Commoditization of IT products, development of higher quality IT services, open source networks,. Focus on utilizing global competences and on innovation and added value for customers. In , Thomas Watson, Jr. The investment paid dividends, however.
Instead of many voluminous special systems, customers were able for the first time to buy a generic computer that could grow with its task by means of modern add-on components without the software for a larger computer system needing to be rewritten each time. IBM built its entire business model around the mainframes. While clearly not optimal, this was still bearable in an almost monopolistic market with a limited number of offerings — as IBM held a market share of up to 70 percent Pugh , pp.
In an increasingly competitive environment, though, with a large number of alternative products it was posing a serious risk. Department of Justice filing a suit against it for establishing a monopoly position and thereby breaching the Sherman Antitrust Act , ushering in years of litigation. In , the previously uncustomary unbundling of software — marketing software separately from hardware — was introduced. By the same token, training services were offered for purchase to non-IBM customers for the first time. Organizationally, the antitrust suit led to IBM spending years preparing to split into two separate companies.
This project was not further pursued, though, once the case was dropped. Viewed in this light, changes in customer requirements were not a central factor. Excellence in everything we do put the ability to adapt and the speed of change on the back burner. In , for example, former IBM employees founded SAP because they saw no way within IBM to satisfy the growing customer demand for standardized, real-time financial applications. The interpretation of respect for the individual changed in much the same way. Values proclaimed and actually lived at IBM in the early s based on Gerstner , pp.
Innovations in ICT such as the development of personal computers, the establishment of open standards and the concept of client-server architectures — for which IBM was not sufficiently prepared 8 — led to a progressive decline in the importance of mainframes. Financially, this was intensified by a drastic fall in prices due to the introduction of efficient CMOS technology with which IBM itself was largely associated.
At the same time IBM stepped up the expansion of its software business, realizing that it must seek to provide total solutions for the customer. This expansion began with the takeover of Lotus in , and its focus was always on middleware as the key to designing integrated total solutions.
It had decisive consequences for the organization. Win: Since economic activity takes place in competition, with winners and losers, the market should be the decisive criterion for all business activity. This made it clear that the previous values of excellence and superior service were to be measured by the yardstick of commercial success. Execute: Speed and discipline were to overcome the obsessive perfectionism that had led to market opportunities being missed and had left IBM vulnerable to competitors capitalizing on IBM inventions.
Starting in the late s, a number of ICT innovations led to the emergence of totally new opportunities and risks, first and foremost the commercial use of the Internet and the establishment of open standards. The acquisition of PwCC, with the takeover of a large number of highly qualified consultants with industry-specific experience laid the groundwork for implementation. Global organizational structures were created to make industry-specific know-how available around the world and to provide worldwide support for international customers.
With the advent of global networks by means of modern ICT, a worldwide integration of processes and value chains within the company became possible, leading to significant economies of scale. Corporate functions were no longer replicated; they were established once only and with global responsibility. For this, Palmisano , p. As ICT undergoes progressive evolution, the value contributions of individual business segments change as well. IBM consistently focused on premium segments such as integrated management consulting and enlarged them further.
Product areas that had become commodities as a result of ICT trends were sold off. GBS was consistently structured along customer industries and solutions. Central corporate functions such as procurement, supply chain management, and financial management were assigned to a central, worldwide leadership that would be in charge of strategy, processes and systems. Global procurement responsibility, for example, was consolidated in Shenzhen, China, in Palmisano also kick-started a renewal of corporate culture to match it to a now service-oriented enterprise and an adjusted business model.
This in turn was only made possible by ICT: an online jam — analogous to informal jazz sessions — gave IBMers an opportunity to share in an open discussion about the desired values Hemp and Stewart , p. This article has claimed that innovations in ICT call for complementary — in some cases fundamental — adaptations to business model, organization and corporate culture to ensure that a company remains successful even when market conditions have changed. Starting with the swifter pace of ICT-driven change and the resulting shorter innovation cycles, we see one of the most urgent tasks for companies in improving their ability to recognize essential changes and to adapt to them in a timely and consistent manner.
As business model and organizational transformations and, above all, cultural adjustments, always take their time, it is not surprising that coping with swift change currently appears to be the most serious problem that chief executive officers face. Some of the challenges ahead will be to deal with a fundamental dissolution of the traditional roles and structures of information production and consumption Web 2. Data and information produced by previous information recipients can be used for innovative business models or for cooperative innovation.
Companies must utilize the resulting opportunities. Maglio , pp.
Corporate organization and processes must be kept flexible along the lines of adaptive systems. Service-oriented architectures in the context of business processes, such as IBM has realized in recent years in its IT service factories, may be considered a promising concept in that respect.
Involving employees early and making them aware of the need for change are critically important for further development of corporate culture in a highly dynamic world. In Germany, for example, IBM launched a number of transformation initiatives in n. With more and even faster ICT innovations to be expected in the future, this ability has become absolutely essential for survival.
Due to the complexity of the safety-relevant system, NASA has hitherto chosen not to change the architecture. These internationalization opportunities are enhanced by the fact that in future markets such as India or China services account for only around 30 percent of gross value added, and can still be expected to catch up in terms of service-orientation Satzger Accessed In the early s, IBM bought in key components such as its operating system and microprocessor in order to gain momentum in its battle for the PC market with Apple.
That helped Microsoft and Intel to gain their later predominant position in the IT industry. Since , IBM has registered the most patents in the U. At the same time, technological innovations were still important, such as, in , the cell processor that is used in game consoles or, in May , Roadrunner, the first petaflop computer. Skip to main content Skip to sections. Advertisement Hide. Download PDF. Period ICT Innovation Direct Implication Socio-economic Implication From BC Development and adoption of writing First-ever possibility for documentation as separate from oral tradition Administration and growth of societies and trade beyond the dimension of clans From The printing press with movable metal types Reduction in the cost of reproducing information Administration of large nation-states by standardized distribution of information; standardization of language; explosion in the amount of information available From Telegraphy and the telephone Reduction in the time lost in transporting information Coordination of global trade From World Wide Web based on Internet technology Separation of information from material carriers and their economic limitations Global delivery of digital services; world-encompassing added value networks.
Social Innovation Creates Prosperous Societies
In many developed economies services already account for over 70 percent of gross value added Satzger The ongoing development of ICT will lead to a further increase in the share of services, due for one to a shift in scope of economic output from products to services and for another to the rising number of opportunities for de- and recomposition of added value networks and their coordination. It should be noted that this ICT-driven service-orientation is further enhanced by two other observable trends: Societal developments promote the emergence of new services.
Open image in new window. Solutions 2. Industries 2. Solutions Globally integrated processes Focus on utilizing global competences and on innovation and added value for customers. In around , however, the importance and implications of these basic beliefs were entirely different from what they had been in Rules, values and traditions had not changed with the market and customer environment Tab. He accordingly set IBM three new and simple imperatives: Win: Since economic activity takes place in competition, with winners and losers, the market should be the decisive criterion for all business activity.
Further acceleration of the pace of change must thereby lead at IBM and at many other companies to further, faster adjustments for which the course must be set here and now. Addison Wesley, Reading Google Scholar. Accessed Google Scholar. Fagerberg J Innovation: a guide to the literature. Gartner Gartner highlights key predictions for IT organisations and users in and beyond. Leading a great enterprise through dramatic change. Graff HJ The legacies of literacy. Hauschildt J, Salomo S Innovationsmanagement, 4th edn. Vahlen Google Scholar. Harvard Business Review 82 12 —70 Google Scholar.
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Conversely, failure can develop in programs of innovations. The causes of failure have been widely researched and can vary considerably. Some causes will be external to the organization and outside its influence of control. Others will be internal and ultimately within the control of the organization. Internal causes of failure can be divided into causes associated with the cultural infrastructure and causes associated with the innovation process itself.
Common causes of failure within the innovation process in most organizations can be distilled into five types: poor goal definition, poor alignment of actions to goals, poor participation in teams, poor monitoring of results, poor communication and access to information. Diffusion of innovation research was first started in by seminal researcher Gabriel Tarde , who first plotted the S-shaped diffusion curve. Tarde defined the innovation-decision process as a series of steps that include: . Once innovation occurs, innovations may be spread from the innovator to other individuals and groups.
This process has been proposed that the lifecycle of innovations can be described using the ' s-curve ' or diffusion curve. The s-curve maps growth of revenue or productivity against time.
In the early stage of a particular innovation, growth is relatively slow as the new product establishes itself. At some point, customers begin to demand and the product growth increases more rapidly. New incremental innovations or changes to the product allow growth to continue.
Towards the end of its lifecycle, growth slows and may even begin to decline. In the later stages, no amount of new investment in that product will yield a normal rate of return. The s-curve derives from an assumption that new products are likely to have "product life" — ie, a start-up phase, a rapid increase in revenue and eventual decline. In fact, the great majority of innovations never get off the bottom of the curve, and never produce normal returns.
Innovative companies will typically be working on new innovations that will eventually replace older ones. Successive s-curves will come along to replace older ones and continue to drive growth upwards. In the figure above the first curve shows a current technology. The second shows an emerging technology that currently yields lower growth but will eventually overtake current technology and lead to even greater levels of growth. The length of life will depend on many factors.
Measuring innovation is inherently difficult as it implies commensurability so that comparisons can be made in quantitative terms. Innovation, however, is by definition novelty. Comparisons are thus often meaningless across products or service. They categorized these measures along five dimensions; ie inputs to the innovation process, output from the innovation process, effect of the innovation output, measures to access the activities in an innovation process and availability of factors that facilitate such a process.
There are two different types of measures for innovation: the organizational level and the political level. The measure of innovation at the organizational level relates to individuals, team-level assessments, and private companies from the smallest to the largest company. Measure of innovation for organizations can be conducted by surveys, workshops, consultants, or internal benchmarking.
There is today no established general way to measure organizational innovation. Corporate measurements are generally structured around balanced scorecards which cover several aspects of innovation such as business measures related to finances, innovation process efficiency, employees' contribution and motivation, as well benefits for customers. For the political level, measures of innovation are more focused on a country or region competitive advantage through innovation. In this context, organizational capabilities can be evaluated through various evaluation frameworks, such as those of the European Foundation for Quality Management.
Some people consider the Oslo Manual complementary to the Frascati Manual from The new Oslo Manual from takes a wider perspective to innovation, and includes marketing and organizational innovation. These standards are used for example in the European Community Innovation Surveys. Whether this is a good measurement of innovation has been widely discussed and the Oslo Manual has incorporated some of the critique against earlier methods of measuring.
The traditional methods of measuring still inform many policy decisions. For example, an institution may be high tech with the latest equipment, but lacks crucial doing, using and interacting tasks important for innovation. An Australian academic developed the case that national comparative cost-effectiveness analysis systems should be viewed as measuring "health innovation" as an evidence-based policy concept for valuing innovation distinct from valuing through competitive markets, a method which requires strong anti-trust laws to be effective, on the basis that both methods of assessing pharmaceutical innovations are mentioned in annex 2C.
Several indices attempt to measure innovation and rank entities based on these measures, such as:. Many research studies try to rank countries based on measures of innovation. Common areas of focus include: high-tech companies, manufacturing , patents , post secondary education , research and development , and research personnel. The left ranking of the top 10 countries below is based on the Bloomberg Innovation Index. John Smart criticized the claim and asserted that technological singularity researcher Ray Kurzweil and others showed a "clear trend of acceleration, not deceleration" when it came to innovations.
Patent Office data. Given the noticeable effects on efficiency , quality of life , and productive growth , innovation is a key factor in society and economy. Consequently, policymakers have long worked to develop environments that will foster innovation and its resulting positive benefits, from funding Research and Development to supporting regulatory change, funding the development of innovation clusters, and using public purchasing and standardisation to 'pull' innovation through. For instance, experts are advocating that the U. Because clusters are the geographic incubators of innovative products and processes, a cluster development grant program would also be targeted for implementation.
By focusing on innovating in such areas as precision manufacturing , information technology , and clean energy , other areas of national concern would be tackled including government debt , carbon footprint , and oil dependence. Economic Development Administration understand this reality in their continued Regional Innovation Clusters initiative. Also, such grants should be better procured to metropolitan areas , the essential engines of the American economy.
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Furthermore, Russia's innovation programme is the Medvedev modernisation programme which aims at creating a diversified economy based on high technology and innovation. Also, the Government of Western Australia has established a number of innovation incentives for government departments. Landgate was the first Western Australian government agency to establish its Innovation Program. Regions have taken a more proactive role in supporting innovation.
Many regional governments are setting up regional innovation agency to strengthen regional innovation capabilities. From Wikipedia, the free encyclopedia. For other uses, see Innovation disambiguation. Main article: Innovation economics. Main article: Diffusion of innovations. Retrieved 14 March Journal of Education for Business. Business Insider. Organisation for Economic Co-operation and Development. Early American Literature. Camden, New Jersey: Rutgers University. Retrieved 19 February The New Yorker. The Atlantic. Towards innovation measurement in the software industry.
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