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Leader of IT Services:

IBM manages to pick up and gets right back on its feet

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Having been through several close calls and critical conditions, legacy company IBM has spent a lot of time, effort and resources redefining its business values. That's perhaps why it can accurately grasp hold of visionary trend and innovative ideas.

IBM manages to pick up and gets right back on its feet

By Isabella Wu
web only

This June, there was an article in Financial Times which stated that "within the economic jungle of the early 21st century, one of the species most threatened with extinction is the large, long-in-the-tusk beast known as the multinational corporation."

Faced with rapid-fire successive changes and uncertainties in the business environment, who knows from which direction the next huge wave will come from? Most entrepreneurs would have freaked out at hearing this, especially when the words emanated from none other than Sam Palmisano, IBM's CEO, Chairman and President.

This year, IBM celebrates its 97th year of history. To date, it still stands strong for its presence in 170 markets around the world. IBM's transformation story is a classic other enterprises strive hard to simulate.

The death and birth of an age-old established company

In the 80's, computer technology was at its peak and innovators swarm the era. However, IBM became a follower in that area then. In the 90's, the popularity of PCs exploded and legacy computers were doomed for life. IBM, the famous creator of legacy computers, lost the battle and lost the opportunity to grow. Both its revenues and profits plunged downwards in a straight line. At one year, its revenues shrank US$8 billion. IBM was at the verge of collapsing.

In 1992, IBM invited Lou Gerstner to be its CEO. Then, Gerstner has just completed a merger at the food company he worked for. It took Gerstner 9 years to get IBM back on track. At 80, IBM was once again on its path to growth.

Today, IBM's leadership is very much apparent. It ranks number one worldwide in the area of IT services and number two as far as profits in the software business is concerned. IBM's share price also reached a 10-year high.

Few enterprises manage to survive in a world characterized by cut-throat global competition. It is even rarer to see a company like IBM, which is very particular with nurturing hi-tech talents, stumble, regain its footing and visibly excel.

Why is IBM capable of growing and innovating?

"Once you've had a near-death experience, you'd be very sensitive to changes." This was Ravi Marwaha, General Manager, IBM Global Business Partners's response to the question. "And you will know what really matters." With a head full of gray hair, Marwaha is an IBM veteran of 40 years who has weathered numerous drastic changes in his time at IBM. His knack for survival is also IBM's survival and growth wisdom.

An insistence to be at the forefront of innovation

Driving southeast San Francisco's hilly terrains makes you feel ever closer to the desert as the apparent lack of lush greenery even in springtime exudes the sensation that you're floating in a succession of varnish-like yellowish heat wave. But this Southern part of the San Francisco Bay Area is known to give rise to America's growth. Silicon Valley is a hi-tech hub where talented, passionate and innovative young minds abound. And well integrated into the natural landscapes of the foothills overlooking Silicon Valley is IBM's Almaden Research Center. Not surprisingly, Stanford graduates are lured into the research center's gates once they leave school.

Regardless of how fast the market changes, the business focus is more on tech applications than on tech innovations at present day. More and more businesses are cutting off funding for R&D projects. Nonetheless, IBM believes in keeping at the forefront of innovation and holding the key technology is the secret of capturing and sustaining the growth opportunities for future.

"Existing technologies and markets are the results IBM have invested in as early as 20 to 30 years ago. None of them is a recent attempt", pointed out Moidin Mohiuddin, the Associate Director of Almaden Research Center.

Standing proudly in front of an aerial photo of the center, it is obviously that Mohiuddin is pleased with IBM's research accomplishments. Mohiuddin started his career at IBM by studying computer hardware. Now, on his 25th year at IBM, Mohiuddin leads a team of 400 researchers studying complicated software computing, nanotechnology, and even measuring force required to move individual atoms which will impact future direction of IT industry.

One can hear the endless hum of machines at the basement. The place resembles a manufacturing factory, a far cry from the stillness of bright office environment. Sitting quietly at one corner is Andreas Heinrich, who is busy with his study of atomic force microscopy (AFM), a research project that has been going on for more than 20 years.

"Thinking of that my own research can affect the dynamics of the entire industry really makes me happy", beamed Heinrich. Sporting a Polo shirt, Heinrich was no different from any other college graduate when he just joined IBM. They shared the same dream, ambition and aspiration in IBM. And that means keeping IBM stay ahead of changes, especially after a wrestle with Death.

This kind of expectation is deeply rooted in the minds of IBM veterans. But how about today? Does such a consensus still hold through?

What kind of an enterprise exactly IBM is?

In 2003, IBM started to redefine its core value system. IBM invited all 350,000 employees worldwide regardless of place or position to join in its online brainstorming platform -- Jam. "This is how IBM's values were built, with the participation of all IBMers", said David Yaun, IBM Vice President of Corporate Communications. Everyone got the chance to speak a piece of his or her mind. Everyone discussed on what kind of a company IBM is, what it stands for and what its values are.

Rebuilding corporate values

One discussion after another ensued, 72 hours nonstop. Finally, IBM came up with 3 core values: Dedication to every client's success, Innovation that matters for our company and for the world, Trust and personal responsibility in all relationships.

These values may seem abstract to the average person for it has nothing to do with the market or technology "but the important thing is that it was a consensus from the bottom up", Yaun emphasized. The focus of a company may adjust and the pace may change; that's why the need for a consensus and priority-setting is of utmost importance.

"If nothing changes, nothing changes." This is Nick Donofrio, IBM Executive Vice President of Innovation and Technology's famous quote. Donofrio is always at the front line of communicating IBM's change to the market.

Whenever IBM changes, it not just happened to IBM's products or business value but to every IBMer.

The certain niche market might be either booming or contracting. One may decide to open a school or to serve aged people.

IBM helps every IBMer to respond to changes early and facilitates everyone to be a member of the avant-garde of identifying the opportunity of change.

IBM initiated the "Matching Accounts for Learning" this year for its employees. It encourages IBMers to learn things of interest to them. It may be flower arrangement, playing the violin or anything outside their profession. The account will pay for half of the tuition up to $1,000 per year. IBM also aggressively helps its employees transfer their careers to government, nongovernment organization, or education institutions.

Indeed, having weathered too many revolutions, IBM knows all too well that regardless of whether innovation or growth are concerned, no other corporation can fully and thoroughly take care of an employee's entire career like the way IBM does.

"Not everyone's significant contribution may happen during his tenure at IBM. Some people's contributions are perhaps more visible in his community", pointed out Stan Litow, Vice President of IBM Corporate Citizenship and Corporate Affairs. A very important part of enterprise of the future is to allow each and every employee to live happily, to continue the tapping of the employees' potentials and to find a way for them to create values.

Now, more and more IBMers are involved in community service, making good use of their tech knowledge and global experience by bringing in their skills and expertise to community and schools to benefit the younger generation.

In the economic jungle of the 21st century, there lies the century-old company that once fell, regained its footing and paved the way for a new growth.

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