I laid out my expectations:

• We would redefine IBM and its priorities starting with the customer. We would give our laboratories free rein and deliver open, distributed, user-based solutions.

• We would recommit to quality, be easier to work with, and reestablish a leadership position (but not the old dominance) in the industry.

• Everything at IBM would begin with listening to our customers and delivering the performance they expected.

6: STOP THE BLEEDING (AND HOLD THE VISION)

“I was indeed ready to make four critical decisions:

• Keep the company together.

• Change our fundamental economic model.

• Reengineer how we did business.

• Sell underproductive assets in order to raise cash.

I have always believed a successful company must have a customer/marketplace orientation and a strong marketing organization. That’s why my second step in creating a global enterprise had to be to fix and focus IBM’s marketing efforts.

Here was a man [Dennie Welsh] who understood what customers were willing to spend money on, and he knew what that meant—not just the business potential for IBM, but the coming restructuring of the industry around solutions rather than piece parts.

The implications of this kind of leap to a company’s economic model can be devastating. In IBM’s case it meant the collapse of gross profit margins and the attendant changes we had to engineer to lower our cost structure without compromising our effectiveness.

Yet the hardest part of these decisions was neither the technological nor economic transformations required. It was changing the culture—the mindset and instincts of hundreds of thousands of people who had grown up in an undeniably successful company, but one that had for decades been immune to normal competitive and economic forces.