A new business model to transform client innovation
We were truly a start-up within IBM
— Rachel Reinitz, Garage CTO and IBM Fellow, recalling the origins of the IBM Garage
It was 2014, and the idea of platform-as-a-service offerings on the public cloud was new, but brimming with potential. For the first time, clients could access a wealth of business applications via the cloud, without the expense of purchasing, deploying and maintaining those assets themselves.
For businesses just beginning their adoption of cloud technology, or small start-ups with limited IT budgets, the ramifications were huge — they could take advantage of the same advanced IT tools available to large enterprises.
Steve Robinson, general manager of cloud platform services at the time, saw the potential, and the potential pitfalls. Those companies new to cloud needed a partner that could smooth their transition and get them up and running on the cloud quickly and efficiently.
“It was going to be a fairly radical new project for IBM,” he explained, “and one of our challenges was to figure out what we could put in place to help a company build that brand-new, first cloud-native application.”
The solution Robinson and his team came up with was IBM Garage, a new business model where IBM experts would partner with a client team to develop transformative solutions on a short timeframe. Based on the start-up community concept, where clients and experts team up in co-working locations, Garage was a departure from IBM’s traditional business model.
Robinson’s hunch about the market potential paid off. A 2020 Forrester study found that the Garage Methodology led to of a tenfold increase in innovative ideas and a 67% reduction in delivery timelines, putting six times as many projects into production and driving a 102% average return on investment.
Big interest from clients and new-collar talent
"We were going after that start-up community, but we found the Garage concept was extremely attractive to larger enterprises that were trying to figure out public cloud and cloud native as well,” said Robinson. “Before long, we had MetLife coming in, and the banks coming in, and everybody wanting to get a taste of this West Coast, San Francisco buzz that was going on. They viewed it as a way to drive innovation back into their companies. It became a tremendous showcase for, kind of, the ‘new’ IBM as we got into the cloud and the public cloud.
“That decision to go into start-up communities was more impactful with enterprise customers than we expected,” agreed Rachel Reinitz, Garage CTO and an IBM Fellow with experience in the start-up world. “Clients would look around, kind of puzzled, and say, ‘Is this IBM?’”
“The first client to come and do a workshop with us was Manulife from Canada,” she said. “The project was set to start on Sept. 20, and we literally moved into the new space that weekend and started on Monday. Manulife sent a developer and a product owner to San Francisco full-time for five weeks, and an architect came a couple of times.”
The Manulife project was designed to find a way to get workers engaged in their financial health. “They designed this great app that was gamified,” said Reinitz, noting the app was used for many years.
Potential clients weren’t the only ones who found the Garage model inspiring.
“The creation of Garage really changed our ability to hire,” said Reinitz. “We were held up as the new IBM, a physical manifestation of where the corporate culture was going — that we were more collaborative, more casual. Garage was one of the first parts of IBM to hire new-collar staff.
“As a female technical leader, I place a lot of value on diversity. You need diverse teams to be innovative, you need diverse skills and perspectives for the kinds of squads we wanted to do. Diversity has been a focus of ours from the very beginning.”
The Garage Methodology
“From the beginning, Garage was about bringing together a set of industry best practices in a new way,” said Reinitz.
She combined practices from various approaches and methodologies often used by successful start-ups as crucial components of the IBM Garage Methodology: design thinking, lean startup, and extreme programming (an agile methodology) with devOps.
“We said, first, let’s ensure that we’re going to build something that people will care about, that people will use, that truly brings in innovation, so we apply design thinking. Then let’s figure out what is the fastest thing we can deliver that’s going to start to prove out the idea and also deliver real business value. That’s the lean element. Then we look at how to build at speed with high quality — bringing together business, development and operations in daily collaboration. For that we apply the extreme programming flavor of agile, combined with devOps.
As an example of how this works in real life, Reinitz said, “Let’s say you have a great idea for a new shopping app targeted at teenagers. The traditional approach would be that you bring me this great idea and I build the app, but that’s really risky, because you and I are not teenagers, so how do we know what they really want? So part of the process is actually testing it out with teenagers as we’re doing the developing. It’s not enough to have a set of great features, they have to be consumable. They have to be features that people really care about.
“And that leads us to the next part, which is about being lean. You figure out what is the minimal viable product you can build, and get it out there into pilot production, to the level of quality that’s required for what you’re trying to validate. Then you can go and interview teenagers and show them the prototype. You might give them a slice of the overall intended solution that focuses on price comparison and find out if they’ll really use it. It may turn out that they say they really care about price, but what they really want is an app that’s going to help them shop for clothes based on features.”
The other important element in creating this new business model was the decision to include the client in the development process.
“When we set up a squad for a Garage project, the client must provide a product owner who’s going to make the decisions about what’s going to be built,” said Reinitz. “An empowered product owner is critical. Instead of just handing off a set of specs to the developers, the product owner is working side-by-side with the developers as part of the squad, directing them on what should get built. The sponsor is also involved on a regular basis through weekly playbacks of what has been built that week."
Apps or pizza
In late 2015, IBM made its Garage Methodology publicly available, another innovative step.“Our goal was to reach as many people as possible,” said Robinson.
He compared the approach to that of a restaurant that might hold onsite cooking seminars, then publish a cookbook for people who want to try the recipes at home.
“The Garage is the restaurant, and if you really want the full-blown experience with a master chef, etcetera, then you go to one of our Garages and work with our folks there, and you really learn hand-in-hand with us, and you have a wonderful dining experience, so to speak.
“The methodology kind of became the cookbook – we’ll make it available, so if you want to try it yourself at home you can. Your recipe may vary a little bit, but we’ll try to capture all the key concepts.”
“The idea is that we’re trying to enable them to be successful,” added Reinitz, “so why shouldn’t we share our approach?”
Changing to meet shifting client needs
Two major factors have shifted some of the focus in the IBM Garage. As more clients move to a hybrid cloud environment, Reinitz explained, “Along with developing the solution, we need to make sure that our customers are ready to maintain and operate the technology. When you’re doing something that’s purely public cloud and managed, much of the platform is basically there for you. But these days, most enterprises need cloud capability that is hybrid, across multiple clouds and on-premises.
“The Garage expanded to focus on adoption of OpenShift, which makes multicloud implementation consistent and manageable. Cloud platform adoption requires new ways of working at the platform level. We apply the same Garage approach, with some additional practices, to build out the platform iteratively, at the same time we’re building the solution on the platform.”
The pandemic also added a twist to the Garage’s process.
We had to pivot very quickly to being virtual when COVID hit. We took a set of our leading folks in the Garage and had them focus on what it means to deliver virtually.
“Our starting point was not to say, ‘How do I do what I’ve been doing in person and do it virtually?’ but to say, ‘This is what I do today, and these are the outcomes I need to get to. How am I going to make that better by doing it virtually?’”
One example Reinitz notes is the two-day workshop that kicks off Garage projects. “The workshop is intensive. People have to fly in, they have to clear their schedule and not do their day job for those two days. Now that we do it virtually, we can do it over four half-days. It’s actually easier to get people virtually because they can still do their job for half the day, and we have more time to reflect on how it’s going and make adjustments as needed. We are constantly improving what we do.”
Before COVID, IBM Garage had 16 physical locations around the world, the vast majority in start-up communities. “We would work with clients in the region, and we deliberately chose sites that were well-located for public transportation,” said Reinitz. “For instance, IBM has a lab in Toronto, but it’s on the outskirts of the city. Instead of locating there, we located the Toronto Garage in a start-up community downtown, much closer to our clients and much easier for them to get to.”
Today, the IBM Garage is largely a virtual experience, but not only because of COVID. Offering Lead Debbie Vavangas, who took the reins in early 2020, says she doesn’t think of Garage as a physical location.
“I like to say that Garage is your space, my space, cyberspace. It’s about a way of working, and a method, and a framework, and a set of skills, as opposed to a physical place. So there are a lot of Garage locations, and we can leverage that extensive network — but right now, they’re all virtual.
“All of our Garages switched to virtual overnight, with no days lost, zero productivity lost. And typically, we’ve seen from 10% to 40% improvement in speed because everybody is remote.
Rather than slow the progress of Garage, COVID amped it up. “For the last six months or so, we have normally had between 2,500 and 3,000 Garage contracts around the world at any one time,” Vavangas said. “In 2020, we grew Garage by 500%, during COVID."
A small idea that changes everything
“This idea started in a single Garage location in San Francisco, simply supporting IBM Bluemix,” said Robinson. “Over the next few years, it expanded to multiple locations around the world supporting all of IBM public cloud, then broadened its focus to encompass hybrid cloud as well.
“It evolved from there into a rich methodology designed to help clients achieve enterprise cloud adoption, and that in turn was merged with IBM Global Business Services to extend even further how IBM innovates hand-in-hand with our clients.
“In early 2021, Garage crossed another threshold with the announcement of pre-sales Garages, and now we’re in the midst of setting up Garages to work with our key accounts. We’re also ramping up hiring to fully staff the Garage model as it scales out to encompass both pre- and post-sales projects.
“People ask all the time how a small idea can grow into something big enough to transform a company — Garage is an excellent example of that.”
“Garage is a way of working that really resonates with clients in COVID," added Vavangas. "It allows them to test and learn and iterate fast, and in a pandemic world it’s more important than ever to know, not guess, where you can get a return for your investment. It de-risks those investments and accelerates decision-making.
“It’s moved from being a way to experiment with new technology to a way to accelerate transformation. It’s about testing and learning with different technologies, working out which gives you the biggest value, and the biggest value fast, and then maximizing the speed at which you scale that technology, or solution, or product, or service.
“From a services perspective, Garage is becoming the primary way our clients experience us,” she continued. “Where it originally started with what we call ‘the product problem’ — a client wants to build a certain thing or test a certain technology, and do it really quick. Now a lot of it is about outcome challenges — ‘I want to grow my business by 10% in this region and I can’t because my customer experience isn’t good,’ or, ‘I want to take 30% of my business global, but I can’t because my back-office processing can’t handle it.’
We look at new technologies that could address those issues, but we also look at what organizational changes might help the client set a strategic vision.”
Organizations of all sizes have chosen the IBM Garage to help power their digital reinventions — Audi, Frito-Lay, CEMEX, the Kraft Heinz Company and the Government of Nova Scotia, to name just a handful. Delta Airlines is working with Garage for a “soup to nuts” transformation that includes the company’s move to a hybrid cloud environment, modernization of existing applications and co-creation of new solutions. On the other end of the spectrum, a collaboration between Raise Green and IBM Garage is working to empower entrepreneurs to start their own community solar energy businesses.
“Garage is a transformation accelerator,” said Vavangas, “and right now, there isn’t a client out there, there isn’t an executive anywhere, who doesn’t need to go faster.”