Innovation Networks
“Now the computer pioneer [IBM] realizes that no matter how big an organization is, more smart people are going to work outside its walls than inside. So it courts R&D partners aggressively”.
“At one time the tech giant was a true believer in go-it-alone R&D. The feeling was that if a technology wasn’t invented by IBMers, it wasn’t good”.
Read Steve Hamm’s article on BusinessWeek.
IBM is setting the stage for corporations to rethink how they approach and manage innovation. I suggest reviewing some of my previous blogs about IBM’s Emerging Business Operations for in-house ventures and the Venture Capital group linking VC firms with IBM’s own third party partners. Other IBM initiatives are based on direct customer involvement. IBM’s “open ecosystem” of chip R&D is leading by example:
- 5 innovation networks.
- 10+ partners such as AMD, Sony, Toshiba, Freescale, Albany Nanotech (university research), etc.
- More than $1 billion dollars contributed by IBM partners to expand the company’s facilities.
- The brainpower of 250 top notch scientist and engineers.
- Members of IBM’s chip alliances have already saved $2-4 billion on research costs, and savings of around $7 billion are expected to be realized in the next three years.
- IBM is expanding its innovation ecosystem to include suppliers of chip materials, chemical companies, and chip-design software firms.
Other success stories mentioned in Steve’s article:
- BT’s projects of this kind have already delivered $1 billion in incremental sales since 2002. BT uses “innovation scouts” in India, China, and Silicon Valley as part of an early awareness process letting them identify emerging trends and innovations worth incorporating.
- P&G formed a in-house team of 200 people who delivers more than 2,500 innovations a year by leveraging outside research, see Connect+Develop.
- BASF, Boeing, and Eli Lilly are also leveraging innovation networks in the same fashion
NEC just recently started to develop innovation networks involving 20 other companies, research institutions and universities. It should be noted that while 20-30% of major corporations are undertaking similar initiatives, only around 5% appear to have made the most of it at this stage. Some partnerships just don’t work out:
- Crolles2 chip research alliance was taken apart this year (NXP, Freescale, STMicroeletronics).
- Back in the 90s, IBM’s JV with Infineon and Toshiba faced too many cultural clashes.
José de Francisco 
Chicago, 11 September 07
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