Who says elephants can’t dancePresented by Thirumeninathan

…grabbing hold…strategy…culture…lessons Learned…observations…legacy

. . . Grabbing hold

…evaluate…in a fish bowl…important decisions…hold the vision…reengineer…revive the brand…pay for performance

• IBM– Bad press– Too many competitors – Angry customers– Bureaucratic approach– Losing money and negative

cash flows

• Lou Gerstner– Management consultancy in

McKinsey– Experience in highly charged

corporate environments– Has experience as an IBM

customer– Proven change agent. . . evaluate

– Symbolized American technology might and R & D prowess – Leader in the industry and too many customers had a stake in

survival– “National treasure”– many competitors in the hardware, software, middleware

markets watching every move

. . . in a fish bowl

• First Impressions• Immediate steps– CFO & HR hiring – Culture reset

. . . important decisions

• Stop the spin-offs • Change the economic model – cut waste• Reengineer – from milking the cow to growing

market share• Sell underproductive assets to raise cash

. . . important decisions

• Bringing the “B” back into focus

• Tough market minded strategies for every business instead of a grand over-arching vision

• More integrated solutions (rather than less)

• Improve customer responsiveness, time to market

. . . hold the vision

• Phase out Management Council – push power to CEC / WMC

• Build a new board• Employee Communications

• Creating a global enterprise– Power bases and fiefdoms– Focus on global relationship

. . . reengineer

• Revitalize the brand– Centralize branding efforts– One agency for unified messaging– Coherence in brand building across

geographies– more bang for the buck

• Some successful campaigns– Solutions for the small planet– eBusiness

. . . branding

. . . pay for performance

• Old rewards – common, fixed rewards, internal benchmarks, entitlement

• New rewards – variable rewards, differentiation, external benchmarks and based on performance

• Stock options as rewards rather than aligning the executives with share holders.

. . . strategies

…making the bets…services business…software business…research and licensing…fallacies and myths

. . . making the bets

• Emerging trends– Services based– Network computing oriented– A post PC world

. . . services business

• The key to integration – services• Building the organization

– Ability to recommend competitor’s products– Lending the balance-sheet – Recruitment, training, compensation and HR processes– Negotiate profitable contracts, price skills, assess risks and walk away from bad

contracts and bad deals

. . . software business

• OS/2 vs Windows• 4000 software products• Reduction of 30 labs to 8• Consolidated 60 brands to 6• Focus on middleware (blue ocean)• Lotus acquisition

. . . research and licensing

• Inability to convert inventions into products for the market place• Licensing gives the capability to set standards• R & D expenses recouped with new revenue streams• Exiting businesses which does not make sense

– DRAM business– Application software business – partnership with Siebel– Telco – IBM network – AT & T– Challenges to exit the PC market

. . . fallacies and myths

• The fallacy that the best technology always wins – a bitter but vital lesson – OS/2

• Myth of account control and the efforts to maintain it– Application software

. . . culture

…basic beliefs…culture of “no”…leading by principles…IBM’s moonshot

. . . basic beliefs

• Excellence in everything we do – quest for perfection, led to checks and balances, bureaucracy

• Superior customer service – became more administrative – did not look at what customers needed and their businesses needed

• Respect for the individual – reflected in the compensation and evaluation system – not in sync with the times

• Dress code – the why• Following basic beliefs as a ritual without understanding the why

. . . the culture of “no”

• Non-concurr management system• Soft request – I did not agree with you• Dysfunctional bureaucracy and jockeying• IBM-isms• Presiders over process

. . . leading by principles

• More customer oriented rather than IBM focussed• More passionate about competition and loss of market share,

leadership position and downsizing• Customer satisfaction and shareholder value are the driving factors• Sense of urgency• Senior leadership Group to focus on leadership and change

. . . the moonshot

• Keeping the crisis as the focus of attention• Market place based mission• eBusiness – the whole organization focussed on winning customer

mind share as the moonshot

. . . lessons learned

…know and love your business…all about execution…leadership is personal…and elephants can dance

. . . know and love thy business

• Focus on core business• Growth through acquisition – only when there is value for both and

not for acquiring new market position or new markets• Market intelligence wins wars• Good strategy – long on details, allocate resources and zero sum

planning every few years to weed out (sunk costs / survival of the fattest)

. . . t’is all about execution

• Inspection not expectation – translation of strategy to results• Solid processes to achieve key success factors – for e.g. product

design• Feeling a high performance culture

. . . Leadership is personal

• Prerequisites of the next CEO– High Energy– Strong bias for action– Strategic sense– Ability to motivate others– Strong team builder– Org culture which tends to ask for forgiveness rather than permission destroys

soon

. . . and elephants can dance

• Decentralization for faster decision making was meant for another era– Org wide changes lead to turf battles and become costly affairs– Overheads are high without real value adds– Scale of economies

• For true integration and clustering resources around the needs of the customers – shift power

• Measure and reward the future – not the past• Walk the talk

. . . observations

…the industry…corporations and the community

. . . the industry

• Industry– No common industry associations for IT – hyper competitive– Annihilation of competitors, increasing returns and networking effect – Constant hunt for the next big wave

• System– Too focused on short term gains– Board only of external directors– High taxation on speculative trading and bring back ownership based economy

. . . corporations and the community

• The media – trolls, rumor mongers, biased – ignore• Under promise and outperform – talk to reporters with an insightful

story line on the industry• Analysts and the 90 day myopia• Beyond check book philanthropy – engage in real change

. . . legacy

. . . Thank you!!!