The insights from this week's webinar and the work the company is doing to integrate a complete and integrated innovation toolkit makes IBM a very impressive case study in next-generation corporate venturing in its widest sense. It is one where universities are playing an increasingly central role.
In this so-called "era of smart", companies, countries and individuals will be judged by how they apply knowledge to create value, with universities a critical part of the ecosystem.
For US-listed IBM, which coined the term era of smart, its own value will be created from amplifying innovation and creating technology and a platform for others to help increase the abilities of individuals and institutions.
The ideas have already helped turn IBM over the past 100 years from a maker of meat slicing equipment to a information technology group with $106.9bn in turnover last year and 433,000 employees round the world, according to Claudia Fan Munce, managing director of IBM’s venture capital group and vice-president of its corporate strategy.
Fan Munce, who last month was picked to join US trade body the National Venture Capital Association’s main board as its first corporate member, was talking as part of a webinar series co-hosted by Global Corporate Venturing and its sister title, Global University Venturing, and academia organisation the National Council of Entrepreneurial Tech Transfer (NCET2) – click here to hear the webinar replay and full presentation pack.
The next two webinars are Cisco and Takeda in May and June respectively (and please drop me an email if you want to be considered for the series or have ideas for our new website on university venturing and want to register for the forthcoming magazine).
Alongside Fan Munce in Friday’s webinar, was James Spohrer (pictured),
IBM’s University Programs World Wide. They described how IBM was managing its innovation pipeline (here’s a powerpoint slide of the matrix) by working with its staff, external partners, such as universities, and venture capital-backed start-ups (often by being a limited partner in the VCs’ funds) and entrepreneurs directly, through the SmartCamp* (see footnote) and broader Global Entrepreneur programme started in 2010 (click here to learn more).
As Fan Munce said: "At IBM, we are technology integrators not a provider of black boxes ourselves. This means we have a huge appetite to bring new partners into our ecosystem."
These partners include 934 participants of its Global Entrepreneur programme and more than 10,000 independent service vendors in 170 countries.
Fan Munce said the Global Entrepreneur programme had been "successful beyond imagination" in reaching entrepreneurs earlier and not necessarily through VCs, partly because it had brought in strategic partners, such as universities.
Spohrer said university start-ups and incubators were a growth area for IBM’s partnership model – click here for the methodology behind how 400 people at IBM are approaching more than 5,000 universities around the world.
Building on a quote by John Sexton, president of New York University, about how to build a world-class city through creating a top university, Spohrer said: "More than ever, universities will generate and sustain the world’s idea capitals and, as vital creators, incubators, connectors and channels of thought and understanding, they will provide a framework for global civil society."
Spohrer said of the 144 acquisitions made by IBM over the past dozen years (of which more are understood to have come from venture capital funds than even serial acquirer Cisco), 50 had been started by people at university and more than 50% still had connections to academic institutes.
But if a university-based entrepreneurial ecosystem is a necessary factor for regional success, then the example of social network Facebook’s development is a chilling example.
Spohrer said that while Harvard University contributed $4.8bn and 44,000 jobs to the Boston and Massachussetts region in 2008, the fact Facebook was started on campus but then moved to California (and the school’s endowment had no stake directly or indirectly) he asked how did the region benefit?
The Facebook example is helping spawn a wave of university venturing funds around the world to take and manage equity stakes in student and faculty businesses while on campus and longer-term.
By keeping close to both universities and VCs and entrepreneurs in all guises, IBM is positioning itself to respond to future technology waves.
As Fan Munce said: "Five years ago, we did not expect social media to blow up into such a large market so quickly [but by being close to entrepreneurs] we have been very aggressive in acquiring companies in that space; 17 in 2011, [such as] Coremetrics in analytics."
That IBM is the only large technology company from the mainframe era to have thrived through the personal computer and into the so-called SoMoLo (social, mobile, local) internet era shows how they have been prepared to disrupt their own business lines and jump on trends not invented inside Big Blue.
To this end, IBM’s personnel strategy is one of the main reasons behind its success. With more than 55% of its staff having less than five years’ employment at the company, the company attracts talented people but as business units mature there is also a steady transfer of individuals to new, faster-growing areas as they build out or back into entrepreneurial ventures – click here for slide.
The insights from the webinar and the work the company is doing to integrate a complete and integrated innovation toolkit makes IBM a very impressive case study in next-generation corporate venturing in its widest sense. It is one where universities are playing an increasingly central role.
*Martin Kelly, a partner of IBM’s venture capital group reporting to Fan Munce, is shortlisted for the Global Corporate Venturing Personality of the Year Award to be presented on May 14 at a sold-out Gala dinner at the Royal Exchange, London, UK. Kelly, who was nominated for his role in setting up Smartcamp with an initial $10,000 budget, will also be speaking at the following day’s Symposium – click here for full agenda and shortlisted nominees – at Centre Point, alongside Profitero, winner of the most-recent Smartcamp – click here for more details on IBM’s programme.
- Please note, applications for the Global Corporate Venturing Tech Scout Challenge on May 14 has now closed and the reviewers are whittling down the huge number of entrants to the final shortlist to be presented in front of investors controlling more than $10bn of venture capital assets under management. Thank you to all that applied and the reviewers and our partners for the day: American Security Challenge, UKTI and Baker Botts.