On average, our competitors were spending 31 cents to produce $1 of revenue, while we were spending 42 cents for the same end⌠So we made the decision to launch a massive program of expense reductionâ$8.9 billion in total.
Related Quotes
Parachuting into a $65 billion company that was hemorrhaging cash and trying to turn it around is a daunting enough task. Trying to do it without a good CFO and HR director is impossible.
We should cut the price of hardware ASAP, simplify software pricing, focus development on
simplification, implement a hard-hitting communication program to reposition the mainframe and workstations, and underscore that the mainframe is an important part of the CIOâs information portfolio.
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.
One example: The segment of IBM that produced applications for distribution and manufacturing customers set a stretch goal to increase sales by $50 million (from a base of about $100 million). It ran ads and promotions and sales contests, and it hit its target. In the process, it alienated every software company in that segment of the market. Those companies, in turn, stopped recommending our hardware and contributed directly to a $1 billion decline in sales in one of our most popular products.
26: ELEPHANTS CAN DANCE
âToo Expensive, Too Slow
I believe that in todayâs highly competitive, rapidly changing world, few if any large enterprises can pursue a strategy of total decentralization. It is simply too expensive and too
slow when significant changes have to be made in the enterprise.