Coevolving Innovations

… in Business Organizations and Information Technologies

What precedes an Emerging Business Opportunity?

I had done some briefings for a client in western Canada, and the client executive asked if I would be interested in coaching one of their senior executives on some case studies. The client has retained an independent consultant specializing in executive development, and that consultant had suggested that the board work their way through some Harvard Business School cases, namely Emerging Business Opportunities at IBM (A), Emerging Business Opportunities at IBM (B) and Emerging Business Opportunities at IBM (C): Pervasive Computing. This key executive that I was to coach was to prepare himself to act as a resource to the board members. Our preparatory teleconference ended up with some discussions on organization culture, deeper than I would have anticipated.

The cases describe an IBM study in 2003 that recognized difficulties in starting up new businesses in six root causes:

  1. Our management system rewards execution directed at short-term results and does not place enough value on strategic business building.
  2. We are preoccupied with our current served markets and existing offerings.
  3. Our business model emphasizes sustained profit and earnings per share improvement rather than actions to drive higher P/Es.
  4. Our approach to gathering and using market insights is inadequate for embryonic markets.
  5. We lack established disciplines for selecting, experimenting, funding and terminating new growth businesses.
  6. Once selected, many IBM ventures fail in execution.1

A book that captured many of the issues, The Alchemy of Growth2, decribes the company’s business portfolio in three horizons, based on their stages of development:

  • Horizon 1 (H1) businesses were mature and well established and accounted for the bulk of profit and cash flow.
  • Horizon 2 (H2) businesses were on the rise and experiencing rapid, accelerating growth.
  • Horizon 3 (H3) businesses were emerging and still developing and were the seeds of the company’s future.3

In 2000, Gerstner promoted John Thompson to vice-chairman, to lead the effort. The case describes the challenges of centralization to generate H3 businesses, and then the issues associated with transitioning from H3 to H2.

In our teleconference, the question of how an initiative became an H3 business was discussed. At the point at which a business is declared as H3, it’s so visible that failure really isn’t an option. This may be compared to the spirit of the First-of-a-Kind (FoaK) projects that have been in place for a decade. (The Seiad project was one of the earlier FoaKs in 1997).

The FoaK is the culmination of a number of things, though. It requires IBM Research, as a division to be on board. It requires one of the Sales & Distribution industry solutions unit (e.g. financial services sector, retail and distribution, public sector, etc.) on board. It requires someone who will take on the assets (e.g. Software Group) once the FoaK is complete. But, most importantly, it requires a customer to sign on, and actively be involved during the development of a new technology. The idea of the FoaK is “easy start, easy kill”, so not all FoaK projects will make it through to the end. This should be seen as a normal result of experimentation, and if all FoaK projects were to be successful, it would be easy to criticize the program for setting the bar too high.

The importance of the customer is a key cultural differentiator that is ingrained at IBM. The essential premise in a FoaK is that an industry solutions unit will be interested in rolling out the resulting solution to all of its customers. To kick the FoaK process off, however, the minimum requirement is one interested customer. If a team wants to do something “innovative”, but can’t find a single customer that will spend some time in early development of the technology or service, it’s not likely to gain traction and get off the ground.

The idea of identifying a single customer became the focal point for our discussion on innovation. This successful business in Western Canada had made some bad investments in the past, has now recovered and turned itself around, and doesn’t want to make the same mistakes it had, previously. The key idea from the case study discussion is centered around getting external parties involved. If you can’t get a single customer excited about your innovation, you’re unlikely to get a whole industry excited.


1David A. Garvin and Lynne C. Levesque, “Emerging Business Opportunities at IBM (A)“, Harvard Business School Case 9-304-075 (revision Feburary 28, 2005), pp. 3-4.

2Mehrdad Baghai, Stephen Coley and David White, The Alchemy of Growth, Perseus Press, 1999. Previews of the book are available at Questia.

3Garvin & Levesque, p.4.

1 Comment

  • “The key idea from the case study discussion is centered around getting external parties involved. If you can’t get a single customer excited about your innovation, you’re unlikely to get a whole industry excited.”

    This couldn’t be anymore true ! I also think one has to believe in the product themselves. I have been in sales most of my life and I don’t I always most successful in selling the products I believe in personally. Either because I have bought or would like to buy it, or I know it is comparitively better than the competition at least in some ways.

    I find it interesting that HP were unable to see the business opportunity in the PC market when I watched the movie based on Bill Gates’ and Steve Jobs life . early days. The scene of them at HP with their monstrous “Personal Computer” idea and the HP executive looking at them as if to say “are you crazy ? What’s this ?”. After HP weren’t interested then that HP employee (forget his name) was off the hook and was able to sell his invention.

    It’s also interesting how Bill Gates didn’t sell the MSDOS software to IBM but only licensed it – genious ! I don’t think IBM saw the potential in the software business.

    I recommend the movie “Pirates of Silicon Valley”, interesting to see the rise of Apple and Microsoft. 2 people who saw Business Opportunities that others missed


Leave a Reply

Your email address will not be published. Required fields are marked *

  • RSS qoto.org/@daviding (Mastodon)

    • daviding: “Web video introduction of 15 minutes for 1-hour Lunch and Le…” March 22, 2024
      Web video introduction of 15 minutes for 1-hour Lunch and Learn #CentreForSocialInnovationToronto on "Systems Changes Dialogues for Social Innovation" invites practitioners for upcoming monthly meetings. Evocative animated images, details deferred to conversations with mentors. https://coevolving.com/blogs/index.php/archive/systems-changes-dialogues-csi/#SystemsThinking
    • daviding: “Web video of slides from "From Unfreezing-Refreezing, to Sys…” March 21, 2024
      Web video of slides from "From Unfreezing-Refreezing, to Systems Changes Learning" for Dialogic Drinks of #EQLab represents only 1/5 of the time compared to peer-led discussions. Concise hosting called for brevity, and richer presentations. https://coevolving.com/blogs/index.php/archive/from-unfreezing-refreezing-eq-lab/ #SystemsThinking
    • daviding: “Hosting multiple Dialogic Drinks on "From Unfreezing-Refreez…” March 8, 2024
      Hosting multiple Dialogic Drinks on "From Unfreezing-Refreezing, to Systems Changes Learning" online, March 12 (Europe), March 14 (Americas), March 15 (Australia). #Leadership meets #SystemsThinking . Short presentations, longer discussions https://www.eqlab.co/from-unfreezing-refreezing-to-systems-changes-learning-david-ing
    • daviding: “"Climate change has no map that we know of. Each time a new…” February 15, 2024
      "Climate change has no map that we know of. Each time a new scientific study returns something we studied before, it's always going to arrive faster and be worse than we thought before". Episode 5, #DavidLHawk "What to do When It's too Late" https://www.youtube.com/watch?v=VPruvIsDRDk #SystemsThinking "Instead of cause-effect thinking, effects coming from prior effects, not […]
    • daviding: “In the third episode of "What to Do When It's Too Late", #Da…” February 2, 2024
      In the third episode of "What to Do When It's Too Late", #DavidLHawk explains his #systemsthinking with humans in #climatechange, dealing with hopelessness. Live weekly broadcast on #BoldBraveTv with video recordings and podcasts. Text digest at https://daviding.wordpress.com/2024/02/02/what-to-do-when-its-too-late-david-l-hawk-2024/
  • RSS on IngBrief

    • Introduction, “Systems Thinking: Selected Readings, volume 2”, edited by F. E. Emery (1981)
      The selection of readings in the “Introduction” to Systems Thinking: Selected Readings, volume 2, Penguin (1981), edited by Fred E. Emery, reflects a turn from 1969 when a general systems theory was more fully entertained, towards an urgency towards changes in the world that were present in 1981. Systems thinking was again emphasized in contrast […]
    • Introduction, “Systems Thinking: Selected Readings”, edited by F. E. Emery (1969)
      In reviewing the original introduction for Systems Thinking: Selected Readings in the 1969 Penguin paperback, there’s a few threads that I only recognize, many years later. The tables of contents (disambiguating various editions) were previously listed as 1969, 1981 Emery, System Thinking: Selected Readings. — begin paste — Introduction In the selection of papers for this […]
    • Concerns with the way systems thinking is used in evaluation | Michael C. Jackson, OBE | 2023-02-27
      In a recording of the debate between Michael Quinn Patton and Michael C. Jackson on “Systems Concepts in Evaluation”, Patton referenced four concepts published in the “Principles for effective use of systems thinking in evaluation” (2018) by the Systems in Evaluation Topical Interest Group (SETIG) of the American Evaluation Society. The four concepts are: (i) […]
    • Quality Criteria for Action Research | Herr, Anderson (2015)
      How might the quality of an action research initiative be evaluated? — begin paste — We have linked our five validity criteria (outcome, process, democratic, catalytic, and dialogic) to the goals of action research. Most traditions of action research agree on the following goals: (a) the generation of new knowledge, (b) the achievement of action-oriented […]
    • Western Union and the canton of Ticino, Switzerland
      After 90 minutes on phone and online chat with WesternUnion, the existence of the canton of Ticino in Switzerland is denied, so I can’t send money from Canada. TicinoTurismo should be unhappy. The IT developers at Western Union should be dissatisfied that customer support agents aren’t sending them legitimate bug reports I initially tried the […]
    • Aesthetics | Encyclopaedia Britannica | 15 edition
      Stephen C. Pepper was a contributor to the Encyclopaedia Britannica, 15th edition, on the entry for Aesthetics.
  • Recent Posts

  • Archives

  • RSS on daviding.com

    • 2024/02 Moments February 2024
      Chinese New Year celebrations, both public and family, extended over two weekends, due to busy social schedules.
    • 2024/01 Moments January 2024
      Hibernated with work for most of January, with more activity towards the end of month with warmer termperatures.
    • 2023/12 Moments December 2023
      A month of birthdays and family holiday events, with seasonal events at attractuions around town.
    • 2023/11 Moments November 2023
      Dayliight hours getting shorter encouraged more indoor events, unanticipated cracked furnace block led to replacement of air conditioner with heat pump, too.
    • 2023/10 Moments October 2023
      Left Seoul for 8 days in Ho Chi Minh City, and then 7 days in Taipei. Extended family time with sightseeing, almost completely offline from work.
    • 2023/09 Moments September 2023
      Toronto International Film Festival, and the first stop of a 3-week trip to Asia starting with Seoul, Korea
  • RSS on Media Queue

    • What to Do When It’s Too Late | David L. Hawk | 2024
      David L. Hawk (American management theorist, architect, and systems scientist) has been hosting a weekly television show broadcast on Bold Brave Tv from the New York area on Wednesdays 6pm ET, remotely from his home in Iowa. Live, callers can join…Read more ›
    • 2021/06/17 Keekok Lee | Philosophy of Chinese Medicine 2
      Following the first day lecture on Philosophy of Chinese Medicine 1 for the Global University for Sustainability, Keekok Lee continued on a second day on some topics: * Anatomy as structure; physiology as function (and process); * Process ontology, and thing ontology; * Qi ju as qi-in-concentrating mode, and qi san as qi-in-dissipsating mode; and […]
    • 2021/06/16 Keekok Lee | Philosophy of Chinese Medicine 1
      The philosophy of science underlying Classical Chinese Medicine, in this lecture by Keekok Lee, provides insights into ways in which systems change may be approached, in a process ontology in contrast to the thing ontology underlying Western BioMedicine. Read more ›
    • 2021/02/02 To Understand This Era, You Need to Think in Systems | Zeynep Tufekci with Ezra Klein | New York Times
      In conversation, @zeynep with @ezraklein reveal authentic #SystemsThinking in (i) appreciating that “science” is constructed by human collectives, (ii) the west orients towards individual outcomes rather than population levels; and (iii) there’s an over-emphasis on problems of the moment, and…Read more ›
    • 2019/04/09 Art as a discipline of inquiry | Tim Ingold (web video)
      In the question-answer period after the lecture, #TimIngold proposes art as a discipline of inquiry, rather than ethnography. This refers to his thinking On Human Correspondence. — begin paste — [75m26s question] I am curious to know what art, or…Read more ›
    • 2019/10/16 | “Bubbles, Golden Ages, and Tech Revolutions” | Carlota Perez
      How might our society show value for the long term, over the short term? Could we think about taxation over time, asks @carlotaprzperez in an interview: 92% for 1 day; 80% within 1 month; 50%-60% tax for 1 year; zero tax for 10 years.Read more ›
  • Meta

  • Creative Commons License
    This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License
    Theme modified from DevDmBootstrap4 by Danny Machal