Open innovation in a globalized world @ IBM

Open Innovation in a globalized world @ IBM Åbningskonference 17.06.2013 Anders Quitzau, Innovation Executive about.me/andersquitzau

© 2013 IBM Corporation 1

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“Innovate or die - Collaborate and strive” “Innovate or die - Collaborate and strive” Anders Quitzau

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1984 1992 2004 2005 2006

© 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

We sold our – a.o. - our, ERP PC, printing and network, businesses Remixed our portfolio toward services, software, and integrated solutions…

2011 another record year…

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But we still sell ERP, PCs, printers, storage, network infrastructure etc.

Alliances Enterprise Applications Alliances

IT Infrastructure Alliances

Networking Alliances


Smarter Cities Alliances


Infrastructure Alliances

Market Development

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“Our path is innovation. We are an innovation company which relentlessly changes and keeps moving to high value. Innovation shapes what we do, who we are as a company, and our strategy.“ Ginni Rometty, IBM CEO


Where does innovation come from?

IBM Institute for Business Value, CEO Study

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We Embrace Collaborative & Open Innovation

§  Established an innovation agenda that spans multiple dimensions: –  Product and technology –  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 –  Opening up and collaboration

§  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

Competitors Employees

Regulatory Bodies

Investors IT Analysts

Alumni

Standards Bodies

Policy- makers

Clients Innovation Ecosystem

“We opened up our labs, said to the world, ‘Here are our crown jewels, have a look 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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IBM’s innovation portfolio reflects the tremendous creativity and contributions of many organizations – both within and outside IBM

IBM-led Innovation

External-led Innovation

Involvement of External Partners

l  IBM Applied Research Projects

l  Emerging Business Opportunities

l  TAP / BizTech

l  Seed-stage Startups l  First Of A Kind

l  IBM Industry Solutions

l  IBM Business Partner Solutions

l  IBM Research Services

l  Ideas

l  Product & Service Offerings

l  Idealabs, Jams

“Bleeding Edge”

Generally Available

l  University Programs

l  Extreme Blue l  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  AlphaWorks

l  CIO-fund

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“The World is our Laboratory…” IBM Research


A successful Research Division…..

§  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

§  Grows and develops their researchers and staff

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© 2013 IBM Corporation 12

IBM Research: Collaborative Innovation - examples

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China

Watson Almaden

Austin

Tokyo Haifa

Zurich

India

IBM Research Lab

Global, Smarter Planet Collaborations

Pangoo

Sao Paolo

Melbourne

Nairobi GOVERNMENT 2.0

NATIONAL RESOURCES


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

§  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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The Smarter Energy Research Institute – a very cost-effective way of joint research and innovation

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“Think in terms of building incremental value and creating a bigger pie, not just getting the fattest slice” Steve Steinhilber


Revenue Growth

GoTo Market activities

Strategic insights

IP Acquisitions

Expanded ecosystems

Credibility & visibility

Infrastructure

Portfolio Gaps

addressed

Expertise

IBM’s Global Entrepreneurship Program – a win-win partnership

“Gets” “Gives”

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Entrepreneurs and start-ups

“Gets” “Gives”


Our experiences: Open and collaborative innovation

§ Open innovation - give to get

§ Open innovation requires organizational readiness

§ People and their relationships – make or break

§ A structured approach to open innovation and partnering helps!

§ Show quick results in partnerships

§ ‘Open’ versus IP protection and first-to-market. Deal with it

§ Measure results, follow up and adjust

“Every time my folks ask me for a strategic alliance, they ask me to start loosing money”

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