Part II
Chapter 12
The IBM culture was the product of two predominant forces
- The runaway success of the System/360
- little competitive threat, high profit margins, commanding market position
- true economic forces don't apply
- company and people lose touch with external realities
- what's happening in the marketplace is irrelevant to company's success
- forgot how fast things change and settled into its success
- Antitrust suit
- 13 years of threatened federally mandated breakup
-scrutiny changes behavior
- eventually dropped and labeled without merit
Vertical integration - merging two businesses that are different stages of production. exp: food production and grocery stores
Forward integration - merging two vertical business towards the consumer
Horizontal integration - merging two of the same business. exp: two grocery stores
With the introduction of UNIX into the marketplace vertical integration was ending. Disaggregated its focus
IBM failed to understand
- PCs would be used by businesses not just enthusiasts
- Lost control of a PC's highest value components
- Operating System - Microsoft
- Microprocessor - Intel
Chapter 13
IBM bet, in the 90's
- to build not just the largest but the most influential services business in the industry
- customers would want companies that provided solutions
- integrated technology from various suppliers
- thought that the IT industry would be services-led, not technology-led
- stand-alone computing would give way to networks
- a proprietary model was, in the past, successful for IBM
- repudiated closed computing, opened their products to interoperate with others in the industry
Chapter 14
92-01 IBM Services division grew from $7.4b to $30billion
80% of the company's revenue growth since the focus towards Service
businesses needed services
- they had to integrate technologies with core business processes
- then integrate processes (pricing, fulfillment, logistics) with each other
IBM wanted to build the integration capability that customers needed
but the culture of IBM would fight it
- intense rivalries between units of a large company were a prevalent behavior pattern
- the traditional base units resist a new unit
Sales and Service had to work together
- salespeople had to learn that services specialists could develop major new avenues of revenue in their accounts
- service people had to learn that the sales team could get them in the door
Sales need to invest the resources to work with the Services team to ensure they understand the competitive advantages of the product you want to sell
Service divisions
- independent and worldwide
- needed to be integrated
Service divisions are much more difficult to manage
- Management skill set is very different from product companies
- managing factories, understanding cost of goods and inventory turns are not management skills for the service industry
- human-intensive services business
- sell a capability
- sell knowledge
- you don't make a product then sell it
- you create it at the same time you deliver it
- it's a different business model
- different economics
IBM services
- manage a businesses IT assets
- products, facilities, staff
- guarantee performance levels
- keep on leading edge of technology
- charge less than it is costing now
New management for IBM
- must be able to drive economies of scale
- a 10-year contract may not make money until year 3
- negotiate profitable contracts
- price skills
- assess risk
- walk away from bad contracts or deals
It's a commitment to invest both years and effort into building the experience and discipline it takes to succeed
When high-tech industry moves in a new direction the IT services opportunity is reinvented.
IT services are even sought in a downturn because other businesses want to outsource to reduce expenses
Chapter 15
Chapter 16
Chapter 17
Chapter 18
Chapter 19
Part III
Chapter 20
The marketplace is the driving force behind everything we do
- serve the customers
Technology company with and overriding commitment to quality
- funnel knowledge into developing products that serve customer's needs
Primary measures of success are customer satisfaction
- not operating margins, revenue growth
Operate as an entrepreneurial organization with minimum bureaucracy
- focus on productivity
Never lose sight of strategic vision
- follow direction and mission
We think and act with sense of urgency
- better to be fast than insightful
Outstanding, dedicated people make it all happen
- especially when they work together as a team
Sensitive to needs of all employees
- communities become better because of our presence
Chapter 21
IBM Leadership Competencies
Focus to Win
- Customer insight
- Breakthrough thinking
- Drive to achieve
Mobilize to Execute
- Team leadership
- Straight talk
- Teamwork
- Decisiveness
Sustain Momentum
- Building organizational capability
- Coaching
- Personal dedication
The Core
- Passion for the business
Chapter 22
Required Behavioral Change
From To
Product out Customer in
Do it my way Do it the customer's way
Manage to morale Manage to success
Decisions based on anecdotes Decisions based on facts
Relationship driven Performance driven
Conformity Diversity
Attack the people Attack the process
Part IV
Chapter 23
Truly great and successful companies go through constant and sometimes difficult self-renewal of the base business.
Don't jump into new pools where there is no sense of depth
Empirical studies show that the likelihood of an acquisition's proving to be a failure far outweigh the chance of success
A successful, focused enterprise is one that has developed a deep understanding of its customers' needs, its competitive environment, and its economic realities.
Chapter 24
Execution is the most unappreciated skill of an effective business leader
It is extremely difficult to develop a unique strategy for a company
People respect what you inspect
- don't confuse expectations with inspection
Execution is about translating strategies into action programs and measuring their results
- build measurable targets and hod people accountable
Chapter 25
What it takes to run IBM
Energy
- Enormous personal energy
- Stamina
- Strong bias for action
Organizational Leadership
- Strategic sense
- Ability to motivate and energize others
- Infectious enthusiasm to maximize the organization's potential
- Builds strong team
- Gets the best from others
Marketplace Leadership
- Outstanding oral communications
- CEO-level presence and participation in the industry and with customers
Personal Qualities
- Smart
- Self-confident, but knows what they don't know
- Listens
- Make hard decisions
- Passion that is visible
- Maniacal customer focus
- Instinctive drive fro speed and impact
Chapter 26
People do what you inspect not what you expect
Real involvement and not exhortation, delegation, and then surprise when change doesn't happen