The Information Puzzle

GA ng openminds sa PHILOSC..panalo!

===

The Information Puzzle

Some observers are perplexed, and others infuriated, by what they think is IBM's contradictory stand on innovation. So let me explain.

By Sam Palmisano

Newsweek

Updated: 11:32 a.m. ET Dec. 2, 2005

Issues 2006 - In IBM's conversations with decision makers—from CEOs to university presidents to prime ministers and community leaders—we are hearing one question over and over: "How can I stimulate growth and economic development while also cutting costs?" Increasingly, the answer is one word: innovation. I agree entirely. The problem is that the nature of innovation is changing in important ways, driven by an increasingly open, networked and global economy. Knowing how to capture innovation's benefits requires rethinking old assumptions about creation and ownership.

IBM has a unique perspective on this topic. We have earned the most U.S. patents in each of the past 12 years by a very wide margin, yet we're also the leading business investor and innovator in the open movement. Some observers have been perplexed—and some partisans infuriated—by what looks to them like a contradictory position. But it's contradictory only if you miss the underlying patterns shaping innovation. The key for business leaders and policymakers alike is not to adopt a black or white position, but to work toward a balanced approach.

Let me try to simplify the issues with two key distinctions: between open source and open standards, and between intellectual property and intellectual capital. Open source is a method of tapping a community of experts to develop useful things. It began in software, but applies broadly, and is anything but anti-capitalist. It can raise quality at reduced costs, and vastly expands opportunities for profit. In a sense, open source fuels innovation much the way science fuels technology. Science is created by communities of experts, whose fundamental discoveries are typically made available to all, including individuals and companies that are able to capitalize on the new knowledge in novel ways. For IBM, the open-source model is familiar territory, given our long track record in the sciences.

Open standards, in contrast, are not a meth-odology, but an underlying condition for economic or social progress because they make possible the free flow of capital, information and ideas. A currency system is an open standard. A highway system is an open standard. The Bill of Rights is an open standard of sorts. The Internet's founding protocols—http, html, etc.—are important open standards. IBM has embracedopen standards over the past decade, and we're working in myriad ways to foster their adoption.

Now, to intellectual property vs. intellectual capital. I recently made a presentation on innovation at Rensselaer Polytechnic Institute. Afterward, a discussion broke out. The top issue for these future technology leaders was how intellectual-property policy is impacting innovation in global economies. A couple of years ago, this was arcane stuff. Not anymore.

NEWSWEEK has described as "seismic" IBM's 2005 donation of more than 500 software patents for use by the open community. That was a strategic commitment, one we recently extended by pledging open access to thousands of IBM patents to designated health-care and education industry-standards organizations. Why do this? Some leaders in business, academia and government find it counterintuitive.

Let me explain. More and more of the innovation that truly matters today functions not only as intellectual property (the brilliant work of individuals), but as intellectual capital (a deep well of knowledge created collaboratively). As with open standards, this is about enlarging the pie and fostering innovation on top of what is available to all. And it's not about gizmos, but about new enterprise models—such as "networkless" telecoms, online auctions or real-time retail systems. Our intellectual-property laws, based on an earlier paradigm, will have to catch up.

In the end, the new, emerging model of collaborative innovation—balancing different aspects of openness and different kinds of ownership, and drawing on the historic and deeply productive relationship between science and technology—has the simplicity and clarity that we always find in big, game-changing shifts. Yes, it certainly is challenging many old assumptions. But that puts it, as a paradigm for future growth and progress, in pretty good company.

Palmisano is chairman and CEO of IBM.