Takeaways from the EIG Conference

Spoke on Tuesday last week at the Entrepreneurship, Innovation and Growth conference. Sixty people representing a number of large firms and corporate venture capital organizations, all huddled in a room in a Cambridge Hotel for two days, wondering what the economy is going to do to their companies’ zests for continued investment in innovation. Of course you know by now what I was talking about in my keynote address… innovation as an emerging business function.  And that means, of course, that while budgets might be trimmed during recessionary times, the innovation function cannot be obliterated off of the corporate organization chart, mission statement, and/or investment priority list. Tightened up, downsized, maybe. But not wiped out. And we talked about ways in which that can happen. Slow the pace of the portfolio. Shrink the portfolio a bit. Figure out how to start monetizing opportunities even as they’re still developing. That’s right…it can (and should) happen that way. Leverage university resources. Leverage lots of things. All of that for now.

But the really cool thing about this conference was just how competent the people were. Wow. So much experience in that room. The people who attended spoke eloquently about scoping and evaluating opportunities, about maturing projects, about getting them funded externally as well. Some showed unbelievable savvy at shaping their companies’ future strategies, through developing scenarios about the impact of technological innovation.  Some, for certain, are just starting out. But this was the first time I’ve been in a room with people focused on innovation in which I felt that there is a quorum, indeed a groundswell, not just of firms who say they want to do this, but of firms with some very, very competent people executing on the innovation agenda. They’re strategic, they’re tactics oriented. They’re focused on people and technology and leadership and business models at the same time.

I got their business cards…will be inviting them in as guest speakers to our classes. It’s great to see a good thing start to take off and grow.

What you don’t know about IBM

Dr Daniel Frye, VP Open Systems Development, IBM gave a talk on “IBM’s Decade of Participation in Open Source Software” at Rensselaer a few weeks back. Dr Frye spoke at length about how IBM setup the Linux Technology Center (LTC) in 1999, and how the unconventional investment in Open Source Technology had started paying off from the first year itself.

Some of my students who attended the talk quizzed Dr Frye on how he was able to convince Senior Management, after all, wasn’t this unlike anything IBM had done before? What Dr Frye revealed was quite unlike the IBM they had read about. It took only one presentation to Senior Management to get approval. The presentation explained how the Linux Model worked, what the market looked like, and IBM’s opportunity to disrupt the competition. It turned out that the developers loved the idea too, only middle management felt threatened. Of course, perceptions have changed over time.

Dr Frye enjoyed highlighting IBM’s strategy on Linux as akin to “scratching your own itch” a phrase he borrows from Eric Raymond’s The Cathedral & the Bazaar. Since Linux communities have their own distinct culture, IBM Developers sign-up on a community and remain silent observers for months together before making any contribution. In such forums, credibility comes with writing good code, and instead of pushing their agenda, IBMers took pains in reviewing others code, pointing out defects, or simply figuring out other ways to make themselves useful. The experience was all about taking small measured steps, developing a reputation and building trust. Often IBM chose to work with existing communities rather than create their own, though they did successfully start a dozen communities, Eclipse being one of them.


IBM’s revenues from Open Source Software products are several times their present $100 million investment. So how does the firm use open source software? IBM has been active in making Open Source find its place at the heart of the enterprise. At IBM, Open Source is used to:

• Run their business
• Operate their hardware
• Its in their software
• As part of service engagements
• As an R&D collaboration vehicle
• As a source of innovation
• Influences the direction of the IT industry
• As a competitive tool
• As a means to create a level playing field
• As a vehicle to enter new markets

Of the $1.5-2 billion invested in improving Linux every year, IBM spends less than a tenth. Among the other firms with significant investments in improving Linux include HPC, Intel, Novell, Oracle, Renesas, MIPS, NetApp, NTT, Sony, Astaro, Monta Vista and SGI. Evidently, leverage happens when others share that very same itch.