Why innovation matters

Bernie Meyerson is IBM's vice president of innovation and an IBM Fellow.

In honor of his company's 100th birthday, we spoke to him about what it takes to foster innovation in a public multinational corporation and why IBM has managed to do it better than most.

SP: Innovation: what does it take?

BM: You show me someone who's never failed, I will show you someone who will never be a leader. Any technologist will pursue things that are aggressive enough but in the instance you're not, learn from your failures and move on. The only caveat is that don't learn that way all the time.

There are things that take off and skyrocket. There are things that slam into a glass ceiling or make a hard left or are left to flounder. All of the above we've had experience with. The successes we have overwhelm the failures. It's never a straight line to innovation.

There was a time when everybody thought you were going to make, forever and anon, computers out of vacuum tubes. People hadn't invented the transistor yet. People were investing bucketloads into tubes. But then the transistor comes along and you have to make a decision. You make those huge bets, or stand behind and watch. We basically stopped developing anything else. We developed System/360, which was such an incredible success. It was this incredible integration of many things. It was this willingness to bet the farm.

Similarly, IBM has been a deep technology company for long periods of time. We invented the disk drive, for example. If we had stopped there, today's laptop would way 250,000 tons.

We invented the magnetic strip on the back of your credit card. That's pervasive today. Bar codes -- [they] make it cheap and easy to remember your product. Tremendous capability.

But we were late getting into Ethernet. There was a transition from a proprietary technique from SNA to Ethernet. We were late, and we had to catch up. You move on. You lick your wounds.

We had an entire program looking at something beyond silicon: gallium arsenide. It turns out it wasn't manufacturable. It didn't work out, and we moved on. But we learned a lot about silicon and its limits.

One that went sideways: many years ago, I invented a technology called silicon germanium. An alternative technology was CMOS…[SiGe didn't work for its intended purpose but] in a very short period of time it found itself in the vast majority of 802.11 modems.

Progress is never a straight line. Progress is really something that comes about through learning that fail in one area, but are adaptable for another.

SP: How do you preserve innovation over a century?

BM: There's an inherent optimism in IBM that if you make an investment in one of these profound technical advancements, it will be profound and life-changing. We continue to invest in foundational exercises. There's an enormous investment in software and global solutions.

It has to be cultural. To make this work, there needs to be a cultural belief that this is how you do it. There needs to be a place in corporate culture that says, it's OK to fail, it's OK to stretch. Tell me the next grand challenge I need to approach. The willingness to take those tremendous challenges on.

Take [IBM's artificial intelligence computer] Watson -- Dave Ferrucci and his team were lucky to get 10 percent of the answers right, and that was sometimes after waiting an hour. These guys signed up for that risk when they had no chance of winning -- you needed 90 percent right in seconds to even be viable. Tremendous courage. It takes a special culture to be willing to hang by your fingernails over the precipice and that, even if it fails, it's worth it for the lesson learned. It's never a waste. On the contrary.

SP: How do you pass on the concept of innovation from generation to generation?

BM: It has to be a part of the culture. The corporate culture outlives the infrastructure, outlives the individuals. It's about maintaining that values system. That's really the magic, and it's passed down generation to generation. The leaders of IBM are inculcated into that culture. When you say coming on, you're taking 20 to 30 years. It takes a long time to build that culture, but it also makes it extremely resilient.

The amazing thing about IBM is that, if you go back 95 years, they were hiring consultants worried about innovation. This was back when our time recording instruments were the beginning of our data handling capabilities.

You mustn't lose it in the down cycles of the economy. I did a CNBC interview on the floor of the New York Stock Exchange and they asked me, what do you do in a down economy? And I said invest. Over my shoulder, the ticker was going down dramatically; it was the absolute bottom of the tumble. You can't rebuild it in the up cycle. You need to do it over 30, 40 years. It's very easy to do one thing well; it's very hard to do global-scale solutions.

It's [about] having many pathways to innovation. No matter how big the ship gets, it's not a monolith. The trick is, you need a special type of person to make this work: "T-shaped" individuals. They have tremendous depth on an issue -- world-class experts. But they similarly have tremendous contextual knowledge to how their piece fits into the bigger picture. That individual is what makes it possible. Those are our leaders.

When you get niche-y, someone will come along and obviate the need for the niche and disappear, you will have a very short and unhappy life. When you can do something that will have a profound impact on society as a whole, that's different. The PC brought IT into the home. What gets lost in that statement is that it brought Internet into the home. It made it possible for someone to touch a billion people. You literally rewrote the possible.

IBM has made its name by reinventing itself. Every year, you're not chasing the future, you're making it. You need to create the future. What are the grand challenges to society? It's a marvelous place to start. You try to find solutions and look around for what you need to execute them. You need to be highly cognizant of the future needs of society. If you proactively address the future needs of society, by definition there's a business there. It's really a question of how you get out front, and keep getting out front.

History is its own proof point. Look at Watson and deep analytics and the opportunities that have presented themselves. It eventually becomes a major new endeavor if it's ready for primetime.

In the era of semiconductors, we thought we'd come up with something that would change things. It didn't. But we made 802.11 so cheap that it became pervasive. You don't know where it will take you, but if you do great stuff…

The mechanics of this don't make it happen.

SP: How do you know when to reel it in? When to stop and move on, versus continue to work at it?

BM: If you have something that's foundational different than before, you keep chipping away at it. Many companies fail because they simply don't know when to punt. For us, data wins. You can get data. Pick something that's quantitative that you can do and measure. You'd be shocked at how many things fail that test. It's not a perfect system. But it's a very finely tuned one. Our hit rate is extraordinarily good.

This post was originally published on Smartplanet.com