IBM is not I.B.M.
When a company’s purpose changes, it is no longer the same company.
IBM recently announced plans to split into two companies. The company continuing on with the IBM name will focus on cloud and AI solutions, while IBM’s traditional managed infrastructure services will reside in a to-be-named NewCo.
I’m a huge fan of focus, so this is a good thing, perhaps even overdue.
However, I have often said that a company’s purpose should be “forever” and if a company changes its purpose, then that probably means it’s no longer the same company. This planned change is a good opportunity to reflect on the fact that IBM is no longer International Business Machines. While the company’s stock ticker, headquarters location, and even management and employee teams have enjoyed some level of continuity, it is not the same company.
The company traces its history back to the 1880s and was incorporated in 1911 as the Computing-Tabulating-Recording Company. The company really started to grow under the leadership of Thomas J. Watson, Sr. who joined the company in 1914. Over the next decade, the company diversified into a number of new product categories leading to the more general name of International Business Machines Corporation (1924). In the 1940s the company started moving towards computing with its first automated calculator products.
In the 1960s Thomas J. Watson, Jr. continued the trajectory his father had set, establishing IBM as the leader in the new computer industry. In the 1980s, the company continued to set industry standards even as the PC/Microprocessor Revolution democratized computer ownership, enabled new competitors, and eventually led IBM to a crisis.
Lou Gerstner took the company reins in 1983 and led the company through this crisis, especially by focusing on services. Under his leadership, IBM became “a company that would literally take over and act on behalf of the customers in all aspects of information technology — from building systems to defining architectures to actually managing the computers and running them for the customers.”¹
Up until this time, IBM had primarily been a product company. The company’s mission statement once was “to lead in the creation, development and manufacture of the industry’s most advanced information technologies.”²
While the company doesn’t currently have an official mission or purpose statement, their most recent 10-K filing with the SEC said “we create value for clients by providing integrated solutions and products that leverage: data, information technology, deep expertise in industries and business processes, with trust and security and a broad ecosystem of partners and alliances. IBM solutions typically create value by enabling new capabilities for clients that transform their businesses and help them engage with their customers and employees in new ways. These solutions draw from an industry-leading portfolio of consulting and IT implementation services, cloud, digital and cognitive offerings, and enterprise systems and software which are all bolstered by one of the world’s leading research organizations.”
Although that’s much longer than anyone would try to represent as a mission or purpose statement, it certainly gives a sense for how broad and unfocused the company has become and how far they have moved from inventing and manufacturing business machines.
Even though the company hasn’t had a formal purpose statement, their purpose has obviously changed a few times over the decades, and each time their purpose has changed, I would argue, they have become a different company.
Bottom line, today’s (and tomorrow’s) IBM is no longer International Business Machines. (And that’s a good thing.)
¹Gerstner, Louis V.. Who Says Elephants Can’t Dance?: Leading a Great Enterprise Through Dramatic Change. New York: HarperBusiness, 2002.
²Retrieved from https://www.ibm.com/ibm/za/en/ on 2020–10–08