Huge Payoff for I.B.M. After a Shift

January 20, 2010

Steve Lohr wrote an article for the NY Times in 2004 about I.B.M’s brand shift: from hardware manufacturer that customized software solutions to strategic consulting partner offering customers customized “on-demand” service. At the time, it was too early to document results. Today, Steve Lohr reports in the NY Times on the financial fruits of that labor, including I.B.M showing a record year of profits.

How did the promise become a reality? Was the innovation as much in the organizational strategy as in the business strategy?

A compelling shift in a business model, without an equally thoughtful and resourced organizational strategy for change, may get off to a great start at the top but can fail to execute as change cascades through the culture and across organizations. Here it seems I.B.M. has done a lot of it right.

The 2004 article brilliantly lays out both the strategic business drivers AND the organizational change challenges mastered over the subsequent years by I.B.M. The story is a multi-layered case about innovative leadership, an integrated acquisition of PricewaterhouseCoopers, coordinated reorganization, and mobilization of “four in a box” teams to work with customers, creatively including technical experts and researchers with sales and account managers at the front-end rather than downstream.

Big Blue may be smaller than it was at earlier times in its history, but has become agile and resilient in its use of training, change management and culture alignment to adapt to new business models needed to remain competitive. Today’s article provides a confirmation of the value of such investments. I highly recommend reading both.

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