups / Entrepreneurs

l VC Backed Firms(Late Stage)

Maturity of Tech-nology/Solution

l Academy of Technology

l IBM Institute for Business Value – studies and PoVs

l IBM Basic Research Projects

l IBM / Client Joint Innovation

l Acquisitions

l AlphaWorksl CIO-fund

IBM’s innovation portfolio reflects the tremendous creativity and contributions of many organizations – both within and outside

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© 2013 IBM Corporation

Innovation@IBM

Innovation as a core discipline at IBM

I N S

I D

EO

U T

S I

D E

Partners

Clients

Internal Stakeholders

IBV reports

Global Technology

Outlook

FOAK

Mobilize Interest, Collaborate

Mobilize Interest, Collaborate

Incubate, Prototype and

Validate

Identity Challenges/Create Ideas

Implement, Take to Market

IBM Lines of Business

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© 2013 IBM Corporation

IBM Research Overview

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© 2013 IBM Corporation

Innovation@IBM

IBM’s research and developmentIBM is 19. year in a row leading the way in

IT-reasearch by having: – a yearly R&D-budget of six billion dollars – over 3.000 researchers, scientists and

engineers – five Nobel prize winners – eight research laboratories in six

countries – 24 development laboratories worldwide !

IBM has the most IT-patents in the world: – In 2011 IBM beat its own record with

6180 patents and can call itself world champion in ”most granted patents.”

– Over 50.000 active patents globally !

IBM’s number of non-IT-related patents is growing: – Patents regarding organisational-

development, solutions and business processes

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Innovation@IBM

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§ Clearly defines its success goals § Leads through partnerships § Leverages its global presence § Couples with outside world § Partners with its customers § Is constructively self-critical § Focuses on productivity

To be successful, IBM Research must enable employees to grow and develop in their careers!!

A successful Research Division…..

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Innovation@IBM

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IBM Research Labs IBM Research – Openings in 2011 IBM Research – Openings in 2012

IBM Research: Globalization

China

WatsonAlmaden

Austin

TokyoZurich

India

Dublin

Australia

Brazil

Africa§ Next Gen Public Sector § Water & transportation § Human Capacity Development

§ Natural Resources § Disaster management § Healthcare/Life Sciences

(60% funding from gov’t)

§ Natural Resources § Smarter Devices § Human Systems/Events

§ Industry Solutions

§ Accessibility

§ Internet of Things

§ “Big Data” Analytics

§ Security

Haifa

§ Smarter Cities

§ Services § Mobile

Communications

§ Semiconductors § Systems § Software &

Services§ Semiconductors § Processors

§ Analytics § Storage § Nanotech

Healthcare

§ Science § Nanotech

Materials

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Innovation@IBM

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IBM Watson: From Grand Challenge through Innovation to solutions

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IBM Research

!25

IBM Research: Collaborative Innovation

China

WatsonAlmaden

Austin

TokyoHaifa

Zurich

India

IBM Research Lab

Global, Smarter Planet Collaborations

Pangoo

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Innovation@IBM

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We engage in public/private partnerships, like the EDISON and ECOGRID projects on Bornholm

4

§ Total budget: 24 million Euro (EU funding 13 million

Euro) § IBM: 171 man months, around 2.2M DKK of servers and

other equipments, IBM SWG products (ILOG, WAS, MQ, DBMS)

§ Demonstration > 50 % of budget (excl. replication/deployment) !

§ A large scale demonstration of a real-time market place for distributed energy resources !

§ A demonstration of a real power system with more than 50 percent renewable energy !

§ To implement ICT systems and innovative market solutions - offering TSOs additional and more efficient balancing services !

§ To enhance small consumer and local producers to participate in the power market through real-time operation, energy storage and savings !

§ To make a prototype solution for Europe - offering a “fast track” option towards market-based Smart Grids in Europe

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© 2013 IBM Corporation

Innovation@IBM

First of a Kind Program (FOAK):IBM jointly invests with clients on cutting edge innovations§ A Collaboration among Research, Sales &

Distribution, Clients and Partners

§ Experimental technology-based solutions engagements

§ Testing tomorrow’s innovations on real business problems and new growth opportunities

§ Yielding prototype solutions across a range of industries

§ Clarifies client requirements and tests market readiness

§ Established in 1995 § 20 – 25 projects funded each year § 70% successfully transfer assets for reuse § 75% drive or influence additional business

§ Some Danish / Nordic FOAK projects: § Intelligent Oil Fields for Statoil, Aker a.o § ASME – medical information hub – with

Aarhus University § Intelligent Trade Lane – Maersk

Customer Lifetime Equity • Reduced marketing costs by 20% • Improved response rates by 10% • Improved customer sat by 10%

BPI for Core Insurance • 50%-60% reduction in work effort • 55%-65% reduction in project duration

Smart Surveillance for Intelligent Oil Fields • Breakthrough in discovery of anomalous patterns • Accurately demonstrated sand production prediction 23 days in advance during trial

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Innovation@IBM

Container Centralen, using advanced secure RFID tags to solve a business problem and provide opportunity for new services

Started in 1976, the CC system was created due to demand for a solution to transport flowers and plants

80.000 users across 22 countries in Europe, e.g. growers, auctions, transporters, exporters, retailers

Based on an exchange system, leading to increased efficiency and lower number of containers needed

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© 2013 IBM Corporation

Innovation@IBM

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§ Distribution § Financial Services § Industrial § Public § Strategy & Change § Innovation § CRM § Human Capital § Supply Chain § Financial Management § Application Innovation § Emerging Markets

§ Future Agendas §3 to 10 year industry

and/or functional area outlook with action oriented next steps

§ Value Realization Studies § In-depth assessment of

today’s critical issues, opportunities, and value potential

§ CXO Surveys §Chief officer studies

Our Focus Our Research Types§ Executive Briefs § Quick Read (Executive

Summary) § Event and Conference

Presentations § Blue Paper (What and

How to Sell) § Knowledge e-cards § Pod/Webcasts § Books § By-lines and articles

Our Deliverables§ Content: Create

extraordinary, fact based business insights

§ Market Impact: Differentiate IBM in the marketplace

§ Value Creation: Value-based approach to identify and deliver client results

§ People Growth: Attract, retain and motivate top GBS talent

Our Objectives

The IBM Institute for Business Value research in market trends, best practices and process on a business and industry level.

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Social - in everything - collaborative, transparent innovation

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© 2013 IBM Corporation

Innovation@IBM

What are Jams? !An introduction

How IBM has used Jams

How customers are using Jams

How do Jams work?

• A massive online discussion using the Internet.

• A time-limited event that can elicit participation from thousands of individuals anywhere in the world.

• Subject-matter experts and moderators guide participants to build on each other’s ideas.

• Advanced real-time text analytics and moderator tools

• Sharing the value with participants - give to get

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Innovation@IBM

Global collaborative inside/outside-firewall innovation Jams enterprise-wide discussion, collaboration and decision-making, examples

WorldJam 2001 !A new collaborative medium to capture best practices on 10

urgent IBM issues

!WorldJam 2004 !

Focused on pragmatic solutions around growth, innovation and

bringing the company’s solutions To life

ValuesJam !An in-depth exploration of IBM’s Values and Beliefs by employees

!!InnovationJam !

For the first time, IBM’s clients, Business Partners, and our Family members joined in a new collaborative exercise

§Real-time threaded discussion §Open idea-rating §Equal access by all employees

WorldJam 2001 !new collaborative medium to capture best practices on 10

urgent IBM issues

!WorldJam 2004 !

focus on pragmatic solutions around growth, innovation and

bringing solutions to life

ValuesJam 2003 !in-depth exploration of IBM’s

Values and Beliefs by employees

!!

InnovationJam TM 2006, 2008 IBM’s clients,

business partners and family members joined in a new collaborative exercise

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IBM and Ålborg University develops revolutionizing and intelligent EPJ interface sparkled by Innovation Jam in 2006

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© 2013 IBM Corporation

Collaborative Innovation !withInnovation Hubs

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Innovation@IBM

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Engaged business leaders share their challenges with the community

Employees respond by posting ideas and collaborating

Community leaders review ideas – implementing successful ones

Successful ideas get communicated and celebrated

Idea management goes social – the Innovation Hub model

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Innovation@IBM

Innovation Hubs24x7 innovation marketplace

§ Localized collaborative innovation model for directed results

§ Next iteration of ThinkPlace program

§ Integrates Lotus Connections social network with idea sharing

§ Sharing business needs, innovation, implementation and recognition

§ Estimated impact of idea programs:

– 45% new revenue opportunities – 37% time savings improvements – 18% cost savings improvements – cultural suggestions

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Innovation@IBM

Innovation Hub: 24x7 Idea Marketplace

§ Open, collaborative system: ideas submitted, discussed, then refined by community

§ Every employee can see ideas from others, comment on ideas, rate them, or tag them

§ Facilitates social networking by using tagsto enable discovery of similar ideas and peoplewith similar interests

§ Personalized action lists with simple workflowfor idea evaluation and collaboration

§ Executive Challenges request ideas toaddress specific issues

§ Hundreds of Catalysts worldwide facilitate collaboration and implementation in their areas of expertise

§ Linkage to prototyping/validation programs (BizTech & TAP) and other resources

§ Innovator’s Awards for implemented ideas

!http://ideas.tap.ibm.com/i_dir/ihubidea.nsf/!37

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© 2013 IBM Corporation

l Encourage innovation by funding small solutions l Bring employee ideas to proof of concept and beyond l Ideas from bottoms up:

è New solutions - explore new technologies/areas è Fix problems - small fixes can have big benefits

l Projects selected by cross-organization Review Panel og Prediction Markets model

l 3-10projects each round, funded to prototype

l 28 Projects Funded since start 2.5 years ago, 20 completed (400 ideas submitted) !l Benefits – lowers barriers for ideas to get implemented !l Sample Project Wins !

l Text Analytics within the Global IT survey process (19 days down to 1 per question set) !l BlueThx – digital/social, company-wide peer-to-peer recognition

Innovation Fund

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Innovation@IBM

Innovation Hub: BizTech prototypes deliver proof points

§ Top talent from across the company gain opportunity to work on innovative projects one day per week for 6-8 months !

§ Senior business and technical leaders serve as project mentors !

§ Projects sponsored by business unit managers and executives !

§ Staffing and project support provided by ThinkPlace corporate innovation team !

§ Measurable results presented at Showcase event twice annually

“[ThinkPlace Prototyping] provides a stage for people who have an innovative idea and want that idea to be transformed into valuable business for IBM.” - Participant

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Innovation@IBM

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Technology Adoption Program (TAP)

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TAP Examples: Hard to find the right person, the right information, the right tool

FACES a faster, more intelligent people search About 14000 visits a month !!!EXPERTISE LOCATOR Employees can share Areas of expertise 10,000 logins, over 100 experts contacted by end users !!!!!ANSWERS find and provide answers Approximately 8000 users per month

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Innovation@IBM

promo%on discovery feedback

+

+ +

hos%ng

TAP provides…

…free to all innovators

!42

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© 2013 IBM Corporation

Innovation@IBM

Technology Adoption Program

Distribution channel for innovators

production

IBM

enables the route to market

168.000+ early adopters

PRODUCTS OFFERINGS

concepts & ideas

hundreds of offerings: hit 1.276000 downloads in 2013

Enable innovators Measure Value

Technology !Adoption Program2.999+ Innovators

Engage the Community

!43

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© 2013 IBM Corporation!44

Social software is today the backbone in IBM’s open innovation endeavors

Innovation@IBM

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Innovation@IBM

Measured Benefits of Social Software in IBM!

– 87% of IBMers collaborating with others using social software increase skills

– 84% access experts quicker

– 74% increase their productivity

– 64% improve personal reputation

– 84% share knowledge with others

– 77% re-use assets

– 64.5% improve personal reputation

– 64.5% increase their sense of belonging

– 59.9% increase sales

– 42.4% improve customer satisfaction

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!!

!

!

!

13 People work,ng together dr,ve bus,ness results !

End Notes!1) �Information,!Technology!and!Information!Worker!Productivity�;!!

Sinan!Aral!,!Erik!Brynjolfsson!and!Marshall!W.!Van!Alstyne;!NYU$%$Stern$School$of$Business$,$Massachusetts$Institute$of$Technology$(MIT)$%$Sloan$School$of$Management$and$Boston$University$%$Department$of$Management$Information$Systems$

2) �You!are!wasting!time.!Find!out!why!:!The!Cost!of!Ineffective!Search�;!!Brodkin,!John;!!Network$World,!January!23,!2007!

3) �Justifying!Instant!Messaging!Investments?�;!!Cain,!Matthew;!Gartner$Research!

4) �Costs!of!Employee!Turnover�;!!Bliss,!William;!Bliss$&$Associates!

5) �Engaged!Employees!Inspire!Company!Innovation�;!Gallup$Management$Journal!

�Understanding!the!True!Cost!of!Disengagement�;!!Hewitt$Associates!

6) �Compilation!of!Turnover!Cost!Studies�;!!SASHA$Corporation!� �Costs!of!Employee!Turnover�;!!Bliss,!William;!Bliss$&$Associates!!� �New!Ideas!for!Retaining!StoreXLevel!Employees�;!!Coca$Cola$Retailing$

Research$Council!!

7) �Engaged!Employees!Inspire!Company!Innovation�;!Gallup$Management$Journal!!

8) �The!State!of!Employee!Engagement!2008,!North!American!Overview�;!BlessingWhite$!

!

!

!!

!!

!

!

!

4 People work+ng together dr+ve bus+ness results !

Can you afford to ignore a better way of working together?!!

Why Corporate Soc+al Networks Matter

For!most!organizations,!collaboration!is!not!just!important,!it!is!essential.!Working!in!teams!or!with!others!is!simply!the!way!work!gets!done!today.!

But!the!way!we!collaborate!is!rapidly!changing.!Work!force!demographics!are!shifting,!workgroups!are!becoming!more!global,!people!are!becoming!more!mobile,!and!new!tools!are!transforming!the!work!place.!

As!business!leaders!wrestle!with!their!collaboration!strategies!and!decide!how!to!manage!all!the!communication!and!content?management!tools!they!have!now,!their!people!are!already!building!corporate!communities!and!social!networks.!What!is!driving!this!move!to!corporate!social!networks?!Are!they!in!your!����� ������ �?term!best!interests?!And!how!should!you!respond!to!this!new!wave!of!collaboration!technology?!

The!best!way!to!answer!these!questions!is!first!to!� ������ �������������� ������������������� � ���������network!and!determine!the!benefits!to!your!business!and!to!your!workforce.!

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Innovation@IBM

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Collaboration in 1000’s of communities ~ Innovation

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Innovation@IBM

We often run ‘mini-jams’ using IBM Connections idea-widget to elicit ideas for innovation workshops with customers

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Innovation@IBM

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Innovation culture – Top down and bottom up

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© 2013 IBM Corporation

Expanding our Innovation Eco System - outside the firewall

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Innovation@IBM

The Watson Ecosystem !is a ground breaking new innovation model to !scale !transformational cognitive computing fast

!50

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Innovation@IBM

3

Revenue Growth

GoTo Market activities

Strategic insights

IP Acquisitions

Expanded ecosystems

IBMCredibility &

visibility

Infrastructure

Portfolio Gaps

addressed

IBM

VC Community

Expertise

IBM and the Venture Capital Community

“Gets”“Gives”

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Innovation@IBM

We work with venture companies to build our innovation eco-system - and to sense what is going on ‘

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Innovation@IBM

Case Study:

4

The Solution: Advanced power management and Smart Grid solution for enterprises !Development • IBM Innovation Center La Gaude • Cloud enabled • IBM hardware, software integration • Enterprise-ready, SAFE approved • IBM Cognos Analytics on top !Mentoring and Networking • Technical road with IBM IDR experts in Europe and US • Business planning with IBM E&U Industry experts !Sales and Marketing • Marketing material, exhibition in IBM Forum in Kgs. Lyngby and La

Gaude • On-going joint projects with large customers • Joint go-to market in Europe, US and Australia • Part of IBM Smart Grid Solutions portfolio

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378,000+ (*including Alumni)

39,000+ users, 500+ IBM groups (65% outside the US)

80+ accounts using “IBM” in the name (25% from outside the US) – over 3,000 IBMers on Twitter

200+ IBM channels

75,000+

100,000 IBMers collaborating with 200,000 non-IBMers

166 communities, 200+ blogs, 5000+ profiles

Social Media Outside the IBM Firewall examples ( incl Alumni)

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Innovation@IBM

Innovation Discovery

Explore Curriculum

Innovation Discovery

Define Incubate

Extreme Blue for Clients

FOAK

Strategic Value Creation

360/Collaborative Innov

Software Business Dev

Channels for Development of Cross-Brand Solutions

Innovation Discovery

Focus Customize

Existing IBM Offerings

Clients who need an introduction to Innovation at IBM

Clients that are ready to focus on specific problems and look for innovative opportunities

Innovation Discovery Client Program for mutual benefits

New IBM Offerings

& Major

transformation partnerships

• Academy Studies for Clients

• Virtual Collaboratories

• Project Definition Workshops

• + others

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Innovation@IBM

Ongoing Innovation collaboration with major, strategic customers: Strategic Value Creation Center Approach

Discussions Initiatives Ideas Delivery Themes

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IBM develops the future of shopping with one of the world’s largest retailers

Infrastructure WLAN Server Content Bus

ComfortShopping

SmartCheck-out

In-store Information

RFID Inventory Management

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Innovation@IBM

§ Promising software programs in research not yet commercialized.

§ Outside companies and developers contribute valuable ideas about bringing them to market.

§ First-cut versions of research technology available for free trial attracting thousands of early adopters, innovators, and entrepreneurs to site.

§ 40% of technologies on the site graduate into IBM products or industry standards.

AlphaWorks- Speeding IBM Emerging Technologies to the outside early-adopter community

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Innovation@IBM

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• IBM Research • Global Innovation Outlook • Collaborative Innovation with IBM • IBM Institute for Business Value • IBM Smarter Planet • First-of-a-Kind Projects • IBM Jams • Technical Exploration Centers • IBM Innovation Centers • IBM Software Labs • IBM Systems & Technology • IBM Design Centers • IBM Benchmark Centers • IBM Executive Briefing Centers • IBM Watson Ecosystem • Innovation Discovery • IBM Global Entrepreneur • IBM Voices (social media agregator)

External web pages

Wider IBM Resources

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IBM Research

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!!Anders Quitzau Innovation Executive [email protected] +45 2880 4705 !about.me !! !!

@Anders_Quitzau Anders Quitzau AQuitzau Aquitzau