Tuesday, September 06, 2011

IBM's Palmisano: Charisma vs. Leadership and the Role of Culture

IBM CEO Sam Palmisano gave a speech recently at the Computer History Museum in Silicon Valley.    He offered his view on how companies can achieve enduring success:

 "We have learned not to confuse charisma with leadership. IBM has faced this challenge (of following a charismatic leaders in founder Thomas Watson Sr. and his son, Thomas Watson Jr.) Many historians believe that Watson Sr.'s most enduring contribution to business was his intentional creation of something that would outlast him -- a shared corporate culture. He showed that how the basic beliefs and values of an organization could be perpetuated -- how they could become its guiding constant through time.  This is why we have focused too much attention over the years on building talent. Betting it all on one person, or a small cadre of stars, is the opposite of building for the long term."

I agree wholeheartedly with Palmisano's remarks.   I found these comments particularly interesting though because of the challenges that IBM endured in the late 1980s and early 1990s.  Many would say that corporate culture served as one of the causes of IBM's struggles during that time.  The culture had become a barrier to high performance and to necessary change.  Fortunately, IBM has transformed its corporate culture during the tenures of Gerstner and Palmisano.   The firm didn't throw out its old corporate culture entirely.  However, it embraced new ways of working. 

In his book, Gerstner wrote, "I came to see, in my time at IBM, that culture isn't just one aspect of the game - it is the game."   He extolled the three basic beliefs or values that Thomas Watson, Sr. had established as the foundation of the company's culture: 1. Excellence in everything we do. 2. Superior customer service.  3. Respect for the individual.  However, Gerstner noted that, "What the Beliefs had come to mean - or at least, the way they were being used - was very different in 1993 than in 1962, when Tom Watson introduced them."  In short, the culture had become rigid, while the world changed dramatically around them.   Gerstner and Palmisano didn't throw out these core values... they brought them to life again, but in a way that fit the new context in which IBM competed.  

To his credit, Palmisano didn't just maintain the culture and the organization that Gerstner put in place.  He has continued to evolve the culture during his tenure, enabling IBM to thrive in a very dynamic industry while many younger, allegedly more agile firms have floundered.  

If you are interested in IBM's history and culture, you might take a look at the book the firm put together for its 100th anniversary.  The book is titled, "Making the world better: The ideas that shaped a century and a company.

1 comment:

Andy Kaufman, PMP said...

I had an interesting conversation with Jim Kouzes recently about the difference between having charisma and being inspiring. Kouzes' and Posner's research shows convincingly that constituents want their leaders to be inspiring (in the top 4, along with honesty, forward-thinking, and competent). What do you think? Is it reasonable to say that inspiring doesn't always have to be a result of charisma?