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Robert Cringley has just posted an extended essay on how IBM can be turned around.
If there's one company that Cringley understands, it's IBM. He's done his research on this company and apparently has dozens of contacts inside the company, plus many more former employees who departed either voluntarily or as part of an "RA" (Resource Action = layoff).
I expected Cringely to go ballistic when CEO Ginny Rometty dropped a three-part bombshell on the financial markets last week: 1) IBM missed its expected revenue and earnings estimates for the quarter by a huge margin; 2) IBM was selling its semiconductor manufacturing business to Global Foundaries; and 3) Rometty was giving up on the infamous "Roadmap 2015" to $20 earnings/share established by her predecessor, Sam Palmisano, which Rometty had been following diligently since she took over the reins in 2012.
Instead, Cringely reacted in a measured way, writing a pair of short analysis pieces for Forbes; the first on how the IBM server business (the high end business the company retained, not the commodity business sold to Lenovo) will be at a huge cost disadvantage over the next 10 years, even after the sale of the microelectronics division to Global Foundaries; second, how IBM's software and services businesses have been badly damaged by frequent waves of layoffs, so that opportunities for revenue growth too often come from tightening enforcement of software licenses and similar gadgetry.
Now, a week after the announcement, comes the longer reaction piece. Bear in mind that Cringley is a journalist and blogger, not a management consultant or financial analyst, so his advice won't be confused with a bound report prepared for management's eyes only by McKinsey & Co. Cringley's prescription follows...
1. Stop cutting staff, particularly in Global Services. The layoffs are damaging quality and alienating customers.
2. Look for Cloud Computing opportunities higher in the stack, in SaaS (Software as a Service) rather than in the commodity PaaS (Platform as a Service). Look for sales opportunities from smaller customers outside the Fortune 1000 (IBM's traditional customer base).
3. Acquire more business software companies (e.g. Intuit, Computer Associates) to obtain products that can be converted into SaaS offerings for the cloud.
4. Create a mobile app store, not to compete against Apple, Google and Microsoft, but rather to entice ISVs to develop mobile applications for IBM's enterprise and cloud software.
5. Fire Ginny Rometty as CEO
Ginni’s plan to save the company will involve further cuts. You can’t cut your way to prosperity.
6. Ask several members of the board to follow Ms. Rometty out the door.
This reminds me of a curmudgeonly quote made several decades ago by W. Edwards Deming, the statistician and quality guru who is credited for helping to revive Japan's industry after World War II:
Populating management with financially oriented people has ruined this country (USA).
Apparently some folks in Armonk, NY didn't get the memo.
(Score: 3, Interesting) by PizzaRollPlinkett on Tuesday October 28 2014, @12:15PM
Okay, say you do fire the board, CEO, the whole C-level crew, and the VPs. Clean them all out. Then replace them with...who?
Today's professional management class don't know how to build and grow. The only arrow they have in their quiver is to fire and outsource. I'm convinced of that. Their professional training has been in ways to boost short-term profits by firing people and outsourcing. I don't think they understand anything else about business. But a generational change has taken place in American business, and the generation of professional managers we have now were all trained in the same way. So who are you going to get to change things? Not some 80-year-old Baby Boomer. Someone like that won't have the energy and drive to turn IBM around. I don't think the people running corporations today would know how to do anything to cause growth. The only thing they've been trained to do is to make cuts for a short-term boots in profits. That's the only tool they have.
The problem is the professional management class protects their position running corporations, because they can fire anyone they want. Workers have no power at all. What are you going to do when you get fired just because an executive wants a bigger bonus? Your job performance doesn't matter. (And company performance doesn't matter - Warner Bros is purging employees after record years.)
Someone could start a new company that does things right - treats people as valuable assets and does quality work. But the corporations which hire consultants want things done cheap and don't care about quality, so who would pay for your services?
Workers could unionize, but there is more supply than demand, and companies like IBM would just switch to 100% offshore labor before they would deal with a union.
(E-mail me if you want a pizza roll!)
(Score: 2) by kaszz on Tuesday October 28 2014, @12:29PM
If you can steal the customers from the corporations that is run by MBA:s etc. Then you can also start to sink them into the drain. Banks will be a problem because they are run by the same people. And the lawmakers are made up of lawyers..
(Score: 3, Informative) by Nerdfest on Tuesday October 28 2014, @02:45PM
Banks and a few other areas (including government) are also the ones that have allowed IBM to exist as long as they have. These are the people who genuinely seem to believe "nobody every got fired for buying IBM". These are the original fanbois. If not for them I think IBM would have been out of business twenty years ago. These people are slowly retiring, but a many remain, and they tend to be in management positions now. It's sad that the people supporting IBM tend to be in businesses that are resistant to competition.
(Score: 2) by Sir Garlon on Tuesday October 28 2014, @02:37PM
The beauty of being a pundit is that you don't have to provide solutions. You only need to point out problems.
Though I would add that if anyone did have a good answer to that question, he or she would be a fool to tell IBM for free.
[Sir Garlon] is the marvellest knight that is now living, for he destroyeth many good knights, for he goeth invisible.
(Score: 2) by bob_super on Tuesday October 28 2014, @04:04PM
Sadly, the answer is "not a woman".
Huge companies make an effort to push a woman to the top, exactly once, whether she's competent or because it looks good on paper. Then pundits and peers instantly start to nitpick and argue every little decision she makes, even if they align with her predecessors, until they've achieved critical mass of "I told you she wasn't strong enough". At the first real speed bump, even if cyclical or required hard choices, the rest of the street rallies around the pundits, ousts her, and it's back to 20 years of good ol' boys.
I'm exaggerating only a bit. You can easily see this pattern, and it applies to women and non-Asian minorities, at the top of companies or governments. Very few escape it, because it takes exceptional timing, insane charisma or crummy opposition to overcome the "see? we tried it" bias.
(Score: 2) by emg on Tuesday October 28 2014, @05:25PM
I don't know about IBM, but, in most companies, you;d replace them with people who've worked their way up the company and know the company's business, rather than MBAs who only know how to push up the share price for a couple of years before they pull their Golden Parachute.
I'm firmly convinced that the MBA must have been a Communist plot to destroy the West, which has, unfortunately, survived the collapse of the Soviet Union. No other explanation makes sense.
(Score: 3, Funny) by richtopia on Tuesday October 28 2014, @06:54PM
Step seven was left off the list, and would answer your replacement question:
7. Hire Robert Cringley as CEO
Also, as can be expected:
8. ????
9. PROFIT!!!
(Score: 2) by HiThere on Tuesday October 28 2014, @07:23PM
Well, if you can't use professional managers, you use experts in the field. Some engineers make good managers of engineering departments. Some salesmen make good managers of sales departments. Etc. And surely you could find one good manager to put at the top. If you can't find one, build one.
Javascript is what you use to allow unknown third parties to run software you have no idea about on your computer.
(Score: 3, Interesting) by hendrikboom on Wednesday October 29 2014, @03:21AM
Along time ago, when I was young and energetic instead of an old greybeard, I heard that IBM's promotion policies were to have two distinct tracks -- technical, and management.
The trick was, that they would only promote people from one track to the other. Tus anyone reaching the top would have experience in both.
I don't know what they do now.