A lot was written this week about IBM’s hundredth birthday, and how remarkable it is that a technology company has managed to survive, and even thrive, for a century.
But beyond an argument about whether it really invented the personal computer — and its more clear-cut status as the inventor of the bar code, the main frame computer, the cheese slicer and Watson, the winner of Jeopardy! — there’s been little insight into the fundamental secret behind its longevity.
The best pieces of analysis appeared in The Economist this week, under the headlines “The Test of Time” and “1100100 And Counting.”
The thesis of both articles is that even though IBM has had its share of near-death experiences as a company, what has kept it going as an innovator is that it focuses on what a situation demands, pours a lot of money into research and at the same time keeps tabs on how that research can be applied.
In “The Test of Time,” The Economist argues that:
IBM’s secret is that it is built around an idea that transcends any particular product or technology. Its strategy is to package technology for use by businesses.
Other technology companies that are thought of as innovators that have also adopted a philosophy of delivering experiences rather than products are Amazon, Apple and Facebook, the article’s author argues.
Amazon focuses on making it easy “for people to buy stuff;” Apple packages the latest technologies and makes them cool by designing them well; Facebook’s focus is on making it easy to share stuff.
In contrast, product-focused businesses are flailing, the article notes. See Cisco, Dell and Microsoft.
All these firms are wedded to specific products, not deeper philosophies, and are having trouble navigating technological shifts.
This insight isn’t new. What’s notable is that it doesn’t seem to be common operating wisdom. Back in 2000, author Jeremy Rifkin argued in a speech at a Wall Street Journal technology conference that all companies of the future would be service companies and not product companies.
If you ran a lawn-sprinkler company, for example, he argued, your customers aren’t really interested in the lawn-sprinkler system itself; they just want their lawn to be watered without much hassle. Therefore successful companies would focus on providing the service rather than selling any one great lawn-sprinkler system.
So what is one example of IBM’s approach?
In “1100100 And Counting,” The Economist notes that IBM ‘co-creates’ products with its customers:
With the State of New York, for instance, IBM developed a method of detecting tax evasion, which it claims has saved taxpayers $1.6 billion since 2004.
More than half of its workforce of 427,000 is dedicated to this approach of working with its customers to come to a solution, notes the article.
IBM isn’t in the headlines every day for its innovations, but it’s an idea factory. For 18 years, it has received the most patents of any company. In 2010, it received 5,896 in all — 16 patents a day.
Its current success is its ability to make use of those ideas, and to apply technology to help its customers, rather than trying to manipulate situations to convince those customers to buy specific products that might soon be outdated in a rapidly shifting environment.
