Book Notes : Who said elephant can’t dance

There was a point in time when IBM was very close from bankruptcy and how did a new CEO managed to turn it around. Overall an interesting book to read how did he managed to change the culture of such a massive company.

Snippets from the book :

His management philosophy :

1) Managed by principle, not procedure

2) The marketplace dictates everything we should do. ( This is in light of the PC revolution that IBM didn’t managed to get a foothold )

3) Move fast. If we make mistakes, let them be because we are too fast rather than too slow.

4) Hierarchy means very little to me. Let’s put together in meetings the people who can help solve a problem, regardless of position. Reduce committees and meetings to minimum. No committee decision making. Let’s have lots of candid straightforward communications.

You can have the most grand vision but if your company is not making money is going to be a problem. “ Now, the number-one priority is to restore the company to profitability. I mean, if you’re going to have a vision for the company, the first frame of that vision bette be that you’re making money and that the company has got its economics correct. “

Communicating to employee about changes

“ The sine qua non of any successful corporate transformation is public acknowledgement of the existence of a crisis. If employees do not believe a crisis exists, they will not make the sacrifices that are necessary to change. Nobody likes change. Whether you are a senior executive or an entry-level employee, change represents uncertainty and, potentially, pain.

So there must be a crisis, and it is the job of the CEO to define and communicate that crisis, magnitide, its severity, and its impact. Just as important, the CEO must also be able to comminicate how to end the crisis — the new strategy, the new company model, the new culture. “

The importance of Marketing

“ I have always believed a successful company must have a customer/marketplace orientation and a strong marketing organization. That’s why my second step in creating a global enterprise had to be fix and focus IBM’s marketing efforts. “

The context is that IBM has hundreds of business unit around the globe and each of them runs like a separate entity. Each having their own budget, marketing team, PR team which leads to confusing messages and even branding logo.

Moving forward, all marketing efforts was controlled by a single HQ department and they hired Ogilvy & Mather to lead the charge in changing the brand image. IBM is one of their oldest customer till now.

Ensuring that teamworks matters.

“ The most unusual part of this plan involved the people who reported directly to me ( CEO )- the highest-level executives, including those who ran all our business units. From then on, their bonuses were to be based entirely on the company’s overall performance. In other words, the person running the Servies Group or the Hardware Group, had his or her bonus determined not by how well the unit performed, but by IBM’s consolidated results.

Looking at the effects of new industry trend.

“ Our bet was this : Over the next decade, customers would increasingly value companies that could provide solutions — solutions that integrated technology from various suppliers and, more important, integrated technology into the processes of an enterprise. We bet that the historical preoccupations with chips speeds, software verisions, proprietary systems, and the like would wane that the over time the information technology industry would be services-led, not technology-led. “

This is in the context when IBM used to be the only IT company that provides the entire stack from server hardware to OS/2 to applications. It is a one complete solution which was IBM biggest cash cow.

The revolution of PCs enabled the enterprise to pick and choose what they would like to have in their server and build it at a fraction of what IBM is offering.

The different options for hardware, OS and applications, companies will find it hard to integrate all these together hence he is betting that integration services would be the key to the industry rather than who has the best technology. Technology will always change and new tech will replace the old.

“ The second big bet we placed was that stand-alone computing would give way to networks.

That may not sound like very big or risky bet today. But, again this was in the context of the 1994 time frame, well before the Internet became mainstream. The first rumblings of change were there. You could find certain industries, particularly telecommunications, that were buzzing about the “ information superhighway , a dazzling future to high-seed broadband connections to workplace, home and school. If this kind of “ wired world “ came about, it would change the way business and society functioned. “

I love how he can see the trends that is coming and predicate what would be the next needed services. Makes me think about what Microsoft CEO said that the next wave would be AI, Mixed Reality and Quantum Computing. What sorts of services of new industry will this spin up ?

The fear of cannibalising

“ The major breakdown was on the product side, where IBM was consistently reluctant to take new discoveries and new technologies and commercialize them. Why? Because during the 1970s and 1980s that means cannibalizing existing IBM products, especially the mainframe or working with other industry suppliers to commercialise new technology.

For example, UNIX was the underpinning of most of the relationship database applications in the 1980s. IBM developed relational databases but ours were not made available to the fastest-growing segment of the market. They remained proprietary to IBM systems. “

Culture Change

“ In comparision, changing the atitide and hebavior of hundreds of thousands of people is very, very hard to accomplish. Business schools don’t teach you how to do it. You can’t lead the revolution from splendid isolation of corporate HQ. You can’t simply give a couple of speeches or write a new credo for the company and declare that the new culture has taken hold. You can’t mandate it, you can’t engineer it.

Whay you can do is create the conditions for transformation. You can provide incentives. You can define the marketplace realities and goals. But then you have to trust. In fact, the end, management doesn’t change culture. Management invites the workforce itself to change the culture. “

“ People don’t do what you expect but what you inspect, I needed to create a way to measure results “

“ I believe effective execution is built on three atrributes of an institution : world-class processes, strategic clarity, and a high performance culture. “

Leadership

“ Personal leadership is about visibility — with all members of the institution. Great CEOs roll up their sleeves and tackle problems personally. They don’t hide behind staff. They never simply preside over the work of others. They are visible every with customers, suppliers and business partners “

Originally published at natnebuer-blog.tumblr.com.