A few weeks ago I participated in the BIF-3 Collaborative Innovation Summit in Providence, RI. BIF-3 is sponsored by the Business Innovation Factory, a community organization whose mission is to "explore business model innovation through a series of experiences designed to get ideas off of the white board and onto the ground as quickly and cost effectively as possible."
I was interviewed on-stage by Walt Mossberg, the renowned journalist whose Personal Technology column has appeared in the Wall Street Journal for sixteen years. Walt has received numerous awards for his writing. In fact, I was there this past summer when he received a Visionary Award from SD Forum, a Silicon Valley business and technology community, which every year honors industry leaders who have pioneered innovation and fostered the spirit of entrepreneurship.
Walt started out by asking me how IBM has changed the way we work with new research ideas, since, in his opinion, fifteen years ago or so little innovation was coming out from IBM compared to the present. IBM's transition over the last twenty years is something I have been reflecting on quite a bit recently, especially given my recent retirement from full-time responsibilities with the company, as well as the seminar I am teaching this semester at MIT.
Few companies survive the kind of near-death experience that IBM went through in the early 1990s. Fewer still not only survive but are able to transform their culture and re-invent themselves to the degree IBM has. IBM used to be the very model of an inward-looking company that pretty much built everything by itself based on proprietary technologies. This was a model that was appropriate for the early days of the computer industry, but by the late 1980s it had become fatally outmoded and almost caused the demise of IBM. After surviving its downfall, IBM has gone on to become a leader in open, market initiatives like the Internet, Linux and Service Oriented Architectures, with a culture almost diametrically opposite to its previous one.
Could these phases in IBM's existence be inexorably linked? Must a successful organizational re-invention be preceded by the kind of cataclysmic events that open up the mind to new experiences - essentially cleaning the brain from its previous inflexible views of life? The ancient Greeks certainly thought so, as reflected in their tragedies.
"Tragedy" - says the Wikipedia entry - "depicts the downfall of a noble hero or heroine, usually through some combination of hubris, fate and the will of the gods. The tragic hero's powerful wish to achieve some goal inevitably encounters limits, usually those of human frailty (flaws in reason, hubris, society), the gods (through oracles, prophets, fate), or nature. Aristotle says that the tragic hero should have a flaw and/or make some mistake. The hero need not die at the end, but he / she must undergo a change in fortune. In addition, the tragic hero may achieve some revelation or recognition about human fate, destiny, and the will of the gods."
So, in reply to Walt's initial question, I told him that I believe that IBM's near-death experience was - in my opinion - an essential part of our successful transformation. We used to think that we were the marketplace - the kind of hubris that the gods in Mount Olympus will absolutely punish. Having invented RISC microprocessors and relational data bases in our research labs, as well as established the IBM PC as the leader in the marketplace, we let others reap the benefits of our work because we were making so much money from our proprietary mainframes, compared to the returns from these puny, emerging businesses. They don't call them tragic flaws for nothing.
Walt pointed out that Apple had recently gone through a similar change in fortunes, being 90 days from bankruptcy only a few years ago. And, just as IBM clutched the Internet like a lifeboat taking us into the new open, market-oriented world where we now live, Apple is using the iPod, iPhone and other digital consumer products to move into the future.
He then mentioned that at The D Conference, which he runs with partner Kara Swisher, Microsoft's CEO Steve Ballmer had mentioned the need to move from the business model they had so successfully developed around desktop and enterprise software – both, in Walt's opinion, being gifts from IBM - into new positions that are key to its long term growth. The examples he cited were search and advertising to better compete with Google, and consumer electronics to better compete with Apple. So, Walt asked me, can Microsoft accomplish such a shift, not having gone through the organizational brain cleansing experiences IBM went through?
Excellent question. The reality is that I don't know. Perhaps Microsoft will prove to be the exception to the Greek Tragedy rule and will successfully move into the future with minimal pain and disruption. But, I said to Walter, I keep wondering how much damage they are doing to their own culture by so ferociously attacking Linux and OpenDocument format (ODF). I totally understand that they worry about the impact that Linux and ODF could have to their present business model. But, in my opinion, it is hard for your organization to embrace the future when you are circling the wagons against the inevitable forces of the marketplace. You send a message to your own people that you are strong enough to defy the common wisdom of markets, and you will move ahead - damn the torpedoes and the Greek gods.
In the end, we all see the world through our experiences, and painful experiences generally influence the mind far more than happy ones. I know that IBM's insular, proprietary culture had to be ditched before we were able to move ahead into the future. Part of what makes the study of organizations so interesting is to observe how different companies react to the marketplace forces that will inevitably derail their best laid plans, the many, very human mistakes they often make in reacting to the forces, as well as the great examples of true innovation that they sometimes display in their will to survive.