Why IBM Is the Most Innovative Company in IT

A recent issue of Forbes ranks the most innovative companies in the world, but overlooks IBM. In this opinion piece, eWEEK's Darryl K. Taft argues that Big Blue belongs atop that list.

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IBM is the most innovative company in IT, period.

The Aug. 8 issue of Forbes contains a list of what the well-heeled magazine sees as the "World's Most Innovative Companies." The print edition ranks 50 companies, and if you go online there are an additional 50 companies ranked. Yet, in that list of 100, Forbes did not see fit to include IBM. That is a slap in the face of Big Blue. That is a shame.

IBM has more innovation going on in its pinky than Forbes' No. 1 ranked innovator, Salesforce.com, has in its whole body. Of course, Forbes has some fancy formula -- involving something they're calling the "Innovation Premium" -- for calculating just who is innovative. And they have some big-time professors from some fancy schools to back up their thinking. What's more is their list appears to have more to do with a company's ability to provide a targeted return on investment than with pure innovation. I don't care how they calculate it or who supports the methodology, to come up with a list of 100 "innovative" companies and not include IBM is a joke. And then to name Salesforce.com as No. 1 on a list that doesn't include IBM is an insult.

It's an insult because IBM, by the sake of its IBM Research arm alone, is more innovative than pretty much anybody else out there. IBM invests more than $6 billion annually on research and development and employs about 3,000 researchers worldwide. IBM's $6 billion annual R&D spend is more than three times the annual sales at Salesforce.

IBM's got an image of being stodgy and stiff - a company for old folks. This is unfortunate, because in the company of more than 400,000 people, there are gobs of young people, and 50 percent of its employees have been with IBM for five years or less. But I'll grant it that the average age of attendees at IBM conferences is probably a bit older than what you'd see at Google I/O, Apple WWDC, Microsoft MIX or Adobe MAX.

However, IBM is 100 years old! That in itself indicates a culture of innovation; it shows resolve. IBM has had to constantly re-create itself to keep abreast of trends in the industry.

And then there are all those patents. In January, IBM announced that its inventors received a record 5,896 U.S. patents in 2010, marking the 18th consecutive year it has topped the list of the world's most inventive companies. IBM became the first company to be granted as many as 5,000 U.S. patents in a single year.

IBM's press release on the issue says IBM received patents for a range of inventions in 2010, such as a method for gathering, analyzing and processing patient information from multiple data sources to provide more effective diagnoses of medical conditions; a system for predicting traffic conditions based on information exchanged over short-range wireless communications; a technique that analyzes data from sensors in computer hard drives to enable faster emergency response in the event of earthquakes and other disasters; and a technology advancement for enabling computer chips to communicate using pulses of light instead of electrical signals, which can deliver increased performance of computing systems.

I know the number of patents is not necessarily the best measure of innovation. I also know that IBM's aggressive pursuit of patents could be perceived as the company building a defense (or even compiling an offensive arsenal) in an increasingly litigious tech landscape. But here again, this shows foresight and strategy. And it indicates just how innovative IBM's engineers and researchers are. As IBMer Bala Subramanian put it, the 5,896 patents in 2010 "works out to an invention every 1/2 hour of an 8 hour working day (5,896/365=16.15 not excluding any holidays or weekends)."

But, to be sure, patents can be used for good or other purposes. Perhaps that's what prompted Google to recently acquire more than 1,000 patents from IBM. Google is No. 7 on Forbes' list, by the way.

In this now-famous story told by prominent tech attorney Gary Reback (and broken in Forbes no less!), Reback talks of how when he was a lawyer for Sun Microsystems in the 1980s IBM came in and claimed Sun infringed seven of its patents. Sun stood up to the IBM team and provided evidence the company did not infringe all seven patents, but perhaps only one.

Then, according to Reback:

An awkward silence ensued. The blue suits did not even confer among themselves. They just sat there, stone-like. Finally, the chief suit responded. "OK," he said, "maybe you don't infringe these seven patents. But we have 10,000 U.S. patents. Do you really want us to go back to Armonk [IBM headquarters in New York] and find seven patents you do infringe? Or do you want to make this easy and just pay us $20 million?"

After a modest bit of negotiation, Sun cut IBM a check, and the blue suits went to the next company on their hit list.