Lesson for Entrepreneurs: Keep Thinking

So when my retired IBM friend read my blog from earlier this week, he got in the swing of things, and called me to say that there were more than three things entrepreneurs could learn from IBM.

I’ll bite, I told him. Give me three more. And so he did.

1. Allocate some percentage of company resources to research and development, recognizing that the benefits of R&D accrue over time.

IBM invests more than $6 billion in R&D annually, with about 30 percent of that going to long-term research.

After the company was established in 1911, it took IBM more than 50 years to receive the company’s first 5,000 patents. Earlier this year, IBM announced that its inventors had received 5,896 patents in 2010.

2. Good employees make good companies. A diversified workforce makes an even better company.

Sure, you can Google the blogs and find plenty of disgruntled former and present IBM employees, but the company has an outstanding reputation for hiring good people, training them and holding them responsible for doing their jobs and doing them well.

IBM has been a leader in a blended work force. The company consistently ranks among the world’s top companies in gender, cultural and other aspects of diversity.

It’s anticipated that IBM will announce a new CEO when current CEO Sam Palmisano turns 60 next month. Unlike Hewlett-Packard and Nokia who had to go shopping for CEOs, IBM has at least three exceptional internal candidates for the job.

“They’ve mastered the art of developing the next generation,” Denny Carey, vice-chairman at Korn/Ferry told Bloomberg Businessweek.

3. When formerly good companies have problems, everything is fair game for change.

There was one IBM CEO who didn’t come from inside the company.

In the 1990s when the company was edging toward financial disaster and obscurity, the Board brought in Louis V. Gerstner, Jr. to turn things around. He ended IBM’s practice of no layoffs and made other tough internal decisions.

Conventional wisdom said that the company was too big and unwieldy and that it should be broken up. But Gerstner said no, that IBM had the capability to solve large and complex problems for its customers.  Gerstner taught the elephant how to dance.

Keep  thinking.

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