How much did Gillard’s endorsement cost IBM?


opinion This morning IBM achieved what can only be described as a sensational marketing coup: It convinced Australia’s Prime Minister to get up on a stage and enthusiastically sing the praises of its corporate brand in front of a national audience.

“I do want to pay tribute to IBM – they carry a very historic brand associated with innovation and change … of course IBM’s brand in the modern age stands for innovation, constant reinvention, a focus on the future, and leadership,” Gillard told a cohort of IBM staff, fellow politicians, academics and the press at the University of Melbourne this morning.

There was more – much more – but sadly the live video of the proceedings this morning is not yet up on the university’s site. I recommend you watch Gillard’s entire IBM ramble later on this week if you feel like having your brain coated in a warm putrescence of marketing guff.

Now Gillard’s comments this morning constituted the kind of endorsement that companies like Nike and ASICS pay big bucks for in the sporting arena.

It would cost millions to convince Tiger Woods, for example, to get up on a stage and talk about how fantastic IBM is, and how its ongoing “smarter planet” marketing push isn’t just a cheap play for multi-million-dollar contracts from governments and utility companies but really a true leadership vision that can take the globe forward with vim and vigour.

Even Stephanie Rice would charge a pretty penny to deliver such drivel – although the famed Australian swimmer’s market valuation has probably taken a steep decline in recent times.

How much it cost IBM for Gillard’s comments, however, we may never know.

That’s because – unlikely sportspeople – it is impossible to directly buy a politician’s commercial endorsement, due to tricky notions they have about ethics and the impropriety of directly accepting money from multinational corporate giants. To win this sort of endorsement from politicians, corporations like IBM must cloak their funds in the guise of an investment in a public institution that will ostensibly benefit the interest of the constituencies which that specific politician represents.

In this morning’s case, IBM announced it would hand over an undisclosed amount of money to the University of Melbourne, so that the pair – in cohort with the Federal and Victorian Governments – can create what is described as a global research and development laboratory.

This kind of investment – in and of itself – would not normally have been sufficient to entice the likes of Gillard back to her Alma Mater (yes, she studied Law at the University of Melbourne) for a launch. But the funds have a tangible outcome – they will create up to 150 jobs over the next five years. And if there is anything that politicians like to announce, it is the creation of jobs.

To attract a top-ranking politician like Gillard to your launch it takes a lot of jobs. 150 in her home state is probably about enough – any less and she would have left it to Victorian Premier John Brumby, who also attended the launch this morning.

Some politicians, it might be said, probably eventually come to believe that this is the function of industry: To open new industrial facilities – especially if they can be described as “centres of excellence”, which politicians can then launch, cutting a rosy red ribbon in front of dozens of photographers.

Now I have just one problem with this whole structure: These kind of investments and the launch events themselves are incredibly self-serving for all concerned – and obviously so.

IBM’s investment in the University of Melbourne is truly a no-brainer. The corporation gets to benefit from the university’s obvious research talent and – courtesy of its funding – funnel that talent into the “smarter planet” areas that it is particularly interested in developing. No doubt several dozen Ph.D students over the years will work in the laboratory to get their qualification and go on to lucrative careers at IBM that will … take them out of the labour market and focus their work on commercial applications.

And there is absolutely no doubt that when it comes time to commercialise any technologies developed as as a result of the collaboration, that commercialisation will take place under IBM’s auspices and will benefit Big Blue directly.

For the university, IBM’s investment offers it a chance to fund an area of research which – in an era of dwindling Government tertiary education largesse – it might not have been able to on its own.

And, of course, for Gillard and other politicians like Victorian Premier John Brumby and Innovation Minister Kim Carr, IBM’s investment delivers a photo opportunity and a handful of news stories on a plate, all without actually committing much in the way of resources themselves. It’s a god-given opportunity and no politician in their right mind would pass it up.

Communications Minister Stephen Conroy certainly doesn’t – the good Victorian Senator will gladly attend the smallest launches, provided there is the chance of some good publicity.

None of this is in and of itself bad – it represents the normal working of our democratic capitalist system. But there is a certain stigma associated with this sort of event which needs to be carefully avoided to maintain decorum.

Politicians who attend such launch events must take care not to spin the corporate hype that they are participating in too strongly. After all, it remains true that their endorsement is not actually being purchased directly, and so they must maintain a detachment from industry, less they be accused of selling out the national interest.

Then too, the competitors of the corporation concerned will be watching carefully. If Gillard favours IBM too strongly, CSC, Fujitsu and HP might wonder, maybe it’s best to take their own investments to another country – one where things are a little more objectively handled.

I am one of those who believe that Gillard went too far in her enthusiasm for the IBM cause this morning. Certain portions of her speech – for example, when she mentioned IBM’s relational database research – had a strong whiff of IBM corporate marketing about them.

In comparison, Victorian Premier John Brumby behaved with much more propriety. Sure, Brumby praised IBM – but he also mentioned a handful of competing firms such as Infosys and Wipro, which have also made substantial investments in Victoria. He was reminding IBM that his favour is costly – and he will never solely have favour for one player. He needs to remain above them all, and he always wants more.

My last comment about this morning’s proceedings is directed at IBM.

IBM is a multi-faceted corporation, engaged in research & development and delivery of technology solutions in virtually every area of technology known to man. It is a powerhouse of innovation and I have a high degree of respect for its achievements.

And yet in Australia, the public discourse which IBM will currently engage in appears to be broadly limited to that concerning its nauseating “smarter planet” marketing initiative being driven by head office in the US. It has taken that initiative and simply applied it wholesale to the Australian market, as if there is no differentiation between the two geographies.

This morning’s investment is a perfect example of IBM limiting its scope too far. From an organisation the size and with the gravitas of IBM I demand real leadership on real issues in 2010 – given its century-long history. A narrow focus on the “smarter planet” will not serve the company’s interests long term, and it will only alienate the rest of the industry through its single-minded obsession. Indeed, this is already taking place.

IBM: Overkill is not the answer.

Video credit: Re-broadcast snippet of University of Melbourne broadcast, believed to be OK under fair use


  1. There must be an election…sometime…soon…

    Ah yes, the Victorian election – nothing like some pork-barreling, photo-opportunistic, job-creationist rhetoric. And throw Julia up there too…that’ll look good.

    I think this is more of Brumby’s orchestration, but Julia was only too happy to oblige with some prose written by IBM Corporate Affairs.

    I feel dirty.

    • Frankly, listening to Gillard’s speech the first time around, I wholeheartedly believed it had been bounced back and forth between her office and St Leonards about a thousand times so that all the correct IBM marketing waffle could be inserted. However, the second time around I wasn’t so sure — it seemed more authentic Gillard.

      However, there is absolutely no doubt that this was a highly stage-managed exercise.

      There is a thing about stage-managed events. Most people don’t mind them. As long as it isn’t nauseatingly obvious how stage-managed it is. As long as there is a shred of authenticity. This morning, John Brumby was the only people at the launch pulling on that thread — everyone else was kept highly on cue. And that cue was …. appalling.

      • Genius really…orchestrated by Brumby, to make him look like “Honest Straight Laced John” heading into the election…Julia just taking a small hit for the team…

    • In the serious hosting space, it was really only going to be IBM, HP, Sun, or Fujitsu that had any real chance to win a contract like that – and it’ll be whichever one dropped their pants on price the most.

      Normal IBM behaviour…

  2. As usual Gillard and other state and territitory governments fail to tell the people that Big Multi’s like IBM get massive tax breaks to do business here. Some years ago here in the ACT the government let the likes of IBM and others have RENT FREE buildings for ten years with a very generous payroll tax break. Whilst Australian home grown business struggle under taxes and more bloody taxes, these Multi parasites feed of us for their gain. Does anyone seriously think any profit made will stay in Australia? If you do then you have rocks in your head. Another cheap lie for Gillard the FABIAN member….ohh and look up Fabian ideals…….very ultra socialist bordering on flat out communism.

    • Was reading the comments and was thinking, “yep! fair enough”, “yep! totally orchestrated” and then I stumbled upon your comment and thought, “what the?”, Fabian? Socialist? oh really? Next you’ll be accusing the Prime Minister or the Premier of murder as part of some Machiavellian plot. You’re probably some conspiracy enthusiast who has read one too many whacked web site about how “they’re” trying to control us with vaccinations. Sheesh, either that or Young Liberals have way too much time on their hands. The Federal Election is over, move on…

  3. As a former IBM employee, I don’t think anybody should be under any illusions about Big Blue’s top priority: the IBM shareholders. Please do not even imagine that any altruisim is involved – no opportunity for profit means no $$$ investment.

    Of course, IBM can afford to take a long-term view of profits, as they are sitting on bucketloads of money and they buy up any potential competitors in the wink of an eye.

    And as for providing jobs, people might want to look at how many IBM jobs (esp. in the USA) have been going to India, China and other cheap labour sources.

    Back in 1945, control of government by business was called “Fascism”. Ah, but that was long ago…

  4. Love one of your last lines: “A narrow focus on the “smarter planet”. Now that’s pretty “narrow” isn’t it ?!

  5. Speaking of great lines: “if you feel like having your brain coated in a warm putrescence of marketing guff” is quite brilliant. You should be collaborating with Rowan Atkinson in a new Blackadder series with lines like that Renai :)

    Apologies if that’s wildly off topic but I enjoyed it.

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