Big Changes In Ibm Senior Management example essay topic

With the naming of Lou Gerstner as its new CEO (and the retirement of John Akers on May 7), IBM now has a chance to change both its own organizational structure and goals and, at the same time, the future shape of the computer industry. Nearly every computer publication has polled its readers asking such questions as 'Do you think IBM can succeed at changing, Do you think Lou Gerstner is the right man to lead a turnaround at IBM,' and 'Do you care?' Reactions to such early pulse taking are mixed. Clearly customers are concerned about IBM's seeming inability to understand their future needs and help them move to new computing platforms. On the other hand, customers are divided between a 'we have to give him some time to assess the problem and formulate a solution' point of view (we concur), and the feeling that an outsider like Gerstner can't possibly fix a computer company (see below). Some are convinced that it just doesn't matter, since the day of the mainframe is over and that means IBM's days as the industry leader are over, too.

IBM, of course, does not agree. Gerstner has not revealed the specifics of his plans at all, except for a few remarks at the Annual IBM Shareholders' Meeting, where he brushed off the widely held notion that IBM would spin off profitable businesses. To him, it appears, reorganization means fewer people, different skills, more distribution of power, but not necessarily the wholesale deconstruction of IBM that some predicted. On the other hand, some of the things he has already done send clear signals of the big changes to come: o He is spending a lot of time in the field and with the customers.

That guarantees he will hear the story first-hand, rather than filtered through tiers of IBM staffers and middle managers. It is just this kind of filtering that has led to the dangerous continuation of the status quo when IBM was teetering on the brink of disaster. Only a senior management badly out of touch with the field and the customers could have been so unaware of what was really going on. Gerstner doesn't intend to make that mistake. o He is making big changes in IBM senior management and many more changes are likely to come. Tellingly, these appointments are from outside of IBM (nearly unheard of in days gone by) and each appointment appears in the business press with tales of just how tough the manager has been before and how good he is in tricky situations. Gerstner must assume that to change IBM he needs a team with no loyalty to the concepts that drove IBM in the past and every possibility of hearing ideas with fresh ears.

On the other hand, there are IBM values that were worthwhile. Customers worry that too much attention to the short-term bottom line could result in an erosion in such areas as continuing investment in R&D, commitment to customer support, and continuing support of older (and perhaps less profitable) products, forcing customers to make changes on schedules not of their own choosing. One could argue that IBM should have been doing those things all along, but an IBM that did, would have been a different IBM than these customers signed up for relationships with. For instance, IBM has announced that its Vice Chairman and Chief Technology Officer Jack Kuehler will be retiring this year, as planned, as will its chief personnel officer. (Its CFO had already resigned.) Kuehler's duties (including supervising the development and manufacture of software and personal computers) will be transferred to Vice Chairman Paul Rizzo. Rizzo is so far a big winner in the Reorganization Sweepstakes, having faded into the background after he lost the contest for the leadership of IBM to Akers in the mid-80's.

He was called back to active duty by the IBM Board and seems to be favored, at least so far, by new boss Louis Gerstner, indicating that at least some IBM insiders are likely to be part of the new team. While it is true that Lou Gerstner has little or no experience in the computer industry, outside of his experience as a significant user of technology, he does have a very relevant skill. Gerstner succeeded early and well as a consultant at Mac Kinsey and Company. The same skills that allow a senior strategic consultant to come into a new situation, assess its status -- with all its political implications -- and make objective recommendations, should stand him in good stead as he tries to turn around the world's largest and (still) most important computer company.