The author is Peter Farwell, CFA and FCPA, a former partner of Ernst & Young, Canada. For further information, please visit Peter’s bio on the web site.
This strategic review of IBM’s business and management style is intended to provide a basis for answering the question: Can IBM survive?
In the 1990’s IBM was in crisis: its sales and profits were plummeting, its customers’ needs were being ignored, and its morale was in shambles. A book was written entitled: IBM, The Decline and Fall of an American Icon. There were numerous negative press articles.
IBM reached outside for a new CEO and Lou Gerstner accepted. Gerstner rapidly sized up the company’s problems and implemented significant, disruptive changes to turn the company around. While he did not change the company’s vision of what it should be he made major changes to its strategies and its execution, both for the short term rescue, to stem the bleeding, and for the longer term growth of the business. He was successful and IBM went on over the next 20 years to new heights as the IT leader.
Now, IBM is in trouble again. Its sale and profits have been falling for several years, and its stock price has suffered. Robert Cringely, a Silicon Valley journalist for over 30 years, has in 2014 published a book: The Decline and Fall of IBM. It is severely critical of the Culture at IBM in the 2010’s. Again, there are a number of articles that criticize various aspects of the IBM business and management.
This strategic review outlines IBM’s vision, strategy, and ability to execute over three periods;
- The Thomas Watsons era from the beginning to the 1980s, when IBM was the dominant IT leader
- The Lou Gerstner era from 1993 to the 2000s, when the PC, Internet and Smartphone had significantly changed the IT landscape; and
- the current era in the 2010’s, when technology changed again and continues to change rapidly
The purpose of the review is to answer the question: Can IBM survive? Suggestions on further changes that would help it to do so are presented.