IBM over the past ten years has begun to develop the ability to handle a very high level of internal complexity and even apparent contradiction. Rather than hiding from conflict or suppressing it, weâre learning how to manage it, even benefit from it. This equilibrium can be achieved only when an enterprise has a very sure sense of self.
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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 IBMâs 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 suppliersâmore minnows in an ocean.
However, what was also clear was that IBM was paralyzed, unable to act on any predictions, and there were no easy solutions to its problems. The IBM organization, so full of brilliant, insightful people, would have loved to receive a bold recipe for successâthe more sophisticated, the more complicated the recipe, the better everyone would have liked it.
It wasnât going to work that way. The real issue was going out and making things happen every day in the marketplace.
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.