The discussion that ensued was very sobering. IBMâs sales and profits were declining at an alarming rate. More important, its cash position was getting scary.
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IBM stock had dropped from a high of $43 a share in 1987 to $12 a share the day of the shareholdersâ meeting.
It became clear to me at that point that the company, either consciously or unconsciously, was milking the S/390 and that the business was on a path to die. I told the team that, effective immediately, the milking strategy was over and instructed them to get back to me with an aggressive price reduction plan that we could announce two weeks later at a major customer conference.
However, what was also clear was that IBM was paralyzed, unable to act on any predictions, and there were no easy solutions to its problems. The IBM organization, so full of brilliant, insightful people, would have loved to receive a bold recipe for successâthe more sophisticated, the more complicated the recipe, the better everyone would have liked it.
It wasnât going to work that way. The real issue was going out and making things happen every day in the marketplace.
There were times when we lost money on every PC we sold, and so we were conflictedâif sales were down, was that bad news or good news?
This kind of wrenching cultural change doesnât happen by executive fiat. As I found, I couldnât flip a switch and alter behaviors. It was, by any measure, the hardest part of IBMâs transformation, and at times I thought it couldnât be done.