Now, I must tell you, I am not sure that in 1993 I or anyone else would have started out to create an IBM. But, given IBM’s scale and broad-based capabilities, and the trajectories of the information technology industry, it would have been insane to destroy its unique competitive advantage and turn IBM into a group of individual component suppliers—more minnows in an ocean.

Fortunately, by the 1980s there were pockets of radical thought inside IBM that were already agitating for the company to join the open movement. And by the mid-1990s, we’d mounted the massive technical and cultural effort required to repudiate closed computing at IBM and open up our products to interoperate with other industry-leading platforms.

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.

Just consider that IBM’s contracts with Sony and Nintendo in 2001 hold the potential to produce more intelligent devices than the entire PC industry produced in 2000.

As a result—and here’s the important point—IBM, for the first time in its history, is now positioned to benefit from the growth of businesses outside the computer industry. This diversification does not take us away from our core skills; we have simply extended them to entirely new markets.

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.