Steve Lohr wrote an article for the NY Times in 2004 about I.B.M’s brand shift: from hardware manufacturer that customized software solutions to strategic consulting partner offering customers customized “on-demand” service. At the time, it was too early to document results. Today, Steve Lohr reports in the NY Times on the financial fruits of that labor, including I.B.M showing a record year of profits.

How did the promise become a reality? Was the innovation as much in the organizational strategy as in the business strategy?

A compelling shift in a business model, without an equally thoughtful and resourced organizational strategy for change, may get off to a great start at the top but can fail to execute as change cascades through the culture and across organizations. Here it seems I.B.M. has done a lot of it right.

The 2004 article brilliantly lays out both the strategic business drivers AND the organizational change challenges mastered over the subsequent years by I.B.M. The story is a multi-layered case about innovative leadership, an integrated acquisition of PricewaterhouseCoopers, coordinated reorganization, and mobilization of “four in a box” teams to work with customers, creatively including technical experts and researchers with sales and account managers at the front-end rather than downstream.

Big Blue may be smaller than it was at earlier times in its history, but has become agile and resilient in its use of training, change management and culture alignment to adapt to new business models needed to remain competitive. Today’s article provides a confirmation of the value of such investments. I highly recommend reading both.

TIP: Create a tech project manager role that is a matchmaker of direct relationships between development and the customer rather than a translator between the two.

The back story: I worked for a software company that developed and patented an enterprise document manage/workflow system using a client-server architecture in the mid-eighties. But bits/bytes are not the point of this post, managing change is.  Let’s just say this PC-based server architecture went where only mainframes had gone before, and for that moment in time was “disruptive technology,” – the business solution offered competitive advantage and cost savings but would fundamentally change (disrupt) how the work was done, and to some extent the work culture. Fast forward:  this is mainstream technology now. Usually the management of disruptive change happens after the fact. We all know how much fun that is. Alternatively, anticipating change could be a part of collaborative product development – that’s what we did, and it worked. Literally, on-site development (the R&D anthropology concept). Today developing project-duration social network/collaboration sites is another way.

Here’s a short video about how Pitney Bowes does customer-collaborative product development.

Leave your tips for R&D anthropology by adding a comment. Serious play is good for business.

Read the rest of this entry »

Partnering with customers with opportunities to play with product prototypes lets business innovate quickly and test satisfaction before going to market. Read how Disney, 3M, Hershey, and Pitney Bowes are using innovation centers to do just this in this article in The New York Times.