Palmisano: Invention For Its Own Sake Isn't Enough

The IBM chairman and CEO says new technology must be applied to practical scenarios for customers.
The chief executives of IBM and General Electric Co. on Wednesday gave business executives an outlook for their companies predicated on turning inventions into industry standards and intellectual property into financial growth.

Speaking at an event in San Francisco to promote IBM's business computing strategy, IBM chairman and CEO Sam Palmisano said invention for its own sake isn't sufficient to make IBM a more valuable company. "Technology unto itself is not enough," he said. Instead, IBM is managing its units to apply new technology in practical scenarios for customers, conceding commodity prices for large swaths of the IT industry such as PCs and printers while brokering new contracts that combine the management of IT and operations.

For example, IBM manages human-resources operations for Procter & Gamble Co., a new business for IBM. Palmisano also said solving new problems in fields such as bioinformatics and telematics will involve applying industry standards through technologies such as Linux, Java, and grid computing.

GE chairman and CEO Jeff Immelt said generating productivity and cash flow are the $130.7 billion-a-year company's most important goals. GE's growth prospects for the next three to 10 years are good, he said, but Immelt predicted an uneven business environment with "clear winners and losers." Important decisions that determine sales growth will hinge on which of its intellectual property GE makes into products and which it outsources or licenses to others. Plus, he said, "we're spending too much money" on IT.

That statement, following Palmisano's remarks, drew a laugh from the crowd at the San Francisco Museum of Modern Art.