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.

I have worked in services companies (McKinsey and American Express) and product companies (RJR Nabisco and IBM). I will state unequivocally that services businesses are much more difficult to manage.

Many IT companies that have built their businesses on some proprietary product have tried to leap across that chasm. Few have made it across successfully.

I suspect that many successful companies that have fallen on hard times in the past—including IBM, Sears, General Motors, Kodak, Xerox, and many others—saw 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.

If a management team doesn’t believe that it has identified and is seriously funding new growth opportunities, then it is likely to wander off and drink the heady brew of acquisitions and diversification—and ultimately fail.