For many in Boulder County, IBM is known as one of the largest employers. It also helped lead the early days of Boulder’s now renowned technology community. What might be less well known is it led the nation in new annual patents issued. Its first patent was issued in 1911 for a punch card system for tabulation. In 2019, it was issued 9,262 new awards bringing its total to more than 140,000. For 27 years in a row, IBM was issued more patents than any other organization in the U.S.
Many factors contribute to this massive haul of new intellectual property: a strategic approach to R&D, a culture of innovation, the resources to develop new concepts, a tolerance for failure. These attributes and others contribute to IBM’s leadership in patents and innovation.
The rate and pace of innovation that IBM continually demonstrates isn’t possible for smaller organizations. Small and medium enterprises have limited access to capital and resources and their exposure to markets and customers is negligible, although there are exceptions. With the advent of startup ecosystems and global networks, entrepreneurs and founders are gaining access to growth resources as never before — and this is good news.
On aggregate, large corporations and organizations have tremendous opportunities to scale innovations. This is important because, in some cases, innovations need to reach as many people as possible, as quickly as possible. The COVID-19 vaccine is an excellent example of an innovation that requires large organizations, corporations and government to develop and distribute with scale. Without these resources, a vaccine at scale might not be possible.
Corporations are a crucial player in the innovation ecosystem. In fact, they have an exceptional opportunity to lead innovation and R&D with the possible exceptions of government and academia. One massive competitive advantage corporations wield is the balance sheet. In addition to the balance sheet, corporations also have access to capital markets. The combination of these assets offers tremendous competitive advantage that’s difficult to match.
Along with capital resources, corporations have access to distribution channels and customers. These channels can be used to market and sell new products, experiment with new services, and pilot new offerings. Access to customers and distribution channels offers an immediate return on investment that produces profit and cash flow, but also offers a valuable feedback mechanism. Building relationships takes time, energy, money and lost opportunities to produce. Resources SME’s simply don’t have.
If managed properly a large corporation can absorb failures and false starts. Creating “sandboxes” and initiatives that are somewhat insulated allows for experimentation that poses a low risk to the core business. An example of external risk reduction is partnering with a venture studio. Working with studios allows the corporation to create and experiment with new concepts and ideas outside its four walls. In some cases, a corporation can partner with a studio with no brand or company affiliation whatsoever. This autonomy allows for flexible experimentation while keeping risk low.
Corporations have myriad opportunities to scale innovation. But one thing is certain: It’s only possible with a concerted, long-term commitment and the resources to enable their development. Creating more than 140,000 patents doesn’t just happen; ask IBM.
Thomas Knoll is founder and CEO of Innovators CoLab.