What keeps a company going for a hundred years and helps set its sights on the next hundred? For the IT giant IBM, it could be the motto that problems are solved by thinking. Also, that it must be ready to change everything about itself, except its beliefs. Big Blue's fortunes over the long haul are an interesting case study in the culture of innovation. It is a knowledge-focussed enterprise that invests heavily in research, even during economic downturns and, by its own account, has had its hits and fair share of misses. What stands out is its big innovations in the century gone by, such as the Alphabet Accounting Machine of 1934, the first magnetic hard disk for data storage (1956), FORTRAN, the programming language (1957), the Selectric typewriter (1961), one-transistor DRAM memory cells (1966), the floppy disk (1971), the IBM Personal Computer (1981), the Deep Blue supercomputer that trounced chess champion Garry Kasparov (1997) and, most recently, the Watson supercomputer that won a high-profile quiz programme. One insight from the company has universal value. Like the alphabet T, there must be broad horizontal knowledge but, equally, deep vertical learning in a chosen subject.
Commercial success depends heavily on aggregation of talent. IBM has a demonstrable record of attracting people with high skills (five were recognised with the Nobel Prize). Its model of rewards since 1963 has partly consisted of nomination as in-house Fellows who are free to pursue their own projects without constraints. The result has been a growing crop of patents. This is an approach that merits close study. What it shows is that a multi-billion dollar annual research budget and collaborations with universities and governments can produce impressive intellectual property. A record 5,896 patents granted to the company in 2010 should convince the university system and governments in India that investing in research is of paramount importance. Another area of knowledge that companies such as IBM are building on is cloud computing and analytics. Cities and countries have a lot to learn from analytics about the efficient use of energy and precious resources such as water, building high performance transport systems and interconnected health infrastructure, and reducing the carbon footprint. What remains to be seen, however, is the life expectancy of even the best-run companies. Management literature measured that index to be of the order of 75 years in the 20th century; for the present century, marked by commoditisation of technology and rapid obsolescence, one index puts that figure at less than 15 years. Any company with a long-term view must evolve continuously in a world guided by short-term thinking.
