Ibm Decades of Transformation

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1) What factors led to IBM’s success during the 1960’s and 1970s and its problems during the late 1980 and early1990s?
IBM’s success in the 1960’s and 1970’s was driven by the vision of CEO Thomas Watson Jr. as evidenced by IBM’s $5 billion development investment into the System/360, “the biggest privately financed commercial project ever”. The System/360, “transformed the industry”, along with IT innovations such as development of the FORTRAN, the hard disk, the floppy disk, IBM supermarket checkout station, and an early version of the automatic teller machine”. Mr. Watson’s vision and or innovation required acquiring talent by making IBM, “the best place to work”. The late 80’s and 90’s became riddled with problems as a result of a lost vision and increasing costs. IBM’s lost vision included not predicting the problems of converting from a lease-oriented business into a sales oriented business, need for network consultants, and the evolution of the PC. Finally, costs went up faster than revenues causing lower profits.
2) What did Gerstner do when he assumed the role of CEO in April 1993? Evaluate Gerstner’s approach in crisis management. How well did he perform as a turnaround manager? What challenges did he face as he attempted to position the company for growth?
In 1993, Gerstner put the customer first, consolidated costs and looked to the future. His approach to the crisis in 1993 was to get involved with IBM’s customers. Gerstner attended sales meetings, created “one IBM” (reorganization), and directed executives to “bear-hug” customers in order to retain their business. He also sought to send a message to customers that employees will be held to high performance standards. “One IBM”, was designed to cut costs while meeting customer needs. Examples include outsourcing PC manufacturing and cutting IT operations cost in half while improving and…...

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