MANILA, Philippines — For a company celebrating its 100th year, IBM (International Business Machines, Inc.) has definitely gone a long way from its humble roots by expanding its business through constant reinvention.

What started as a business making clocks, scales and cheese slicers has evolved into a global enterprise that’s responsible for a blur of innovations that include ATMs, mainframes, mini-computers, supercomputers, memory chips, the now obsolete typewriter, the barcode, and even that thin magnetic strip you see on your credit card.

Last February, in fact, IBM proved that machines are smarter than mankind—at least where “Jeopardy” is concerned. The company came up with a supercomputer called Watson, named after IBM Founder Thomas Watson, and it was pitted against two of the world’s best Jeopardy players of all time. Millionaires in their own right, Ken Jennings and Brad Rutter conceded to Watson after a three-day competition that ended with the supercomputer winning a $1 million prize for charity.

“Watson’s victory culminates years of research and development for IBM. “It isn’t just something fancy that you have a computer that can play ‘Jeopardy’,” says IBM Philippines Country General Manager James Velasquez, “but imagine being able to have a computer that can respond to natural language, can recognize human puns and ironies, and be able to detect with a certain level of confidence what the correct answer is—the implications that surround it is amazing.”

More than anything, Watson is testament to IBM’s core competency of providing solutions for the enterprise. Velasquez says: “The point here is really intelligence. There are now computers that can process a lot of information; there are now software that can do analytics and so on; and this combination allows for the world becoming smarter.”

From Multinational to Global
Celebrating its 75th year in the Philippines next year, Velasquez points out that essential to maintaining IBM’s sustainability is keeping its business relevant—especially in the locations that matter.

“Now it’s apparent that we have BPO the world over, and we call it a move from being a multinational corporation to a globally integrated enterprise,” says Velasquez, adding that what this means is that the company does its work where it’s best done: HR in the Philippines, Procurement in China, Accounting in Asia, and Application Development in India.

Too often-most companies start with operations wherever the headquarters would be, and when they eventually move international, the oft-practiced strategy is moving to a multinational setup that mirrors the processes in the main branch. But what IBM is seeing is that companies need to shift from a multinational to a global operation. “Having a multinational corporation where you have mirrors of what you do everywhere may have worked in the ’50s to early ’90s, but that was before the Internet entered the picture,” says Velasquez.

In today’s environment where everything is interconnected, “you have to take advantage of that interconnection,” asserts Velasquez. “Where work is best done is really the best approach, and not just from a cost standpoint but from a scales and capabilities standpoint. And to be a truly global company, presence is important. You need to be in the locations that matter,” he says, pointing out IBM’s move to set up its headquarters for “Growth Market Units” in Shanghai, China as an example. “Clearly, being there is important; and when you talk about being global, you need to be there, and you need to have people there who are capable of adapting to a global setting and the local requirements of growing business in that country.”

Transformational Leadership
IBM continues to lead in Patent Development worldwide and continues to invest heavily on research and development. But more than its bevy of innovative products, the company attributes its success to the IBMer. “More than anything, we’re proud of our people—we’ve always been a company that espouses innovation, technology and leadership,” Velasquez shares.

A true measure of a global company is its employees. More than just the sheer number of a company’s workforce, a company’s success lies in how its employees perceive things in a global context. “For a global enterprise to define its mission and purpose, it needs to ask itself some age-old questions like how it creates value and the role it plays in society at large,” Velasquez asserts.

Much of IBM’s innovations exist not only to improve business processes, but society in general. “Our vision of a smarter planet is really about looking at what companies and governments can do to essentially optimize our resources, and our employees are heavily involved in that,” says Velasquez. “For instance IBM has held online collaboration events aimed at solving specific problems, and we invite our employees to suggest solutions,” he adds.

As things become more interconnected because of the Internet, organizations cannot afford to follow their set traditions. “The things that were only in the digital realm are now able to sync with the physical realm,” shares Velasquez, adding that trends are now pointing to the rise of Business Analytics.

“It’s something very relevant that companies need to take advantage of. Look at what’s out there, what can be automated, what can be analyzed and so on,” urges Velasquez, “and you can use those insights to improve the service you offer in the market, you can use it to make some changes in your business, and you can use it to plan ahead in terms of what you need to do to move forward.”

Published in the June 13, 2011 issue of the Manila Bulletin Business Agenda section.