This week, of all weeks, with IBM seemingly melting-down, you’d think I’d be writing about it and I have been, just not here. You can read two columns on IBM I published over at forbes.com, here and here. They are first day and second day analyses of IBM’s earnings announcement and sale of its chip division to GlobalFoundries. I could publish them here three days from now but by then nobody will care so instead I’ll just give you the links.
One thing I can do here is consider the way IBM CEO Ginni Rometty is spinning this story. She was all over the news on Monday repudiating the 2015 earnings target set by her predecessor Sam Palmisano and more or less claiming to be a victim — along with the rest of IBM — of Sam’s bad management. Well she isn’t a victim. Ginni was an active participant in developing the Death March 2015 strategy. And as CEO — now CEO and chairman — it’s laughable to contend, as Ginni apparently does, that she has been somehow bound by Sam’s bad plan.
When you get the big job the whole idea is that you start calling your own shots.
Ginni Rometty is in trouble along with the rest of IBM. She’s leading a failed strategy laid out in gruesome detail in my IBM book (link at right — buy a bunch, please) and appears to have little or no idea what to do next. Having finally repudiated that crazy 2015 earnings target, the market will allow Ginni to reinvest some of that money in trying to save IBM’s core businesses. But it isn’t at all clear she knows where to invest or even why. If that’s true, Ginni Rometty won’t survive much longer.
A bold turnaround plan is coming from Ginni, we’re told. And I’ll be coming up with my own plan, too, which will be interesting to compare and contrast. Look for that here at the end of the week.
Some readers see this as pointless. They don’t care about IBM and don’t want to be bothered reading about it. Well I’m sorry, but I have a sentimental connection with the company. And that’s not to mention all the IBM customers, retirees, and current employees who wonder what the heck is actually going on?
As Churchill said of the USSR, IBM has been a riddle wrapped in a mystery inside an enigma. But maybe not for much longer.
Keep them coming, Mr. Cringely. I, too, had a soft spot for IBM, having put my first BASIC program on an IBM PC at a friend’s father’s company in 1982.
Your comment is irrelevant to the story, and quite frankly, no one cares what your relationship to IBM is.
Whereas your comment is actually super helpful and relevant. Kudos.
And I care not for your input, Sirrah !!
Cringely and Cuban on same page: https://www.cnbc.com/id/102109502
Is this the only picture available for Ginni? Disconnection, terrified.
It’s the grimace posing as a smile with the eyes of a startled deer caught in the headlights of a charging truck.
Appropriate I suppose.
I think the fact that people don’t want to talk about IBM speaks volumes.
There is only one winning strategy for tech companies right now. Especially those focused on Services where their product is essentially their people. Focus on your employees. The firms with the best people are winning.
And always have. After all, it’s pretty difficult to have a “knowledge-based” service offering without people who have, you know, “knowledge.” IBM thought they could automate and off-shore their way to prosperity.
As a wise man once said, “You can’t shrink your way to greatness.”
Well, maybe. It sure seems that services companies are slashing payroll to meet numbers (IBM, HP, and others), so I suspect that IBM won’t be the only one with major personnel problems in the future.
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What I don’t really get is why IBM and others seem to think that experienced employees are easily replaceable by low paid employees who use a script to follow along. That might be fine for simple issues, but once the complexity level gets ratcheted up all of the people who could fix that sort of problem quickly are all gone.
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Unless, of course, that’s the entire point: more billable hours.
If you can step back from the emotional aspect (hard for me to do as a member of technical staff) it’s an interesting dilemma. IBM competes in a global market, so they need globally competitive labor rates. If they expect to win deals. So they globally resource (GR) labor and implement every other measure possible such as automation to reduce the cost of their labor from high cost countries. Assuming they survive, the GR thing will eventually even out as labor rate disparity between low and high cost countries dissipates. At least I believe that but I recognize there will always be a new low cost country to contend with. The dilemma, which I think nerdpocalypse touches on, is that throughout all of this you lose your skills in the higher cost countries to either GR or automation. And at some point, you will need them. This leads to the machines taking over the world scenarios.
“When you get the big job the whole idea is that you start calling your own shots.” I had to laugh.
It is all the last guy’s fault, right Mr. President. This is leadership today. The buck stops on the last guy’s desk.
One thing IBM did right was train managers. Many train wrecks at other companies could be helped with real managers dealing with real things, not passing the buck. Sigh. They don’t even learn from themselves.
Keep the good articles coming.
Old joke………your predecessor leaves you three sealed envelopes, with instructions to open each in turn when things get tough.
Envelope 1 says: Blame your predecessor.
Envelope 2 says: Blame market conditions.
Envelope 3 says: Write three envelopes for your successor.
Clearly we’re at the Envelope 1 stage.
Ginni opened 1 and 2 at the same time. Cheat.
First envelope – Resource Action
Second envelope – Resource Action
Third envelope – Resource Action myself
Thanks for posting this – Google news had alerted me to the first article but missed the second.
My biggest issue as a DE at IBM is fighting through the layers of Directors and Vice Presidents to get anything done. The quantity this executive dead wood here is trully astounding. Their real expertise is playing the internal system and stripping cost. They deal in frameworks and concepts – very rarely reality. Many a VP does not even have the power to give a raise to retain people. I found this out when I received a few percent upon reaching DE. I hear it is the same for IBM Fellows. The real smart staff leave way ahead of making DE as renumeration is so poor or the bureaucracy drives them off – I was surprised that I made it – but it is all about playing the system of hoops. Directors and VPs do not even have to jump these hoops – they get promoted as ‘good old boys’.
When I see Ginni recognizing this and starting to fire some of these loudmouth Executives off – I will believe the company is turning around.
Amen. As a retired Distinguished Engineer myself I totally agree. I personally stayed there too long (36 years) and when I went solo I quintupled my net worth in 3 years and had much more fun.
I’ll add that managers and executives are a protected species and the employees who don’t brown nose and tell customers the truth are the endangered ones. As they say in the consulting business, Ginny is “part of the furniture” and she had a hand in causing the problem throughout her career. It’s time for a true cleansing and not led by another con man like the cookie monster. If the company is to survive, they need a true leader, not a financial engineer come publicity hound like Gerstner.
BTW, the current top technical types are suspect as well. I remember to this day when Irving B. quietly told me “Remember, it’s who you know, not what you know or Many of them are just politicians disguised in “techie skins”. We need to clean house there as well.
I left as an STSM, the process of becoming a DE was a process fraught with ass kissing and brown nosing. It’s long been said that IBM lost its technical soul when Nick Donofrio retired. All that’s left are SVP’s desperate to save their nichedoms. John Kelly doesn’t even come close, his only purpose is to justify Research’s existence making promises on what the future will bring. Ginny has drunk John’s Watson Kool Aid recipe.
I left as an Executive Architect, profession lead for my business group, and Chief Engineer of a $1.2 billion dollar account. For all that work, I was rewarded with raises in my last three years of $0, $110/month, and $0. To go along with almost nothing as a bonus. When I left, and I chose to leave, I wasn’t RA’s, a point of pride of mine, I was $35k below the mid-range of a band 10. I suppose I could have pushed for DE, but as the comment said…it was a process that was far to daunting for the reward.
When I got certified, I was told the rewards were coming…just wait!
Then I was told to get senior certified, and the rewards would come…just wait!
Then I was told to hand on until I got my promotion to band 10, and boy, the rewards would start pouring in!
Then I was told if I could just make it DE, THEN I would be rewarded for all my hard work.
Instead, I updated me resume, interviewed with almost every big name tech company out there, left, and was VERY richly reward on the outside.
I left to become a director elsewhere, and I’m now at the VP level. I’m also now fairly compensated against the market place. I’ve had more fun in the past thee years since leaving, and have learned more than I could ever have at IBM.
My ONLY concern with IBM now is that I still have a lot of friends there, and I really want them to have fun again. I want for them what I have. I’ve heard from most of them this past week…everyone of them have their parachute strapped on, and are ready to jump.
If you think there was a brain drain before, just wait…some hugely talented folks with serious chops are out there interviewing as I write this.
Amen to the brain drain. I did a casual troll through my LinkedIn of former peers and 80% of them have departed. Vice Presidents. Directors. General Managers. I was an Industry Leader. Left the moment (the day) I had age and years of service. The brain drain is shocking. As further proof that IBM is losing talent, the IBM internal account utilizes resources from HCL and TCS to do IBM work. Apparently that has been going on for some time. I had no idea. So how does an IBMer look a customer in the face and sell against the Indian firms when IBM has conceded a portion of their own account to the competition? Great job Ginni. Keep it up. You might want to stand back a little bit from that exit door though so you don’t get trampled by the ongoing exodus.
Reading all these comments I see one thing that would scare me.
An obsession with layers of management and titles for progressoon. The same disease that affects public sector departments.
Strip out 5 layers of management and 3 levels of engineering and empower those who do to do rather than fill out forms.
I keep getting calls from recruiters there and every time they keep giving bands and titles rather than actually what is expected for delivering customers’ needs.
Promotion, at least on the technical side, is a double-edged sword. The relative performance employee measurement system IBM uses means you have to compete with your peers and be measured as “better” than them if you want to get any kind of raise. Going through the number grades (letter grades are reserved for execs) provides relatively little financial reward but makes it harder to achieve a good result at the next review. Unfortunately managers are often given promotion targets so encourage their staff to go for the next grade even though it is often not in the best interests of the member of staff to do so.
Re: “…often not in the best interests of the member of staff to do so” How could not trying be better?
@Ronc: “How could not trying be better?” I know a number of people in the company who defer on promotion because they are good at what they do, are getting the associated raises, and where promotion would require them to do additional tasks for the sake of their review scorecard that are not a primary part of their role. If I’m a senior developer on a strategically important product such as Watson (which I am not), surely I should be rewarded for doing a good job on driving development of that product even if that causes me to score lower than my peers in other areas such as the number of blogs or whitepapers I’ve written, or external presentations I’ve given. Obviously promotions come with greater responsibilities and expectations but having to compete directly with other employees in this way is inflexible and divisive, and is the reason many companies have dropped relative performance appraisals.
Thanks. I was confusing trying for a promotion with trying to do better in general. As far as stack ranking goes, it seems to me everything is relative, whether a company acknowledges it officially or not. Am I missing something?
ot: apple admits to having no new ideas so they buyback $17 billion in stock instead of investing
in their business via r&d.
Yep, they are suspect as well. Some have evn said theat they are out of new ideas. McKinsey had an interesting article on the life cycle of companies and it may be that companies like IBM, HP and Apple do have a beginning and a slow deadly end…..
Apple has been under pressure to do something with all its money.
BIG mistake on Apple’s part. the way you handle a highway robber like Icahn is to say, as Jobs had done, “You don’t like the way we build our business, sell the shares.” buybacks are just paying off a schnook without getting the negatives back, every time he waves a copy of the photo.
It was recently published, and I don’t have the link, how Apple uses that money. Got a new iThingie coming out, and don’t want the copycats of the S-word bringing out three clones in hopes one sells? Buy a year and a half’s world production of key components. Can’t get that much? Buy a vendor, or build a factory yourself, so there is no way in Hell anybody can get an unobtainium doohickey.
that is called “captive market,” and lets you price however you damn well want.
doesn’t work that way if the greenmailers take down that wall of greenbacks behind the home office.
They have finally succeeded in turning it around. Only problem is that it’s now pointed straight down. For years from within I watched as their “trimming” amounted to random slashing and cutting. There was NEVER an apparent direction to make thing more efficient, run better or work smarter. Each quarter was simply a lifeboat drill, whom can you live without? Each 3rd, 4th or 5th line was given a number and everyone underneath had to contribute a similar amount. Higher ups were judged on x US bodies vs x Global bodies. Moving responsibilities from A to B would disturb the ratio of US vs Global bodies that they were being measured upon. No training, no education, no focus on combining inefficiencies, everyone was so protective of “their territory” that it simply came down to how many had to be excluded from the boat. Once the boats became somewhat spacious, they were replaced with smaller ones. Rinse, lather, repeat. Add in a pathetic, time consuming and entirely laughable capital acquisition process and HR bots to make sure no one strayed outside the lines and the stage was set. Accomplish nothing, but heaven forbid do not make any waves outside the box or question decisions being made. Failure to comply stamped RA in a column of a spreadsheet. $125 will arrive long before it ever climbs back to $200 if that is even possible at this stage. Keep writing Bob, maybe the sun will shine again someday.
I care about IBM and have sentimental feelings as well since I need them to be successful to continue receiving my pension (however paltry after 37 years). During high school I told my business teacher that I would work for IBM one day. He laughed. Well, with a high school diploma and not one college credit, I got the dream job I was looking for as a Customer Engineer. I absolutely loved my job as a CE. I eventually took several jobs along the way and became a Server Support Center Manager in 2000. I enjoyed management too until about 2007 when the company dramatically shifted its focus and the job wasn’t fun anymore. I left the company on December 31, 2013. I left behind some very good employees. People I miss. However, I left the company without a tear in my eye.
It seems that Ginny just doesn’t get it. IBM has lots of cash to push around. BUT, they are running out of options to ‘cook’ the books. This recent sale will miraculously appear as a profit in the not to distant future. They are not selling product yet they continue to show black ink. How long can they survive with this strategy? A radical change needs to take place in the executive cloud before things improve.
BTW…. I am humbled to have been mentioned in your book. It was a good read. Barney.
Barney, I too left after a couple decades and it was around the 2006-2007 timeframe that I also noticed things really start to change. Bully execs who had utter disdain for anyone technical. I had new hires ask me point blank ‘why does management hate me so much?’
I remember going for a lunch time walk periodically around that time frame and thinking to myself ‘something just isn’t right here.’ Within a couple of years from that time, I started to look for a new gig and thankfully found one a couple years ago. The (house of) cards is now unfolding just like my lunchtime walk premonitions once warned me of.
Likewise, I also hope IBM turns things around, if for no other reason so the many retirees I know who are living off the pension will be ok. Unfortunately IBM will not turn anything around with the joke-leadership they have in place these days. As far as my pension, I took my cash-balance dollars and moved them to my own personal IRA just to be safe. Have never looked back.
Barney,
Misty’s right on. I saw and felt what she wrote she saw and felt in 2006-2007. That’s why I committed “IBM Career Suicide” by going back into servers after a safe, distinguished job in Networking I had developed for years (albeit not much IBM networking left). Dozens of people questioned my move and volunteering during the GTA re-org. They could not understand, or even accept, why someone who was well known customer facing problem project fixer and problem solver even as a DE with almost a dozen patents would just leave suddenly networking and go back to servers which were struggling to sell even back then. What they didn’t realize was I had just decided to go out in a blaze of glory, confounding all of the management above me. They tried to save, calling me several times to warn me, offer me “interesting problems to solve and troubled projects to fix” then at the end realized I had just sold a huge contract to an old friend and customer that would give me cash flow as I got my start-up going, and it worked.
The company you knew is gone, Barney. Have no soft place in your heart for it because they don’t deserve it and really don’t care about you anymore. We are anachronisms because we care about a past and love customers which they don’t. They have destroyed it and replaced any good management they had with leadership that is self-destructing and cares nothing for the hard working, dedicated employees who are left, if any are still there. It was a form of “competency and honest professional cleansing” of employees that was going on when I left in 2008.
First envelope: “Blame Predecessor”
Second envelope: “Reorganize”
Third envelope: “Prepare three envelopes” (and get out)
Perhaps all is not lost (yet): https://www.theregister.co.uk/2014/10/22/lufthansa_sells_it_infrastructure_unit_to_ibm/
Conversely, this has to be the kiss of death: https://www.theregister.co.uk/2014/10/22/ibm_microsoft_cloud_partnership/ Partnership? Microsoft? When has that ever worked.
PS: I did buy a copy of the book 🙂
Yes, GOOD LUCK to LUFTHANSA and its employees, which will be soon cut to the bones.
Outsourcing with IBM means transferring staff to Global Delivery Facilities (GDFs), and laying off the majority of established taken-over employees …. this is what is being described as “cost savings”….
I feel sorry for the employees. IBM was such a big name in the tech industry and now it seems to be a cursing name. Can anybody tell me why we only hear bad news about IBM? I looked at passed income statements (http://finance.yahoo.com/q/is?s=IBM) and it looks quite stable concerning the net income. The only thing I discovered is that IBM has moved from being a tech company to being a service company. Is that a bad move? I don’t think IBM is heading for a fall it’s just trying to figure out which way to go. But maybe I am wrong. Maybe Robert can tell us why he’s so negative about IBM? It makes me curious what’s in the book he wrote :).
sorry if you find some spelling mistakes. English is not my native language.
Stable income is death for big companies as it slows share growth and earnings per share. A key part of Bobs book is how IBM has cooked the books (share buybacks) and slashed costs (retrenching worker) to push up both rather than increase actual dollars in the door.
Ginni talks about moving to the cloud. All well and good, but Amazon Web Services has cut prices 19 times. What if IBM enters the cloud space but prices are already commoditized? Google, Microsoft, Cisco, HP, and other big players have cloud strategy’s too. IMHO, it’s going to be very hard for IBM to make enough money in that space to overhaul and save IBM.
IBM management really disdains anyone who questions their motives or directions. IBM management with ask techies for their honest technical opinion and do else wise if it adds to their own net $$ screwing the techies. After awhile a lot of technical folk left IBM. Management didn’t ask for their advice or even supported them; sometimes holding them in contempt. No wonder IBM is where they are now.
Give trexibmer the award for ‘hitting the nail on the head.’ I witnessed quite vividly the tragedy unfolding with the technical labor arbitrage and exited stage left. Sadly IBM never arbitraged the Directors, VPs or GMs, they instead multiplied like rabbits. IMHO, history will show that it was Lou who set the stage but it was Sammy who pulled the fatal trigger for the company with his roadmaps. Ginni just gets to go down w/the ship – even if she had turned on a dime day-one of her tenure, it was probably too little, too late at that point.
IBM forget The Cloud. It’s gone for you now. IBM was too late to the game. Try to put all ya yeggs in WATSON. Maybe only hope.
IBM had the Cloud technology long ago with the mainframe VM (which became VMWare.etc.) Virtual resources, Virtual storage, etc. All in the clouds! Nice going Ginni, you have no clue and never had one…
Unfortunately the cookie man did a great harm to IBM. management had a disdain for any one who questioned them. Benefits have gone, salaries are on hold , and Lou walked away with millions. This guy was really corrupt and he really did a number on the IBM employee. I remember one of the last THINK Magazines was entitled ,THIS IS NOT YOUR FATHERS IBM. Lou really made that happen.
I would be interested to see a compare on all the companies that are now being run by exIBM executives and how their IBM cloned strategies are working. Companies such as CSC, Telstra in Australia etc. Seems to me like these companies are also being tarred with the same brush where respect for the employee is no longer paramount.
Second! Comment that is.
Having read Father, Son & Co. many years ago I’m struck by the notion that IBM started with manual typewriters sold out of a horse drawn wagon. It moved on to paper card technology, then magnetic core memories, invented the Winchester hard disk, survived Wang word processors, reinvented the personal computer (almost destroying Apple) and is actually still around.
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Thinking of the enormous change in a century-plus of technology, it’s incredible to me that IBM wasn’t out-competed and bankrupted long ago. Must there always be a day of reckoning? As Jerry Garcia sang, isn’t there a company built to last?
There is a magic formula for turning a company around. Here it is.
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1. Focus on your present and potential customers. Learn their true desires and needs. Decide how best to satisfy these desires and needs with your present and potential capabilities.
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2. Focus on your employees. The few remaining ones who provide real value to your present and potential customers. Not the ones just putting in their time. Ask for their advice on matters in their area of expertise. (Probably need a third party to do this. No one is going to be honest with the SOBs that have treated them like disposable waste.)
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3. Focus on your existing products and services. Determine which ones provide real value to your present and potential customers. These probably are the ones showing a true net profit (before allocating any of the bogus headquarters overhead to them).
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4. Focus on potential new markets. The ones that can provide you with the big profit margins you need.
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5. Focus on the deadwood. Determine who does not provide real value to the company. (Concentrate on managers, executives, Board of Directors, and foreign “wage slave” workers, of course.)
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6. Forget about the shareholders and Wall Street. What good can they do you now? Nada.
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7. Now you are in a position to plan how to rebuild the company into a technology powerhouse.
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This will never happen of course. They would have to replace their entire Board of Directors and top management for starters.
Free advice is mostly worth what was paid for it. Your #1 through #5 can be summarized as: be mindful about the business. Your #6 could be restated as: bite the hand that feeds you. A company with shares held by the public is supposed to be operated in trust for the -shareholders- .. except now that we shower shares down on management, they claim that not only are they shareholders but are the only shareholders that matter. How self-serving!
Thanks for replying to my remarks. That’s all I really wanted for such obvious truths. Unfortunately, the big boys in long lived companies often ignore the obvious truths. As for item #6, I don’t agree that the shareholders and Wall Street are the hand that feeds you. It is the customers, employees, and technologies that feed a long lived company. I don’t see much feeding going on after the IPO (and any other stock issues for a long lived company). As for any stock options given out at a long lived company, the big boys probably don’t deserve them. Using high valued shares to acquire other companies? Perhaps, but often not a good idea.
And the lies continue from the CEOs office particularly with the CAMSS (SCAMS) scam…..Softlayer seems to be nothing than heavy on marketing PR but ZERO on execution. Heck you can’t find anyone from the Softlayer organization listed in the IBM Bluepages when there’s a customer problem, did you know that ? Why is that ? Did Ginny cut them a special deal to do as the Softlayer executives please because someone thinks they are as good or better than Amazon ? Global services will always be a mess and the blame goes on Price Waterhouse these days, so I hear; so how come Ginny hasn’t given them the boot – or it is because she’s too way chummy with Bridget and Erich and misery loves good company ? She certainly hasn’t shown backbone with Rod Adkins, choosing to pay him a hefty salary for doing nothing till the end of 2014 ? A total waste of good money – he’s about as useless as they come ! Should have been shown the door when he retired…..Ginny herself is likely readying her golden parachute because the end is likely in sight. You can fool some of the people some of the time but you cannot fool all of the people all of the time, particularly customers ! IBM doesn’t own the world any more than Microsoft or Red Hat !
IBM looks like the sinking Titanic: too big to be rescued.
Once the prow is drowned, there’s no way back swimming.
It’s too late to redesign the company long- and mid-term strategy plans.
Those were due a couple of decades ago.
Unless those plans were to ditch the whole company.
In which case, they have fully succeeded.
I’m sorry to say, but as former employee, I hope they go under. I’ve just seen too many colleagues have nervous breakdowns. Can they come back from this? Maybe, But in my opinion, they don’t deserve to.
To all those technical staff who are still in that place: any other company would be happy to have such a skilled person as you. Just because you’ve been told for years that while your technical work is good, you’re not good enough in some fluffy way – you are good enough and any other company would love to have you. It will be ok, just dust off your CV; it can be a list of bullet points if that’s all you can manage, each one is probably worth a raise outside the company anyway.
Lastly, you don’t need luck, if you’re an old school IBMer you’ll be fine. But I’ll say it anyway.
Good luck.
Hi john, I recently launched a site where you can review your boss in your case IBM. I’d appreciate it if you could contribute by adding IBM and a review of course. It’s anonymous. I only show the username.
Here is the link : http://www.scoreyourboss.com.
Let me know what you think. 🙂
Interesting article and comments.
Anybody who’s been with IBM the last decade has witnessed a company which has COMPLETELY lost it’s soul. When you’ve lived it – quarter by quarter x a number of years – the mistakes being made, the arrogance and the ignorance at the senior levels, the lack of good human resource management (speaking from the Professional Services perspective, where ultimately your product is your people) has been breathtaking.
What is amazing is how long the ‘financial engineering’ approach has worked. Served Palmisano very well, and Rometty has ridden it until there is no more juice left in the tomato. Now she recognizes this and is passing the blame. Sorry, you ARE part of the problem Ginny.
This company needs a labotomy from head to toe.And those inside (and those who’ve recently left) know that. But there is too much arrogance to effect the change needed.
Cost-cut yourself into oblivion IBM. Just too bad so many good people have had to suffer because of the greed and arrogance from the top.
totally agree… the end is nigh
IBM HAS LOST ITS SOUL. Very apt description of today’s IBM as it has ceased to be a Tech company and has become more of a Financial company focused on just maintaining its EPS target without earning real money for the benefit of its shareholders and ensuring the IBM execs’ golden parachute or boat is there when the ‘captain’ suddenly decides to abandon ship and leave the dumbfounded crew behind.
I read one of the blogs this reporter posted. He talks about IBM server chips being “Silicon on copper” Really? This reporter should get some of his facts straight and some of his words right.
J.
You are right, it is actually “copper on silicon.” More precisely there are electrical connections between the millions of devices on a modern CPU (or complex chip). Those connections are normally made from silicon. IBM has a way to make them out of copper — which is a better conductor and is one of the things that allows the chip to run faster. But in the context of this discussion this is like saying the paint on the barn that is on fire is red instead of orange. If you don’t put out the fire, does the color of paint really matter?
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Even for one who has read Bob’s columns for years and read his books, the problems are deeper and worse than even I imagined.
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Truthfully if Ginni wishes to save IBM she needs to immediately stop doing the things that are hurting IBM. They need to begin by stop abusing their employees, then come up with a business plan that will really work.
You and Cringley both got it wrong. Everyone uses copper wiring. What IBM is different (and mostly alone in doing) is using Silicon-On-Insulator (SOI) wafers to build their semiconductors.
What I don’t understand, then, is why everyone doesn’t use it. I was introduced by IBM in 1998, and seems to have a lot of advantages: http://en.wikipedia.org/wiki/Silicon_on_insulator
Perhaps Bob is referring to “copper interconnects” and this IBM article: https://www-03.ibm.com/ibm/history/ibm100/us/en/icons/copperchip/ .
somewhat relevant posting on Slashdot…
http://hardware.slashdot.org/story/14/10/23/1249255/sale-of-ibms-chip-making-business-to-globalfoundries-to-get-us-security-review
IBM is an officially sanctioned trusted supplier to the U.S. Defense Dept., and the transfer of its semiconductor manufacturing to GlobalFoundries, a U.S.-based firm owned by investors in Abu Dhabi, will get U.S. scrutiny. Retired U.S. Army Brig. Gen. John Adams, who authored a report last year for an industry group about U.S. supply chain vulnerabilities and national security, said regulators will have to look closely. “I don’t want cast aspersions unnecessarily on Abu Dubai — but they’re not Canada,” said Adams “I think that the news that we may be selling part of our supply chain for semiconductors to a foreign investor is actually bad news.”
Rometty put up a video about the results. Most of the responses were bland platitudes from the staff who have little real to say other than echo her words and perhaps get a little attention from above. Normally with these you see the occasional kick-ass comment and you get an internal ‘like’ system – a bit like facebook likes. So, one Canadian guy writes a response along the lines of ‘you are the captain. I am just a stoker’….he then goes on to say her message told him nothing other than ‘just follow the captain’. He then goes on to say he has ‘zero faith in IBM leaders. He trusts them as far as he can kick a moose’. Followed on by how he does worry for his customers. He then goes on to talk about how IBM has disabled its technical staff by under investment & idiots at the center dictating …..
This guy gets 266 likes. That does not sound a lot – but you are lucky to see 10 likes on a particularly brave post. He even managed to get a number of people to comment & stick their necks out.
One brave guy – where the culture is now one where the most skilled serfs mean nothing.
I hope he and the 266 people who liked that are still in IBM by Xmas. Time will tell.
The fact is the company is gutted and increasingly our teams are made a mockery of by Client tech staff in key meetings who know more than we do. It is nothing to do with education – there is plenty of foilware & virtual courses. It is because we get no hands on anymore – you have to show the dog the rabbit. Hands on is supposed to be done in India by cheap labor.
So, the immediate response in past few days – offshore more aggressively & cut costs further. The hollow suits in command know no other way.
She speaks to staff and customers as if they were toddlers in kindergarten.
Foilware?
Foilware is a new version of the old timer term foils. Like saying “I’ll check my reader” (RSCS era on VM/CMS before Gerstner bought the Lotus pig in a poke from Ozzie). 20-30 years ago presentations weren’t ppt decks but literally on thermal burn plastic sheets (“foils”). Frequently done by … secretaries because (long before my time) technical people mostly never did their own typing or prep. Seemed to be left over from the very long ago era when technical staff did not have a typewriter to type anything, although some bravely used human font to get their point across.
Thanks! 40 years ago those “foil” projectors were just called “overhead projectors” and they projected “transparencies”.
About GR and whatever she said or implied about “blame” for this mess… Both she and Sam are equally culpable. When she was appointed, she was quoted as saying that direction would not change, since she was part of the team that put that direction in place. And only last quarter she reaffirmed this ludicrous roadmap. Now the big turnaround, which could not have been more poorly handled. At least the roadmap is dead.
That all being said, Palmisano is also deeply complicit. But what does he care? Maybe 150 vs. 200 million payout?
It breaks my heart after 40 yrs to see the changes in IBM. They forgot their strength was their people. They slash and cut people with no regard. They continually add executives who provide little value and resource action the hands on workers. The people who are still there live in fear if they will be gone next quarter. Respect for the individual is long gone. They have forgotten what has made them successful in the past.
They need to get back to the basics and resource action should be applied to the layers and layers of management. Turning the Queen Mary around is a huge challenge. I just hope it is still possible. I think it is very sad. There was a day many years ago when people were proud to say they worked at IBM. Now they just ask do you know anyone who is hiring? The employees live in fear of losing their jobs. People in that state cannot be productive. I am sentimental and I hope they can recover.
You wanted cheap labor outsourcing, you got it. Keep believing that lie Korporate Amerika, and you too are headed to the ash-heap of history.
Cutting costs is suicide. Companies need to create awesomeness instead.
10-15 years ago the talk was that Microsoft would fall just as IBM did, then later it was that IBM would outlast Microsoft. Now which do you think will last longer.
With Nutella running the place they will both be gone in 5 years.
No more advanced math calculations required to post. Perhaps Bob will share what he chose as an alternative method of spam control.
RA’d… or should I say fired… in Feb this year – almost 20 years at IBM…. bled blue – back in the day it wasn’t a company, it was a way of life – an identity and a calling… about the only place I would have been prouder would have been NASA… (in the old days)… I’m now with a much smaller, nimble and enlightened company – very glad to be there. So sad to see what today’s IBM has become – it’s a sham, a shell and nothing more than a holding company – technology, innovation, initiative, folks with a spine and fearless analysis have all been eradicated. Hopefully it is broken up soon and us true believers can return and to smaller organisations and make a difference. If that isn’t the way things track then I hold no hope for the future. For all those amazing ex-colleagues that remain – all I can recommend is – get out now – the grass is greener…
@gone – you’ve got it. I saw the train coming and got off the tracks after 15 years as an employee (after 25 as a customer). I was proud when I got to carry an IBM business card. I’m not a slacker; I did well there – PBC 2+ or 1 every year, the last 7 in a row at 1. But I couldn’t stand in front of customers any more an present idle promises I knew there was nothing behind but Powerpoint and smart engineers with no budgets.
@crow, there are and were amazing people and ideas there, but they are either leaving, were exiled to Lenovo, or are hanging on in quiet desperation and depression, waiting for retirement or a package offer. I moved on, and I’m proud of my business card again, but I am saddened at what used to be and what could have been, and the friends left behind. I think IBM may survive, but as a very different company, selling other people’s stuff and ideas.
@Bob, thanks for the book, it was a riveting read having lived a great deal of it. Some things became clearer when I saw the bigger picture of what was going on 6-8 years ago when I started seeing the cracks opening., about the time abandoned the “innovation” buzzword and all those asterisks (which they apparently sold in bulk to WalMart).
Hmm…. some journalists have gotten into big trouble with reposting the same article that they legitimately researched and wrote. Slate magazine and NPR publish stuff that’s been published elsewhere on a daily basis.
Personally, if you didn’t put a link I’d NEVER read the forbes articles and I always read the ones here so if they were reposted and labeled as such, I’d be happy.
Also, if I don’t get your wonderful articles and YOU get a steady paying job… I will miss this column and… be really ok with that.
point taken. i still see parts of their research as nothing short of amazing, so many smart people. its just, pardon my language, plastic whores at the top are sucking last life out of IBM. Its just sad to read over and over.
Wait, wait – I thought all that 71% cheap Indian labor workforce was going to save IBM? You mean it didn’t? Add IBM to the list of once-great American companies destroyed by the India, Inc. RICO conjob racket.
When IBM begin to sold everything related to the M in their name, they forget who they are. Then they forget everything else.
you are not the only one to have doubts over the quality of ibm past earnings, check out this link :-
http://jeffmatthewsisnotmakingthisup.blogspot.fr/search?q=ibm
Of course this is largely true. IBM is essentially a hedge fund. It buys non strategic hot companies and guts them of cash and IP for 2 years until the employment contracts of the former owners expire. Then they cast them away. IBM figures that if one acquisition out of four pan out they’re ok. Even if they’re successful, they’ll be rebranded into oblivion anyway and merged into the Software Group Borg or the Tivoli Borg or the Security Borg or the Websphere Borg. And now seemingly the Cloud Borg. In the two years it takes to vampirize each acquisition, almost nothing is invested in them to improve them or keep them current. And why should they when 50 startups will do the work for you in the next 2-5 years. Of those 50, 45 will disappear and the 5 remaining will be in a beauty pageant where IBM, Oracle, Microsoft, HP, etc are all looking to buy.
If IBM fired every single non executive US employee and re incorporated in Abu Dhabi, who would be shocked? Again, why not? It’s not really a company anymore in the classic sense of the world. It’s a few hundred attorneys and accountants.
Just what does IBM exactly do for a living? Sold the hardware to Lenovo and the chips to GlobalFoundries. So they provide Services? From experience their services are expensive and service is sub-par. They low-balled a bid to win a contract then proceeded to micro-bill us for many things as well as over charging by fraudulent amounts on storage and other things. Not to mention their service was horrible and the liaison management would merely quote the contract at every opportunity. Ended up costing us more than doing the work ourselves. We switched to another vendor who super low-balled the bid and is now in a bad position and losing money. I suspect the sales staff from this vendor knew their division would be sold soon and they underbid to win the contract, take their commissions then jump ship. The vendors staff reductions are hurting us and all we can do is demand the bare minimum is maintained per the contract. Found out they have been furloughing staff without telling us. We think those workers are on PTO but in fact, they aren’t being paid by the vendor for those days off. Now we have problems filling those outsourced positions because so many candidates fail the background and drug tests. Had a couple “incidents” where we determined the background checks were not done! Also found out our outsourced vendor outsourced some of it’s staff to a 3rd party! So now many of those working for the company report to the 3rd party company who answers to our outsourced vendor! Insanity? It is difficult to get staff who will work for peanuts apparently and those who will have criminal records or drug habits. The only good outsourced staff are those stuck when they migrated from IBM to the new vendor and the the economy and job market tanked. They can’t afford to quit or even wait a month with no pay to switch jobs! They are working paycheck to paycheck and taking unbelievable abuse. They are lucky to even be employed in this stalled economy…
So yeah, we got away from IBM but we are in just as bad a shape if not worse. Sure we saved money but we get even worse service than we had from IBM which was truly horrendous! Our only saving grace was we insourced our infrastructure which IBM was supposed to manage but we needed an RFP for any changes whatsoever. Now at least we control our data centers.
The business excuse that you can’t compete without outsourcing is not valid. You can compete if you are efficient. You need to shed all the excess fat. Start with all those morons who immediately jump into full time Six Sigma or Continuous Improvement or ISO9000, etc. Anyone of your staff who leave their position to fill a full time role supporting a McKinsey based project have just identified themselves as irrelevant. They aren’t working for you but in fact you are paying them to work for McKinsey! There are advantages to some of the McKinsey based methods but much of it is merely common sense. Fire McKinsey, identify what everyone is doing, get your staff to speak up about problems that need fixing and then actually fix them. Course you reduce staff, say you have 30 people who all day process workflow that simply goes away because you fixed the inefficiency? Well yeah you don’t need those people anymore! All it takes it true leadership and streamlining your management tiers. Hire excellent people and run a tight ship. Invest in IT, you must upgrade your systems if you have a hodge-podge of legacy systems that don’t talk to each other. Over the years these systems are the root cause of huge inefficiencies in workflow of all sorts. Things have changed dramatically in IT and if you still run these ancient monstrosities you need to replace them.
All too often you replace those “legacy” systems at great risk and at even greater expense, though. I know a fair number of companies who are now 4-5 years (or longer) into a promised “1-2 year replacement/conversion process”, and a fair number more who have effectively now abandoned the process altogether. Many have run into situations where the “latest and greatest” wasn’t stable, wasn’t secure, and didn’t deliver the promised results – or if it did it only did so at unexpectedly high levels of expense and/or low levels of efficiency.
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You’re right in that you can’t just sit still and let things pass you by, but it’s not usually a good idea to do a wholesale rip-and-replace either. You’re generally better off to replace the pieces that need replacing WHEN they need replacing, and to pretty much let the rest continue doing its thing for the time being. Sometimes this means those remaining pieces will hang around much longer than expected – perhaps indefinitely.
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And those legacy systems don’t just necessarily sit there gathering dust, either. Often the vendors that produced them are still slowly but steadily improving them – providing patches and updates with new features and such – but it’s incumbent on their customers to go ahead and implement these rather than to ignore them.
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I think NASA is still using punch cards for their software. They were last time I was working on it.
How long ago was that? NASA has to support a lot of long-term missions, and has archives of computerized stuff going back decades, so it’s no surprise that they still have a lot of older technology around. You can’t just snap your fingers and make all that stuff go away, even if you want to.
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I once worked for a company in the 1980s which was required by federal law to store punch cards and to be able to process them, too, if the need arose; most of the rest of their computer stuff was fairly state-of-the-art, though. It was very weird to see all that old punch card stuff stacked against the wall in the computer room, ready to go at a moment’s notice, and even weirder when you had to make use of it. AFAIK they were still doing this up until at least the mid-1990s.
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http://archive.wired.com/wired/archive/7.03/punchcards_pr.html
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Another company that I once worked with had non-computer production equipment that was already 100+ years old at the time I walked in the door. They’d spent a small fortune trying to computerize some of this, with only limited success, so they were now trying to go down a path of wholesale replacement. The brand-new, fully-computerized stuff was what I was working with, and we ran into a remarkable number of technical challenges with that – including the small problem that the overall quality of the output from it was really no match for the quality of the output from the ancient stuff. The company decided to let that slide, though, in the name of “progress” – but I don’t think that ultimately helped their bottom line any.
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Look?
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did you mean “Take a look?”
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AFAICT the only really interesting stuff from IBM lately is their neural net hardware, hopefully GlobalFoundries will be able to manufacture it.. I could see it being useful as a coprocessor for vehicle autopilots, augmented reality, and maybe even algorithmic trading, if they can get it to accelerate/reduce power for pattern recognition and processing.
Dynamic Automation – what a load of crock. Vast cost savings promised that haven’t eventuated when deployed even though they performed ‘cost take out’ (ie RA’d staff) in anticipation of savings. Any admin worth their salt will attempt to automate activities to make their life easier. ‘Dynamic Automation will pre-emptively action situations where the disk space is detected as running low’ Sorry, we already do that, we set up scripts over 2-3 years ago using Tivoli that goes through specified drives, folders etc that can be cleaned up and performs that activity before we get to the point where we’d get auto ticket generation.
Staff in IBM India have such a high turnover that some of my counterparts there are considered ‘senior’ in the team when they’ve been there for more than 6 months (it takes 12-18 months to see every aspect of this customer’s environment. Due to the customer’s requirement for background checks etc they might not actually get logins or be allowed to touch the customer systems for the first 3 months they are there. The cost of replacing these people every 3-6 months is not factored into the costs other than changing the requirement that they give 3 months notice when resigning – we’ve had people resign 15 days after starting. What we get is often very junior people starting with IBM (fresh out of a college) and get a few months of experience and then jump ship once they’ve got some experience to another company that will pay double for the same work they are doing at IBM.
I’ve been dragged into a Cloud proposal project for my customer because ‘they need a Windows guy’ – the project has no funding so they are pulling in people from normal support roles to help design and build the solution being proposed. Instead of working out what particular skillset they need from the ‘Windows guy’ and perhaps getting the right skills for the job they’ve pulled a name out of a hat and I’m it. And this seems to be happening on just about every account – teams cobbled together and told to spend at least 20% of their time working on Cloud proposals (essentially people reinventing the same things over and over.) Manager told me “The work you do now is a dead end, there is no future in it. Cloud is the future…” I’ve got a very good relationship with my customer and one of their recent comments was “Why should we trust IBM with these new technologies when you aren’t delivering the expected service on our existing technology?”
who is taking business from IBM? Is it HP? or Accenture? That would be an interesting analysis…
I forgot to add: ibm management neither leads nor manages employees. The only time they’re really engaged is for planning a resource action.
Everything is centralized so you’re just another cog easily replaced.
Uh oh… a sign of the times?
Although from looking at closedclub.co I don’t see it getting much traction… not much there .. maybe after you signup.. not!
Joined iBM in 1966 as SE then Mktg Rep and HQ Product Administrator. Never in management. I didn’t want it. Left on bridge in 1990. Retired in 1995. Had several Golden Circles and other accolades. While I was there, any questioning of management direction or Corporate/Divisional direction was taken as prima facia evidence of “negative thinking”. I was guilty of a lot of that. Joined IBM as a professional hire, not my first job. They never “captured my mind”. In many ways it was a. BS outfit long before more recent problems. Biggest problem was..IBM believed it’s own BS. Deadly. I believed all this was always in the small part of IBM I had real knowledge of. I thought somewhere there was a “”real IBM” doing things right and earning all the money covering the part I did see. I guess not. I’ve learned to trust my gut feelings much more. As a rep, IBM expected me to have “customer control” …obvious nonsense..I managed to have customer influence. From what I read and hear, that is a hell of a challenge today. I truly feel for those left in a very rough situation.
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Wait…. you mean to tell me all the Indians who took over the IBM jobs didn’t perform as promised?
What else it new.
Sun Micro, IBM, looks like Microsoft will be their next victim…..
When I joined IBM fresh out of college in 1978, a then IBM employee who had at least 10 years under his belt with the company told me a very simple – and over time up-holding truth – when the company wants to redirect focus – it has a re-org as the focus then becomes the chaos of the re-org vs whatever the item of focus before the re-org may have been. Basically, a smoke-and-mirrors tactic to keep the “real” issues from being scrutinized and addressed. Thus, it is not surprising that the “answer” put forth by IBM is a re-org. Unfortunately, this means the underlying morass truly needing to be addressed is given slight attention – if at all.
I am no longer with the company. I had 35+ years with them in technical roles. Once, folks with skills such as I had were held in high regard by IBM’s customers. That venerability has vanished as IBM chose to become “like the other technology companies” . And today, it is. It makes faint attempts at keeping it technologists ahead or, at least, even with the game. When I joined the services company in its infancy back in 1983, it was given, we’d minimally get about 3 weeks of education each year. That was on “normal” business hours. It was seen as a viable investment in its people and, in turn, the company itself. In some measure, it was a demonstration of respect for its employees and the valuable assets they were to the company. That practice went out also with Gerstner. Education is now a “fit it in on your own time” and, BTW, do it all by yourself. Forget anything remotely close to “hands-on” or “human-interaction”
Following other technology companies, the strategy followed became and continues to be – don’t bother training, kick-out, and replace.
For me, the steady decline of IBM overtime has been the loss of IBM differentiating itself from the other technology firms. A true maverick leader who truly wants to remove the tarnish that has befallen IBM would wake-u and realize this and strike-out to be something better than the “standard-faire”. It is stuck in being “just like everyone else” – and that simply said, is mediocrity – not being a market leader. f
So, will this “major” re-org make much of any difference? While, it would be nice to say otherwise, sadly, it likely will not as all that underlies many of the problems IBM is facing remain intact.
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