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Paul Horn
  Paul Horn, IBM

Innovation: Where Invention and the Market Place Meet

4/7/2006 --

IBM's director of research says technological innovation can be managed to produce business success.

ANN ARBOR, Mich.—To manage technological innovation and translate it into business success, companies have to embrace risk, ask questions, create a culture of open thinking and foster an atmosphere of collaboration.

Paul Horn, senior vice president and director of research at IBM, defines innovation as the "connection of invention and the market place." In his presentation titled "The Changing Nature of Innovation (in a Services Economy)" at a recent event sponsored by the Tauber Manufacturing Institute (TMI) and the School of Information, Horn said "We think of ourselves as a technology company. Our challenge is creating value out of it."

IBM is the world's largest IT research organization and has led patent leadership for the past 13 years. IBMís strategy is guided by two tools developed to predict emerging technology trends—the Global Technology Outlook and the Global Innovation Outlook (GIO). The GIO is generated by IBM's worldwide offices and laboratories and influences IBM's technical strategy.

Technological innovation is disruptive to existing businesses and simultaneously creates potential for new businesses. As a result, companies like IBM need to reinvent themselves to stay competitive. They must "think disruptive technologies out carefully and understand customer challenges," Horn said.

Horn described how rapidly the computing business has evolved, demanding change from information technology companies. Grid computing or using distributed computer resources as a virtual computer is next on IBM's horizon, Horn predicted. "The layering of hardware, operating systems and middleware suggests a framework to define virtual computer components."

Another example of industry adjusting to innovation is the current state of the automakers. When the Ford Motor Co. was founded, it was vertically integrated and Ford handled every aspect of manufacturing from parts to assembly. In today's economy, "the value chain is increasingly relying on external suppliers," Horn said.

Similarly, IBM began by building all the hardware components for its PCs. Now, IBM serves more as a distributor of computing services, especially on-demand services.

Horn also spoke about, a company that successfully built its business on a platform of integrated online services now used throughout the retail sector.

Innovation can be managed in today's environment of the commoditization of technology and globalization of markets, Horn said. Key insights from IBM's GIO include the need to develop new business designs based on open collaboration, establish standards across industries and leverage the power of both individuals and networks.

A web cast of Hornís speech is available online at To view the web cast, you will need a high-speed Internet connection and Windows Media Player 9 or better.

For IBM's Global Innovation Report, please see

For more information, contact:
Adrienne Losh
Phone: (734) 615-5068