IBM Latest Restructuring is the Canary in the Well

Last month, the CMO of IBM announced the elimination of working remotely for the company’s marketing department. If you were one of the unlucky distant workers, you were suddenly seeking new employment.

IBM’s CEO has discussed how the company is restructuring its business to become agile and increase profitability. One of its objectives is to foster innovation by having everyone move back to IBM offices. 

Some suggest that IBM is seeking to increase innovative collaboration from the water cooler effect. Studies have shown that individuals are more likely to share ideas when standing around in the kitchen taking a break. 

The problem with this theory is that bringing people together into an office does not instantly create innovation. What if the innovative employees were the ones living in the smaller cities and the less creative ones happened to live in the city. 

Forcing people together and then telling them to innovate - generally, produces less than desired results. Being innovative and creative is a fluid process. 

Randomly selecting individuals by geography to remain on the marketing team appears more like a decision to cut cost than to create a “Steve Jobs” atmosphere. Granted, I am not privy to information on which employees were offered incentives to stay. On the surface, the decision seems counter intuitive. 

We constantly refer to Steve Jobs. Why, because he was and will be one of the world’s greatest visionaries. Whether you agree or disagree with his methods, he had a vision and was brilliant in the execution. 

IBM is a scientific development and research company. The company is gifted at developing technologies, many of which, we use today. 

I believe the restructuring of the company and its departments is the canary in the well. IBM must find a path to profitability, or it will not survive in the digital economy. Even though the company appears large, its market capitalization is considerably smaller than its competitors. Apple could purchase IBM with money to spare. 

When I think about IBM, it reminds me of the last time I was in a Best Buy store with my son. Walking through the aisles was like visiting a technology graveyard for soon to be obsolete products. Everywhere you look, the company seeks to ink out profit from anything possible from stoves to potato chips.

IBM is similar. The company has several highly profitable practice areas while the rest of the company holds space in its respective market. 

If these latest employee cuts (layoffs) do not work or if management cannot find a way to monetize its latest cutting edge technologies, IBM will remain stuck, unable to move forward. 

Building sustainable businesses in our new digital economy requires more than being innovative and having everyone camped out at the office kitchen sharing ideas. CEO’s, management, and employees must think completely different.

Complacency is the biggest risk to companies today. 

The digital transformation is cleaning house. Companies that are inefficient, complacent, and without a sustainable vision with have a difficult time competing. 

Thanks for reading. My writing, consulting, and speaking are on www.dillon5.com and www.tiffanysunday.com

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