International Business Machines Confidential

In 1990, International Business Machine (IBM) had its most profitable year ever in business. By 1993, victimized by its own lumbering size, an insular corporate culture, and the PC era IBM had itself helped invent, the company was on its way to losing $16 billion and International Business Machine (IBM) was on a watch list for extinction.

How could this happen to the corporation that had invented many of the industry’s most important technologies?

International Business Machines Confidential

International Business Machines (IBM) likes to protect information.

International Business Machines (IBM) was presented as a culture of smug insularity, where Louis Gerstner* characterizes the corporate view in 1993 as one that blames the media and public relations for their problems.

Yet, the core problems with IBM were the same as with many companies who become disconnected from their market and customer base.

Instead of being customer-centric, instead of starting with the customer needs, International Business Machines (IBM) was product-centric, assuming that it could charge whatever it wanted for its hardware and software and that people would be forced to buy it.

Two events were conspiring to derail them:
1. The growing irrelevance of mainframes;
2. International Business Machines (IBM)’s lack of any ongoing competitive analysis.

Pricing was set based on a required target profit margin, without even considering what alternatives customers could choose.

It’s no wonder their sales were plummeting during the early 1990s! (how many companies do you know that get painted into this corner after a few years of success in the market?)

* Louis Gerstner was installed as chairman and CEO of IBM in 1993 when the company was in serious trouble, in danger of going out of business. He is credited with saving the company.

International Business Machines Confidential Solutions

Of course, there are some bottom lines to the information for sure.

Some information has to stay inside the compnay for competitive and/or legal reasons.

The solution to these difficulties should be to make sure the team or employee who involved understand what they can do with the information, not to deny their access.

Constrast this with the open-source world where information flows freely.

Everybody makes fully informed, transparent (ostensibly, anyway) decisions.

While these decisions are openly discussed and (frequently) debated, in the end at least everybody understands why certain decisions were made.

As they used to say in the G.I. Joe cartoon, “Knowing’s half the battle!”

When you are clear on your goals, your values, your mission – everything will begin to fall in place.

It’s the decision in knowing what you want that sets you on the path. The “how” of making your goals come true will appear in miraculous moments.

Notes: IBM had a remarkable turnaround and you can read further from the book “Who Says Elephants Can’t Dance?” which tells the story of IBM’s competitive and cultural transformation.

IBM had been the one company that has been at the pinnacle of an industry, fallen to near collapse, and then, beyond anyone’s expectations, returned to set the agenda.

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