36956788-Ibm Bm391 Assignment

7/30/2019 36956788-Ibm Bm391 Assignment

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IntegratedStrategyProject-IBM

AllanWilliamsMay5th,2008

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1.1.6Scenarios.

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2.2TranslatingStrategyIntoObjectivesandInitiatives.


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CONTENTS

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2.6PersonalDevelopmentReport.

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57.1.5IBMsStakeholders....................

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0.1.EXECUTIVESUMMARY0.1ExecutiveSummaryNomatterhowdismaltheUSeconomymaycurrentlybe,theseareheadytimesforIBM.Record

profitswereannouncedfor2007,withIBMreporting$10.4billionUSDonrevenues

of$98.8billion.$21billionwerereturnedtoshareholdersthroughstockbuybacksand

dividends,andafurther$12.2billioninvestedintoacquisitionsand


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capitalexpenditures.Unprofitablebusinessesweresoldoffordivested,newmarketsentered,allowingIBMtoenjoya42.3%grossmarginonrevenue.

Despitethesesplendidresults,IBMknowsfullwellthatitmustcontinuouslyput

newofferingsintheproductlifecycle;rivalsarealltookeentoemulate

orundercutIBMslineofproductsandservices.IBMhas


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longabandonedthetraditionalpracticeofcustomerlock-in,wherecustomersareforcedtouseIBMproductsoncetheyenteranIBMcontract1.IBM

fullysupportsanysoftwareplatformonanyhardwaresystem,allowingcustomerslowentrance

andexitbarriers.IBMreliesononeassetthatprovidesthehighestvalue

(andmargins)itsconsultants,contractors,andexpertsprovidedto


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customerstosolvetheirmostdifficulttechnicalandbusinessproblems.Tomeetclientdemands,IBMemployeesaredispersedthroughtheworldtobeclose

totheircustomers,takingfulladvantageofvirtualization,oranofficeless,alwayson

workingstyle.

IBMinmanywayspioneeredthecurrenttrendof

virtualization,alreadyhavingeliminatedofficesforemployeesandvacatedentire


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buildings,suchasthethefamousaddressof550MadisonAvenueinNewYorkCity.Employeesareequippedwithlaptopsthataretheiroffices;

theycanconnectandworkanywhere,fromhome,clientsites,airports,foreigncities,

andanyconceivablelocationwithanInternetconnectionofsomekind.Employeesare

alwayson,workinganominal40hoursperweek,but


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reachableatanytime.IBMemployeesarealsoisolated,workingasindividuals,attheirowndiscretionofwhatthecompanysfutureholdsandwhat

skillsanddevelopmentstheywillundertake.IBMemployeesmustregainacommonvision,

purpose,camaraderie,andformalearningnetworkthathasdisappearedwiththeircubicles

andoffices.

Manyofthecomponentsforthis


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transformationisalreadyinplace;knowledgemanagementsystemsareplentiful,socialnetworksarereadilyused,rewardmechanismsused,andeducationwellestablished.Whatis

missingisanarchitectureforimplementingthenewstrategyofteam-basedlearning,customer

engagement,andmarketadvantage.Thenewarchitecturehasitscomponentsofhigh-levelobjectives

mappedtocriticalsuccess

1Gerstner,2002


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CONTENTS

factors,targetsmatchedwithinitiatives,andartifactssuchasaBalancedScorecardwillbeusedtomonitorprogressandresults.


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0.2.INTRODUCTION0.2IntroductionIBMisaglobalITmanufacturingandconsultingcompany,with335,000employeesacrossnearlyeveryindustrializedcountryinthe

world2.Oncelargelyfocusedonthesaleofmainframesandrelatedsoftware

contracts,IBMhasevolvedintolucrativetechnologyandbusinessconsulting,supportedbya

widerangeofIBMsoftwareplatformsandproducts.Figure1


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showsIBMsvaluesysteminthemarketplace,demonstratingarelianceonknowledge-basedtransformationandprocesses.Productssuchashardwareandsoftwareareeither

soldoutright,orused(alongwithcompetitorsproducts)asabasisforconsulting

engagements.

Table0.2givesanoverviewofIBMsfinances,showinga

mildlyflatgrowthinrevenue,butasteadyincreasein


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Table1:IBMYear-EndFinancialResults,inBillion$USD

2IBMAnnualReport,2007


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CONTENTS

Open Source InitiativeServicesSoftwareSystems &FinancingConsulting and Systems IntegrationApplication Management ServicesStrategic OutsourcingBusiness Transformation OutsourcingIntegrated Technology ServicesMaintenanceWebsphereInformation ManagementTivoliRationalOperating SystemsServersStorageRetail Store SolutionsMicroelectronicsCommercial FinancingClient FinancingFortune 500 CompaniesSmall Business/Home BusinessOpen Source InitiativesUniversities/EducationGovernment/Federal/MilitaryRetail/POS/e-CommerceFinance/BankingMicroelectronicsResearch & DevelopmentMainframes/Workstations/NetworksConsulting/Contracting/ServicesIntegration/Business TransformationIBMCUSTOMERSSUPPLIERSCompetitor Systems and PlatformsSub-contractingservicesUniversity research departmentsJoint ventures / alliancesRaw materialsfor microelectronicsHardware manufacturersInternal/external laborFigure1:ValueSystemofIBM

0.2.1AssignmentStructureThestructureofthisassignmentisintwoparts;the

firsthalfdeterminesIBMscurrentstrategicpositioninthemarketplace,withfocuson

competitionandcustomerdemands.Fromthisdetermination,theunderlyinglogical


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reasonsforIBMsfuturedirectionsareanalyzed,formulatingthebasisofabusinesstransformation.Thesecondpartofthisassignmentdetailsthe


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0.2.INTRODUCTIONmechanicsofthetransformation,keepingIBMaheadofrivals,preservingmargins,andraisingrevenue.

* Porters 5 ForcesSWO TRVEInternalExternal* McKinseys 7S* Value System* Product Portfolio* Competitive AdvantageStakeholder AnalysisScenariosStrategic ChoicesCHAPTER 1Henley Transformation Framework* PESTLECHAPTER 2Figure2:

AssignmentStructure


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CONTENTS


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Chapter1

StrategicPositionAnalysis

1.1StrategicDirection1.1.1ExternalAnalysisPESTLEAnalysisAfullPESTLEanalysisisperformed

inAppendix.1.1,andthepressingissuesarediscussedinturnbelow:

SkilledEmployees-DespitetheranksofskilledworkersinIndiaand

othercountries,competitionhasshrunkthepoolofavailablecandidates.


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Employeesworkinavirtualorganization,wherelocationisnolongerdefined;employeesareconnectedtoeachotherthroughnetworksandtechnology.Commoditization

ofTechnology-Ascompetitorsbecomeadeptatduplicatingthesametypesofservices

IBMdevelops,competitionincreasesandprofitsdrop.BecauseIBMdoesnotforceclients

touseanyparticularproduct,itiseasyforclients


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tomovetoIBM,attheriskofthemeasilymovingelsewhere.PressuretoInnovate-Innovationofnewproductsandservices(orthe

acquisitionofthesame)isthelifebloodofIBM,misstepsinpredictingindustry

trendscanbecostlyinvestmentswithlittlereturn.AdangerouspositionforIBM

isthenon-differentiationbetweenaskilledemployeeworkingforIBM


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andthesameemployeelaterworkingforacompetitor.ClientsmaynotseevalueinpayingIBMspremiumpricesifthesameservicescan

befoundcheaperelsewhere.Simplypayingemployees

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CHAPTER1.STRATEGICPOSITIONANALYSIS

moremerelyincreasescostsallaroundandmaynotbeaneffectivesolution

anewwaytodifferentiatetheavailablepooloftalent,raisecompetitivebarriers,

andyetkeepoverheadcostslowmustbefound.Porters5Forces

Figure1.1diagramsthedetailedFiveForcesanalysisfrom


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Appendix.1.2.

High/Lowgrowth and sustained advantageis difficult.THREAT OF NEW ENTRANTSRivals are small compared to IBM,but can compete on at least onespecialized front, such as anarrow or unique service orproduct, or more often, on price.BARGAINING POWER OFSUPPLIERSSuppliers are skilled workersemployed by companies,specialized skills can berare and expensive.BARGAINING BUYERSHigh if the service be bought elsewhere,low if the service propietary, or the close relationship OF SUBSTITUTIONLow forIBMs recent technologyfrom R&D efforts, or productsgiven away for free by IBM.High if service is copied oravailable from the competition.INTENSITY OF RIVALRYIBM, as the dominant player inthe market, is the natural focusof rivals. IBM can expect smalloutfits to attempt to chip awayat every weakness it has.HighMediumHighHigh/LowMarket is easy to enter, butFigure1.1:PortersFive

Forces

Competitionisintense,althoughIBMholdsthelargestshareof

anyonecompany(seeAppendix.1.4),itdoesnotholdadominantposition.

Muchofitscompetitionissmallcompaniesandindividualswho


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mayhaveafocusasnarrowasIBMsiswide.FewcompaniescanholdtheirownagainstIBMsbreadthanddepthofsoftwareproducts

andplatforms,butthelucrativebusinessofprovidingskilledindividuals(thesuppliers)is

attractivetoanycompany,largeorsmall.


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1.1.STRATEGICDIRECTION131.1.2InternalAnalysisMcKinseys7S

Figure1.2illustratestheeffectivenessofeachoftheelementsofthe

McKinseys7Smodel(pleaseseeAppendix.1.3formoredetail).Thebiggestweakness

inthisdiagramistheStructure,puttingIBMinacriticalriskwith

competitors.Employeesdeployedinconsultingpositionsoftenareworkingalone,


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withtheirlearningself-directed.WhilematerialsareavailableforlearningonanyconceivablesubjectthatIBMhasinterestin,thereislittledirection

inwhichmaterialstostudyortherelevanceofsubjectsnotinthe

immediatescopeoftheemployeescurrentpositionorproject.Inturn,Structureweakens

theStrategyandSharedVisionportionsofthe7Sdiagram.


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IBMsstrategypertainingtoitsconsultingbaseisstronglylinkedtoemployeessharingthesamecorporatevision.

GoodEffectiveness: GoodEffectiveness: GoodStructureSystemsShared VisionStrategySkillsStyleStaff*DefinesIndusry StandardsWell developedplatformsFlexible,work orientednetworks fordispersedemployeesHighly skilledand diverse fromall industrializednations in the

worldEmployeesworking onsolitary projectsIndividualsresponsible fordevelopmenrCompanywide vision isgood, individualor specialistvision needsimprovementGood companywide strategyfor systems,but improvementsfor analyists/consultantsHighly developedskills, top notchtraining availableas well as activerecruitmentWeaknessNeitherStrengthInteraction with other elements: GoodInteraction with other elements: PoorInteraction with other elements: GoodInteraction withother elements: PoorEffectiveness: FairInteraction with other elements: Figure1.2:McKinseys7S


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ValueChain

IBMcanbesplitintoitscomponentsusingPortersValueChain,as

showninFigure1.3.Inthisfigure,arrowsinredindicateweaklinkages,

whilearrowsingreenshowstronglinks.

PlayingtoIBMsstrengths

isthestronglinkbetweenTechnologyDevelopment,ProcurementandInbound


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Logistics,asIBMhasaggressivelyacquiredordevelopedawidearrayoftechnologyplatformsthatmeetthechallengesofclientsneeds,aswellas

awillingnesstosupportnon-IBMproducts.

Weak linksOrganizations InfrastructureHuman resource managementTechnology developmentProcurementInboundLogisticsOperationsOutboundLogisticsServiceMarketingandSalesMarginMarginWeak contribution to margin.Strong linksFigure

1.3:ValueChain

AsTable0.2shows,IBMsprofitshaveincreased

asadirectresultofwideningmarginsdespiteflatrevenues.


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Thisisaresultofcuttingoverheadandimprovingefficiency,butthereisanaturallimittohowlongthistrendcancontinue.To

increaseprofits,revenuesmustincrease.TheweaklinkbetweenHumanResourceManagement,Organizations

Infrastructure,andOperationsisthelackofdifferentiationbetweenIBMspoolofconsultants

andthesamepoolatIBMsclosestcompetitors.Areasthat


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needstrongercontributionstomarginsareindicatedinyellow.

ProductPortfolio

IBMhasanenormousproductportfolio,encompassingeveryaspect

ofITandbusinessconsultingforclients.IBMreliesonwidemarginsand

ability


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1.1.STRATEGICDIRECTION15

touseitsspecializedknowledgetoattractclients,ratherthancompetingonprice.Forthisreason,IBM

putsgreateffortincreatingnewmarketsandrespondingtoearlytrends.Figure

1.4shows(inred)therandomnatureofemployeesdirectingtheirlearningwithout

guidance.Greenarrowsshowthedesireddirectionoflearningeffort.


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ThisrequiresanimblemobilizationofIBMconsultantswithreadilyavailableskillsandexperienceinareasthatrepresentacompetitivebusinessadvantageforclients.

ItisessentialthatIBMorchestratesthelearningeffortsofemployeestocapitalize

onemergingandpotentiallylucrativeopportunities.

Current Learning EffortsDevelopmentMaturityDeclineShakeoutGrowthMarketGrowthProfitHighest Profit Margins for IBMIBM Exits MarketDesired Directed Learning EffortsFigure1.4:

IBMProductLifecycle

Matureordecliningmarketswith


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diminishingprofitmarginsareroutinelyexited,leavingthecostadvantagemodeltolowerpricedrivals.

1.1.3IBMStakeholderAnalysisAsalarge

publiccorporationwithaglobalpresence,IBMhasmanystakeholderswithvariedinterests.

ThestakeholdersofkeyconcernareshowninFigure1.5.Clientswhoare

cost-sensitivearegenerallynotpursuedbyIBM,andhavea


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diminishingrelevance.However,companieswhoprovidediscountedpricessetthepricefloorforIBM,andhenceIBMsexitpointfromthemarket.Quickercapabilities

andentriesbylow-costrivalsputspressureonIBMmaintainingmarketlead.Clients

withtechnologicalleading-edgeneedswhoarewillingtopayhighinitialpricesare

themostdesiredcustomersforIBM,aswellasits


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closestcompetitors.IBMscriticalasset,itsownconsultants,needtomigrateupthePowerscaletoedgeoutcompetitionwithaearlymarketcapture

advantage.


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INTERESTPOWERLowHighHighShareholdersMinimal EffortKeep SatisfiedKeep InformedPrincipalLeading edgeCustomersCompetitionLow-CostPreminum ServiceCompetitionIBM ConsultantsPlatformsCompetitorCost sensitive customersFigure1.5:IBMStakeholderMapping

1.1.4SWOTAnalysisTable1.1is

aSWOTanalysisforIBM.IBMhasenviablestrengthsinmarketleadershipand

respondingtonewtrends,inadditiontohavingbillions$USDtospendas

necessary.

TheweaknessesthatIBMfacesareskills


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shortagesincriticalareas,especiallyinnewproductsandservicesIBMwishestodominate.Timingiscritical,waitingtoolongtogetemployeesup

tospeedonneededputsIBMatriskoflosingbusinesstolower-cost

rivals.Motivatinganddirectingemployeesinalearningcorporationrequiresshapinganddriving

acommonsetofvalues.Alackofcompetitiveadvantage


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inretaininganddeployingskilledemployeesshortensthetimewhenIBMcancountonthewidemarginsdrivingprofits.

1.1.5EVRCongruence

IBMisatightlyrunorganization;carefulstrategies,positioningofproducts,andlevel

ofservicehasresultedinaeffectiveEVRcongruence.However,Valuesisin

dangerofdriftingoutofcongruence,duetotheneed


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tocoordinatethevisionanddirectionofIBMconsultantemployees(Figure1.6).


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1.1.STRATEGICDIRECTIONStrengthsIndustryLeadershipDeepresourcesNimbleresponseWeaknessesUndirectedlearningRelianceonhighmargins

EmployeevaluesOpportunitiesEmergingmarketsImmediateclientneedsSkillsdemand

Continuouslyscoutfornewmarketopportunitiesanddevelopproductsandservices,cultivatedemand

throughmarketing.Systemizeemployeelearningeffortstopointtoemerging


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marketsandareasofhighdemand.Mobilizeteamstosupportclientneeds.ThreatsFormulatenewstrategythatmakesskillsAddressskills-buildingandem

CostcompetitionLowentrybarriersprovisioninghardtoployeevaluesissues.

Skillsshortageduplicatebycompetition.

Table1.1:IBMSWOTAnalysis


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EVRFigure1.6:IBMEVRCongruence

Environment

IBMhasrespondedtoan

environmentofhighcompetitionandaconstantneedforinnovativeandemergingtechnology

fromclientsseekingoutanybusinessadvantage.Thebusinessmodelofcreatingnew

marketsandrespondingtoemergingtrendsiscriticaltomaintaining


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IBMswideprofitmargins.

Resources

IBMhasconsiderableresources,incash,assets,intellectualproperty,andproductlines.Despitetheseassets,

IBMsprincipalmethodofcreatingshareholdervalueistobuybackitsown

shares.Table1.1.5showsIBMsstockpriceandmarketcapitalizationvs.theamount

spentonsharerepurchase1.

Year20052006


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20072008ShareRepurchase(Billions,USD)$7.7$8.0$18.8N/AIBMStockPrice,January$98$85$98$110MarketCapitalization(Billions,USD)$163$129

$146$160

Table1.2:IBMEffectsofStockRepurchase

Theflatmarketcapitalizationandstockpriceseemstoindicatethatinvestorsdo

notseeIBMasagrowthcompany.Itisnot


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clearthatthesharerepurchaseishavinganysignificanteffectonvaluecreation.Thismoney

1http://fortboise.org


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1.1.STRATEGICDIRECTIONmaybebetterspentoninnovatingnewwaystocreategrowthandrevenueincreasesforIBM.

Values

IBMcurrentlyhasaworkingprocess,butinordertoenergizevalue

creationatIBM,amorefocusedvisionandstrategyisneeded.Valuesis

anareaofcriticalattention,andmustbepreventedfrom


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drifting.Thedisconnectthatemployeesfeelastheyworkinavirtualenvironmentenforcesdrift;eachemployeemakesthebestchoicefromtheinformation

thatisavailabletothemandapplicabletotheirsituation.

Conclusion

IBMisindangerofbecominganunconsciouslycompetentorganizationwithout

astrictcorrectionofitsvalues2.Abetterredirection


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ofIBMsconsiderableresourcescantightentheEVRcongruence.

1.1.6ScenariosInthenearfuturethereisabestcaseanda

worstcasescenarioforIBMtoconsider:

IBMsWorstCase

IBMcanexperienceanaturallimittoimprovementsinefficiencyandcost

reductionthatiscurrentlydrivingmargins.Revenueremainsflat,stalling


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profitgrowth.CompetitorstakeadvantageofIBMsisolatedconsultantsandemployeesbypoachingthem,providingfocusedteamsvs.IBMsunorganizedranks,andchipaway

atwideningnicheadvantages(costandexpertise)overIBM.

IBMsBest

Case

IBMcanincreaseprofitsbybothincreasingrevenueandlowering

overhead,anddifferentiatetheirconsultingservicestoraiseentrybarriers


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forrivals.Figure1.7showstheidealpositionforIBMsconsultingofferings,whichisdonebyidentifyingandenhancingIBMssweetspotadvantagesover

thecompetition3.

2Thompson,Page1253Collins&Ruckstad,2008


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Sweet SpotIBMsCapabilitiesCompetitorsOfferingsCustomersNeedsIBM StrategicFigure1.7:IBMStrategicSweetSpot

Option1

IBMcountersthe

downsidesofvirtualization,bringingIBMemployeestogethertoaddresstheneedsofa

LearningOrganization4:

ASharedMindsetSpeedofNewIdeasLearning

AndKnowledgeManagementAccountabilityCollaborationLeadership

Option2


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IBMleavesemployeestofindtheirownlearningplanbasedontheirpositionandunderstandingofindustrytrends.IBMdevisesareward

schemetoemployeeswhosuccessfullyreachlevelsofskillsthatclientsdemand.

Option3

IBMaggressivelyhiresemployeeswithhigh-demandskills,and

shedsemployeeswithskillsthatareinindustriesthatIBM


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planstoexit.

4HenleyCritique11


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1.1.STRATEGICDIRECTIONConclusion

Options2and3arethemosteasilyimplementableandmayusefinancialrewardsasincentivefor

employeestofindthebestsolutiontogainskills,perhapsinwaysIBM

hasnotthoughtof.Unfortunately,thisdoesnotprovideanydistinctcapabilitiesthat

cannoteasilybecopiedbycompetition.Employeeswhohaveindependently


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achievedhighskillsthroughtheirowninitiativemaynotfeelthattheymustremainloyaltoIBM,andcaneasilyleavetoworkfor

competitorsorthemselves.

Option1isthehardesttoimplement,but

fitswiththenewgoalofcreatingasustainablecompetitiveadvantage.Thisoption

makestheassumptionthatemployeescanbecomecapableinnew


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skills,avoidingtheproblemofrecruitmentinatightlabormarket.Option1ischosenfortheBusinessTransformationinthenextChapter,to

implementthegoalofcontinuousretrainingasshownonFigure1.4.Thistype

ofchangewillnotbeasuddenshiftforIBM,asitwill

takeadvantageofmanyprogramsandfacilitiesalreadyavailable,marking


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itasanIncrementalTransformationasshowninFigure1.8.

Scope of ChangeDirectionProposedTransformationBig BangIncrementalEvolutionRevolutionReconstructionAdaptionRealignmentOutcomeFigure1.8:IBMsScopeofChange


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1.2AnalysisofSuitability,Feasibility,andAcceptabilityThestrategyfromtheprevioussectionisanalyzedthrough

aSFAtest,asshowninTable1.2.

SuitabilityThechosen

strategyfitsinwiththeaimsofcreatingsustainableandhard-toduplicatecompetitiveadvantage

forIBM,whileavoidingproblemswithrecruitmentorinefficienttraining


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mechanisms.FeasibilityIBMhasspentmuchenergysolvingthehardfactorsofvirtualization,thebalanceremainsonfocusingonthesoftfactors.Thetransformation

isbasedonbehavioralandpeoplemanagementissues,andnotreliantontechnology

thatneedstobeinventedorsoftwarethatmaynotbeusedor

accepted.AcceptabilityTherewillbecertainemployeeswhowillnot


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acceptanychanges,nomatterhowbeneficialthesechangesarethoughttobe.Forthisreason,thistransformationmustbetargetedtoemployeeswho

arereceptivetochangesthatwillbebeneficialforthemselves,theircareer,and

forIBM.

Table1.3:SFAAnalysis-JohnsonandScholes

1.2.1ConclusionFromtheSFAanalysis,theTransformationwilltarget


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IBMshighlymotivatedemployees,withasuitablerewardmechanism,toalleviatetheisolationfromthevirtualworkenvironment.Theendresultwillbea

migrationintolearningteamsthatcannoteasilytransferredtocompetitorsifanemployee

leavesIBM.


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Chapter2

BusinessTransformation

InthisChapter,theHenleyBusinessTransformationmodelisusedtoleadthechangefor

IBMtosustaincompetitiveadvantage.

2.1MobilizingforChangeAtthe

centeroftheTransformation,IBMwilladdressthefollowingfivecorecategoriesof

behavior1:

ChallengingtheProcessesInspiringaSharedVision


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EnablingOthersModelingtheWayEncouragingtheHeart

ThefocusofchangeswillbeintheStructure,Strategy,andSharedVisioncomponents

oftheMcKinseys7Smodel(Figure2.1).Manyofthecomponentsnecessaryfor

thetransformationexist(asindicatedbyStructure),butarepoorlyutilizedordisorganized.

Theultimatefocusistoinstillanew


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SharedVisionthatwillleadIBMforward.

2.1.1CommunicatingtheChangeProcessAtthisjuncture,IBMfacesadifficultyinmountingany

transformationefforts;thebalancesheetistoogood(Table0.2),IBMbeatWall

Streetestimatesfor20072,andcontinuedwins,orsignificantcontractswithimportant

1KouzesandPosner(1998)2IBMAnnualReport,2007


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23


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CHAPTER2.BUSINESSTRANSFORMATION

StructureShared VisionStrategyEmployeesworking onsolitary projectsIndividualsresponsible fordevelopmenrCompanywide vision isgood, individualor specialistvision needsimprovementWeaknessbut improvementswide strategyfor systems,Good companyfor analyists/consultantsNeitherFigure2.1:IBMsChangesintheMcKinsey7S

clients,

continuetobesigned.Thereislittleurgencyforchange;itisnot

plausibletostateIBMisintrouble.Asenseofurgencythereforemust

becreatedtomotivateemployeestolookforwardtowhat


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maybeinstoreinthefuture.Unmotivatedorchange-resistantemployeeswillbebypassed,withtheexpectationthatemployeeswhogoalongwiththe

changeswillsetagoodexamplebyhavinganadvantageinleantimes.

Figure2.2showsthetargetedstakeholdersinthischangeeffort:

Inaddition,IBMseffortsinthecommitmentcurveshown


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inFigure2.3willfocusonemployeesattheAdoptionstage,andnotspendanysignificantenergyonemployeesintheDenialorResistance

stage.Employeeparticipationwillbeoptional.

IBM,bynomeans,is

astaticcompany;therearemanyprogramsandinitiativesthatcurrentlyexist.IBM

employeeshaveresponsibilitiesforimportantongoinggoals,suchasa


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personaldevelopmentplan,skillsassessment,certifications,professionalinterestgroups.Inaddition,thereareclasses,workshops,electroniccommunitygroups,electronicforums,andeducationavailable.What

ismissingisaformalstructure,asshowninFigure2.4.

Thenewstructureforemployeesistoformformallearninggroups,inwhich

employeesbelongtogroupsthatareexpectedtoachievelevels


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ofcompetenciesinspecifictechnicalareas,increasecommunicationamongsimilargroups,providementoringopportunities,andawardprofessionalrecognitionforaccomplishments.Thisstructureisdescribed

inSection2.4.


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2.1.MOBILIZINGFORCHANGELowHighHighLowCommitment to ChangeEnergy for ActionSleepersChampionsPreachersFocusLowFocusMediumFocusHighBlockersFigure2.2:IBMStakeholderMapping

For IBM EffortTIME/EFFORT5. Commitment4. Acceptance2. Resistance1. Denial3. AdaptionCutoff PointFigure2.3:IBMCommitmentCurveFocus

Unfreeze,Move,andSustain

Acommunicationsstrategywillbecomplex,

especiallyinanorganizationthesizeofIBM.Thefocuswilldrawand

attractreceptiveemployees,withthe


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Competency GroupsIBM CONSULTANT POOLCURRENT STRUCTUREProfessional DevelopmentMentoring ProgramsTechnical Jam SessionElectronic GroupwareTechnology FairsCertification ProgramBalanced ScorecardPerformance BonusesBusiness CommitmentsTraining and EducationIndividual Development PlanFigure2.4:IBMEmployeeStructureNow

messageofpromotingyourcareer;

thedesiredsegmentwillbeemployeeswhohaveaninterestinmovingahead

intheirlineofwork.

2.1.2LeadershipandChangeAgentsIBM

hasnoshortageofgoodleaders,andcanrelyon


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skilledemployeeswhoareexpertsintheirspecialtytogivebacktothecommunity.Thefocusofleadersandchangewillbetheemotional

needsofemployeestoensuresuccess.

Inthistransformation,theleaders

aregiventhegoaltoformasenseofcommunityandtoenhance

moraleamongIBMemployeeswhomaynotbelocatedin


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thesamegeographicarea.Withsupportfromuppermanagement,leaderswillberecruitedfromcurrentIBMranksthatdemonstratethefollowingcharacteristics:

1.Adesiretoleadandtoinspireworkers2.Highlycharismaticand

championsforemployees3.Deepexpertsinadistinct,specializedfield4.Are

abletodesignlearningprogramsandcertificationlevelsDozensto


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afewhundredleadersmayberecruited,forspecializedcommunities(forexample,databasedevelopment),withalearningplan,drawnfromIBMswiderangeof

trainingmaterials.Leaderswillbeinchargeoforganizingrecruits,fosteringnetworks,and

givingrecognitiontoachievements

inanenvironmentwhereemployeeparticipation

isstrictlyvoluntary.


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2.1.MOBILIZINGFORCHANGE27ChangePhaseCommunicationsPurposeAimsMethodUnfreezeMobilizingBringawarenesstoIBMstaffGenerateinterest

CreatemomentumBeginadvertisinginIBMinternalwebpagesbeforerollout.Pamphlets,e-mail

distributedtomanagersandstaff.Transformationdetailsreleased.MoveInformDescribechanges

BenefitsHowtoparticipateProvidefulldetailsin


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websites,howtogetstarted,workshops,conferencecalls,kick-offmeetings.SustainUpdateSustaininterestProvideprogressupdatesSuccessstoriesAnnouncesuccesses;

employeeswhohavegonethroughthetransformation,encourageemployeestolistcredentialsearned,

periodicworkshopstoinvitenonparticipantstotakepartoftransformation.

Table

2.1:IBMUnfreeze,Move,Sustain


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ThenextsectionsappraisetheculturalchangesthatmaybeneededwithinIBMtorealizethetransformation.

OperationalCultureFocus

Table2.1.2showstheanalysisfrom

theGarrisonDiamondTestModeltodeterminethenecessaryissuesthatmustbe

focusedontomakethetransformationeffective.

Behavior


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CurrentDesiredActivityFocusedonemployeescurrentassignment,dependentonvaluesandgoalsofclient.Employeessenseofactivityisoutofalignmentwith

IBMduetoisolation.Employeeencouragedtokeepupwithlatestdevelopments,contribute

topeerlearning,andforgeemotionalandprofessionaltiestoco-workers.ExcellenceRewarded

throughclientworkandatIBM,basedonclientfeedback.


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Honoraryandfinancialincentivesexist.Continuefocusonexcellence,usinganyadditionalresourcesthatbecomeavailable.BalanceBalanceisskewedtowardsuccessofclients.

Developmentandcareerdesiresofemployeesaresometimesneglectedduetolackof

communicationfromIBMside.Careeradviceoftencomesfromclientsemployeesratherthan

IBM.AdjustbalancesothatIBMemployeehasaready


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andsympatheticgrouptodiscussconcernsanddesires,andtogetadviceandhelpfromIBMresources.FriendlinessCamaraderieexistswithinIBMranks,with

recognitionforworkingforthesamecompany.Leveragethisfriendlinessintoatrue

networking,learning,andengagingexperience.

Table2.2:IBMGarrisonDiamondTest

FromtheGarrisonDiamondtestmodel,theneed


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tomovethedependencyforconnectionandfulfillmentawayfromtheclientandbackintoIBM.


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2.1.MOBILIZINGFORCHANGEManagementStyle&Structure

Figure2.5showsthecurrentanddesiredpositionofIBMintheBlakeMouton-

McCansemodel.IBMscurrentorientationliesbetweenProductionPusherandDoNothingManager.

ThisreflectsIBMfocusingonresults(successattheclientengagement)whileleaving

IBMemployeestofindtheirowncultureandguidance.The


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desiredpositionistobeintheTeamBuilderquadrant.

DesiredCountry ClubBuilderTeamManagementPusherProductionDo NothingManagerCurrentPositionPositionFigure2.5:IBMintheBlakeMoutonMcCanseModel

UsingtheHandymodel,IBMiscurrentlyleaningtowardtheTask

Culture,withthedesiredemphasisonPersonCulture.Thegoalbeingtorecognize

theIBMemployeeasapersonneedingaperson-orientednetwork,


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ratherthanbeingfocusedonlyonthetasksontheircurrentassignments.

RiskOrientation

IBMisagreatrisktaker,

asindicatedintheDeal&KennedymodelinFigure

2.7.

AsIBM,bynecessity,mustalwaysfindnewmarketsandeventuallymustabandon

entireindustriesaslow-costcompetitioncatchupincapability.IBM


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isinaconstantpositionofneedingtobetyourcompany,andwilllikelykeepthiscultureintheforeseeablefuture.


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CultureDesiredCurrentPositionPersonCultureCultureRolePowerCultureTaskPositionFigure2.6:IBMintheHandyModel

ThepreviousmodelsshowthatIBM

istask-and-resultsoriented,withlittleinthewayofaddressingtheemployeeas

anindividual.Figure2.8supportsthisconclusionbyshowingcontrolthroughgreatemphasis

ontechnologicalachievement,butnotfollowingthroughonthesofter


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organizationalneeds.

LearningOrganizationStructure

Aneworganizationalstructureisnecessarytoimplementthelearningandcommunityenvironmenttore-introduce

asenseofcommonvaluestoIBMemployees.Thenewstructure,shownin

Figure2.9,isreplicatedacrossspecifictechnicalsubjects,andisdesignedtoaccomplish

theseobjectives:

1.Addressneedforemotionalsense


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ofbelongingandloyaltytoIBMAsinglefaceisgiventoeachtechnicalspecialty,usuallyarecognizeddomainexpert.Chosenforcharismaticleadership,

thisResidentDomainExpertisresponsiblefororganizingIBMcoursesfortraining,setting

upnetworks,beingapointofcontact,anddrivingmomentuminnetworkingefforts.


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2.1.MOBILIZINGFORCHANGEHigh RiskPositionBetWork HardMachoYour CompanyPlay HardProcessLow RiskSlow FeedbackHigh RiskSlow FeedbackFast FeedbackFast FeedbackLow RiskCurrentFigure2.7:IBMintheDeal&KennedyModel

Yearly review withRoutines and RitualsControl SystemsTechnically competentIBM ="Im By Myself"Success through winsmanagerIBM employee fitin with client powerstructureIBM employees ontheir ownLittle supervision onceIBM employee is

engaged in client projectTechnical focusStoriesPower StructuresParadigmOrganization StructuresProfessional DevelopmentBehaviorsother than IBM logodeployed withclientNo distinctive logoValuesEmployee is OK ifSymbolsFigure2.8:IBMsCulturalLevers


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1ExpertLevelLevelBeginnerLevelIntermediateCertificate AwardCertificate AwardCertificate AwardCohortCohortCohortCohortCertifiedDomain ExpertBeginnerMentoringMentoringMentoringCommunicationNewslettersEventsGroupwareAnnouncementsRecognitionAchievementceremoniesNetworkingCohort timelineClass studiesExpertDomainResident23456Figure2.9:TransformationalOrganizationforIBM

2.Buildnetworksamong

employeeswithsimilarinterestsIBMemployeesareplacedintocohorts,orgroupsformed

atspecifictimeswithatimetabletocompleteacourseofstudyfor

acertificate.Teamassignments,regularcalls,andasmalland


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intimategroupwillformbondsandasenseofobligationbetweenmembers.3.GiveinformaladviceaboutcareerandskillsEmployeesincohortswill

beencouragedtomentoremployeesinlessadvancedcohorts.

4.Promote

learninginchosenspecialtyAstaggeredlearningcoursewithawardedcertificatesaregiven

ateachleveloflearning.Cohortsandnetworkingfacilitiesallow


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remotelearning.

5.RewardandrecognizeachievementamongpeersFormalawardsceremoniesareheldtopresentachievements;ifgeographicconsiderationsmakethis

impossible,thenotherformsofrecognitionaregiven,suchaspersonalcongratulationsfrom

theResidentDomainExpert,publicationinacompanywidenewsletter,andtheright

touseatitleonpresentingqualificationsinIBMsBlue


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Pagesdirectoryandresumessenttoclients.

6.UseexistingIBMresourcesandinitiatives


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2.2.TRANSLATINGSTRATEGYINTOOBJECTIVESANDINITIATIVES33CoursesandfacilitiesaresimplifiedbyusingIBMsestablishedtrainingprograms,tailoredtofittheschedule

ofthecohortsoeachmemberlearnsalongsidefamiliarpeople.

2.2

TranslatingStrategyIntoObjectivesandInitiatives2.2.1ProcessofImplementingStrategyTo

determinetheeventualresultoftheTransformation,analysismustbe


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performedtodeterminethespecificactionstobetaken.ThestrategicgoalsaretakenfromSection1.2andaremappedinanetworkof

strategicgoalsinFigure2.10.

8PerspectiveCustomer PerspectiveProcessPerspectivePotentialPerspectiveIncrease revenuesby 10%Gain more wins bypredicting futurein-demand skillsetsBuild employee loyaltyThroughnonfinancialincentivesWe deliver superiorservicesOur employeesfeel connectedandfulfilledLower costsof recruitingWe go beyondsupplying aconsultantOur technologyfits every needpossibleWe do not haveskills s

hortagesOur services arecutting edge andcannot be hadelsewhereWe position ourskillsets to theforefront of marketdemandWe generate newideas and innovatenew solutions andproductsOur employeesare trained in thelatest technologiesWe are notaffected bytalent warsOur employeesanywhereand can workare virtualizedWe see new marketsbefore our rivalsand opportunities1234567FinancialFigure2.10:IBMStrategicGoalNetwork(Ahn,

2001)

Strategiclinkspointtotheultimatestrategic


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goalofraisingrevenueby10%,apointraisedinSection0.2.Reducingcostsandoverheadsetsthefloorofmargins,whiletotalrevenue

setstheceiling.Thelinksarediscussedbelowinturn:


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1.Link1IBMemployeesfeelingsoffulfillmentandconnectionbuildsloyaltyandmakesIBManemployer

ofchoice.Salaryisnottheonlyconsiderationforemployeeswhohavechoices

ofwheretowork.

2.Link2Byseeingwherethe

marketisgoingandnewopportunities,IBMcanpositiontraining


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programstomeetskillsdemandaheadoftime.Employeesoftenonlyseetheday-to-dayresponsibilitiesoftheirjobsandnotlong-termindustrytrends,or

strategypositionsIBMmaybetaking.

3.Link3Bybeing

inacompanythatoffersthelatesttraining,IBMemployeesbecomeawarethat

theylosethisbenefitinthelongtermbymoving


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toacompetitor.

4.Link4Bymakingthetrainingregimenteamandnetworkoriented,theclientisassuredthattheyare

notbenefitingjustfromthetalentoftheIBMconsultant,butalsofrom

thepersonalnetworkandresourcesavailabletotheconsultant.Theclienthaspenetration

intoIBMstotalknowledge.

5.Link5Keeping


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inwithIBMsstrategyofpursuingthehigh-endmarket,IBMassurestheclientofsuperiorservicestoanyotherinthemarket.Thisassurance

restsonthequalityofIBMemployees.

6.Link6Superior

servicesmeansgoingabovewhatacompetitorcanoffer,inthiscase,more

thanjustwhattheconsultantisexperiencedwiththe


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potentialtotapintootherexpertsasneeded.

7.Link7Withthepositionofprovidingonlysuperiorservices,morewinsare

signed,contractnegotiationsfallingtoIBMsfavor,withthegoalofboostingan

otherwiseflatrevenuetrendupwards.


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2.2.TRANSLATINGSTRATEGYINTOOBJECTIVESANDINITIATIVES352.2.2GapAnalysisThegapsbetweenIBMspresentstateandthedesiredstatein3years

isanalyzedinTable2.3.

20082011GapsLoyaltyandbelong-Loyalty,

connec-Createnetworkingtoimmediatesurtions,andfulfillmentingstructurestoroundings,suchas

withinIBM.overcomedraw-clientworksite.backsofvirtualizedworkplaces.


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IBMemployeesmustdecidetheirownlearningstrategyonownperceptionofindustrytrends.Directedtrainingprogramstokeepaheadofclientdemandsand

industrytrends.Createtrainingprogramsbasedoninformeddecisionontechnologyanddemand

trends.IBMEmployeescanmovetoacompetitoreasily.IBMEmployeesreluctantto

movetocompetitorsbecauseoflossofpeernetworks.Enhance


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andencourageemployeestoworktogether,evenwithgeographicalgapsandacrossprojects.ClientsgettheknowledgethatcomeswiththeIBMemployee.Clients

getthesameknowledgepluseveryoneelseontheemployeesnetwork.Encouragenetworking

andtrackmetricsandeffectivenessofteamwork.Revenuesremainflat.Revenuesincreasemarkedly,

goalis10%overthreeyears.Implementstrategicplanningwith


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ultimategoalofrevenueenhancement.

Table2.3:IBMGapAnalysis

2.2.3FinanceThefinancialgoalsarea3.3%growthover

2007revenues,asshowninTable

2.2.3.


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20072008200920102011$98.8102105108.58111.84

Table2.4:IBMFinancialGoals,

in$USD,billions

Initiatives

Thefinancialgoalsarea

10%increaseof2007revenuesover3years,representing$10billionUSDin

2011.Consultantswithdesiredskillsetsindemand,andIBMgaining


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afirsttomarketadvantage,drivesextrarevenue.Revenuecancomefromnewclients,negotiatingahigherrateforexistingclients,orfollow-upcontracts

fromcompletedwork.IBMisnottoloseanybusinessbynothaving

skilledcontractorsreadytoworkonaproposedcontractreadytosign.

2.2.4CustomerPerspectivesSetgoalsforCustomerPerspectives:


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1.IBMprovidesclientswithcompetitiveadvantage2.IBMhasareliablesupplyofskilledconsultants3.IBMcommandsapremiumfee,not

discountedservicesInitiatives

Torealizethisgoal,marketingfocusesonIBMs

consultinginitiativeswiththemessagethatclientsgetmorethanjustanIBM

consultant.Thispromiseisfollowedupbysuperiorcustomersatisfaction,


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aperceivedgapbetweenIBMslevelofservicevs.acompetitor,anddeliveryofservicebasedoncompetitivevalueratherthanonprice.Marketing

campaigns,readilyavailableresources,andclearleadershipinindustrytrendsarevital.

2.2.5ProcessSetgoalsforProcesses:

1.Createdirectedlearning

inskillsidentifiedtobeespeciallyvaluabletoIBMsclients.


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2.CreategroupsofnetworksforIBMemployeestoparticipatein.3.Encouragepeernetworking,trackeffectivenessthroughmetrics.


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2.3.THECHANGEPROCESSInitiatives

Theinitiativestocreatethisnewprocessfollowsthesestages:

1.Identifyareasof

skillsthatareinshortsupplyandlucrative.2.Identifyandrecruitleaders

responsibleforencouraginganddrivinglearningandnetworkingactivities.3.Createcertificatelevels

andcurriculum(fromIBMsexistingeducationcourses),dependingonindustry


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needs.4.StandardizecommunicationsthroughITsystems,suchaswikis,forums,newsletters,personalcommunication,mentoring.5.Tracknetworkingactivity(suchasawardingpointsfor

answeringpeoplesquestions),andcontinuouslyimprovingprogram.2.2.6PotentialThePotentialperspectivehas

twomaingoals:

1.IBMEmployeesareconnectedandfulfilledat

IBM.2.IBMisnotaffectedbytalentshortages.Initiatives


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Toachievethesegoals,IBMmustpayspecialattentiontothehumannetworkingneedsofemployeeswhoarenotworkingintraditional

offices,andfollowthroughwithdirectedlearninginitiatives.

2.3TheChange

ProcessTheTransformationwillfocusonthechangeleversshowninFigure2.11

toaffectanewparadigm.

2.3.1SymbolsIBM


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employeesvaluemarksoftechnologicaldistinction,suchastitlesconveyingalevelofachievement(CertifiedITSpecialist,DistinguishedEngineer).Thesetitlesgivestatusto

employees,especiallyinasituationwhereemployeesworkathomeandrarelymeet

theirpeersinperson.Traditional


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Change ArchitectureNew ParadigmTargeting LeversFigure2.11:IBMCultureChange

symbolssuchascompanycarsandcornerofficesare

noteffectiveifemployeesarenotseeninthem.

Inthe

virtualworld,symbolsappearintheformofemployeeresumes(viewablebyanyone),

thenumberoftimesanameappearsinasearch


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engine,andmentionsincompanynewsletters.Takingadvantageofthisfocus,anewsymbolwillbeintroducedforemployeeswhohaveachievedahigh

levelofcertificationinadirectedlearningcourse.Thissymbolwillbedisplayed

prominentlyinanemployeesentryintheBluePages,orcompanydirectory.The

employeewillhavetherighttousethissymbolin


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hisresume,andtoreinforcetheprestigeofsuchsymbols,areal-lifemanifestationwillbeawardedaswell.Thismanifestationmaybeasmall

plaque,pin,orotheritemmeanttobedisplayedathomeorin

anoffice.

2.3.2PowerStructuresTheTransformationisdesignedtobe

voluntary,withIBMemployeeschoosingifandwhentheywill


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participateinthedirectedlearningandnetworking.Thisisdesignedtoensureahighlevelofcommitmentandenthusiasminthosethatparticipate.IBM

employeesareempoweredinthisregard,withthefocusofpoweronthose

whofreelysharetheirknowledgeratherthantheirpositioninthemanagementhierarchy.


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2.3.THECHANGEPROCESS392.3.3OrganizationalStructuresIBMemployeescurrentlyhaveanetworkedorganizationalstructure,whichfollowsthenon-geographicalnatureofvirtualized

workspaces,andthefactthatemployeesoftenchangeassignments,withnewproject

managersandco-workerswitheachchange.Figure2.12showsatypicalnetworkof

anIBMemployeeinred,andthenewelementsin


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blue.Thenewelementsarethecohortsthatarealsotakingthedirectedtrainingastheemployee,andtheprofessionalnetworkinstitutedbyIBM.

IBM EMPLOYEERESOURCESHUMANMENTORMANAGERPERSONALDEVELOPMENTCLIENTMANAGERMENTOREERESOURCEDEPLOYMENTMANAGERCOHORTNETWORKIBMMANAGERIBM EDUCATIONAND TRAININGFigure2.12:IBMEmployeeOrganization


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2.3.4ControlSystemsITSystemsIBMhasaheavyinvestmentanddependenceonITsystems,andthe

existinginfrastructurewillbevitalinmeasuringthesuccessoftheTransformation.As

employeeswillhaveverylittlechancetonetworkinperson,thebasisof

communicationwillbenearlyentirelyelectronic.Figure2.13showsthe


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necessarymetricstobecollected.Keytoencouragingnetworkingandcommunicationiskeepingscoreinhowoftentheemployeeaccessesthenetworkingfacilities,the

frequencyandnatureofinteractions,andfocusontimesavingshortcutstomakethe

systemconvenientandeasytouse.

IBMCLIENTIBM EMPLOYEEContributionsto body of(newsletters,training)Activity inelectronicresources,answers toqueries, etc.126345Metrics Gathered1) Existing metrics of client satisfaction2) Employees cont

ribution to body of knowledge3) Progress in keeping up with cohort in learning4)Employee interaction with others in networks5) Activity in supporting IBM engagements6) Employees use of network resourcesCOHORTNETWORKknowledgeFigure2.13:IBMControls

Management


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CentraltotheTransformationisthedesiredincreaseofhumaninteraction;theResidentDomainExperts(Figure2.9)toencourageanddrivethis

interaction.Theymaychoosetopublishregularnewsletters,answerinquires,communicateone-to-onewith

individuals.Theirpurposeistoputahuman


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2.3.THECHANGEPROCESSfaceontotheprocess,andservetodrawinterestandinteractiontoissuesandtopicsoftheday.

Moreimportantly,theseleaderscontinuouslyimprovetheprocessinacycleshownin

Figure2.14.

Inadditiontoexistingcriteriaconsideredattheemployees

annualreview,participationandnotablecontributionstonetworkingwillbe


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afactorindeterminingtheoutcomeoftheemployeesreview.

ComparisonGaps identifiedStable SystemImprovements implementedNew metrics gatheredFeedbackAccurate andtimely data,relevant tousersCorrectiveActionCorrection planinitiatedFigure2.14:IBMPerformanceMonitoring

2.3.5

RoutinesandRitualsOnanongoingbasisintheinterestofrecognizingachievements

andperiodicallyreviewingtheperformanceofthedirectedlearningandnetworksinstalledby

theTransformation,routineswillinclude:

Quarterlyreports


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ofmetricsandperformancebyResidentDomainExpertsPeriodicnewsletters,meetandgreetevents,workshopsIndividualone-on-onediscussionsbetweentheResidentDomain

Expertsandconstituentsofdirectedlearningandnetworkingefforts


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Ritualswillinclude:

Awardsceremonies,recognitionforachievementsFeedbackforannualreviewgiving

metricsforemployeesparticipationinTransformationeffortsBalancedScorecardresultstyingTransformation

toultimategoalof10%revenueincrease.2.3.6StoriesStorieswillreflectthe

successofindividualswhohavecompletedacourseofeducation


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inagivenskillset,focusingonhowtheycontributedtoIBMssuccessaswellastheirown.Thepositivebenefitsofnetworkingandhow

employeesreliedonittosolvedifficultproblemsarehighlighted,whileplansare

discussedtoaddressareaswheredrawbacksordifficultieshavebeenuncovered.Thesestories

willbeusedtodrawnon-participantsintotheTransformationscheme,


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usingallavailablecommunicationschannelswithinIBM.

2.3.7NewParadigmAsaresultofmodifyingthechangelevers,Figure2.15showsthe

outcomeoftheTransformation.

Control SystemsSymbolsRight to use iconson online directoryand resume forlearningachievementsIBM power focusedon knowledgableindividuals who sharewith other employeesIBM works togetherSuccess throughnetworkingInvitation to allto join as wellTechnical and socialfocus in professionallife within IBM,bringing successesto all clientsNetwork of manyindividuals to drawknowledge fromPeriodic improvementreviewsAchievement

recognitionIT systems to implementnetworking channelsManagement tracksnetworking metricsParadigmStoriesPower StructuresOrganization StructuresRoutines and RitualsBehaviorsValuesFigure2.15:IBMCultureChange


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2.4.ALIGNTHEORGANIZATION2.4AligntheOrganization2.4.1SocialCohesionThedesiredalignmentoftheTransformationistoraisesocialcapital,or

socialcohesionamongIBMemployeesinavirtualworkplace3.Figure2.16shows

IBMmovingthroughPhase5,wheregrowthisaresultofcollaboration4.

ToleadIBMemployeesthroughthisphasechange,managementwill


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stressthattheactionisvoluntaryontheemployeespart.Thissidestepsemployeeswhomayresistoropposethechange,whilegivingambitiousand

willingemployeesanopportunitytobuildandcreatethemissingsocialcapitalin

theirdaytodayactivities.Bysettinganexample,theymayenticethose

withawaitandseeattitudetojoinaswell.


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Avoluntaryapproachtiesmanagementshandsinthenumberofapproachestheycanemploy;namely,coercionisruledout,leavingonlypositivechangebehaviors

suchaspersonalencouragement,actingonfeedbackandcriticism,aswellassetting

thetoneofmutualrespect,powerofknowledge,andrecognitionofachievements.

2.4.2ActionPlanThetimelineforthisactionplan


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withtheirdutiesshiftedtothisendeavor.AmodestbudgetwillbeallocatedtoeachResidentDomainexperttohostawardsfunctionsandprizes

asappropriate.

2.4.3MonitoringandEvaluatingtheChangeProcessFora

largescaleeffortinvolvingmanypeopleandtheirneeds,criticismandfeedbackare

tobeexpectedimmediatelyafterinceptionandimplementation.Forthis


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reason,theResidentDomainExpertsaregivenawidelatitudeonactionstakentoimprovetheTransformationefforts.Periodically,feedbackandmetricsmeasurementsare

gathered,analyzed,andactedupon,asshowninFigure2.9,showingadouble-loop

learningfeedbacksystem.

3Greenier19724HenleyCritique8


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EventIdentifyskillsets,nowandfuture,thatareinshortsupplyandlucrative.IdentifyandappointResident

DomainExperts,eachinchargeofskillsetsidentified.DomainResidentExpertstodesign

corecurriculumforImmediate,Advanced,andExpertqualifications,designedforpart-timestudyfor

cohortsatafixedtimeCreatestandardizedstructureforelectronic


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resources,libraries,wikis,newsletters,allowformaximumease-ofuseandmultiplenetworksforusers.BeginadvertisingandcommunicatingtoIBMemployeesaboutdirectedlearningand

networkingopportunities,stressingbenefitsandcallstoparticipation.Ongoingcollectionofmetrics,focusing

onperformance,effectiveness,andbottomlinescores.OngoingAwardsrecognition,periodicnewsletters,one-onones

withindividualIBMemployeesparticipatinginTransformationprogram.Halfwaypoint


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in3yearprogram-measureprogressofcompanyagainsteventualgoalof10%revenueincreasein3yearsafterinception.Endof3year

program-measureprogressofcompanyagainstgoalof10%revenueincreasein

3yearsafterinception.TimeJuly2008August2008October2008November2008

December2008OngoingOngoingJan2010July2011OutcomesList


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ofskillsets,inpriorityofprojectedmarketreturnsAppointmentsmade,jobdescriptionschangedtofocusonTransformation.CurriculumusingexistingIBMtrainingcourses,

withabsoluteminimumofnewmaterialscreated.Directedlearningandnetworkingplatformthat

iseasilyreplicatedasnewskillsetsarecreated,usingexistingIBMtechnology.IBM

Employeesformfirstcohorts,undergotrainingasdesigned,beginuse


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ofnetworking.Metricscollectedandanalyzed,feedbackactedupon,improvementsmadeActivitiestodrivemetricscollectedGeneralreportonprogrameffectiveness,successes&issues

toactupon.DecisiontocontinueTransformationprogramorterminateduetolack

ofperformance.PrincipalsIndustryforecasters,topstrategymanagers,expertemployees,HRTopexpert

employees,HR,StrategicmanagementDomainResidentExpertsITServices,Domain


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ResidentExpertsHR,SeniorManagement,ResidentDomainExperts,IBMEmployeesSeniorManagement,ResidentDomainExpertsResidentDomainExpertsSeniorManagement,ResidentDomainExpertsSenior

Management

Table2.5:IBMTransformationActionPlan


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2.5.CONCLUSION45through creativitySmallLargeSize of OrganizationAge of OrganizationYoungMatureCurrentPost-Growth throughdirection3. Growth throughdelegation4. Growth throughco-ordination5. Crisis ofleadership2. Crisis ofautonomy3. Crisis ofControl4. Crisis ofred tape1. Growth5 Figure2.16:IBMGrowththroughPhases

2.5ConclusionThispaperhasdetailedtheproposed

Transformation,onhowIBMcangiveitselfadistinctiveadvantageoverrivalswho

constantlytrytoduplicateIBMsofferingsatlowercostpoints.IBMgaineda

gooddealfromitsvirtualworkforce,beingthepioneerin


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manycases,butnowmustaddressthedownside-thelossofcamaraderieandknowledgesharingwithinatraditionalofficesetting.Theendresultof

theTransformationistorestorethesocialsettingoftheIBMemployee,building

loyaltytothecompany,promotingteamworkandrelianceamongpeers,givingjoyto

theworkexperience,andsatisfyingclientswithexcellentservicethat


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cannotbeobtainedanywhereelseinthemarket.


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MonitorCollect andevaluatemetricsManageImplementchanges withdata fromcollectedmetricsSearchFor newopportunitiesfor competitiveadvantageMonitorManageRecreateCreateCreate vision/strategy withTransformationFigure2.17:IBMDoubleLoopLearning


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2.5.CONCLUSIONHenley TransformationProcessPre-TransformationDesired Post-TransformationStateFigure2.18:IBMsTransformationProcess


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48CHAPTER2.BUSINESSTRANSFORMATION

2.6PersonalDevelopmentReportIBMhasbeenanexcellentplacetowork,andinmanyways

IfeelfortunatetohavejoinedIBMwhenIdid,justatthe

verybeginningofthedot.comcollapse.InsomewaysIBMpresentedcredibilityand

security,beingoldeconomyandanestablishedcompany.IBMmay


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notbeglamorousasworkingforGoogleorFacebookmightbe,butinexchange,workingondecidedlybread-and-butterindustriessuchasinsuranceandinvestment

bankinggivesmeinvaluableexperienceonprojectsthathavenohypetosell;

whateverIBMprojectIamonissuccessfulbecauseofthemany

experiencedpeopleIfindmyselfworkingwith.

In


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acompanyofexperiencedandtalentedleaders,itisdifficultforanyonepersontostandoutfromoveraquartermillionemployees,and

theonesthatdoareemployeeswhohavedoneagreatdealfor

IBMsbottomline.Standoutsincludesalesmen,inventorsofmarketcreatingproducts,visionaries,and

peoplewhohaveshownprescienceinthewaythemarkets


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areheading.WhileIhavecertainlydonewellonprojectswithatechnicalfocusordelivery,Ivealwaysbeenonlysomewhatawareofthe

businessdeliberationsthattookplacebeforeIbecameinvolvedinthework.With

theMBAstudies,evenwiththebasicsinFoundationsofManagement,Ivefound

itmucheasiertomakesenseofwhatIBMwas


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doinginitsbusinessdealings,suchasinitsacquisitionsorcourtingofcertainclients.Inmyownpersonaldailyworklife,merelymentioningan

interestinbusinessprocesseshasopeneddoorstoworkingcloserwithbusinessanalysts

onprojectsmostnotedforitsstrictdividebetweentechnologyandbusinessinterests.

OnewayIvefoundthatwouldallowme


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tostandoutatIBMistobridgethegapbetweentechnologyandbusiness.Itisraretofindanyonewillingtoworkwith

bothgroups.Usuallywhenthebusinessanalystsaredonewiththeirrequirements,its

tossedoverafencetothetechnologygrouptoimplementtobetossed

backatsomefuturedate.Withmyknowledgeandtools


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IhavelearnedfromHenley,hopefullysomedayonmyprojectstherewillbenofence.


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Bibliography

[1]Bragg,StevenM.(2006)FinancialAnalysis:AControllersGuideNewYork:WileyandSons.[2]Collis,DavisandRuksand,

Michael(1993)CanYouSayWhatYourStrategyIs?HarvardBusinessReview,April2008

[3]Gerstner,LouisV.Jr.WhoSaysElephantsCantDance?NewYork:HarperCollins

Publishers,2002[4]IBMAnnualReport,2007,2006,2005[5]


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KaplanRSandNortonDPTheBalancedScorecard:TranslatingStrategyintoActionHarvardBusinessSchoolPress1996[6]Larson,CarlE.and

LaFasto,FrankM.J.(1989)Teamwork:WhatMustGoRight;WhatCanGoWrong.

NewburyPark,Calif.:Sage.[7]Lewin:BusinessTransformationInstructionMaterial,HenleyManagement

College.1941[8]Marchand,D(2000)CompetingwithInformation,John


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WileyandSons[9]McFarland:ManagingInformationMaterial,HenleyManagementCollege.1963[10]Nellis,D.Parker.(2002)PrinciplesofBusinessEconomicsEssex:FinancialTimes

[11]Oakland,J.S.(1992),TotalQualityManagement,Oxford:ButterworthHeineman.[12]PorterM

(1980)CompetitiveStrategy:TechniquesforAnalysingIndustriesandCompetitors,TheFreePress[13]

Porter,ME&Millar,VE(1985)HowInformation


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givesyouCompetitiveAdvantageHarvardBusinessReview,Jul/Aug198549


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BIBLIOGRAPHY

[14]Porter,M.TheValueChainandCompetitiveAdvantage.FreePress.NewYork.p.33-61.1985[15]Thompson,Johnand

Martin,Frank(2004)StrategicManagement:AwarenessandChange,ThomsonPublishing[16]Treacy/Weirsema(1993)

CustomerIntimacyandOtherValueDisciplines,HarvardBusinessReview,Jan/Feb1993


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.1.APPENDICES51

.1Appendices.1.1PESTLE

Table6givesaPESTLEanalysisofIBM.

DriversExternal

FactorsInfluenceonIndustry0to10(A)ImpactonCompany-5to

5(B)(A)*(B)ProbabilityofChangePolitical/LegalConflictingregulationsbetweendifferentcountries;compliance

withlocallawsvs.globaloperations.4-1-4Low


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PatentlawsareinafluxintheUSandworldwide;patentreformchangesnatureofcompetition.8324MediumEconomicalGlobalrecession

fromUSeconomictroubles9-4-36HighShiftawayfromUSas

primarymarket7321HighSocialWorkforcegrowingolder;feweryoungemployees

andmorediverseworkers6212HighWorkersseparated


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geographically;trendofemployeesworkingfromhomeorregionaloffices8324HighTechnologicalTechnologyquicklybecomeswidespread/copiedbylowcost

rivalsDisruptivetechnology;newinventioncreatesordestroysanindustryquickly89

-4+/-532+/-95HighMediumEnvironmentalFocusongreenorlow-consumption

sustainableenergy428MediumNaturaldisasters2-4


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-8Low

Table6:EnvironmentalfactorsaffectingIBM

Political/Legal

-IBMisamultinationalcompanyoperatingin

manycountries,oftenresultinginIBMneedingtonavigateconflictingregulations.Whatmay

belegalinonecountrymaynotbeinanother,financialpracticesmay

differ.Workersrights,patentlaws,exportcontrolsareallfactors


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thatneedtobetakentoconsideration.


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BIBLIOGRAPHY

Economical

-EconomicrecessionscanimpactclientswhomaycutbackonspendingonITandbusinessoperations.IBM

mayfindthatitneedstorelylessonUSoperationsforprofit

asemergingcountriescomeonline,forexample,Chinesecompanieslookingforpremium

ITservice.

Social

-Workersaregradually


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graying,becomingolderasboomersmovetowardretirement.Employeeneedsanddesireschangeasworkforcebecomesmorediverse.Technologyallowsemployeestocollaborateand

workfarawayfromeachother,downsidesofisolationandseparationneedto

beaddressed.

Technological

-IBMisthetrendsetterandmarket

makerfornewtechnologyforITautomationandbusiness.It


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islikelythatoldstandardscanbedisruptedovernightwithintroductionofanewtechnology.IBMneedstocontinuouslyinnovateasanythingcanbe

copiedoradoptedbyrivals.

Environmental

-Naturaldisasterscan

disruptIBMoperations,asfacilitiesarelocatedworldwide.Focusongreentechnologyan

importantissueasclientsandgovernmentstrytoaddressglobal


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warming.


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.1.APPENDICES

.1.2PortersFiveForcesThreatofNewEntrants

AstheITandbusinessconsultingmarketislucrative

andaglobalbusiness,newentrantsareconstantlyenteringthemarketinresponse

tonewopportunities.Thisisespeciallytrueofemergingcountries,whereskilledand

low-costworkersincountriessuchasChinaandVietnamare


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underbiddingIndia,oncetheleadinglow-costbidderforWesternoutsourcingbusiness.Ashavinganadvantagethroughbusinessautomationandcostsavingsthroughoutsourcingmeans

aadvantageovercompetition,anybusinessofappreciablesizewillwelcomenewproducts

andservicesthatwillworktotheirfavor.

Threat:High

SupplierBargainingPower

IBMcannolonger


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engageincustomerlock-in,inwhichthecustomerisforcedtouseIBMproductsexclusivelyonceenteringacontract.Openstandardsallowsaclient

tomigratetheirdataandprocesstocompetitorplatformsasneeded.Forthis

reason,IBMembracescompetitorproductsaswellandprovidesservicewiththesame

depthasasimilarIBMbrand.Supplierscanalsomean


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IBMsconsultingbase,employeeswhocanworkforIBM,acompetitor,orhangouttheirownshingleasanindependentconsultant.

Threat:

Low

BuyerBargainingPower

Buyersaredividedintotwo

camps,oneseekinglow-costserviceandtheothercampseekingleadingedgeIT

productsandservices.Low-costservicereducesoverheadforclients,but


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requiresamaturemarketwithanadequatenumberofcompetitors.Leading-edgeclientsoftenwillpayapremiumfornewproductsandservices,andhave

fewvendorstochoosefrom.IBMnearlyexclusivelypositionsitselfintheleading-edge

market,andmustconstantlycedebusinesstolow-costcompetitiononcemarginsbecomeunsatisfactory.

Threat:Medium

ThreatofSubstituteProducts


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&Services

Whenanewserviceorproductisdeveloped,anewmarketiscreated,onethatpromisesanewlevelof

automationoranewwaytoreachcustomers.Inthetimeofmarket

creation,productsandknowledge(intheformofconsultants)arelimited.Overtime,

ascompetingproductsaremadeand


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BIBLIOGRAPHY

moreconsultantsgainknowledge,customershavemorechoicesandthethreatofsubstitutionincreases.

Threat:Medium

CompetitorRivalry

Competitionisfierce,butIBMenjoysalargeshare

oftheleading-edgeITconsultancymarket.ManyofIBMsproductssetthemarket

standard,allowingIBMtocontrolthedirectionandprogressof


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themarket.ManyofIBMscompetitionareniche-orientedorcost-leaders,orarecomplementary(usingIBMsproductstodrivedemandforaspecializedservice).

Threat:Medium


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.1.APPENDICES

.1.3McKinsey7S

HardElementsStructureAcompanyofIBMssizeissplitalongthree

lines:Software,Services,andSystems&Financing.Bynecessity,therearediversestructures

suitedtothenatureofaparticularbusiness.Thestructurethatisin

questionistheranksofIBMconsultants,whoaregenerally


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individualsonassignmentandarenotnecessarilyalignedwithanydirectionotherthantheirown.StrategyIBMsummarizedtheirstrategysuccinctlywith...

tosolveourclientshardestproblems;IBMcontinuouslyseeksopportunitieswhichrepresenta

technologicaladvantageoracostsavingsforclients.ServicecontractsbasedonIBM

productsandplatformsarelucrativeforgrowthmarkets.Systems


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IBMoftensetstheindustrystandardsforsystemsandautomation,andhasaninterestinbeingflexibleandresponsivetomarketconditions.Manymechanisms,

suchastraining,HR,andassignmentdeploymentarewelldeveloped,althoughoftenleft

toemployeestodiscoveranddeterminehowbesttousethem.Soft

ElementsStyleIBMhasasurprisinglyinformalandcollaborative


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styleforanorganizationofitssize.Gonearethedaysofpinstripesuitsandsincereties,replacedbyaglobalcollaborativenetworkin

whichIBMemployeesworkonprojectsfromanylocation.Afullthirdof

IBMemployeesworkfromhome,withtherestinsolutionsdeliverycenters,IBM

campuses,orinclientsites.SharedValuesIBMplaces


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emphasisonintegrityandcustomersatisfaction,andeveryIBMemployeemustreadandsignadocumentdefiningwhatIBMstandsfor.Becauseofthe

dispersednatureofIBM,oftenvaluesmaybethatofaclientthe

IBMemployeeisworkingfor,orassumedvaluesfromatemporarygroupworking

together.Transientassignmentstendnottoreinforcevaluesovertime.


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SkillsIBMplacesahighpremiumonskills,asitiswhatmakesthecompanymarketabletoclients.IBMisoftenthecompany

offirstresorttosolvecomplexissuesorintroducenewtechnologytoclients.

Despitetheimportanceofskills,cultivatinganddirectinglearningeffortsisleftto

theindividualemployee.


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BIBLIOGRAPHY

StaffWithnearly400,000employees,IBMhasawidepooloflabortodrawfrom.Cleanlydividedintobands,

orlevelsofresponsibility(andpay)aswellasbroadjobdefinitions,IBM

marksoutsteppingstonesinadvancementfortheemployee.Ayearlyperformancebased

bonus(bothindividual,department,andcompany)motivatesemployees.Specialprograms


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suchascertificationandtitlessuchasdistinguishedengineersgivespecialrecognitiontoemployeeswhohaveachievedaremarkablelevelofskill.


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.1.APPENDICES57

.1.4MarketShare

IBMSUNMicrosoftHPAccentureInfosysOtherFigure19:IBMMarketShare2006

IBMsmarketsharefor

ITandBusinessservicesin2006,showingthatwhileIBMhasalarge

portionofthemarket,anevenlargerportionisheldbysmallIT

consultancies.Individualconsultants,smallshops,anduniversitieslendingscholarsmake


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upforthelargestshareoftheITmarket.RivalssuchasHP,Infosys,andMicrosofthaveasmallmarketsharenow,butare

expectedtoinvestandstakeoutalargershareovertime.


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BIBLIOGRAPHY

.1.5IBMsStakeholdersCompetitorPlatforms

IBMsupportsallITplatformsandproductsasanormalcourseofbusiness.

IBMhasnostakeinprovidingserviceexclusivelyforitsownproducts.As

aresult,competitorsoftentakeaninterestinIBMsupportingtheirplatformas

itcandrivesales.Ontheotherhand,IBMsopenness


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alsoallowsthepossibilityofacustomermigratingtoanIBMproductaswell.

Shareholders

ShareholdershavenottreatedIBM

asahotstock,andIBMsP/Eratioremainslowcomparedwithother

similarcompanieswithintheindustry.Thistreatmentmakesitdifficulttoretainkey

executiveswithstockoptionsandemployeeswhomayownIBM


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stockthroughcompanyplans.Evenwithrecordprofits,IBMisnottreatedasagrowthcompany.

IBMConsultants

IBMConsultants

arethestockintradewhengivingcustomersadviceandsupplyingskilledlabor.

Consultantsfindthemselvesinhighdemandwhentheirskillsetisinshort

supply.However,consultantscanfindthemselvesisolatedfromanysense


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ofdirectionorcorporatevisionastheyareisolated,eitherbybeingembeddedinclientcorporationsorworkingalonefromhome.WhileIBMmay

seeemergingtrends,thisisoftennotsharedwithindividualconsultants.

CostSensitiveCustomers

Costsensitivecustomersareclientsthathavefound

acheaperalternativetoIBM,usuallywhenatechnologymatures


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enoughthatlow-costcompetitorshavedevelopedsufficientskillstoprovidethesameserviceIBMdoes,butatadiscount.IBMcannotcompeteoncost

somustfindwaystoprovideclientsvaluethatlow-costcompetitioncannot.

LowCostCompetition

Lowcostcompetitionarecompetitorswhohave

developedsufficientskillstocompeteagainstIBM,especiallyinmature


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ordecliningmarkets.LowcostcompetitionsetsthepricefloorforIBM,drivingIBMforwardtofindingnewmarketsinwhichIBMcancharge

higherprices.


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.1.APPENDICES

PremiumServiceCompetition

PremiumservicecompetitionarecompetitorswhohavethesamebusinessmodelasIBM,eschewing

competitiononpriceandinsteadfocusingonvaluedeliveredtotheclient.IBM

mayeithercompetehead-onorelseformpartnershipsandallianceswiththiscompetition,

especiallyfortechnologyrequiringsubstantialknowledgeandinvestment.


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LeadingEdgeCustomers

Leadingedgecustomersarecustomerswhowillpayahighpriceforproductsandservicesthatwillgivethem

abusinessadvantageorsignificantcostsavings.Theseclientsseektogainan

edgeovertheirowncompetition,andarewillingtomaketherequiredinvestments.

Leadingedgecustomerscanalsobecostsensitivecustomers,especially


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whenportionsoftheirinfrastructurehasmaturedenoughtomakeitdifficulttojustifyretainingIBMtoserviceit.


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