Thursday, October 03, 2013

IBM: What explains the sustained success?

IBM serves as a rare example of a very large organization that went through a near-death experience and came back to become one of the most successful and admired companies in the world.  If you look at the top 10 most admired companies on Fortune's original list in 1983 and compare it to today's list 30 years later, only 1 company is in the top 10 in both years - IBM.   In the middle years, of course, the company nearly did not survive.  Lou Gerstner led a remarkable transformation during the 1990s.

What accounts for IBM's remarkable sustained success over many decades?  One answer may be found in a quote from CEO Ginny Rometty in the current issue of Fortune magazine.  She says, "To be 100 years old, you can never define yourself by a product."  What an astute observation.  Too many firms become defined by a particular product that becomes very popular and profitable.  Then, as  the world changes, they can't adapt and newer, better products pass them by.   In IBM's case, they have not let a particular product become paramount.  They have been able to move beyond one generation of technology and embrace a new wave, and they have done that multiple times.  It's rare.  One wonders whether that "defined by a particular product" phenomenon serves as an explanation for the struggles of firms such as Blackberry.  

No comments: