IBM
9057 IBM15 - WHODUNIT?
By 1993 the IBM we all knew and loved had effectively died; or at least it had become a zombie, devoid of all the characteristics which had previously marked it out as an example of remarkably successful - if idiosyncratic - business practice for the rest of the world. As usual, the commentators in the mass media had a field day trying to pin the blame for the (near) death of IBM onto one specific individual. It is a regrettable feature of our society that we try to personalize organizational failures - much as we personalize their successes - and seek the ultimate scapegoat; though, at the time, John Akers - who was very happy to claim responsibility for the few successes (and to pick up his $5million golden parachute) - must have expected this!.
Thus, much of the blame has been laid on the person of John Akers - who is the obvious scapegoat. As you will have gathered, I too am very critical of his period of management. It is impossible to ignore the many mistakes he made; but even then I am not convinced that this was truly a personal failure. If it was, there would be no useful lessons to be learned by other managers. It was much more a failure of the overall IBM system which produced him. He had spent almost all his working life immersed in IBM's culture which by then had become incestuous in the extreme (scarcely recognizing anything which took place outside its walls). We should not be surprised that - when this disintegrated around him - he was as lost for solutions as were all the other IBMers.
Cultural Chaos…a particular danger of very strong cultures is that, when they break down, their leaders are as vulnerable to confusion as anyone else - they have no magical protection and, at the focus of the problems being experienced by the whole culture, may be (much) more vulnerable. Conventional management theory assumes that CEOs are somehow able to distance themselves from rest of the organization, and rise above it. A few theorists, such as Henry Minzberg (in 'Crafting Strategy' in the Harvard Business Review), have pointed out just how much of strategy emerges from 'intuition', based on their experiences rather than logic. What very few have tried to address is what happens when this intuition, built upon experience over many years within the organization, proves false. How do you then redirect the CEO? The concept of the 'learning organization' (which, in essence, puts in place formal processes to understand what is happening - especially in terms of significant changes - to it and especially to its environment) might seem to address this problem; but only, I suspect, if that 'learning' contains a great deal of input from outsiders.
The system may also be blamed for appointing him. It was his predecessors, especially John Opel (but with the blessing of Frank Cary), who chose him; with the full knowledge of his capabilities - gained from personal contact with him over a number of years. It could be argued that he might have been the right choice, as a charismatic leader, to lead a strong IBM to even greater success; but he was not the one to turn around what was in the event found to be a very sick company. Again, though, that was the fault of the system for failing to recognize what was to be demanded of its CEO (and, especially, of having no mechanism for rectifying its mistake).
CEO Infallibility…earlier I placed stress on just how important it is to recruit the best employees. Needless to say, it is even more important to ensure that the CEO is up to the job. In fact, the process is usually much more Byzantine than that applied to the ordinary employees. Typically, the new CEO 'emerges' - based on the prejudices of those with influence at the time. Having 'emerged', he (or very rarely she - some prejudices are stronger than others!) is typically deemed to have almost papal infallibility. More fundamentally, where the choice turns out to be mistaken, like the Pope he cannot be removed - without (excuse the mixing metaphor) the distasteful use of some form of 'impeachment'. Corporate board members, especially those external ones who are supposed to form the 'independent jury' on the CEO's actions, must therefore recognize their own accountability - and be brave enough to make the necessary changes; though, as Enron showed, this may be asking too much of them. In terms of 'people management', almost all theory assumes that there is someone hierarchically above the person being managed. This breaks down at the level of the CEO - as, indeed, it does in collegiate systems which are being increasingly adopted by a range of more sophisticated organizations; where management is by the person's peers. Research work still needs to carried out into how problems in such - peer management - situations are to be resolved; for, as the IBM example shows, those involved in 'managing' others in such peer-to-peer positions currently have no clear guidelines.
A surprising 'system' failure, considering IBM's track record and the many millions it spent elsewhere, was that Akers was given a remarkably narrow training; as compared with his predecessors. He covered only a small range of functions, none of them outside of the US, and - after a surprisingly slow start - moved on so fast that he never was in one position long enough for any errors to catch up with him. The IBM traditional training for top managers, which had worked so well with his predecessor, was designed as much to detect failings as to prepare them for the responsibilities they would eventually assume. The judgement of Akers, thus, reverted to the norm; of assuming that good performance at the lower level (in his case, most notably his very public success in sales management with DPD) guarantees success at the higher level. The most widely quoted of his characteristics was indeed his (sales) charisma. Had they been working as a team, this might have complemented John Opel's very (personally) low key approach; where Opel was described by commentators as 'vanilla'. But of course, whilst it might have suited his previous position supporting Opel, as CEO he eventually had to stand on his own feet - and this was at the worst of time for him and IBM!
Ignorant CEOs…training for CEOs must ideally be the best there is; covering the widest range of roles throughout the organization. In addition, an extended period must be given to each of these roles, so that failures arising from weaknesses may detected; and the weaknesses rectified, or the 'trainee's' career path reviewed. Once again, theory fails to match the needs of organizations. By the time a CEO is appointed he or she should already have managed a range of functions. Ideally, if they are to be well rounded CEOs, this training should be in a range of different functions across the organizations. Their performance in managing these functions, if they are well chosen (and the range of skills needed parallels those of the CEO), can - and should - reveal how suitable they are for the top position. Little of this is described in the general literature.
To be fair, though, the most authoritative of the commentators have ultimately tended - as have I - to look to events rather than individuals as being the key factors in its demise. Thus, both Paul Carroll and Bob Heller (who was clearly very influenced by Carroll's work) ascribed much of the blame to technological factors. Partly these were seen by them as 'external'. Thus, Heller said "You can argue that the speed, force, depth and breadth of the second wave of computer technology would have swamped IBM in any circumstances That was historical inevitability. The little personal computer unveiled to such brilliant effect in 1981 was IBM's nemesis." He goes on to add, again from a technological perspective; "The technology needed an accomplice: the IBM culture. The conspicuous end-product failures are bad enough....its procedures and principles have retarded the progress to market."
These two elements, the external environment and new product sterility, are typical of many explanations of IBM's demise; so I will examine them first of all.
On the surface, at least, IBM's inventive genius did seem to have deserted it in later years - despite the billions of dollars it spent. The commentators, such as Paul Carroll, who see this as a failure of IBM's whole development process may be right, but I suspect that the reality may have been much more complex than this. Even in 1993, at the time of the launch of Carroll's book, IBM still managed to secure a further 1,000 patents - more than any other company!
At one level almost the whole of Western R & D was facing a crisis of confidence, as a result of the unremitting onslaught by their Japanese competitors at that time and those (such as the PC vendors) who followed their example. This was partly based on the real dynamism that these new corporations did seem to exhibit, but it was also just as much a matter of psychology. Western R & D traditionally focused on the long-term search for the 'radical' breakthrough. For these developers, including those in IBM, it was always the quest for major developments which counted; and, indeed, it was such great steps forward - into the unknown - which created and defined the 'Information Revolution'. The classic example was the launch of the IBM 360 - but later generations of computer (including the 370 and the 3090 mainframes, and also - even more important - software concepts such as SNA - Systems Network Architecture - IBM's mainframe communications architecture) also made major (radical) advances; and the work involved in such advances was reflected in the length of time they took in development (SNA, for instance, took more than a decade to reach its true fruition).
On the other hand, the Japanese and their followers in the PC sector concentrated on incremental development; small steps which gradually moved their technology forward. This approach was, at least in the short term, just as technologically powerful as the Western one. Indeed, though it may fail to anticipate some of the radical breakthroughs, it has the significant marketing advantage of producing new 'developments' every few months rather than every decade; Honda's development of 113 new models of motorcycle, in the 18 months of its competitive 'war' with Yamaha, is most often quoted as the classic example of this capability.
The practical problem for Western developers at the time was that, while they were patiently working - for a decade or more - towards their major breakthrough, the Japanese - and the PC clones - had a monopoly of 'new products' (even if they were barely indistinguishable, in technical terms but not consumer terms, from the current ones). Even when their radical new development did appear, the clone-makers were soon back in business; adding their incremental touches to it!
In many respects, though, it was the psychological impact that was the worst aspect of this process. At one extreme, the Western developers were being told to speed their processes up to match those of the Japanese (and, as a result, were having to abandon the long-term programmes at which they excelled). At the other, they had come to believe that the Japanese and their Western high-tech followers had somehow or other managed to shorten the timescale for 'radical' developments from decades to months. Some of the incremental developments were, indeed, very impressive - but nobody should be fooled into thinking that the processes behind them were the type which produce radical breakthroughs. Thus, for instance, it might be reasonable to consider, in the context of what it offered the user, the 386 chip to be a generation apart from the 8088 chip which powered the original PC. On the other hand, the intermediate 286 was clearly an incremental step (and a very flawed one). Similarly, the 486, and even the Pentium, did not represent the 'new generations' which were claimed for them; they were simply rather faster versions of the 386 technology.
Paradoxically, IBM, which was then launching ten new (incremental) products each week - far outstripping any Japanese corporation, seemed (almost as much as the media) to have bowed to the creativity of its competitors (and of its own practical failure) almost without question. It did this even though its PR people at the time were blustering about how many Nobel prize winners there were in its laboratories!
The result, for Western developers, was - at least - a significant disturbance in the rhythm of their long-term development processes and, much worse, a major loss of confidence. The (relatively) simple answer was to understand how both processes (incremental and radical) work, and then to use them in tandem.
Complementary R & D…the most effective R & D uses incremental development to maintain market leadership - while its investment in radical long-term developments are coming to fruition. These radical breakthroughs are used to create significant competitive advantage - which is maintained by further incremental development. There has been some considerable debate about the virtues of incremental development versus the radical form, usually in recent years coming down in favor of the (incremental) former. There has been much less discussion about how you manage the two in such a way as to develop a synergy between them.
It should be easier for the West to manage this complementary process (since it is easier to introduce the relatively routine incremental work than to bring on stream the creativity needed for radical work - especially as the Japanese are weaker in this area). In any case, this was how IBM had traditionally maintained its own lead; and, I suspect, would still be doing if its senior management had not lost their way. Instead, it gave the impression that it thought that Intel and - especially - Microsoft were better developers than itself (of the technologies in which it was recognized to be a world beater!) and deferred to them.
The second, and most 'popular', explanation for IBM's demise is that it was overwhelmed by changes in its external environment. This explanation seems to be even more convincing. The world is changing ever more rapidly, and the lumbering dinosaurs of multinationals are being out-maneuvered by the small new start-ups. But are they?
Indeed, 'globalization', the other popular explanation for business trends, was so expensive before the advent of the Internet (and in many respects still is for 'manufacturers' who still have to distribute their physical products) that it normally can (by definition) only be afforded by the multinationals. Thus, many of these new upstarts are in fact subsidiaries of the self-same multinationals, who are 'segmenting' their businesses - using ever more 'corporate brands' - to better match the needs of their different groups of customers. One of IBM's most poignant failures was that, in not recognizing this trend (which also has the virtue of reducing risk, by isolating adventurous new brands from cash cows), it failed to protect itself against the damage which resulted from its PC adventure.
The seemingly most telling point, in favor of the external change hypothesis, is just how much the PC transformed the face of computing; and obsoleted the large mainframes. Undoubtedly the PC has had an enormous psychological impact, coupled with some rather less real effects in terms of business processes; what PCs were still in reality used for before the advent of the web was still not earth-shattering. Despite the publicity about new applications, most were still used as expensive replacements for typewriters (word-processors) and calculators (spreadsheets), and possibly some information distribution (E-mail) within the department; and more recently email distribution outside the organization (together with some surfing the Web, often for personal use!). Even now, e-commerce across the web has relatively little impact on the average PC user.
On the other hand, the PC revolution simply didn't exist until IBM itself created it. Apple had, at that time, a (minority) group of users with much the same profile as it has now. It was IBM which brought the PC to the corporations, who are still the main users, and legitimized its widespread usage. Even so, to illustrate the degree of confusion, the 'model' IBM used (for its market) when it launched the PC was that of the small business. When I worked with PC Group, in the mid 1980s when the price-war was just about to start, more than 95% of its marketing staff were focusing exclusively on businesses with less than 100 employees; and nobody talked about usage in the large corporate users. Its justification for the use of dealers was only talked about in terms of their position with these small businesses. Nobody was thinking strategically about what was to happen when these dealers came into conflict with the IBM sales-force in the large accounts; though isolated instances of this were already occurring. The philosophy, even within PC Group, was that corporate users were the property of DPD, and were expected to use terminals linked into the mainframes not PCs.
Of course, what actually happened was that, driven by the dealers (who understood just as well as IBM that the biggest computer usage, of all types, lay within the corporate customers), it was these traditional IBM customers - and typically the largest of them - which first bought heavily into use of PCs. The tragedy, from IBM's point of view and from that of its customers, was that it should have been better able to serve this demand with terminal systems (albeit with processing power increasingly distributed, first to departmental systems and then to the desktop terminals - the reverse of what has happened). This would have kept control of the key corporate market (which was all that was ever really important to IBM), and would - paradoxically - have developed it even faster; the internal 'communications' aspects, which were (and often still are) the growth area, were effectively barred by the appearance of the unconnected (save now to the Web), stand-alone PCs which appeared on every desk.
Thus, there were changes in the overall environment, but it was IBM itself which drove them! At that time it dominated the market(s) and it decided what should happen. It decided wrong!
What then do I see as the main causes of IBM's downfall. As can be seen from the earlier chapters in this book, the picture is a complex one. There were many possible causes, and IBM seemed almost intent on making as many mistakes as possible - not a few of which might have been fatal by themselves!
Above all, though, I believe it was from John Opel's decision to make IBM the 'lowest cost producer' that most of the other mistakes subsequently emerged. It was this one 'objective', which he held to be central to IBM's future, which was indeed to prove central to that future - but not in the way he would have wished. In the 1980s I was sure his original decision was in response to the Japanese challenge, and when I started my research on this book I felt much the same. Now I am not so sure.
For the overall philosophy was already implicit in the earlier decision to found his IBUs In addition it was so central to his thinking for the whole time he was CEO (as it was to that of John Akers) that I have now come to the conclusion that it must have been based upon a more fundamental vision. After all, over the decade and more involved, the computer world changed beyond recognition - and yet that flawed vision remained the mainspring of Armonk's thinking. It is true that, where John Opel earlier saw it as the route to IBM's $100 billion dollar expansion, John Akers later saw it as a desperate defense against the hostile world crowding in on a beleaguered IBM; but it was still the central vision.
Faulty Vision…a powerful vision, held by the CEO, is of major benefit to any organization wishing to make changes. If that vision is flawed, however, it may just as easily destroy the organization. Such visions inevitably embody risk as well as opportunity - and it behooves the boards of stable well-established organizations to consider those risks as well as the opportunities. Management theory does recognize the importance of 'vision'. It does not, however, allow for the scale of the risks involved.
As it turned out, the visions of the Watsons' were positive; despite their failure to follow conventional business thinking (and, in particular, the very idiosyncratic nature of Tom Watson Jr's contribution). On the other hand, John Opel's much more conventional contribution proved to be disastrous.
Distant Vision…the most successful 'visions' seem to (idiosyncratically) diverge from conventional thinking to a degree which is almost perverse - and it is this very perversity which may give them the distinctive character needed to make them stand out from the rest. It may, if the vision is a successful one, uniquely differentiate them from others and also give their staff a powerful sense of that difference. Theory emphasizes the 'logical' (rational manager) approach to setting the 'vision'; where this is probably the least productive - indeed probably meaningless - approach to genuine vision!
The Perfect MBAs…I have, a number of times, alluded to the fact that in the 1980s IBM CEOs did all those things which the management theory of the times might have asked of it. This was, especially for John Aker's, almost an obsession. IBM may have been one of the first leaders in the field, but drives for efficiency were almost constant features across a wide range of companies during the 1980s; and were regularly supported by expert advice in the management literature. The future belonged, as Akers (and most of industry) believed, to the most efficient producers. Even into the 1990s the fashions continued, with Quality Circles giving way to TQM and thence to Business Process Re-engineering. I do not know how influenced John Akers was by this management theory, though (as has been evidenced in this book) he clearly followed it in other areas, but - in any case - that does not matter. Management theory at the time would have fully supported his decisions!
Theory and Practice…management theory must always be used with care. Sometimes it is ill-advised in most cases. Often it is ill-advised in some cases. Very rarely is it ideal in most cases; and certainly not in all cases. The user must ascertain that it fits the specific situation. Caveat emptor, where management gurus too often pretend that their favorite theories are universal. This is rarely, if ever, the case!
Management Theory as Superstition…some (management) theory is best approached as the superstition of the educated. It seems to bring welcome order to a chaotic world; and that, especially today, is the fervent desire of most managers. The results of slavish adherence to unsuitable theory can, though, be a disaster; as it was for IBM.
Perhaps the most important long-term fallout from the 'lowest cost producer' objective was the pernicious undermining of the existing culture; which was based on the previous 'three philosophies'. I have pointed out, at some length, that the loss of these this must inevitably have damaged IBM; where, as also pointed out by Peters & Waterman, IBM's culture was its greatest strength. Even in the early 1980s, the dangers were immediately obvious to myself, and to all the IBMers with whom I worked. The IBM culture is blind, but not that blind!
I can only assume that the Management Committee, on the other hand, thought that the three philosophies were so entrenched, and so strong, the new 'objective' really would be (as John Opel claimed) complementary to them! Surely, though, when John Akers enshrined the principle in his new set of objectives, some four years or so later, the potential for damage should have been as obvious to them as it was to the ordinary IBMers! Of course the actual effects were not yet immediately obvious; according to my own observations (across a number of organizations) it takes a decade and a half on average to build a strong culture (and the same time, as here, to completely destroy one).
When, after seven years (the 'half-life', or in this case - to be more precise - the 'half-death') the effects were becoming clear (as would have been predicted by my timescales) and John Akers finally ordered a reversal of the policies (returning to something approaching 'customer service'), I thought a rescue might then have been possible. The problem was that, as so often with Akers, his actions belied his words. The lower level policies still focused on cost reductions to the exclusion of service!
Cultural Half-Lives…strong cultures take more than a decade to build - typically a decade and a half - and little change is obvious until the half-life (five to seven years) of this process is reached. It is, though, quite possible to destroy them at almost any time given sufficient negative effort. It is safest to assume they are hot-house flowers, and treat them very carefully. Whilst management commentators talk about the advantage of strong cultures, they rarely give any idea as to the timescales involved in creating one, let alone the creativity required; or the effort involved in protecting it once established.
The PC Disasters…the most important short-term problems were undoubtedly caused by the PC. Many of the commentators have also made this assertion, but - as we have seen - their interpretation of exactly what happened is very different.
IBM did not sell its core competences; it gave them away! We have already seen that its hardware and software position (as well as some of its expertise) was passed to Intel and Microsoft. As we have also seen, this was perhaps forgivable (but barely so) in a resource starved minor IBU. It was crazy, though, for IBM senior management to continue this - for a whole decade - long after it had recognized the importance of the PC; especially as it might still have been able to recover its position over most of this time.
Protect Core Competences At All Costs…core competences are the main justification for the existence of your organization. You should think twice before you sell them - and certainly before you give them away. IBM's management may have been wildly incompetent - but are you really sure you wouldn't make the same mistake? Management, and economic, theory has recently placed much emphasis on the 'make or buy' decision. This is undoubtedly an important one, but the theory does not warn you strongly enough that there are certain things - the core competences - which you must never source outside, no matter how attractive the apparent cost benefits!
Probably the most important 'core competence' that PC Group gave away was its market! IBM was above all a marketing (or, at least, a selling) company. Its greatest strength was in the relationship it had with, and indeed the hold it had over, its customers. This almost symbiotic relationship was what had allowed it to survive all the changes over three quarters of a century. That relationship never changed - until the PC arrived!
It is possible that the change was irreversible from the very moment that its small IBU appointed its first dealers - and this was the one thing which the Management Committee did apparently worry about (but not enough!). Limited by anti-trust regulations, it would never have been (and never was) able to control them.
Intuition…'gut-feel' is a poor way to run a business by itself, but (if the gut-feeler is an expert in the affairs of the organization) it can a useful check on the decisions that are being taken. If it feels wrong it probably is wrong; or at least is questionable enough to investigate further! Management theory assumes logical decisions being made by the rational manager. Practical evidence suggests that most successful managers also rely on their intuition, not least as a check of decisions which are taken logically.
On the other hand, there is little evidence that IBM has ever, since that time, made a serious attempt to curtail dealers' activities! Its few feeble moves have foundered on its short-term greed for more business in the current year. The result has been that IBM effectively set up, and funded, what were to become its own most destructive competitors; and guaranteed that it would, thus, lose control of its end-users.
Customer Control…your position in the market, your relationship with your customers, has to be one of the most precious of your assets. You must defend this 'customer franchise' at all costs. The value of customers is, according to our research, recognized by 90% of organizations. Unfortunately, they do not know how to maintain their relationship with them, and the theory offers only some very hazy ideas on the subject. The best practice is to go out and ask the customers what they want!
Worse still, IBM then actually encouraged - initially by default but later also as a policy - price-cutting! This was bad enough in the PC market, not least because (despite John Opel's brave claims of 'lowest cost producer') it started a war it couldn't win. When the war spread to the mainframes it became a disaster.
Death by Price-Cuts…price-cutting, especially if it escalates into a price war (as it often does), is disastrous for everyone - and usually is most disastrous for the initiator (mainly because it normally demonstrates their ignorance of marketing basics). It is guaranteed to be fatal if your optimal position depends upon obtaining high prices. Too much emphasis is, in the theory (especially in economic theory), placed on price. Our research shows that it is only in 10% of cases that commodity pricing is needed; in the other 90% the profit comes from establishing the highest price premium.
As we have also seen the introduction of dealers (as 'honorary IBMers) created a cancer within IBM's culture.
More immediately, however, the dealers destroyed IBM's (brand) image. They rapidly became the most public face of IBM. Once again, suicidally, IBM supported - and indeed promoted - this position. It defended them against all criticisms (most of which were justified), and allied itself with them. IBM had spent literally decades building its whiter than white image; and in less than five years of contact with dealers was rolling in the gutter with them. The resulting IBM image had very little to do with customer service and pursuit of excellence. As a result, the IBM (corporate) brand significantly reduced in value.
Brand (Image) Value…your brand(s), corporate or otherwise, is one of your most precious assets - being the mirror image of the 'customer franchise'. It encapsulates the overall 'image' which persuades your customers to do business with you. Damaging that image, and hence the brand, damages your asset - and your organization's future prospects. There has been much academic debate about the value of brands. Whatever the book value, if any, placed against them, brands are an asset which must be defended as any other asset.
In many respects it was these marketing issues, - revolving around IBM's decade-long affair with dealers - which had the most damaging effects. These were already evident by the mid 1980s (when IBM was still at its peak); though I then assumed, far too optimistically as it turned out, IBM would also recognize them and deal with them! But IBM had, at least in terms of its mass marketing, terminal myopia. Its culture, especially that of its senior management, simply could not see (let alone understand) what mass marketing was really about. It is surprising, though, how few commentators have recognized this failing - and have seen how serious were its marketing errors.
The other major mistake, which I only realized when I had left IBM, was a misunderstanding of the true meaning of the sales figures in the early 1980s. I cannot imagine how Armonk, with all its sophisticated information systems, failed to see that sales were being artificially inflated by the process of converting its rental mainframes to outright purchase.
Fool's Gold…in these days, when creative accounting is the rule rather than the exception, you had better employ somebody with a very loud voice who understands the real accounting figures. Enron amply demonstrated the problem more recently. Even so, accounting is still seen to be, and often taught as, an exact discipline. It is not! It will, in the short-term at least (and often in the medium-term too) provide the figures that you and your stockholders want to see. This is a problem for financial analysts, outside the organization, but it usually proves as big a problem for management; who too often come to believe their own optimistic inventions.
This fundamental mistake led John Opel to believe that his 'objectives' had transformed IBM and that his ambitious targets were being met; and justified his increasing the number of employees by another 100,000. The shock, in the mid-1980s, when this pot of gold ran out, and growth rates returned to historical levels (and then to below these) jolted confidence across the whole of IBM. It subsequently put John Akers in a position he could not handle - his consequent lack of confidence and vacillation was the hallmark of his decade in office. Worst of all it meant that it became almost inevitable that IBM would have to shed those extra 100,000 heads - and in the process tear up its policy of lifetime employment!
The Price of Success…success is very welcome, but it does tend to disguise underlying problems. A wise management uses success to address those problems - and not to indulge in flights of fantasy. Success is the objective of much of management theory, which rarely talks about its problems.
That about exhausts my list of major mistakes. Interestingly, not one of them resulted from outside developments. Every single problem was initiated by IBM; even those which later had significant impacts on competitive activity directed against it. My research in a very different field, that of 150 FMCG (Fast Moving Consumer Goods) products, showed a very similar pattern. Strong brand leaders (such as was IBM) are virtually immortal; unless they commit fatal errors (as did IBM).
Ultimately, I believe the main source of IBM's woes was that fateful decision, made in the late 1970s, when John Opel first directed IBM towards becoming the 'lowest cost producer' of his ambitions. Which colleagues, and management theorists, directly or indirectly conspired in that decision is (fortunately for them) hidden in the mists of time. What is clear is the long chain of mistakes which led from it; mistakes with which nobody in IBM, not for more than a decade, was able to even come to terms.
For many years, according to some commentators from the moment Thomas J Watson arrived from NCR, this slogan appeared everywhere in IBM. Eventually, but not before it had worked its magic for almost three quarters of a century, it perhaps became something of a cliché. Sometime around the beginning of the 1980s, perhaps in reaction to John Opel's new style of management, it dropped out of sight; which was doubly unfortunate, since that was precisely the time when it was needed most. Had IBM management really thought about the decisions they were taking they might not have taken them - and IBM might still be the supremely successful corporation it once was.
In my academic work on management in general, the most important conclusion I have come to is that every management situation is so different that you have to approach it anew. In this context, theory should normally be seen to be most useful as offering a framework within which your own thinking about the individual situation can best operate. It would seem that, in a wider context than just management theory, THINK is a slogan which every manager should remember - and as a slogan for your desk it cannot be bettered, just so long as you take it seriously (as IBM eventually failed to do!).
Even when I had left the culture of IBM, and was able to stand back from its overwhelming culture, I still failed to draw the inevitable conclusion from the evidence I had then gathered - of IBM's pending terminal decline - though my writing then did at least hint at some of the problems (which no others did at the time!), I am loathe to repeat that mistake! All I will say, with any degree of certainty, is that the old IBM - which was so widely admired - really is dead. The new IBM is a much more conventional organization - and very much the weaker for that; hence my rather cruel labeling of it as a zombie.
On the other hand, IBM still has massive resources at its command and a significant position in the market from which to deploy them; and these assets usually mean an average company, which IBM now is, can expect a relatively long life ahead of it. Thus, despite the losses of key personnel, it still has just about the only really significant collection of the resources (human and technical) which are about to be in demand for the next (communications based) leap into the future of the ICT Revolution; and into the e-commerce era which is the start of the real Information Age. IBM has long been waiting for this breakthrough; though it was never able to create it itself. Maybe, just maybe, it will be able to ride on one created by others. If its senior management are now able to harness the undoubted abilities of its employees - and to allow it to regain its former confidence - maybe IBM will continue to be viable (if not great again).
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