It is commonly thought that IBM is one of the world’s most innovative companies. But the public has a false memory when in the 1960’s IBM executives believing that the personal computer was just a toy allowed a young entrepreneur by the name of Bill Gates to supply them with an operating system called Microsoft it was probably their biggest blunder. IBM promotes their innovation as being leading edge and indeed some of it may be but its really for the benefit of IBM and in many cases it is highly exploitive of their customers. Consider how during the 1970’s and 1980’s even into the early 1990’s IBM pursued a policy of actually controlling its customers. IBM had a representative on McDonnell Douglas’s Corporate board. During those years most McDonnell executives were not computer literate and actually deferred major decisions to IBM executives in the area of automation and in the building of their computer center. This is not all bad because McDonnell didn’t have the expertise needed for automating the company. But with this kind of power you don’t need to innovate all you need to do is keep out competitors which is exactly what they did. McDonnell was an IBM “shop”.

A small crack occurred in the 1980’s when the McDonnell Missile Systems Company bought Digital Equipment Vax computers for its manufacturing division. By this time it was obvious that the obsolete application programs coded were very expensive to maintain. These application programs were stand alone units and there was little integration and data sharing was not possible. I was with a team that proposed that broadband be installed throughout the manufacturing areas and the application programs be rewritten using a common operating system. This would allow the system to use computers from different vendors and with the SQL (Structured Query Language) all computers could be integrated and able to access data from various databases. The broadband wiring was installed in the manufacturing areas and some offices. But when the company computer programmers (all were IBM trained) refused to program the new system. The new system eventually failed to meet its deadlines and was abandoned in 1989. Because IBM lacked the technology to hook up to the Broadband system they had it removed in 1992. This should be a lesson to those in business and government who have IBM “Shops” don’t expect innovation that benefits you the customer.

Among the most innovative companies that innovate for their customers is Google. Google’s search engine business started with the question “what does the customer want?” not how can we make money from the customer.
Eric Schmidt CEO of Google knows the importance of innovation. His employees are allowed to spend 20% of their day working on their own innovations knowing if the company buys in they will have the chance to develop their ideas. Google spends 70% of their efforts on the core of their business the search engine, 20% on search engine related business and 10% on unrelated customer driven innovation. The real question for industry and government leaders who want answers on automation issues is who do you ask IBM or Google. The answer is clearly customer driven innovation companies like Google.

Another innovative customer driven company is Walmart. It uses customer driven innovative by providing customers with the opportunity to purchase low cost goods. No other company can compete with its innovative distribution system. But Walmart also has a unique marketing strategy first developed by Sam Walton. It works like this the store finds a bottom of the line product especially in consumer electronics and puts pressure on the manufacturer to sell at high volume lowest price only through Walmart. The next step up in customer perceived quality is where Walmart makes its profit on a product which may or may not be priced below that of competitors. This approach has made Walmart a leader in retail goods.