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IBM: From Inventor to Innovator

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Case Details:

Case Code : BSTR136
Case Length : 11 Pages
Period : 1970 - 2004
Organization : IBM
Pub Date : 2004
Teaching Note :Not Available
Countries : USA, Global
Industry : Information Technology

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"The IBM Research organization represents a strong source of innovation for the IT industry, a model for vendors managing research organizations and an opportunity for enterprises wishing to partner on research activities."

- Gartner Research Report, in 2001.1

"The very nature of innovation is different today. It is not simply about a research scientist launching the latest gadget from the lab. It's no longer about 'the next big thing' - because the world is now primed for hundreds, thousands, millions of next big things. That's because innovation is occurring more frequently at the intersection of multiple disciplines, and at the intersections of business, government, and academia."

- Nick Donofrio, senior vice president, technology and manufacturing at IBM, in 2004.2

IBM Tops Patent List

The United States Patent and Trademark Office,3 in January 2004, announced the names of the top ten recipients of patents in the private sector for the year 2003. International Business Machines Corporation (IBM), which received 3,415 patents, topped the list. It was also the first company to cross the 3000 milestone in patents in a single year in the US.

"We consider patents a starting point on the path to true innovation," said Nick Donofrio (Donofrio), senior vice president, technology and manufacturing at IBM.4 It was the 11th consecutive year (since 1993) that IBM was the top patent recipient in the US. (Refer Exhibit I & II). Even in 2003, it was far ahead of its competitors, having been granted 70 per cent more patents than Canon Kabushiki Kaisha, which was the second highest patent holder receiving 1,992 patents. IBM's patents in 2003, covered innovations in areas ranging from personal computer (PC) and server software and hardware, to emerging areas like on-demand computing, autonomic computing, life sciences technology, and pervasive computing. Analysts were of the opinion that IBM's strength lay in its research facility.

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IBM Research was one of the preeminent research organizations in the world. Several technologies that became the foundation of the IT sector were products of IBM Research.

For the greater part of the 1900s, IBM was a technology leader and introduced a variety of computational devices to the market. However, in the 1980s, the company experienced a downturn because of a governmental investigation against it and its own operational mistakes. As a result, it lost the lead in the IT industry to new companies like Microsoft Corp (Microsoft) and Apple Computers (Apple). In the 1990s, under the leadership of CEO Louis Gerstner (Gerstner), it revived and reestablished itself in the industry. In the early-2000s, IBM Research was involved in a number of path breaking projects, which experts believed, had the potential to change the face of computing in the future.

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1] J. Fenn, "Inside the Lab: IBM Research", Gartner Research Note, November 19, 2001.


3] An agency of the US department of Commerce.

4] Arik Johnson, "Innovation Powerhouse IBM Breaks U.S. Patent Record & Tops the USPTO List for 11th Consecutive Year", Competitive Intelligence, January 19, 2004.


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