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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: 0) by Anonymous Coward on Tuesday October 28 2014, @12:24PM
Statistics are the problem. Modern business management is all about stats and metrics, and making decisions on the assumption that these stats and metrics correlate to reality. Well in most cases they don't, leading to the disatrous situation we have now.
(Score: 1, Interesting) by Anonymous Coward on Tuesday October 28 2014, @12:33PM
There are a number of problems with metrics.
As I see it, the biggest one is in choosing the right metric. Your measurements can be 100% accurate but still misleading if they don't measure what you need to be measuring.
The other problem with a metrics-first approach to business is that it reinforces the status quo. You got on maximizing what you've already got that you stagnate and become to rigid to keep up with the changing marketplace, that lets young and hungry businesses eat your lunch. It is a similar problem with "big data" - where we end up with a sort of self-fulfilling prophecy, except "big data" has a societal impact instead of taking down individual corporations.
(Score: 1, Interesting) by Anonymous Coward on Tuesday October 28 2014, @01:57PM
That is part of the issue.
The other part is ignoring your customers. Seeing them only as a way to extract money and an open cash register. Instead of someone who is willing to come off money because you provide value. I see it time and time again. I ask these top VP people 'how will this help our customers'. The answer to that question is usually very telling. I many times get a blank stare they had not even considered the point. What do your customers want. Many will not know. But some will. Ask them.
I also hear sr vp level people telling me 'we only want businesses that make billions of dollars'. Yet they have nothing in the pipeline to do that. As if any of the ventures we are working on are worth a billion dollars. Guess what, it probably already would be if it was worth that.
Look to the people who create value instead of destroying it. It sounds like this dude is advocating buy someone who can build things as you already stupidly sold off those parts of your business.
(Score: 1) by Whoever on Tuesday October 28 2014, @03:10PM
Statistics are not the problem. Statistics are merely a tool.
In general, MBA types don't have a good grasp of statistics, so they tend to misuse the tool. In particular, as you noted, understanding the limits of accuracy of statistics and their value (or lack of) in predicting the future. Think of it as the Dunning-Kruger effect applied to statistics when used by MBAs.
(Score: 2) by frojack on Tuesday October 28 2014, @08:51PM
MBAs really don't have that many tricks up their sleeves.
The MBA degree program largely consists of
1) Finding costliest items in the budget
2) Cutting same
3) Avoid risk, by liberal use of risk-shifting paperwork.
Very seldom to they look at the revenue side of the equation, and even when they do, they tie revenue to sales staff, and never look any farther.
No, you are mistaken. I've always had this sig.
(Score: 3, Insightful) by HiThere on Tuesday October 28 2014, @07:10PM
Statistics aren't the problem, but they aren't the solution, either. They're just a tool
If you want to build things, get an Engineer at the head.
If you want to sell things, get a Salesman (not just any Sales Manager) at the head.
If you want to do lots of things, get a good manager at the head, but put the right expert in charge of every department. It's a load of garbage to claim that a good manager can manage anything. They can only properly manage the things that they can understand. Steve Jobs was fantastic because he was a missionary with a vision who understood engineering, design, and marketing. He wasn't that good a manager, but he was able to inspire managers that he hired with his vision (I did say he was a missionary) and his vision was based on sound engineering and good design. This is an extremely rare combination, and you can't expect to find someone like that who is amenable to your purpose. So you need to backstop.
This means that you MUST have each department managed by someone who is both a competent manager and is really skilled in what they are managing. And you need someone at the top who can inspire them to do their best. A much more abstract task than inspiring them to follow your vision.
Javascript is what you use to allow unknown third parties to run software you have no idea about on your computer.
(Score: 3, Insightful) by Zinho on Tuesday October 28 2014, @07:55PM
Modern business management is all about stats and metrics, and making decisions on the assumption that these stats and metrics correlate to reality.
I've got a pretty metric-centric management where I work, and it's not necessarily bad. The one warning about use of metrics is that once you start measuring something and using it as a measure of success, behavior changes to improve that metric whether it's good or bad for the company/employees/customers involved.
With that in mind, the big mistake many corporations are making (at the bidding of their MBA-wielding overlords) is that they are focusing on quarterly earnings as their prime metric of success. There are many short-term strategies (layoffs, spinning off subdivisions with a larger-than-necessary share of debt, etc) that work to improve the quarterly earnings, some of which even make the company more profitable in the process. Many of them, unfortunately, tend to destabilize the company in the long-term. Reducing or eliminating R&D is a clear example - on the balance sheet it appears to be a black hole for money, reducing profitability and never generating income; however, R&D is where all new products come from, without it a company stagnates and eventually becomes irrelevant in the market. IT is seen the same way, it's a cost center only and generates no revenue - outsourcing to reduce spending makes sense if you're looking to reduce expenses, but is seen as an unconditionally bad decision by the people who depend on IT for their operations.
There is an old story about a goose [storyit.com] that should perhaps become mandatory reading at business school...
"Space Exploration is not endless circles in low earth orbit." -Buzz Aldrin