The Republic of IBM

At a high-profile press conference, a young lady dramatically whisks away a red cloth and is instantly flooded by a lightning storm of camera flashes. The audience in front of the stage nods and applauds in agreement. As the crowd ponders what is under the red cloth, a standard baritone speaks the line, "Innovation - you need a guide!" The latest television commercial shares the consistently inexplicable style of IBM advertisements - though it seems to have said nothing, the viewers have to admit that they immediately come up with IBM.

This is the IBM style. For most of the time, the whole world is wondering, "What the hell is IBM doing?" In recent decades, the world's largest information technology and business solutions provider has introduced many novel concepts, including the idea of packaging equipment and software sales together into "concept sales", which enabled IBM to become the "Chief Architect" of a great number of large international corporations and create many business models that once puzzled many enterprises.

Since coining the term "e-business" in 1996 to its more recent proposition of "on-demand", IBM has built a business model on identifying trends, introducing concepts according to those trends, and then preparing and offering products and services for its customers. Obviously, IBM, like a missionary, instills these concepts into the minds of business leaders and spends quite a long time to pave the way for market acceptance. For example, in the first few years after the e-business concept was proposed, IBM spent roughly US$700 million each year to nurture the market and gain acceptance for its new services. Once the concept was launched, IBM acted as the head of an empire, setting mandates, determining directions and using its influence to promote the revolution. Back then, IBM was the core.

But things are different now, and the way IBM is doing business is also changing, profoundly.
In early August, 2006, the "IBM Innovation Jam", the largest online brainstorm in history, attracted 150,000 participants from 104 countries, including IBM employees, their family members, universities, business partners, and customers from 67 countries. During two separate 72-hour discussions, the participants contributed roughly 46,000 ideas. And IBM decided to invest US$100 million in the next two years to support 10 most innovative business plans generated from the extemporaneous Innovation Jam.

This online discussion is regarded as a new model for concept generation at IBM, as the new concepts did not come from IBM's own research institute. "We need to open our labs,"said IBM CEO Samuel J. Palmisano, "The collaborative innovation model requires us to believe in the creativity and wisdom of our employees, customers, and members of other innovation networks."

IBM has its own considerations when it calls for collaboration. Joel Cowley, from the strategic planning unit of IBM says, "We have seen from a growing number of fields that future innovation requires the participation of numerous members who have expertise on subtle levels."

Actually, with the extensive application of information technologies within global businesses over the past decade, IBM has realized that, if it acts merely as an advocate for commercial information technologies, the company will struggle to lead industry innovation or forge unique concepts on its own as it did ten years ago. Today, across every field, the frontiers of technological innovation are becoming increasingly specialized. Any significant breakthrough can only be achieved by combining the growing specialized expertise.

In such a situation, what need to change are not just the "models of new concept generation", but IBM's own behavioral model, and its way of doing business. So, in recent years, IBM has been redefining its original role as a "mentor" to a "supporter", and its relationship with customers is also shifting from a vertical-oriented "supply-demand relationship" to a horizontal "partnership".

Now led by the flag of innovation, a more "democratic and open" IBM, very different from the original "empire", is rapidly emerging. Particularly on the Chinese market, IBM is using all kinds of methods, including capital investment, to nurture large, medium and small Chinese enterprises to build a brand new "Republic of IBM" together.

It is believed that the change in the business model of the world's most influential company will inevitably have a deep impact on the development of many Chinese enterprises.

This is an abstract of the Special Coverage on www.cbfeature.com.
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