Question:
Discuss about the Innovation Strategy of IBM for American Multinational Technology.
In the present report, the example of IBM has been taken. The company is an American Multinational Technology organization, with headquarters in the United States. The company was founded in 1911 and pioneer manufacturer of computing devices (Success Story, 2018). It is also a research organization and over the years, invented several computing devices. It always focuses on developing long-term strategies, which adapts the organization to the current market trends. It is one of the largest employers in the world and several of its employees have received recognition for invention and innovation (Patterson, 2010). Over the years, the company has developed a diverse portfolio of product and services. The company offers varied services for cloud computing, Internet of Things (IoT), mobile and security.
IBM is the forerunner in innovation and holds the maximum patents granted to a single company. The vast array of innovation has been possible as the company invests a lot in developing its innovation strategy. The company has 12 labs and 3000 researchers. The research labs are present in different countries, and the company has earned several Nobel Prize for its innovation (IBM, 2018). The company has innovated in diverse fields, such as energy, genomics and material science. A significant amount of the research is based on specific business opportunities (Nylén & Holmström, 2015). However, the company not only emphasizes on the quantum computing and neuromorphic chips, it also emphasize on different opportunities, license and other technologies.
IBM is different from other technology companies as the main business of the organization is providing technology consultancy services and designing solutions for the corporate partners of the organization. The organization structure of the company is different as the company sells does not directly sell product or services to the customers; however, collaborate with partners to sell the end product (Dodgson, 2018). The company has to design its innovation strategy according so that the organization can work out these partnerships.
IBM also aggressively uses patent strategy. It tries to protect the investment in innovation. The company tries to secure its investment, with the help of innovation strategy. Unlike other companies such as Tesla and Google, the company has not open sources its patent and key technologies. The company tries to pursue specific opportunities with the help of partnership, licensing and donation of technology. The company has diversified its innovation as it presumes that these innovation and technology can be commercially important in future for the organization (Appleyard & Chesbrough, 2017). Therefore, the company takes an unconstrained approach towards research and innovation in the organization.
However, diversification of inn ovation, results in decline in the motivation of the researchers or the employees. The company regularly monitors the performance of the researchers to evaluate their performance and keep them motivated towards work.
It can be critiqued that the organization has no specific business metrics; therefore, patent can be used here to evaluate the performance of the employees. The patent also works as a motivator as the researcher gets recognized for their contribution and business impact. However, the company practices reasonable and nondiscriminatory licenses and prevents other firms from using the same technology. The company also cross license its patents with other firms so that it can operate freely.
IBM’s Business Model – Collaboration and Consultancy Services
In the recent years, the patent strategy of the organization has strengthened; however, its commitment to open source its product and technology has been reduced. Although it does not open source its technology, the company effectively use its finite sources to advance the technology by contributing its patent to the open source foundations such as Linux as well as Apache. By patenting the innovation, the company does not try to impede the invention; as the company tries to build on the innovation to increase the market size of the organization. The patent also tries to protect the freedom of action of the organization. There are several downside of patent technology as it makes the competitor aware to the innovation techniques and novel products of the organization (Dahlander, O’Mahony, & Gann, 2016).
The changes in the external environment impact the organization’s ability to innovate properly. Over the years, the company has analyzed the changes in the external business environment and adapted to them frequently. In the past, IBM was a manufacturer of clocks; however, currently, it has established itself as the pioneer company in Information Technology (Success Story, 2018).
Over the years, IBM has developed a unique organization structure to foster its innovation capabilities and enhance its ability of product development. The company has adopted various structural characteristics to align different aspects of organization structure with the corporate vision and mission of the organization (Carley & Prietula, 2014). The organization structure refers to different components of business structure, business form, interaction between different components and organization design, which impacts on the business processes. There are several structural features, which enhances the interaction between the employees of the company. The organization structure impacts the corporate culture of the organization (Joseph, Klingebiel & Wilson, 2016). It is primary variable which impacts the performance of the organization and the ability of the organization to deal with the challenges in the industry.
IBM has developed its organization structure according to the priorities of the business. The company emphasize on continuous innovation and product development of the business enterprise. The innovation and the product development also reflect on the organization’s priorities for growth and expansion (Katzenbach & Smith, 2015). The company has a unique organization structure; therefore, which defines the job duties of the employees of the organization.
In the present, the company has product-type organization structure. It means that the organization is divided into different business processes according to the development, production, distribution and sales of the product. The product-type divisions refer to the structural features in the operations of the organization. The product-type divisions of the organization are the primary feature of the organization structure and impacts on the approach of the business in exploiting the market opportunities (Camisón & Villar-López, 2014). The corporate structure of the organization assists in the overall development of strategies and business tactics in the development of competitive products. The corporate structure of the organization can be defined by three elements, namely, product-type division, function-based segments and geographic divisions. The product type divisions refer to the changes in the organization structure, which represents the core business offering of the organization (Ginter, 2018). The main structural attributes of the organization are formed according to the focus of the core business processes of the organization. It should match with the transformation of the business with the industry and major demands of the consumer market. The corporate structure of the organization has following functional divisions, namely, cognitive solution, global IT support services, cloud platforms and technology service and financing services.
IBM’s Patent Strategy – Protecting Investment in Innovation
The function-based segmentation is the secondary method to differentiate the organization structure of the organization. In this method, the organization focuses on the functions of different departments, which support the global business of the organization. The main purpose of the organization structure is to provide organization-wide support to each product division of the organization. The global market segment of the organization supports all the product-type divisions of the organization. Another major division of the organization is the research, development and intellectual property of the organization. It increases the competitiveness of the organization and provides significant research and development investment of the organization (Rothaermel, 2015). According to the functions of the organization, the organization can be divided into global markets, research, development and intellectual property and integrated supply chain. When the organization is divided on the basis of geographical features, it refers to the regional markets. The corporate structure of the organization should be able to manage the global operations of the organization. The company has different operational subsidiaries in different divisions in the Asia Pacific region.
There are certain advantages and disadvantages of the organization structure of the organization. The core competency of the organization division the organization structure is aligned with the business goals and objectives of the organization of continues growth and innovation. The corporate structure of IBM assists the organization in prioritizing the efforts of the organization to match the market demands. Therefore, pursuing innovation aligns with the growth intensive strategy and the generic strategy of the organization.
However, there are certain disadvantages of the corporate structure of IBM. The company is not efficient in controlling imitation in the global markets for information technology. It can be critiqued from the operations of the organization that it is using cost leadership strategy. The company has minimal emphasis on the product uniqueness, which makes the product of the organization imitable. Another challenge in the current organization structure of the company is inability to diversify the product portfolio. The diversification is a significant growth factor of the organization as a result of technological advancements in different industries and business environment. It is recommended that the organization develops an integrated and organization-wide structure for the operations of the organization.
The organization should make efforts in integrating additional structural elements to support the strategic position of the organization and support the diversification and growth strategy of the organization. It is recommended that the organization should shift to the function-based business structure so that the research and development activities of the organization can be supported. It will reduce the imitation threat of the organization. The company should create a structural division, which can support the diversification activities of the organization. It should be based on the technological integration of different industries and market of the organization. The company should divide the current geographical division of the organization in small divisions so that the significant different between different markets can be identified (Lombardo, 2017). These changes will assist the organization in its innovation strategy. The proposed system can strategically fit as the company aggressively pursues innovation.
Impact of External Environment on IBM’s Innovation
Elon Reeve Musk is a business magnate, investor and an engineer. He is the CEO of various technology-based companies such as SpaceX, Tesla Inc., and Neuralink. Elon Musk has adopted a transformational leadership style to motivate his employees to work for excellence. He leads by example and drives the people towards excellence and pushes the followers towards their maximum potential. Eon Musk is a potential leader, who demonstrates incredible vision, dedication and perseverance to achieve his vision. Elon Musk is an engineer with an amazing vision and convincing ability. He has amazing convincing power and leads people in believing that his vision will work. In all his ventures, Musk has set the benchmark for rest of the companies in the industry. He motivates other auto manufacturers to enter the electric car industry and expand the market of electric cars. SpaceX is also partnering with NASA so that the trips to the Mars can be made affordable.
It can be critiqued that the transformational leader may face conflicts with the employees who resist change in the organization. They have a high sense of intuition and can easily identify the system elements, which are not working in the organization (Blazek, 2016).
Eon Musk has a sense of accuracy and intuition. He is an early investor in different companies such as PayPal, spaceX and Tesla Motors. There are several characteristics in the leadership style of Eon Musk, which has made him a significant leader. First characteristic of the leadership style of Elon Musk is leading by example. It is his belief that the CEO of the organization must complete all the tasks in a proper manner. No company can succeed if the CEO is not ready to complete all the tasks. He believes that a person can control his efforts, so an individual can change the world if he implements his vision.
Another characteristic of the leadership style of Elon Musk is that an individual should have a compelling goal for the whole organization. The leader should firmly believe that the following actions can result in great outcomes. It is a challenging task for the leader; however, in order to make others believe in the vision, the leader should have full conviction of the vision. Moreover, the organization’s vision should be motivating for all the stakeholders. In SpaceX, the company did not build rocket ships as they were good for the portfolio of the organization; however, the leader should develop a vision to uplift the standard of the society.
Another characteristic of the Musk’s leadership style is that his creativity. Musk was creative and capable of finding innovative solutions to the common problems. In most of the companies, the business processes become stagnant as the employees are forced to think in a specific manner. However, well-developed processes reduce the ability of the organization to be creative. Another approach used by Musk in the management of the organization is the collaboration approach. According to the leader, the talent in the organization is extremely important; therefore, all the employees should work collaboratively in the organization. It is important for the organization to understand that teamwork is necessary for the success of business enterprise. All the employees and team members must be recruited and selected according to their team player skills. It is important in employing a team, which works in a team-oriented fashion (Predictive Success, 2018).
It can be analyzed that there are a large number of companies led by average leaders; however, there are a significant leaders, who have become the world leader in a very short span of time. These set of leaders implement revolutionary ideas and convince people to believe in them. Eon The work and the leadership style of Elon Musk can be identified as extraordinary as he has high ambition and aims to uplift the standard of the human society with the help of the purpose. The major challenge that Elon Musk encountered was his extraordinary ideas. Initially, nobody believed him; however, his belief and love for the brand was contagious. He demonstrated through his lectures and inspirational talks that his work is close and personal to him. He has an extraordinary vision and inspire teams, motivate the performance of others by creating products of additional value (Fisk, 2016).
References
Appleyard, M. M., & Chesbrough, H. W. (2017). The dynamics of open strategy: from adoption to reversion. Long Range Planning, 50(3), 310-321.
Blazek, K. (2016). THE TRANSFORMATIONAL LEADERSHIP STYLE OF ELON MUSK. The Booth Company. Retrieved from https://www.boothco.com/360-feedback-resources/leadership-style-of-elon-musk/
Camisón, C., & Villar-López, A. (2014). Organizational innovation as an enabler of technological innovation capabilities and firm performance. Journal of business research, 67(1), 2891-2902.
Carley, K. M., & Prietula, M. J. (2014). The” virtual design team”: Simulating how organization structure and information processing tools affect team performance. In Computational organization theory (pp. 19-36). Psychology Press.
Dahlander, L., O’Mahony, S., & Gann, D. M. (2016). One foot in, one foot out: how does individuals’ external search breadth affect innovation outcomes?. Strategic Management Journal, 37(2), 280-302.
Dodgson, M. (2018). Technological collaboration in industry: strategy, policy and internationalization in innovation (Vol. 11). Routledge.
Fisk, P. (2016). Elon Musk’s leadership style is about vision and obsession … deep and persistent enough to change the world. The Genius Works. Retrieved from: https://www.thegeniusworks.com/2016/08/elon-musks-leadership-style-vision-obsession-deep-persistent-enough-change-world/
Ginter, P. M. (2018). The strategic management of health care organizations. John Wiley & Sons.
IBM (2018). About Us. Retrieved from https://www.ibm.com/ibm/us/en/
Joseph, J., Klingebiel, R., & Wilson, A. J. (2016). Organizational structure and performance feedback: Centralization, aspirations, and termination decisions. Organization Science, 27(5), 1065-1083.
Katzenbach, J. R., & Smith, D. K. (2015). The wisdom of teams: Creating the high-performance organization. Harvard Business Review Press.
Lombardo, J. (2017). IBM’s Organizational Culture & Radical Thinking. Panmore Institute. Retrieved from https://panmore.com/ibm-organizational-culture-radical-thinking
Nylén, D., & Holmström, J. (2015). Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation. Business Horizons, 58(1), 57-67.
Patterson, L. (2010). IBM Midmarket Software Buying and Selling Guide. IBM Redbooks.
Predictive Success. (2018). Top 10 in Leadership from Elon Musk. Retrieved from https://www.predictivesuccess.com/blog/elon-musk-top-10-leadership-lessons/
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
Success Story. (2018). IBM Success Story Retrieved from. https://successstory.com/companies/ibm
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