How to Make IBM's Research Strategy Even Bigger

Posted by: Steve Hamm on September 08

When I interviewed IBM Research chief John Kelly for our package on global research strategies, he told me IBM CEO Sam Palmisano is urging him to make even more of his “collaboratory” initiative—where he’s forming research ventures with countries, universities, and other corporations. Kelly was supposed to prepare a proposal to deliver to Palmisano in the coming weeks. Of course, Kelly wouldn’t reveal his ideas to BusinessWeek in advance. But, over the weekend, I spent some time thinking what I would propose to Palmisano if I were Kelly. Here’s what I came up with:

Economic Development as a Service

The idea is to turn IBM into a formal, strategic partner for countries and states in developing technology-based economic development clusters. Its role would be a combination of strategic consulting, collaborative research, and outsourcing. The country or region would essentially outsource the task of creating a cluster to IBM, with IBM as the key technology partner, as well. IBM would start with an assessment of the potential of the place—proposing a plan for developing a cluster that would be based on the country’s competitive advantages and potential. Then it would oversee the development of the cluster, bringing together government entities, universities, sources of capital, and commercial partners. It also would help to lay the groundwork for increased startup activity. Maybe it would even invest some venture money in a few key startups to prime the pump.

IBM played a vital role in the creation of Silicon Valley and it was instrumental in putting together New York’s silicon cluster, centered around its chip plant in East Fishkill and the University of Albany, so it knows how to make things like this happen. As part of delivering economic development as a service, IBM would work with governments to create the right policy structure and incentive system. It would collaborate with universities to improve curricula to better prepare a workforce for the needs of the cluster, and it would perform collaborative research with the universities and local companies to develop the core technologies that the cluster would need to differentiate itself. IBM would identify both global and domestic commercial partners whose skills and assets would be key pieces of the cluster and would bring them into the ecosystem.

IBM may be the only company in the world with the combination of assets and skills to play this kind of organizing role. It would be trusted to do the job because it has successfully reinvented itself, so it would be seen as a competent guide for countries and regions that want to do the same. In addition, it has mastered globalization, so people would see it as a guide for helping countries and regions do that, too.

By playing this kind of role, IBM would come to be seen by government officials, business people, academics, students, entrepreneurs, etc. as a major progressive force in countries and regions. That image would help with sales of products and services, with forging relations with the smartest researchers, and with attracting and keeping the best employee talent.

There would be risks. Ever since Silicon Valley established itself as a model for high-tech activity, places around the world have been trying to imitate it—with only spotty success. So IBM, as economic development promoter, would face reputation risk if some of the clusters it backs fail or don’t produce the hoped-for results.

Still, if I were Palmisano and Kelly, I’d go for it. IBM is getting out of commodity businesses and expanding in non-commodity businesses, and this clearly is a non-commodity business. Plus, look around the world and you see that countries are hungry for this type of activity.

What to you think of this idea? What do you think Kelly and IBM should do?

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