Third in a long series of columns about what’s wrong with IBM
The current irrationality at IBM described in my two previous columns and in the comments so far from about 300 readers is not new. Big Blue has been in crazy raptures before. One was the development of the System 360 in the 1960s when T.J. Watson Jr. bet the company and won big, though it took two tries and almost killed the outfit along the way. So there’s a legacy of heroic miracles at IBM, though it has been a long while since one really paid off.
There are those who would strongly disagree with this last statement. They’d say that with its strong financial performance IBM is right now in one of its greater moments. But haven’t we just spent a day and 2000 words showing that’s not true?
Successful companies aren’t heartsick and IBM today is exactly that, so the company is not a success.
Looking back over the 35 years I’ve been covering this story I can see in IBM an emotional and financial sine wave as rapture leads to depression then to rapture again, much of it based on wishful thinking. The first IBM rapture I experienced was pre-PC under CEO John Opel, when someone in finance came up with the idea of selling to IBM’s mainframe customers the computers they’d been leasing. Sales and profits exploded and the amazing thing was the company began writing financial plans based not only on the idea that this conversion largess would continue essentially forever but that it would actually increase over time, though obviously there were only so many leases to be sold.
When the conversions inevitably ended, IBM execs were shocked, but Opel was gone by then, which may have set another important precedent of IBM CEOs getting out of Dodge before their particular shit has hit a fan. We see that most recently in Sam Palmisano, safely out to pasture with $127 million for his trouble, though at the cost of a shattered IBM.
Thanks for nothing, Sam.
Opel was followed by John Akers who enjoyed for a time the success of the IBM PC, though Bill Lowe told me that IBM never did make a profit on PCs. No wonder they aren’t in that business today. Akers‘ departure was particular gruesome but it led to IBM looking outside for a leader for the first time, hiring Lou Gerstner, formerly of American Express.
Gerstner created the current IBM miracle of offering high-margin IT services to big customers. It was a gimmick, an expedient to save IBM from a dismal low point, but of course it was soon integrated into IBM process and then into religion and here we are today with an IBM that’s half IT company half cargo cult, unable to get beyond Gerstner’s stopgap solution.
Ironically, in Palmisano’s effort to continue Gerstner’s legacy, he destroyed almost every one of his predecessor’s real accomplishments.
Where will future IBM growth come from? Wherever it comes from, can IBM execute on its plan to grow new businesses using cheap, underskilled offshore talent? If Global Services is struggling to hang on, how well will this work for the new IBM growth businesses coming up? As IBM infuriates more and more of its customers, how long can IBM expect to keep selling big ticket products and services to those very same customers?
Global Services is a mature business that has been around for about 20 years. In IBM’s 2015 business plan big income is expected from newer businesses like Business Analytics, Cloud and Smarter Computing, and Smarter Planet. Can these businesses be grown in three to five years to the multi-billion dollar level of gross profit coming from Global Services? Most of these businesses are tiny. A few of them are not even well conceived as businesses. It takes special skills and commitment to grow a business from nothing to the $1 billion range. Does IBM have what it takes?
Probably not.
Do you remember eBusiness? Do you remember On-Demand? These are recent examples of businesses IBM planned to grow to billions in sales, businesses that no longer exist today. Some claim that Blue Gene is shortly to be shuttered, too.
Here’s a simple thought experiment. When it comes to these new software and Internet services, IBM’s competition comes from a variety of companies including Amazon, Apple, Dell, Google, Hewlett Packard, Oracle and others. Does IBM have an inherent advantage at this point against any of those companies? No. Is IBM in any way superior to all of them and thence in a position to claim dominance? No.
IBM isn’t smarter, richer, faster moving, better connected. They may be willing to promise more, but if they can’t also deliver on those promises, any advantage will disappear.
IBM is still buying profitable businesses, of course, imposing on them IBM processes, cutting costs and squeezing profits until customers inevitably disappear and it is time to buy another company. It’s a survival technique but hardly a recipe for greatness.
My opinion is that IBM’s services business profit will continue to decline as they try to cost cut into prosperity. Unless they find a way to grow revenue and provide a quality product (service), they’re either headed for a sell-off of the entire service business, probably to some Indian partner, or to a complete implosion. In short, it’s a race to the bottom and IBM is winning.
Yes but, readers tell me, that’s just services, not the real IBM.
There is no real IBM, not any longer.
The company has become a cash cow. You never feed a cash cow, just take money out until the cow is dead.
Hardly respect for the individual, eh?
If IBM is planning a 78 percent staff reduction, then that will of necessity involve all USA operations, not just Global Services. Hardware, systems, software, storage, consulting, etc. will all see serious staff cuts. This means IBM could be moving a lot of its manufacturing and product support offshore. Raleigh, Lexington, Rochester, and several other IBM communities are about to lose a lot of jobs.
Every non-executive job at IBM is viewed as a commodity that can be farmed out to anyone, anywhere.
IBM was once so special but today there’s little difference between IBM, AOL, or Yahoo except that IBM has better PR. All three are profitable, something we tend to forget when it comes to AOL and Yahoo. All three are effectively adrift. All three are steadily selling off the bits of themselves that no longer seem to work. When Global Services is gone, what will IBM sell next?
Everything else.
last!
Commodity is right – during my 6 years at IBM, I had a Serial Number, not an Employee ID. To all IBM employees reading this – get out now! Don’t wait.
The number on you badge, your serial number WAS your employee ID. It’s been that way for decades.
Yes, that’s my point. My chair had serial number, laptop had a serial number, and I had one. I know this is because they pre-purposed a system for emplpyees, but it also demonstrates a way of thinking that they never tried to alter the identifer.
Even during the holocaust IBM gave all the camp goers serial numbers… It’s the way they do things… (I’d say read IBM & the holocaust, but you probably know that one)…
Every place I’ve ever lived, worked, or visited either gave me an ID number or used the SSN number I was given at birth. “Get out now” may be good advice but the issue has nothing to do with employee IDs.
1 year was enough for me. I saw the light and got out it’s NOT a stable company, quite the opposite. I got my IBM on my resume’ and took a higher paying job. I did not like the culture of threats, job cuts, and constant pressure to beat out your next colleague or risk the loss of your job.
Amen to that Martin. I got out in 2006 (I was essentially forced out) – it was the best thing that ever happened to me!
You should send a link to these series to Warren Buffet.
He just invested tens of billions in IBM and praises them highly.
I am pretty sure Warren Buffet knows when to bail. Who knows, maybe he felt sorry for us in his old age and wanted to do a charity event for IBM.
In his first IBM post, Cringely said they’ll probably make their goal of doubling share earnings by 2015. Question is, how long will they last after that? I doubt Buffet is planning to sit on that stock for very long.
I worked for IBM briefly in Canada during the nineties. From the grunts to the managers there was constant bitching about how terrible Microsoft was all the while using Windows OS in their development computers. Nobody, except me, seemed to see the irony in that.
Subsequently, I worked for Microsoft in Redmond. I don’t remember ever hearing IBM mentioned. As an employee, I felt much more valued and trusted at Microsoft than I ever did at IBM. The company cultures were different as night and day. At the end the workers that get laid off at IBM might be the lucky ones
I was with IBM Denmark during the 00’s, and I can recall the picture of seeing enemies everywhere. As a technician, you really needed to switch your brain off during the long kick-off meetings, where some manager that you see exactly once a year pops up and gives a statement about “wanting growth”. I had five or six managers between myself and the country manager …
However, I don’t agree with Bob on IBM going anywhere anytime soon. As far as I can tell, managers are still buying lots of IBM software, and if they’re not, IBM buys the companies that produce the software, managers buy — and double or triple the licensing costs in the process. This can go on forever if managers continually accept horrible licensing schemes and support. Speaking about support: anyone heard the job title “Accelerated Value Leader” (AVL) within IBM? Anyone dare to guess what it is..? 🙂
Would the AVL be the English speaking contact for support to make it appear that the team is local?
“they’re either headed for a sell-off of the entire service business, probably to some Indian partner, or to a complete implosion. In short, it’s a race to the bottom and IBM is winning.” As Cringely states, this is a good probability, not exact science, but it could be the reason Warren Buffet has invested $10Billion in IBM.
Reminds me of an anecdote about a gipsy who tried to save by teaching his horse to eat nothing.
And just as he succeeded and celebrated the fact his horse did not need any food, the horse, miraculously, died…
The problem is financial people are running the world and creating bubbles to fill their pockets even more, where in reality the whole “financial business” is a zero sum game, adding no real value.
Only companies actually providing products & services are adding real value.
But of course, it is much easier to provide bogus value than it is to actually R&D and deliver products & services…
[…] Here is a link to the third […]
Among IBM’s many problems is that “respect for the individual” is often nothing more than a marketing slogan. In the groups where I worked, there was an explicit effort (stated by management) to reduce the need for and presence of “heroes”. The idea is that the “value” within the company is not within its people, but rather within process definitions and intellectual capital. As mentioned by other posters, people are intended to be nothing more than replaceable parts — “resources” that can be changed out and swapped at will. This effort manifested itself in employee pay (usually no more than industry average, by design), personnel assignments (one person is “as good as another”), and who got the axe during resource actions.
Have you ever worked with someone who is truly SPECIAL? Maybe it’s the salesman who brought in millions of dollars of new business…year after year. Maybe it’s the awesome engineer, or perhaps the quiet programmer who cranks out line after line of bug-free code. How about the guy who just has average technical ability, but who will stay with the customer on-site late into the night until their problems are fixed? That lady who can magically calm down angry customers? You know the kind…I’ll bet you’ve worked with such people before.
So have I. I’m pleased to have worked with legions of such people during my IBM years. I’m also displeased to have seen the way they were often abused. Whether it was shabby pay rates, lousy treatment by management, or just plain getting fired during resource actions, I have never in my life seen a company waste so much individual talent. Now that I look back on it, I’m utterly amazed…yet at the same time utterly disappointed.
For what it’s worth, IBM still has great people working for it. Thousands of them, in fact. Bright and capable and hard-working — you name it, they’re still there. But their abilities will never be realized as much as they could be, because the corporate structure and management philosophy will not support it. It’s a real shame.
Well said. When I came onboard years ago, I was utterly shocked at how poorly the management team could (or couldn’t) utilize the various degrees of talent scattered around the company. They simply didn’t know how to put people in the right places to succeed and this is because of what Bob alluded to in a previous article – the management didn’t understand the business, didn’t understand the technology and therefore didn’t know how to utilize the talent they had to drive meaningful success. One must remember, the average IBM executive is lucky to know how to boot their laptop every day. And they are the ones running a technology services company… it’s a frightening reality.
@Doomed-IBMer.. I couldn’t agree with you more.
I saw so much talent wasted during my sentence… err.. I mean tenure at the company… Management would subtly or not so subtly discourage employees from attempting to move to new positions. Up to and including using the “critical resource” card to stop a transfer. This was prevalent in the support areas where it always appeared that the groups were always short-handed. People were burning out, but were not allowed to move on and “grow”. In some cases, people got tired of getting transfers blocked that they just quit.
There was one area which people called the “Roach Motel” because you could check in, but couldn’t check out..
When I was told I was going to be paroled … err laid-off, most people I told thought I was joking. They were shocked that I was getting the boot since I had a skill set that was needed in many areas… Such is life in the churn and burn environment of big blue.
I also love how the manager says that you can try to find a new job within the company, knowing full well that it will be next to impossible to get a transfer when you have the RA mark on your forehead. I knew from a manager I knew well, who definitely had not drunk the kool-aid, that IBM quietly freezes most job postings prior to a RA to make it difficult to impossible for people to find new positions.
Even if you can find a position to apply to and get an offer, it will take executive management approval for it to occur, even if it is outside of the tower you are currently in. The want you out of their tower in the worst way since it reduces their headcount and would prefer to have you out of the company.
During my “blue time” @ IBM, I personally saw people who were “resource actioned” interview for open positions (because they were told they could), be a good match for the position and get an offer, and then said offer was rescinded because the manager extending it had not realized that when IBM says people marked for disposal can interview, they’re only kidding — they want those people gone, regardless of whether they actually do have useful skills.
When IBM is asked about resource actions and responds, the IBMers always give some chirpy baloney about the people who jobs “went away” being able to interview elsewhere in the company for jobs. It sounds so marvelous. “These people can seek employment elsewhere within IBM.” Who couldn’t like that? Talk to the people who found firsthand the difference between IBM’s rhetoric and reality. Being resource-actioned is akin to being blacklisted within the company, and it really is a firing.
Absolutely on the money. I saw the writing on the way in the middle of last year and made haste to get out of IBM and go elsewhere. It was the smarted decision I have every made in my professional career.
Employees being RA’d are told they can interview for “open” positions, but to my knowledge, not a single one of the people I knew personally ever got one of the available jobs.
Just a quick point of clarification, as I tend to agree with most everything that has been posted here. I had to execute multiple RAs as a manager in Global Services in the 2000’s, and while most folks that were “transitioned” did leave the company, I did have one employee who was able to find a job with another division within IBM. It was painful, and a struggle for all involved, but it did happen.
I also want to second the notion that IBMers are, without a doubt, some of the brightest, most hand-working people out there. In 7 years with the company, I can count on one hand the number of people who I felt were incompetent…say what you will about the company, but their ability to attract talent is admirable. And that’s the only silver lining in this is that (perhaps) this talent – if utilized properly – can keep the company afloat for the long-term. Sadly, I agree with most that this is not likely. Selling the remainder of my stock this week…
Waited until no. 4 – can resist no longer.
Regarding managers I think IBM makes a positive virtue of them NOT understanding what their teams do. They are their to impose the strictures from on high, not to understand the problems from below. So a team is just a bunch of resources. ‘A’ may know about performance improvement, but ‘B’ is available so send him. By the time the customer realises the contract is over and the bill is in.
The mystery is that customers keep coming back to be kicked in the crotch again. Is it because they have no choice because our commitment to open systems like Linux is a sham? Are they stupid? Or are they also part of the same risk averse cultures that pass the buck?
What is true is that we are less and less able to claim to be better than out partners (== competitors) as we are not trained, expanded, or helped internally in any productive way.
Why Am I Still Here? Because IBM has finally made me sick of IT and I don’t want to jump ship to another IT company.
@Former IBM Employee .. I agree with your phrase “replaceable parts”. I have a friend who had a manager who said that employees were like machine parts. When they wear out, you replace them. That manager may not have used those exact words… but it definitely tells the story of the mindset of the management who drank the kool-aid.
@Former IBM Employee: +5, Informative
I have never ever witnessed as many failed projects as during my years with IBM. And the frightening norm was to keep projects alive looong after all sane technicians/programmers could see that all hope for a healthy project outcome was gone. The reason was, of course, that IBM had a lot of time/materials contracts sitting there. Not that project managers didn’t know exactly where we were heading (because we told them). For some odd reason, many of the customers kept coming back.
Thank you for your heart-felt comments! My sentiments as well.
The one real thing the IBM has forgotten, is that its employees ARE the intellectual capital. I don’t know about anyone else, but when IBM started asking thiose of us with the deepest skills to start entering it into their “Social Business” plactform, creating Blogs, Wikis and other mediums within the infrastructure, I only enetered the simple stuff, I kept my intellectual capital to myself. I know ten times more than I provided for future IBMr’s. As an experienced IBMr, I had deep Software Skills, was an IT Specialist, Architect, Consultant, and Always could come up with solutions. My background taught me these skills, my tenure honed those skills and my common sense told me not to share them with everyone. The IBM processes, get in the way, slow things down and often are the reason competitive bids are lost. But hey, I am not angry, any more, I keep in touch with my old team members, those that are left, and from what I hear, working in a sweat shop would be an improvement. Recently I have “Officially” retired from IBM and will be receiving checks from the “Old Plan” for the next 40+ years, at least. And I am looking forward to every last check I can get….. HA HA HA HA, This Bud’s for you, IBM…
I heard another RA is coming in June, and a part of me fears job loss, but on the other hand, I am SO TIRED of the CONSTANT THREAT of RAs, I think it would feel a bit more like relief. I’ve lost a lot of talented co-workers to RAs. The environment could not be more demoralizing, depressing, and negative. The IBM execs know there’s a horrible morale problem, but they’re just turning the screw more on us, lowering appraisals, hoping to increase attrition in order to reduce severance packages.
Yes, it’s true, exec’s may be turning the screws more, lowering appraisals, hoping to increase attrition in order to reduce severance packages. But you can win at this game. Just lower your performance and become a small problem. Nothing blatant, just work less and have, hmm, let’s say, an opinion or two. If you want out, this is a twofold winning strategy for you and a total loser for the BluePig. First, you get your life back for a year or two, reduced stress, less working hours, etc and all for the same “great” pay. Eventually you appear on their radar and are offered a package (USHR119 – ISAP, look it up on W3) to leave. Same package as an RA, just less severance pay. Sweet deal, check it out. Otherwise, you can wait for an RA that may never come. I doubt the 78% will be offered the current RA deal, it will be reduced. So get out while there’s something left to take.
On IBM buying companies.. to me, they are looking a lot like CA – the place where software goes to die. We have had very bad experiences as DataStage, then Cognos, were bought by IBM.
Hi Bob,
As a current IBMer, i agree partially to what you are saying. IBM (or rather, its top management), is trying anything and everything in its power to ensure that 2015 plan is met. Not meeting it is not an option!
One fall out is heavy cost cutting. And, the job cuts you are mentioning is only one facet of this epic greed (or should i say, valiant effort) to meet a seemingly insurmountable target. Not sure what more plots are being hatched.
Like any other big company, IBM too has labs all around the globe (and, i work at a GMU Lab). And, by first hand experience, i can tell you that the skill set is anyway less in this part of the globe. It is only fair to say that there are highly skilled as well as those that aren’t.. every society — oriental or occidental, has such a mixture. It is quintessentially part of the grand demographic design.
As far as the non-executive jobs are concerned, IBM seems to be increasingly thinking that they are just ‘resources’, and can be replaced anytime. It is ironical that these non-executive skilled workers, are the ones who are working on the field, making things happen, adding value to the customers. If only they were left alone to do their jobs better!
IBM has a fat mid layer (several hundred VPs, and SVPs, and Directors, and all those fancy names), who are busy killing IBM’s business. These are the people who have spent decades at IBM, and if they cant have growth, and career, where else would they go. All those years for nothing? Their careers come above IBM (quite humane, perhaps). Cutting the fluff in the middle, might save IBM.
What is more poisonous is such culture is spreading, and some senior non-executive managers have caught the virus as well. They put themselves before their people. They threaten, lie to get things done. Uh!
IBM is heading towards a disastrous collapse. God forbid. In any case, IBM will still be remembered for years to come — as a case-study for management students, of how not to run a company!
(Hope this is really anonymous :-))
Correction: “… skill set is NOT in anyway less in this part of the globe…”
What’s truly poisonous is that IBM exports this culture of executive idiocracy to other companies. And not just the ones they acquire, stripmine, and destroy, but the ones that former IBM execs are hired into.
When someone I know has had their employer bought by IBM, or has acquired new ex-IBM senior management, I always offer them my heartfelt condolences.
A few of you mentioned PBC ratings. I would like to comment further on this farce.
Every year, the employee is required to fill out a portion of the PBC with their achievements for the year. At first glance, this sounds like a good thing. It’s the employee’s chance to prove their worth to the company and show Mgmt how they’ve added value to the company……….HOWEVER, the employee is never told that their PBC ratings have already been decided a month or two earlier.
The information the employee added to the pbc is totally worthless and Mgmt doesn’t even care about anything in there.
Furthermore, Your PBC has less to do with job performance than it does with saving the company money. You are graded on a bell shaped curve. The Mgmt teams get together and rates everyone to fit inside that curve.
The rating system is totally unfair, and is demeaning to each and every employee. It is not merit based, as IBM wants the employees to believe.
This year, top Mgmt came out with a new bell shaped curve graph. They were told that 60% of the employee population needed to fit into the category of 2s and lower. (Also lowering the numbers of 1s, and 2+s that could be given out).
Last year’s model allowed 60% to be rated at 2+ and above.
In IBM, this is called raising the bar. It allows IBM to withhold a bigger chunk of the variable pay award (Which is already far lower than other related companies in the industry). And it also allows them to forego giving the employee a raise for the year. It is another cost cutting exercise. But the employee thinks they don’t contribute enough to the company. They increase their hours and work hoping to get a better rating the following year. It’s a win-win situation for IBM no matter how you look at it.
Also, I want to add one more thing. The variable pay. Each year, each dept is given a ‘bucket’ of money to hand out to each employee.
Did any of you know, that the executives ask for a kick-back from that bucket of money? For lack of a better word, they ask for ‘donations’ from each individual pool to fuel more executive pay. This is totally voluntary on the part of each manager, but how many managers are going to bite the hand that feeds them. They end up giving up a portion of that pay back to the fat cats at the top of the food chain and the employee that was stiffed out of his raise for the year, is now also cheated out of some of that variable pay.
Disgusted IBM : in GBS it’s not a donation, it’s mandatory on the holdback.
In 2004-2007 it was about 1% average of all pay buckets that was kicked back to the GM level as a donation. With pay raises so bad now that must have been increased, I guess.
I hear some of the pay bucket hold back used to be sneaked back into an executive expense budget item so the executives could evade taxes at the GM and above level. They’d pay for incidentals out of that budget items expenses that HQ had banned for all employees or that couldn’t be deducted by corporate like Disease & Deformity free women (“D&D” contract staff) or foreign/customer bribes like the Japanese and the Vienna crowd got caught doing a few years back.
Anyone know if they are still passing older excess inventory through 3rd party subsidiary countries like Central America GSM to avoid US technology? embargoes?
grrrrrr… PBC and Variable were a crock when I was and and got worse. People I spoke with about it did not believe that management was appraising and I use that word very loosely, on a curve. They did not believe that the numbers were already decided weeks or months before and that it did not matter how hard you worked, you were not going to get that 1 you felt/thought you deserved.
I stopped busting my hump when year after year I saw other people who put out less and screwed up more get the recognition. Definitely not a way to engender passion to one’s job. It’s a wonder that morale is not lower than it already is.
As for the hold-back, I was told by a manager friend that it was mandatory for his group.
@IBM parolee:
PBCs as high as 2’s, I recall, seemed to be political; I suspected that there were a small number of them available from a director and each manager had to find some way to get one for an employee. This, I believe, made the 2+ a requirement (a 2+ is between a 2 and a 3).
I do not have any idea of how 1’s are rationed…
I recall speculating with a manager that they were required to hand out a certain number of 3’s in order to increase attrition (I seem to recall that two — or was it three — consecutive years with a PBC 3 would be turned into a 4… which rhymes with door) and he said nothing but sure looked like he didn’t want to agree with me… and he was one of a small number of managers that were the exception to the “Idiots Become Managers” mantra.
I’ve worked with four GREAT managers in my life… and the last one was an IBM manager.
As for GBS…
I’ve seen some of the work GBS does, like a file transcoder for mobile phone billing records exchanged with other companies…
How can a GLOBAL business, with a date and time field, leave out the f**king time zone? The practical upshot of this is, should that company operate– or front– phone switches outside their expected time zone, the differing times mean that some of the calls we get happened in the future. (It might have been less of a problem if the GBS folks had converted local time into UTC/GMT for this record. I was appalled when I looked at the functional spec the phone company forwarded to us since we had to interpret the file format.)
That being said, I suspect the IBM is like the Sirius Cybernetics Corporation where their minor design flaws cover the major design flaws. (I’ve seen an application Verisign developed that was a PERFECT example of this kind of principle.)
I had been inside IBM for almost 9 years and was caught in the undertow of 2007 RIFtide… and, despite the hard times as a red-shirt (contractor) since, I feel bad for those still caught up in the gears.
It might’ve been nicer if the patent I filed wasn’t abandoned just as the USPTO was going to issue it… and, no, it wasn’t a S/W patent.
People talk about the dead Watsons providing power to upstate New York by attaching generators to the spinning bodies, has anyone consider how much more power they’d’ve gotten by connecting up to Herman Hollerith?
The “spinning” has little to do with advances in technology, although they do play a role. It has to do with the unethical firing/hiring policies of one company in the 21st century.
I can only imagine what EDS people are thinking right now, reading all of this.
IBM has some very talented people, but they can’t keep them. With the change in the pension, people who’ve been there 12 years or less really have no incentive to stay there. With lack of promotions or even lateral movements, people aren’t able to reach their maximum potential. I really didn’t like performing at a higher level and not get a decent raise or a promotion for years to be told “Well, maybe there’s a chance next year.” I’m not going to stick around for another full year for something that might happen. I can provide a ton of innovation, but it’s like talking to a brick wall because the executives have their favorites and your manager won’t advocate for you.
Strangely they do seem to keep them in spite of it all.
I often think that the three Watson rules, which apply universally to ANY BUSINESS AT ANY TIME are still good. They are, for the shills who think that IBM is just about money…
Respect for the Individual
Go the extra mile to do a thing right
Spend alot of time keeping customers happy.
Today it would be translated, perhaps into Hindi, but would be thus.
Respect for the shareholder
Go the extra mile to keep the stock price high
Spend alot of time keeping shareholders happy.,
Anybody notice that the “individual” and ‘customer” are meaningless in my contemporary translation? That is because the true IBM believers who drink the blue kool-aid often say that anything “that keeps the stock price high is OK in their book” …. and forget absolutely EVERYTHING ELSE!!!
Anybody here remember W. Edwards Deming!
Yep, good point…IBM found that in a global market, it could no longer play by the old American business principles of decency. Those are gone and replaced by the focus on financials and Wall Street and stock price – that’s all that matters anymore.
I’m not sure you’re up on your business history, but the situation in 2012 hasn’t changed at all since 1870. If anything it has gotten worse.
Well when what you are selling is a commodity, you have to compete on price. Or am I missing something?
Missing one word – quality.
Good is rarely cheap and cheap is never good.
Those IBM TV commercials about Building a Smarter Planet (what is IBM’s definition of it anyhow?) and with an IBM employee saying “I’m an IBMer” is trying to put a personal stamp on the work IBM is doing really makes me wonder how many of these employees in the commercials are still IBM employees and if any are paid commercial pitchmen(women).
I don’t see how this planet is any smarter because of IBM.
Even a cursory look at the 2011 annual report (or the 2010 report, or the ones before then) can confirm that much of this article simply is not true. Margins are up. Net earnings have increased 50% since 2007. We have more customers and higher satisfaction than ever before. Global Services – GTS – is quickly becoming commoditized labor that can (and should) be sent overseas, while GBS is booming. There’s no 78% cut in headcount coming – you can count on that. The author here is trying to gin up pageviews with nonsense claims.
Things probably look shitty if you’re a 25 year veteran in STG. If you’re in SWG or GBS, on the other hand, the future is bright. The company is changing, guys. Those who don’t change with it can say goodbye.
Enron had an even better annual report.
There are rolling lay offs (ie firings) EVERY year , and most years twice. Rigged “low performers” are forced out (folks that go through this are demoralized) and 2 performers (the bulk of US IBMers) are pariahs.
The EPS is artifically inflated due to layoffs, stock buy backs, draconian rules on what can be reimbursed , not paying OT (IBM was sued, not sure if successfully, for this), nonexistent raises/ bonuses, and most of all- off shoring every fucking job they can, including all of US payroll function.
The senior executive team are a bunch of greedy, immoral bastards.
And what’s your beef with offshoring? If the company can get the work done just as well for a small fraction of the price elsewhere… hey, that’s business. I’m all for it.
There is a heroic assumption in your assertion there. Hint: it involves the words “just as well.”
Even if they could do it just as well, the underlying assumption is that it’s OK to harm communities for the benefit of a couple of rich banditos.
Thomas, spoken like another economic traitor. Good jobs being shipped to other countries and firing workers here! You support this?
I imagine it’s just for the worker’s jobs, not the management’s or executives’.
All Thomas said was “that’s business”. Most of our manufactured goods are made outside the country to save money. Should software be exempt? It may not be the best thing for the country but it spreads the wealth around the world. That’s not to say IBM is right; all things considered, we can love Apple and hate IBM even though both offshore.
And if it is your job that gets shipped overseas?
Pretty much everything except executives can be shipped there, and the only thing that is keeping executives over here is that they are the ones doing the shipping.
Just think about it: with webcasting, shipping logistics, conference calls, cloud computing, and everything else, and entire corporation of 300k people can be sent overseas and yet still sell in the U.S. And think about the 200k high paying scientific/engineering jobs that our country supposedly needs if it wants to compete in the global economy, now scrounging the want ads or working in the low end service industry.
Good for business, not good for the economic well being of the country.
The fact is that we simply live in a different world today than we did 20 or 30 years ago. Talent, hard work and innovation isn’t contained in national boundaries anymore. American workers have a lot of advantages, which is why a lot of the research, design, and higher value-add steps are still done here – but will the Indians, Chinese, Romanians, Brazilians and whoever else eventually catch up there, too? You bet. So we need to keep moving and improving here at home, too. Because it’s not just California workers competing against Texans and Virginians anymore, but also against workers in Kiev and Bangalore and Rio.
We should be giving out H1-B visas like candy to talented engineers to come to our country, because there aren’t *nearly* enough of them here. Those workers found a disproportionate amount of startups here in the U.S. and we all reap the rewards. In lieu of that, in a global economy, business needs to operate globally. That’s exactly what IBM has been doing for a long time, and I think it’s a smart way to do business.
Or we can stick our heads in the sand and pretend the world is the same as it’s always been. Good luck with that strategy. I choose to face the world as it is.
Does Thomas stand for Thomas Friedman by any chance?
Hopefully in the future “Watson” could replace the IBM “leadership.”
I’m sure it would do a better job too.
Of course we have a changing world, but what I’ve seen are that the H1B visas are for people who come over, learn the job, and then go back and train people overseas. The days of H1B visas for people to permanently work here are gone.
Also, given all of the layoffs in IT, you don’t think that there isn’t a skilled workforce out there in the US already? I know that in the Midwest the IT layoffs have gone on for over a decade now, and the depression on wages has gone on at least that long.
No, there is a skilled workforce in the US right now, it’s just not being utilized. Worse, that workforce is being laid off because at 60k a year they’re more expensive than a 10k a year employee in Manilla. Never mind that it takes 8 people in Manilla to do the same amount of work, with fewer problems, but it is cheaper there. In Europe they have problems there too, but their employment laws make it harder for companies to lay people off there. India, ironically enough, is starting to feel the same pain that people in the US have because of wage inflation making Manilla, Kuala Lumpur, and other places a cheaper alternative.
I’ve told high school students who ask me about IT to not bother with it. If you’re looking at a technical field for a career, you’d better do it for the love of it rather than for the money. For every Zuckerberg there are hundreds of thousands of laid off engineers and IT personnel.
In the US, we value the MBA rather than the scientist and engineer. And our corporations prove it every day.
@Thomas: And how does that require shoddy treatment of your employees? How does that require robbing the pensions? How does that require not reacting to abysmal results in employee satisfaction surveys for years? How does that require over-promising and under-delivering to your customers? Is any of that required to be a global company? I think not. These articles are not simply about globalization. They are about the decline of management culture in IBM and the mistreatment of its customers. And if you can’t see that there’s a lot of sad truths in Bob’s articles, then I really wonder in which area of IBM you work. Because you can see it from just about everywhere since years. Even many Global Delivery colleagues from the so-called “growth countries” said as much!
Dear Thomas, Of course margins are up, of course profits are up. Yes IBM has a higher Gross than in previous years. Can’t argue with you there, now lets looks at the underlying reasons, Gross Margin, IBM has grown by about 3-4% a year, but has bought companies that should have made it to the 7-8% range. HMMM… Next Margins and profits are up. 90% of that is due to Cost cutting, that same cost cutting that in that last several years has cut IBM US’s workforce by about 30%. That is a lot of fat to be trimmed, especially since none of it was above 2nd level manager (i.e. grunts)..IBM Middle management is bloated. Sometimes I thought there was 1 Director/VP for every 5 employees that sold, and of those 5, 1 was a 1st level manager that spent all of his/her time kissing butt to get to the gravy train that is mid level management at IBM. Oddly enough, those are the line items in the Financial Report that aren’t explained, the just show a reduction in expense. Have a good life up there in the ethereal plain that is your life.
And why do you care about this company? Why should anyone care about them for that matter? They certainly don’t care about you.
I took a buyout at the end of 1997, with 30 years at IBM to protect my retirement plan & medical. At the time I worked for a Sr. Director who worked for the CIO who worked for Gerstner. A year later I came back to IBM in the same job as a contractor/consultant. I was working for a manager, who worked for a Director, who worked for a VP, who worked for a SVP who worked for the CIO who worked for another SVP who eventually reported to the CIO.
In less than a year, Palmisano had destroyed the “flattened” management and added all these layers, who contributed nothing, because none of them wanted to “own” anything. It was all about not being responsible for delivering anything.
As part of the Global CIO team, I had the opportunity to sit in Randy McDonald’s (Head of IBM HR) office and listen to him spout off about how he only wanted people at IBM for an average of 5 years, and how people were just replaceable resources. It’s this style of management that has contributed to the most talented people leaving IBM, either through RA’s or resignations.
I now work for a Business Partner, and see the attrition that is damaging IBM. We find a good IBM salesman, who will work to close deals and deliver value to the customer, but IBM either forces that person out (to “manage income”) or they leave for a company that will actually pay them for what it’s worth, or they “reorganize” and lose all the customer knowledge and experience.
IBM is no longer the pre-eminent sales company that it was through the 1980’s. Global Services has always been a smoke & mirrors organization, with the true cost/value of contract hidden in a maze complex deals….
The “Gerstner Turnaround” was really all about re-branding “Mainframes” which had gone out of “style” as “Servers” and then selling more of them at less profit. Everything else was in cooked books and smoke & mirrors services deals.
Randy MacDonald — HE should’ve been outsourced after 5 years. Another IBM Executive VP loser who would never survive being “in the ranks.”
I was there when they cashed-out your pension if you were under 40 (which I was), and I instantly lost over $200K. However, not surprisingly, the executive mgmt’s pensions were untouched. I’m SO glad I got out of there after 18 years. TOXIC!
I feel so sad that this has happened to a once great company. I can only hope this and the many other blogs, emails, and other stories get to the IBM execs and they actually fix it.
Else Tommy Watson will roll in his grave for all eternity.
[…] Part 3: Magical thinking at IBM […]
Although we have relied on IBM for a number of critical applications, we have never forgotten the fact that Watson Sr was in cahoots with Hitler and the Nazi’s starting in 1933. https://www.ibmandtheholocaust.com/ , http://en.wikipedia.org/wiki/IBM_and_the_Holocaust that directly lead to the deaths of millions of innocent people of Jewish and other faiths.
Visit the Holocaust Museum in DC, you’ll see the IBM punch card machine right near the front door.
A company with this kind of legacy cares not about the lives of anyone, sadly many good people’s lives are about to hammered by IBM, certainly not to the gas chambers in Sobibor, but nonetheless abandoned.
Regarding “the idea that this conversion largess would continue essentially forever but that it would actually increase over time” while being finite is such an insidious and chronic aspect of business, so much so it has even infected how governments have thought about growth. It’s really an absurdity that has troubled capitalism, especially as monopolization has increased, so much so that there needs to be a reckoning. Sadly I doubt we’ll see such a reckoning short of absolute and unresolvable (without drastic replacement) economic system failure.
Doesn’t anyone understand that although IBM’s profit is rising revenue is way down. This will continue as long as IBM keeps off shoring american jobs. Visions of IBM will end up with one building (in Armonk) and the only people that will be there are the executives. Because of this, we as Americans have no loyalty, no job securement and lost proud of who we are and we stand as AMERICANS. What a horrific show of greed
Understand your point but wonder if you might be an IBM employee who is a naturalized citizen of the US. (Or perhaps not.)
But thats what America stands for: Greed. Its no great secret. America is being poisoned by its own dog food, to mix metaphors. 🙂
OMG, this article read amazing! I will have to tell all my friends about it!
As a recent parolee (RA) and many years in the system, here is what happens (or what happened to me)
TOP performer, etc…
3 times I was in the hot seat for RA, and the third time wound up to be a charm. BUT before every one I could see this pattern. Noone talks about it so here goes.
You may see that you are temporarily assigned to another manager, or in blue pages that you are assigned to a different group in the same division. You may not even be told about it, just that bluepages is updated. Not all of your teammates are “moved” in blue pages, just some. You try to figure out what you have in common with them, it may be age, time in service, but nothing is conclusive. You ask your manager why you are suddenly moved under a new manager, they call it either nothing, or a realignment, or tell you that there are some HR technical problems. Basically you are stonewalled.
Sometimes at the same time you see executive movements, new blood comes in, sometimes people are promoted rapidly (peers become managers).
There was one quarter during the churning event (what I call it) where I had 3 different managers (guess they could not decide where to put me LOL)
DURING this churn things are strangely quiet and peaceful, managers do everything to make you think things are great (good time to take vacation, stay low, relax).
GET ready for the churn.
Manager may start sending you jobs to apply for, but manager may also just start limiting your workload (you may not have more than 2 hours a day of work to do, this is annoying as hell to a top performer, it is very boring, so it is a good time to take some online web classes)
Once you get the news
You have x days to find a job (30/60) or (else) or
I am sending you a package and you have been selected
then you know it is real, TAKE A LOOK then at blue pages, you may be in a newly formed group within a division, the division may be new (merged from other divisions)
I believe that this movement is done in order to skirt the WARN act and other laws against age discrimination.
Tough to prove though
Do not worry about PBCs as they do not matter. Everything is decided at Fall planning time at IBM.
Rigid business systems (the kind it seems IBM continues to use, seemingly to replace employees) have no flexibility.
You need flexibility and adaptability to survive in today’s business climate.
IBM’s culture of algorithmic thinking is going to be their downfall. Might produce temporary results, but like most “bubbles” of the economic past, will eventually “pop”… leaving IBM scrambling for solutions it doesn’t have.
I have been working for 8 years in the Argentina GDC now …. When I started (2006) there where no more that 200 employees … By 2010 there where almost 4000 , to accomplish this they started to hire anyone , if you could start a pc you where in … if you where out of high school , in …. They would hire people who didn’t know any English at all for american accounts…… Give 20 year old kids a job for around 300 U$D /month and would make them sit in a chair for 3 months without a computer to work on and no training at all ….. They had to build 3 buildings to hold the huge amount of employees to the point that sometimes I would be waiting for around 1 hr to get a parking space in one of the buildings …. Right now there are around 1000 employees left and 2 of the 3 10 story buildings are closed …
There is no more hiring these days and when people quit it is taken as “account efficiency” … This is due to the fact that Argentina has a 30% anual inflation and the cost is getting higher and higher , so every single position that is lost here is being shipped to cheaper country’s like India … I guess they do the exact same thing as here , get 1 guy with experience that does all the real work and surround him with 20 kids to ask him questions ..
Anyway , you should add Novartis to the long List of accounts that are not renewing their contracts with IBM …