There's no simple formula for developing innovative technology. Hiring the smartest professionals and spending substantial amounts of money on research and development is the standard approach, and it usually works. But IBM has discovered that another way is to listen to new voices.

The multibillion-dollar technology vendor, which in most years ranks as the worldwide leader in obtaining new patents, is harvesting ideas from a group of computer-science and MBA college students who team with IBM business managers in an 11-week summer internship program called Extreme Blue. The 4-year-old program has been so successful--it produced 20 patent-pending inventions last year--that IBM is extending it into the fall for the first time.

To facilitate the move, IBM is developing co-op partnerships with colleges and universities. Next month, it plans to launch a program that will provide students with temporary jobs during the school year to work on emerging business-technology opportunities; the jobs are proposed and paid for by IBM business units.

"We haven't got [the fall program] fully funded yet," says John Wolpert, manager of IBM's Extreme Blue lab in Austin, Texas. He says that shouldn't be a problem. This year, the Extreme Blue program got 107 proposals from IBM product groups to fill its 24 project slots. "Extreme Blue is good at getting high-risk projects attention and proving that they ought to be done," Wolpert says.

The summer program, which runs from June to August, has about 100 students who work in IBM research and development labs in Almaden, Calif.; Austin; Cambridge, Mass.; and Raleigh, N.C. Projects range from distributing digital media via grid computing to the use of Web services in IBM printing systems.

Telematics is a key project this summer at the Austin lab. The students are working with IBM personnel to build software that would connect telemetry data, such as a car's location and mechanical condition, to a business application such as a restaurant or gas-station locator, Wolpert says. The team also is exploring ways to aggregate telematics data and sell it to the auto industry, which could use the information to develop more safety or luxury features for cars.

IBM is careful about whom it selects to participate in Extreme Blue. When the company visits colleges or checks out programmer competitions to scout for interns, it intentionally looks for candidates who understand the value of having business and technology professionals work closely together on projects.

"The summer wouldn't be as productive if you weren't looking at problems from a business and a technology perspective," says David Cautin, a former director of business development at America Online and now a Harvard MBA student. By having students and IBM employees exchange views and perspectives and merge their talents while working to create a product or service for customers, "you keep each other honest," says 29-year-old Cautin, who's interning at IBM's Cambridge lab.

This is the first year that the Extreme Blue interns will interact with existing IBM customers for feedback and perspective on early development projects.

Programming while focusing on customers and revenue-generating models is a new way of thinking for Nell Rehn, a computer-science graduate student at the University of Illinois. When Rehn worked on a grid-computing project at Argon National Labs near Chicago as an undergrad, she never had to think about ways to market the product she was developing. "I've been so isolated from the business side," she says.

This year is different. Rehn is part of a team that includes two other computer-science majors and an MBA student working in IBM's Raleigh research lab on a grid-computing music-distribution product. One key consideration, she says, is remembering who the customer might be and how her team can make the product easier to install and use. "There definitely are a lot of design decisions we base on what the customer would want and who they would be," she says.

The internship program is one way IBM deals with the challenge of finding skilled professionals who have a combination of business and technology knowledge, says Jane Harper, director of Extreme Blue and IBM Internet technologies. When IBM finds those gems in its internship program, it tries to hire them. Last year, IBM offered jobs to 57 of its 80 U.S. interns. It ended up hiring about 53.

Many of the projects that were worked on during the internship program are somewhat futuristic--the kind that some people weren't ready to bet big money and careers on, Wolpert says. But testing them out in an internship program gives the ideas exposure within IBM and "helps to keep innovation alive at a big company."