November 13, 2006 9:01 PM PST

IBM's chief steps into 'Second Life' for incubator launch

IBM's chief executive, Sam Palmisano, is set to launch a $100 million investment to incubate new businesses--and he will make the announcement in both the physical and virtual worlds.

Palmisano is scheduled to host a "town hall" meeting in Beijing and in the Second Life virtual world on Tuesday to tell IBM employees about the investment, which will be spread over two years.

The financial commitment stems from IBM's InnovationJam, an online brainstorming session that the company says brought together more than 150,000 people over two 72-hour periods.

IBM in Second Life

The goal of the InnovationJam was to develop new business ideas through large-scale collaboration.

IBM has hosted internal online brainstorming sessions since 2001. For the InnovationJam session in July, IBM for the first time invited partners, customers and IBM employees' family members to participate.

Nearly 50,000 ideas were posted and then winnowed down, in part using sophisticated analytical software. IBM hosted another jam to vote on and refine the ideas. These were eventually reduced to 10, all of which are being funded.

"Clearly, the numbers tell a story. The world, and particularly this company, is ready for new forms of collaboration and new forms of solution and opportunity generation," said David Yaun, the corporate vice president in charge of innovation programs at IBM.

Palmisano plans to give details of the 10 initiatives that came out of the InnovationJam in Beijing, a move that underscores IBM's commitment to working in China.

Meanwhile, Palmisano's avatar will discuss the announcement in Second Life's Forbidden City, a space created in the virtual environment by IBM and the Chinese government, an IBM representative said.

Big Blue's employees can also participate in the InnovationJam funding launch in Second Life--a practice that IBM has been experimenting with for several months.

The avatar was proposed and created by a team working on IBM's presence in Second Life, Yaun said.

"Sam (Palmisano) got wind of the avatar and created his own avatar--a casual one," Yaun said. "The formal debut of the one in his suit, the business one, will be (at the launch)," Yaun added.

Where IBM is placing bets
Yaun said that the business proposals address near-term, medium-term and long-term business opportunities, although the company didn't set out with a plan to cover different time frames.

He said that the ideas that seem likely to produce something solid in the next year or so are: "Intelligent Utility Networks," which looks into ways to do real-time monitoring and control of power transmission grids; "Real-time Translation Services"; and "Simplified Business Engines," a proposal to package Web 2.0 services up with IBM blade servers.

Medium-term projects are "Smart Healthcare Payment Systems," which use smart cards to process medical claims; and "Integrated Mass Transit Information Systems," a way to get real-time data for mass transit systems.

Longer-term projects are "Electronic Health Records" and "Big Green Innovations." In the second case, IBM intends to seek out emerging environmental opportunities, such as using nanotechnology for water filtration.

Other ideas include "Branchless Banking for the Masses," "3D Internet," and a simplified online storage service dubbed "Digital Me."

IBM will not necessarily launch a separate business around each idea, but it will invest in these areas and potentially seek business partners to commercialize them, Yaun said.

Members from the teams behind these initiatives received their assignments about 10 days ago, and they are expected to present business plans in about 45 days.

The driving idea behind the investment move is to set up a different structure outside the existing product groups to foster new businesses, Yaun said.

"Sam (Palmisano) has made it 100 percent clear that he doesn't want 'business as usual.' He wants radical new ideas," Yaun said. "By developing a business idea of the normal processes in IBM, people are feeling liberated by starting something from scratch."

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