Presentation given by Matthias Kaiserswerth, Director, IBM Research - Zurich Laboratory, PRISMA Innovation Night, March 18, 2009

1. Zurich Research Lab
Open Innovation in a Globally Integrated Enterprise
Dr. Matthias Kaiserswerth
Director, IBM Zurich Research Lab
© 2009 IBM Corporation

2. Building a smarter planet
Agenda
Introduction to IBM Zurich Research Lab
Small and medium businesses in a “flat world”
Collaborative Innovation at IBM
Innovative small and medium businesses
Next steps
© 2009 IBM Corporation

3. Building a smarter planet
Introduction to IBM Zurich Research Lab
Small and medium businesses in a “flat world”
Collaborative Innovation at IBM
Innovating small and medium businesses
Next steps
© 2009 IBM Corporation

4. Building a smarter planet
IBM Zurich Research Lab
Zurich Research Focus Areas
Lab population: ~ 320 persons
Computer Science: Security and Privacy,
• Regular employees 240 Business Integration Technologies,
• Pre-docs 50 Systems Management
• Post-docs &
visiting scientists 30 Systems: Server Technology, Accelerator
Technology, I/O Link Technologies, System
Software, Energy Management
Collaboration with external Storage: Tape Technologies, Heads and
partners Actuators, Storage Systems, Memory and
Probe Technologies
• University projects 30
• Industrial partners 30
Math & Computational Science: Business
• Govt. programs 30 Optimization, Computational Sciences, Data
Analytics
>30 different nationalities
Science & Technology: Semiconductors,
Systems, Beyond the Transistor,
Nanotechnology, Biotechnology
4 © 2009 IBM Corporation

5. Building a smarter planet
IBM Labs are Globally Integrated
More than 3,000 scientists and engineers at 8 labs in 6 countries
IBM spent $6B in 2008 on R&D
Watson Zurich
1945 1956 Beijing
1995
Almaden Tokyo
1955 1982
Austin Haifa Delhi
1995 1972 1998
5 © 2009 IBM Corporation

6. Building a smarter planet
Agenda
Introduction to IBM Zurich Research Lab
Small and medium businesses in a “flat world”
Collaborative Innovation at IBM
Innovative small and medium businesses
Next steps
© 2009 IBM Corporation

7. Building a smarter planet Zurich Research Lab
The reality of living in a globally integrated world is upon us.
Frozen credit markets and limited access to capital.
Economic downturn and future uncertainty.
Energy shortfalls and erratic commodity prices.
Information explosion and risk/opportunity growth.
Slowing superpowers and emerging economies.
Increasingly complex supply chains and empowered
consumers.
The world is connected:
economically, socially and technically.
7 © 2009 IBM Corporation

8. Building a smarter planet Zurich Research Lab
The world is smaller and flatter.
8 © 2009 IBM Corporation

9. Building a smarter planet Zurich Research Lab
IBM Global CEO Midmarket Study
The Midmarket Enterprise of the future is focused on …
1 2 3 4
Business New breed of Greater need for Global
model informed and corporate social growth
innovation collaborative responsibility strategies
consumer programmes
© 2009 IBM Corporation

10. Building a smarter planet
What you told us...
Rethinking what is done in-house and through
collaboration
 The increasingly informed and collaborative
consumer
 Increasing investments in corporate social
responsibility
Optimism about becoming more global and about
tapping into the rising purchasing power of
emerging economies
© 2009 IBM Corporation

11. Building a smarter planet
Agenda
Introduction to IBM Zurich Research Lab
Small and medium businesses in a “flat world”
Collaborative Innovation at IBM
Innovative small and medium businesses
Next steps
© 2009 IBM Corporation

12. Building a smarter planet Zurich Research Lab
What is innovation?
“Innovation resides at the intersection
of invention and insight, leading to
the creation of social and economic
value”
National Innovation Initiative
© 2009 IBM Corporation

13. Building a smarter planet Zurich Research Lab
The changing nature of innovation
 Key factors driving change
– Dynamics of a flattening world
– Emergence of new capabilities
– Evolution of information technology
– March of commoditization
– Massive shift in demographics
– Unpredictability and impact of change
 Innovation in the 21st century
– Open
– Collaborative
– Multi-disciplinary
– Global
© 2009 IBM Corporation

14. Building a smarter planet Zurich Research Lab
Why does innovation matter?
 Generates high-value,
higher-paying jobs
 Fuels wealth creation
and profitability
 Creates new industries
and markets
 Spurs productivity and
economic growth
 Raises standard of living
 Goes beyond invention
© 2009 IBM Corporation

15. Building a smarter planet Zurich Research Lab
Open, collaborative innovation
 What would happen if we could…
– Bring our top technologists and
consultants together to envision Venture
Capitalists
ISVs
the future of innovation? IT Analysts Business
Partners
Investors
Alumni
– Invite our innovation ecosystem Regulatory
to join in the conversation?
Bodies Innovation
Clients
Ecosystem Universities
– Partner with those ecosystem Community
Leaders
participants to address the Employees
Standards Policy-
challenges and opportunities Bodies makers
Competitors
that emerge?
© 2009 IBM Corporation

16. Building a smarter planet Zurich Research Lab
InnovationJams
© 2009 IBM Corporation

17. Building a smarter planet Zurich Research Lab
The result of IBM InnovationJam
© 2009 IBM Corporation

18. Building a smarter planet Zurich Research Lab
Can you Jam? Absolutely
© 2009 IBM Corporation

19. Building a smarter planet Zurich Research Lab
Evolution of a Partnership
IBM Research’s Public-Private Partnership with ETH
IBM and ETH Zurich Information IBM and ETH Zurich
open Center for Security Center form $90 million
Advanced Silicon created with ETH partnership in
Electronics and Credit Suisse nanoscience
September 2003
August 2001
June 2008
© 2009 IBM Corporation

20. Building a smarter planet
A Model for Collaboration
For the first time in Switzerland will Industry and Academia not only
share research infrastructure, but actually create it in a joint effort.
● Investment of 90 Mio USD
● IBM constructs the building
● ETH rents space for
a minimum of 10 years
● Both joint and individual
research projects
● Available to more
organizations
© 2009 IBM Corporation

21. Building a smarter planet
Agenda
Introduction to IBM Zurich Research Lab
Small and medium businesses in a “flat world”
Collaborative Innovation at IBM
Innovative small and medium businesses
Next steps
© 2009 IBM Corporation

22. Innovative Collaboration
Varioprint AG and IntexyS Photonics
What’s innovative?
• Intexys Photonics and
Varioprint AG Partnered with
the IBM Zurich Research to
develop a cost competitive,
optical data transmission
solution to increase the
bandwidth between
processor chips.
22

23. Building a smarter planet
Disruptive and Radical Innovation
Bandwidth Density of Objects
All Electrical All Optical
 Today, optical interconnects are used
for long-distance intra-cluster
connections due to high bandwidth
(BW) capabilities
 As BW requirements increase, optics IBM Federation Switch
will be able to provide a cost- copper and optical interconnect versions
performance advantage for even
shorter distances, for backplane and
card level interconnects
© 2009 IBM Corporation

24. Building a smarter planet
Optical Interconnect: A Supplier Ecosystem
Optical printer circuit board
Multinational
Partner
Optical connectors
Multinational
Partner
+
European
Startup
Opto-electronic transceivers
© 2009 IBM Corporation
Card-to-card optical interconnect prototype

25. Building a smarter planet
Building and Maintaining a Health Ecosystem
 Broadly speaking, there are two foundational components of an
effective keystone strategy. The first is to create value within the
ecosystem […] the second is to then share the value within the
ecosystem (Iansiti, 2004)
 “Successful innovation requires tracking your partners and
potential adopters as closely as you track your own development
process” (R. Adner, 2006)
Supply Chain Ecosystem Strategy
Actively create and “manage” supplier base, create value
for suppliers ( support adoption of the technology in an
entry market).
Track ecosystem risk.
© 2009 IBM Corporation

26. Innovative Collaboration
Max Bahr, do it yourself store automates inventory
What’s innovative?
• IBM Dynamic Inventory
Optimization Solution performs
eighty to ninety percent of Max
Bahr's inventory replenishment.
• There is no ERP system involved
Smarter Business Outcomes
• Increased average shelf
availability to 99.1% (93.5% is
the average shelf availability in
retail)
• Over 90% of the items planned
are automatically replenished
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27. Innovative Collaboration
Numhi Technologies, reinventing medical records
What’s innovative?
• 3D avatar links to medical
records at Danish Hospital
• Collaborating with IBM with
its go to market strategy and
in product licensing
Smarter Business Outcomes
• Supports hospital's strategy
for a paperless environment
• Improves doctor patient
experience
• It will allow doctors to see
more patients and diagnose
them more accurately.
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28. Building a smarter planet
Agenda
Introduction to IBM Zurich Research Lab
Small and medium businesses in a “flat world”
Collaborative Innovation at IBM
Innovative small and medium businesses
Next steps
© 2009 IBM Corporation

29. Building a smarter planet Zurich Research Lab
To realize the potential organizations need to do three things – the
underlying enabler is open collaboration and innovation
1 2 3
FOCUS ON VALUE EXPLOIT OPPORTUNITIES ACT WITH SPEED
Do more with less Capture share Manage change
 Cash/capital focus  Disrupt weak competitors  Clearly communicate simple goals
 Flexibility  Acquisitions  Seek and leverage experience
Focus on the core Build future capabilities Leadership
 Businesses  Protect and acquire talent  Get the information to act
 Initiatives  Initiatives  Set the agenda
Re-align relationships Change your industry Risk and transparency
 Financial solidity of  Bold moves  Business performance
suppliers, partners  Position globally management and analytics
and customers  Risk management
 Revisit/renegotiate
© 2009 IBM Corporation

30. Building a smarter planet
Zurich Research Lab
30 © 2009 IBM Corporation