Working Wider Begins @ Home: An IBM Case Study

If working wider interests you, read IBM’s 2009 Annual Report.  What you’ll see is a veritable poster child for how a large company teaches itself how to think and work wider.  Even better, what they’ve done applies to any size company.

Let’s ground our discussion in results.  Started just two years ago, their Growth Markets business unit now accounts for 18% of total revenue.  Internal R&D now ranks 8th as a source of new product ideas whereas employees, customers and partners hold the top three spots.  Along the way, IBM has embraced new technologies from non-IBM sources (e.g. Java, Open Source, etc.) quicker than many of their competitors.  IBM is no longer a hardware company known for mainframes, servers and PC’s.  Today it’s a software and services behemoth that has more than half their employees working outside the U.S.  With nearly 500,000 employees, IBM is not your average company – in fact, it has moved much faster than many smaller firms.

The key question is what can IBM teach us about working wider?

IBM’s transformation started by thinking wider.  Rather than sticking with simply growing through periodic equipment refreshment cycles, IBM leadership invested time in re-testing their strategic assumptions including their business model, organization and customer requirements.  Additionally, IBM has used their Jam methodology (see below) to engage IBM employees across the globe in this transformation.  Over the years, this has led to divesting successful but less profitable hardware businesses such as disk drives and PC’s.  The 2009 annual report cites three summary conclusions from their thinking.

First, they saw that the rise of the developing world combined with the growth of the internet made working wider not only possible but also a huge business opportunity.  Technology is a critical component to make working wider effective, efficient and less risky.

Second, instead of just growing within the expanding PC/client server computing model, IBM widened their view of computing to include the growing universe of “smart” devices.  The increasingly powerful cell phone is the most obvious example, but there are also thousands of sensors in roadways, power lines and agricultural equipment to name just a few.  The potential value that will come from harnessing these devices is at the edge of our imagination.  This trend fuels IBM’s software and analytics businesses.

Third, IBM observed customers were reaching beyond cost containment and seeking innovation in business processes and management as well as product and services.  This implies driving technology deeper, and intelligently connecting all aspects of work.

My experience is that while the above is clear and compelling, most of us have participated in strategy sessions that have identified similar guiding insights.  Where the rub comes is acting on them.  Why?  Because seriously taking action requires stopping some of today’s activities.  You can’t just put a new tablecloth over the same old table and say you’ve changed.  People’s daily work, investments, commitments and business model may have to change.  Otherwise, the more aggressively one attacks the new opportunities, the more existing structures and behaviors will resist and hold you back. Over the years, I’ve noticed that companies, large and small, that are able to make changes of this scale share a common characteristic.  They start by taking their own medicine at home.

Cisco was the first company I directly witnessed that did this extremely well.  Back in the early days of the internet when Cisco was a young, fast growing company only selling routers, the demand and headcount in customer service was growing in line with the rapidly expanding installed base.  Extrapolating this trend, CEO John Chambers saw that shortly he’d have twice as many engineers in customer support than in product development.  He turned to his head of service and asked him to break the trend.  The tool would be to use the Internet and create a new form of customer self-service.  This quickly evolved into a rich discussion of should Cisco list all known bugs publicly?  How would customers react when checking on their problem they saw hundreds of others they hadn’t hit yet?   Remember, no large company was doing this at the time and yes, they chose to share all the bugs, including the status of fixes.

The point is that Cisco then and to this date, has used applying their own technology to evolve their internal work system before or simultaneously with asking the world to do the same.  Doing so has enabled Chambers to rightly position Cisco as a thought leader in how to use technology, which of course sells more technology.

IBM has taken a similar approach.  Through their Global Innovation Outlook initiative, AlphaWorks and Jams collaboration methodology IBM has changed inside as they reach wider outside.

The Global Innovation Outlook (GIO) is the most ambitious and far reaching effort.  IBM recognizes that solving the world’s most challenging problems requires multiple perspectives, competencies and collaboration.  The GIO began in 2004 by taking their internal forecasting process and opening it up to external participation.

“The GIO is rooted in the belief that the very nature of innovation has changed in the early days of the 21st century. It is increasingly open, collaborative, multi-disciplinary 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. The GIO challenges the brightest minds on the planet — from the worlds of business, politics, academia, and nonprofits — to collaboratively address the most vexing challenges on earth.”

AlphaWorks is positioned as a bridge between research and commercialized software where new ideas and technologies are offered to early adopters for adaptation and feedback.  This is a form of what’s now commonly called Open Innovation. In 2006, 92% of the Fortune 500 downloaded technologies from AlphaWorks.

IBM Jams is an electronically facilitated global idea generation and discussion process that reaches across geographies, time zones, business units and allows multiple degrees of participation.  Begun in 2001 to gather internal best practices on ten key issues, the first Jam evoked 6,046 posts and a quarter million view.  In their Innovation Jam five years later, IBM opened it to outsiders and had 37,000 posts and over three million views.

Jams, GIO and Alphaworks are teaching IBM employees how to collaborate with external partners in academia, government and industry.  By design, the GIO takes on mega issues such as global water, the future of cities and Africa, that force IBM’ers to work with others who rarely have the size, resources or assets of IBM.  These collaborations place IBM’ers in situations where their formal power and resources may get the party started but there’s no way they can achieve results on their own.

IBM is transforming itself from the outside-in. Is this because there are business opportunities for them?  Of course, but this approach will also show them how to design, distribute and work with others in ways that create new value without having to be in complete control.  IBM CEO Sam Palmisano summarizes:

It’s a new approach to problem-solving, and it works—because the participants understand that their best ideas will only get better by being part of a larger conversation, where they can be debated, vetted, expanded and improved. And that’s why we feel so strongly about sharing this work. It’s not just our point of view. The insights gathered here have far-reaching implications for individuals, enterprises and institutions everywhere.

Just like charity; working wider begins at home