What happened, however, is that we did neither. We saw two forces emerging in the industry that allowed us to chart a very different course. At the time, it was fraught with risk. But perhaps because the other alternatives were so unpalatable, we decided to stake the companyâs future on a totally different view of the industry.
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I think it would have been absolutely naĂŻveâas well as dangerousâif I had come into a company as complex as IBM with a plan to import a band of outsiders somehow magically to run the place better than the people who were there in the first place. Iâve entered other companies from the outside, and based on my experience, you might be able to pull that off at a small company in a relatively simple industry and under optimal conditions.
In the end we gained more than a software company. Culturally we proved that we could keep some organizational distance and allow a fast-moving team to thrive. Perhaps most important, the hostile acquisition sent a clear signal inside and outside IBM that we were out of survival-mode status and serious about reclaiming a position of influence in the industry.
The implications of this kind of leap to a companyâs economic model can be devastating. In IBMâs 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 cultureâthe 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.
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.
I suspect that many successful companies that have fallen on hard times in the pastâincluding IBM, Sears, General Motors, Kodak, Xerox, and many othersâsaw perhaps quite clearly the changes in their environment. They were probably able to conceptualize and articulate the need for change and perhaps even develop strategies for it. What I think hurt the most was their inability to change highly structured, sophisticated cultures that had been born in a different world.