Change Agents at IBM

A - Z Characteristics of High Achieving Organizations

A change agent is a person who transforms an organizational culture and its processes so that the organization anticipates, identifies, and overcomes challenges threatening its economic or cultural welfare. 

The business world consistently produces change agents who arrive when a company’s future is bleak and formulate actions to save it. The philosopher Hegel believed that a great person does not create historical reality but only uncovers the inevitable future.

At key times in IBM’s history, high-power change agents transformed the company’s culture to face an emerging, ambiguous future. What challenge did these change agents perceive and how did they transform IBM to meet this challenge?

Organization In Point

Thomas Watson was IBM’s first CEO. He was a salesman in the Computing-Tabulating-Recording Company (CTR) and later its president. In 1924, he combined CTR with several other companies and renamed it International Business Machines (IBM).

Watson like most change agents was charismatic, energetic, decisive, and strong-willed. He transformed a disgruntled and dissatisfied CTR salesforce to create IBM’s unique culture. He began by instilling a sense of purpose and ethics into his sales force by developing slogans that emphasized excellence and exceptional customer service practices. He fraternized with his employees and fostered an atmosphere of trust and loyalty. During the depression he insisted on full employment without layoffs. He created opportunities for lifetime employment. He created an education department where his employees could take classes. He insisted on luxurious work environments that encouraged worker productivity. He forged international trade agreements. He allowed women to train for executive positions and paid them at the same rate as the men. In 1943 he named a woman vice president and in 1945 he helped fund development of the world's first large-scale calculating computer, the Automatic Sequence Control Calculator (ASCC).

Watson changed IBM from a conglomerate of companies that manufactured a wide range of products into a dynamic corporate culture that emphasized employee growth, life-long employment, loyalty, and customer service.

Louis Gerstner came to IBM in 1993 a time when the company was losing money at a phenomenal rate and Wall Street analysts were recommending dismantling it. Gerstner recognized immediately that IBM’s strength as a company and its path to survival depended on the culture that Watson had instilled. Gerstner met with the IBM’s Corporate Management Board and identified major corporate weaknesses: low customer ratings on quality, a drive towards decentralization, slow responses to interdepartmental issues, disputes over sales processes, and a lousy performance measurement system.

Over the next nine years Gerstner transformed IBM’s culture by realigning Watson’s primary customer service focus to meet current market challenges. Grestner changed IBM into knowledge company that did not just sell IBM solutions but, when conditions warranted it, suggested competitive products and serviced the total solution after purchase. Gerstner’s brainstorm, IBM Global Services, built a service business inside an asset intensive corporation to meet the direction indicated by rapid technological expansion.

Takeaways

In 2012 Virginia Rometty became IBM’s latest change agent. She recognized that IBM was not keeping pace with the unprecedented rate of technological change. She proposed a strategy of “continuous transformation” with three abiding principles:

1. Don't protect the past.
2. Never be defined by your product.
3. Always transform yourself.

Under Rometty IBM embraced one central idea: the IBM Cloud is the platform for the next era of business. The company is betting its future on this idea. The company surprised Wall Street and share holders by allocating large R & D resources to the concept that cloud-based technology’s foundation must rest upon artificial intelligence (AI) containing a full range of cognitive abilities. IBM calls its AI product Watson – a machine that simulates human thought processes by using self-learning systems, data mining, pattern recognition, and natural language processing to mimic the way the human brain works. Watson will drive IBM’s future through its cloud-based services as well as its security infrastructure.

Rometty is a life-long IBM employee with technical credentials. Her plans for another company transformation are bold and still in the development phase after five years of intense effort. Her vision as stated in a Wall Street Journal interview, “You can actually take any product or service and put learning inside of it and it will change the basis of a business. I see it happening.”

Articles in this Series: A - Z Characteristics of High Achieving Organizations

1. Agility Thinkers at Facebook
2. Boundary Spanners at Juniper Networks
3. Change Agents at IBM
4. Decision Drivers at Cisco
5. Execution Experts at Caterpillar
6. Future Scenario Planners at Shell
7. Gritty Explorers at SpaceX
8. Honest Culture Creators at GE
9. Innovation Masters at W. L. Gore
10. Justice Ambassadors at General Grain
11. Knowledge Management Champions at Xerox
12. Loyalty Partners at Starbucks
13. Motivation Maximizers at Trader Joe's
14. Nurturing Leaders at FedEx
15. Optimistic Visionaries at Intel
16. Performance Navigators at Gap
17. Quality Virtual Instructors at Boeing
18. Resilient Re-inventors at Barnes & Noble
19. Servant-Leader Heroes at Southwest Airlines

______________________________________________________________________

Sandhya Johnson, PhD is a leader in HR optimization, leadership development, team performance, and organization effectiveness. She has a proven track record of developing innovative talent management strategies for a diverse group of leading organizations. Sandhya is the founder and Managing Director at Ingenium Global, a Dallas-based consulting firm that is committed to co-creating talent-driven organizations. Connect with her on Twitter @IngeniumGlobal