IBM’s Innovation Strategy: Analysis of the Most Innovative Company

IBM’S INNOVATION STRATEGY 1
INTERNATIONAL BUSINESS MACHINES CORPORATION INNOVATION STRATEGY
By
Institution
Course
Lecturer
Date

IBM’S INNOVATION STRATEGY 2
Executive Summary
The following report presents an analysis of the innovation journey of what has been
described as the most innovative company, International Business Machines Corporation (IBM).
It critically analyzes the various aspects of the organization's innovation qualitatively to identify
the organization’s need for process changes and innovation, its process performance evaluation,
business process design and improvement and potential risks. Under the organization need for
innovation, the report puts into consideration aspects such as innovation framework and culture,
funding model, organization structure and design as well as business transformation and
integration. It also analyzes organization’s business process design through the use of
stakeholder engagement, the role of leadership in the innovation process and involvement of
leadership to drive innovation in the organization. The reports also document the main methods
used by the organization to evaluate its performance. The discussed methods are balanced
scorecard and the use of cycle time. Finally, the various strategies used by the organization to
deal with failure are also discussed. In addition, the report analyses various enablers and barriers
to innovation such as lack of adequate research and lack of focus on different markets and
products. It also analyses the critical success factors for the innovation process within the
organization, documents the main lessons that can be drawn from the IBM case Study and
concludes with a summary of main points covered in the report.

IBM’S INNOVATION STRATEGY 3
Contents
Executive Summary...........................................................................................................................................................2
Introduction..........................................................................................................................................................................5
Part 1: The organization’s need for innovation and process changes.....................................................................6
Innovation framework...................................................................................................................................................7
Innovation culture..........................................................................................................................................................8
Organizational structure and design..........................................................................................................................9
Funding model..............................................................................................................................................................10
Business transformation and integration................................................................................................................11
Part 2: Business Process Design and Improvement..................................................................................................12
Innovation strategy......................................................................................................................................................12
Leadership role.............................................................................................................................................................13
Involvement of Key stakeholders.............................................................................................................................13
Part 3: Process Performance Evaluation.....................................................................................................................14
Balanced Score Card...................................................................................................................................................14
Cycle time......................................................................................................................................................................14
Part 4: Potential Change Management and Risk Issues...........................................................................................15
Dealing with failure.....................................................................................................................................................15
Barriers and enablers of innovation.........................................................................................................................16
Critical success factors...............................................................................................................................................18

IBM’S INNOVATION STRATEGY 4
Lessons learnt and path for future............................................................................................................................19
Conclusion.........................................................................................................................................................................20
Introduction
Innovation has been a central area of focus for modern organizations. Organizations both
new and existing have taken upon themselves to identify and adopt better ways of doing things in
order to compete effectively with other industrial players and maintain their market Share.

IBM’S INNOVATION STRATEGY 5
Reliance on outdated technologies and unfashionable ways of doing things have been some of
the reasons why Multinational companies that were doing quite well in the past years have gone
down in history as classical examples of companies whose lack of focus on innovation caused
their downfall. Companies like Nokia, the once global technological giant and Kodak an
American based Technology Company failed for issues related to innovation. For Nokia its
reliance on an outdated Symbian operating system saw being edged out of the market by modern
technologies based on Apple and Android ( Gehani, 2013). Instead of responding to changes in
consumer tastes and preferences the company assumed that it would still remain to be a market
leader with its aged Symbian platform. For Kodak on the other hand, it did not fail because it did
not innovate but due to lack of a strategic approach towards innovation. Although it was the first
technology company to invent a digital camera in 1975 the company missed an opportunity of
reinventing itself by failing to market its new technology for fear that such a move would hurt its
thriving business( Gehani, 2013).IBM Innovative journey dates back to over 90 years since its
formation. The company places high significance on innovation and has for over 60 years
embarked on research to aid its innovation journey. The company can be described as among the
companies that highly value innovation based on its overall spending on research and
development and the several years it has focused on innovative research. In order to achieve its
innovation objectives, the company has eight research laboratories and a central research
organization with over 3000 engineers and scientists. Apart from its heavy spending on research
and development, the company also has 24 development laboratories spread across various parts
of the world. In order to fulfill its research and development mission, the company has a dynamic
technical vision covering all its business which it adapts to the realities of the market on a
continuous basis. Based on these facts, it is evident that company places high value on

IBM’S INNOVATION STRATEGY 6
innovation. For it innovation is not only an organizing principle but also a business model. The
company uses technological innovation as a way of reinventing itself and meeting the changing
needs of its clients. Innovation is the processes through enterprises implement new ideas in order
to create value for their offerings. Through innovation organizations come up with new products
and services as well as systems and processes in order to improve their efficiency and meet the
needs of their customers. Despite the strides made by the organization in its innovation Journey,
it is difficult to present or describe its innovation story because of the organization’s complexity.
This report documents IBM’s innovation strategy, processes, infrastructure and organization
structure.
Part 1: The organization’s need for innovation and process changes
The competitiveness of a technology organization like IBM is determined by its ability to
innovate and create better, efficient and high-speed Technological solutions. The organization’s
need for innovation is therefore based on the organization's desire to be a pacesetter in the
technology market. Through innovation, the company is able to stay ahead of its competitors by
enabling it to offer unique products to its customers. The introduction of new technologies
almost on daily basis makes the technology industry one of the most dynamic industries. The
organization need for innovation is therefore as part of its strategy to meet the changing needs of
its customers. The ability of an organization to attract best talents in the market is determined by
its perception towards innovation. Employees, especially in the technological industry, will tend
to work for an organization that provides them with opportunities to be innovative. The
organization also needs to innovate in order to attract best talents in the market (Hammer, 2015).
Finally, the organization focus on innovation is also likened to its need for growth. Innovations