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.
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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.
Opening up our stack (and our minds) to others had many positive effects on IBM. It cut our losses and improved our integrated offerings to customers. And it freed up resources to invest in the future. Huge sums of money and huge quantities of brainpower have been redeployed from wall-banging futility to exciting new work in areas such as storage systems, self-directing computers, bioinformatics, and nanotechnology.
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 came to see, in my time at IBM, that culture isnât just one aspect of the gameâit is the game. In the end, an organization is nothing more than the collective capacity of its people to create value. Vision, strategy, marketing, financial managementâany management system, in factâcan set you on the right path and can carry you for a while. But no enterpriseâwhether in business, government, education, health care, or any area of human endeavorâwill succeed over the long haul if those elements arenât part of its DNA.