Soylent Green is the punchline of a bad joke told to me at the breakfast table by Channing, my 13 year-old son, but in a way it is fitting for this column about women executives in danger of being chewed-up by their corporate machines. And kudos to you if you caught the reference to Edward G. Robinson’s final film — about an over-populated world where people are recycled into cookies.
First up is Yahoo CEO Marissa Mayer, whom I’m told is rapidly losing the support of her hand-picked board. Mayer, who is expecting twins, will probably not be returning from her upcoming maternity leave and Wall Street has begun speculating about possible successors.
Hers would have been a tough gig for anyone. Yahoo is asset-rich while at the same time unable to execute on its re-spackled but essentially unchanged business plan of being a web portal (remember those?). Yahoo’s Alibaba and Yahoo Japan stakes make it a target for activist investors and Mayer’s desire to show she can run an up business in a down industry was probably a fantasy right from the start. Still, she was doing what she thought would work.
Well it didn’t work. Getting the activists off her back by spinning-off Yahoo’s Alibaba stake not only comes with a big tax bill, the board has finally started to realize they were spinning the wrong part of the business. What really has to go is the depreciating asset that has come to be known as Yahoo’s core — all the parts of the company except Yahoo’s Alibaba and Yahoo Japan holdings.
But don’t expect Yahoo to just flip the plan, keeping Alibaba and spinning-off to investors those parts of Yahoo with a yodel attached. I suspect that ship has sailed. What I think more likely is an outright sale of the legacy business to one or more Private Equity funds. They’ll take private what we all think of as Yahoo, strip it mercilessly of under-performing businesses and luxury assets (bye-bye Katie Couric), load-up with debt that shriveled carcass which they will then sell piecemeal to the only two real players left in the portal business — Google and Microsoft.
What remains of Yahoo after this process is complete won’t be an Internet company but rather a very wealthy financial entity worth $50 billion or so. In short, a completely different company and one Mayer probably wouldn’t even want to run. And that suggests a completely different type of CEO for the successor company which makes me suspect that the candidates being considered in Wall Street speculation are either short-timers there just to engineer the Private Equity sale or they are the wrong folks for the job.
My candidate to run post-Yahoo is Kleiner Perkins honcho John Doerr. This is just my opinion, mind you, and not based on any insider information or discussions with Doerr, who is probably as surprised as you are to read this. But I think Doerr could use a change of venue following the Ellen Pao mess and this would give him an amazing third act in his Silicon Valley career. Just imagine the impact on Silicon Valley and the technology world of putting a very smart billionaire in his own right who has nothing left to prove in charge of investing $5 billion per year in young companies.
The next female CEO in jeopardy is IBM’s Ginni Rometty. Given all the negative things I’ve written about IBM since 2007 this should be no surprise, but the story is more complex than simple mismanagement. I’ve decided Ginni really believes in what she is doing. It’s still the wrong plan and I think bound to fail, but I now believe Ginni has decided to take even bolder moves in the wrong direction — moves that should very quickly prove that one of us is right and the other wrong.
I’ve been told another big Resource Action (IBMspeak for layoff) will be starting in January, ultimately costing the company up to 30,000 heads. This will be accompanied by a change in IBM’s 401K plan, either reducing or eliminating completely the company’s matching funds. The cuts will be coming mainly in IBM’s Global Technology Services (GTS) division which is responsible for 60 percent of the company’s revenue. These announcements will be accompanied, no-doubt, by additional cloud investments, the idea being to sell investors on the idea that IBM will make up in its cloud business what it inevitably loses in GTS.
This will represent a significant strategy shift for IBM. For one thing, it’s Big Blue essentially abandoning its largest current business. GTS customers are already unhappy with IBM’s quality of service so what will be the likely effect on those customers of taking 30,000 more bodies from their already lousy service provider?
There are three ways I can see IBM playing these changes in GTS. The BIG PICTURE will continue to be IBM committing to cloud and making necessary changes to go with that, but on the more tactical level IBM can: 1) simply say it is getting out of services over time, customers and employees be damned; 2) recommit to GTS but as a significantly smaller operation offering white glove service to only IBM’s highest-margin customers (in other words abandoning many accounts), or; 3) make the headcount reduction not through a Resource Action but by selling outright some or all of GTS, generating more cash to put into cloud. Expect any GTS buyer to be Asian.
No matter which course she chooses Ginni will piss-off a workforce that already distrusts her, but she’s so far down this path-of-no-retreat that it probably doesn’t concern her. 2016 is the year that will make or break Ginni Rometty as IBM’s CEO and she appears to be okay with that. I think it is going to be a disaster but you have to kind of admire her all-in attitude.
Remember IBM’s CAMSS (cloud, analytics, mobile, social, security) strategy? I think we can expect some strategic streamlining, rolling at least two or three of these letters together. IBM is all-in on cloud so that won’t change and their security business I think has good prospects, but analytics, mobile and social are all at risk because it’s difficult to show financial progress in those areas. IBM hasn’t been especially successful generating new analytics business, their mobile strategy is too dependent on Apple (a total loon in IBM’s view) and IBM still can’t even describe its social business, much less break out financials. Ginni will find a way to spin this change, too, hoping to buy time.
But the bottom line for IBM seems to be a future in cloud and security (and mainframes, as a couple commenters point out below — that’s not going to change, but neither is it going to get any bigger). To do that with characteristic Armonk gusto, Ginni will use the 401K savings as well as division sales, if any, to bankroll a major cloud expansion, hoping to leapfrog Google and Microsoft and move into the #2 position behind Amazon in that sector. Alas that’s #2 in a business that’s nowhere near as big as what IBM is abandoning, so the company as a whole will continue to shrink. Share buybacks will continue, the dividend will continue to go up, but there will come a point when IBM is a $40 billion cloud and security company. Maybe that will be a good thing, but what it won’t be is a consequential thing. It’s the end of what used to be IBM.
And finally we have one more female executive on the hot seat — Diane Greene, who was recently hired to run Google’s enterprise cloud business. My friend Om Malik has a good analysis of this move here and I agree with him that it won’t work, though I have a few extra reasons why that Om doesn’t mention.
When a baseball team is performing poorly one of the cheapest moves the owners can make is firing the manager. It shakes-up the squad, hopefully scaring the high-salary players into trying harder. And it almost always works, especially if you hire a new manager who is just as good or better than the old one while — this is key — being obviously different in some major way. Well Diane Greene, who comes from VMware, is clearly different from the usual Google executive hire. It’s not that she’s a woman but that she’s coming from a high position in a company with a very different corporate culture than Google’s. “This time we really mean it,” is the message that is supposed to be conveyed by this hire.
But it still won’t work. Google’s enterprise cloud business performance has been miserable, Om points out that VMware pretty much missed the cloud boat, and Amazon Web Services has a huge lead while Microsoft has an installed base of loyal developers that Google simply does not. It will take a miracle for Greene to be really successful in her new job and miracles have been few and far between lately at Google.
Here I’ll throw a couple more logs on the fire. Remember IBM appears to be about to bet the company on enterprise cloud computing. Google will have a hard enough time making headway against Amazon and Microsoft, but throw-in a kamikaze Big Blue and it looks even worse. But the biggest problem Diane Greene faces at Google is Google, itself. The company’s heart is just not in enterprise cloud. It never has been.
If you’ve ever pitched a startup idea to a really successful tier one venture capitalist — some billionaire who sits on the board of at least one iconic company they see themselves as having helped found and made successful — you’ll notice that they tend to hear your pitch through a filter that emphasizes how the startup will impact their already-successful #1 portfolio star. Your idea can be new and fresh and exciting and truly world-beating, but if you are pitching it to someone who got really, really rich from Yahoo or Google or Facebook, they’ll concentrate first on what this means to Yahoo or Google or Facebook. That’s because their incremental upside in that unicorn is bigger to the VC than the risk-adjusted upside of your little startup is ever likely to be. And that’s exactly the problem Diane Greene has trying to get Google to see its enterprise cloud business as something important to the company.
What’s important to Google is search, ad sales, and YouTube. Cloud, to Google, is an internal service that enables these other revenue generators. Slugging it out with Amazon may sound exciting, but what impact will it have on search, ad sales, or YouTube other than to distract internal developers and put those services at some risk? That’s why Diane Greene will have a very difficult time succeeding at Google, because her very success will be seen internally as a threat to the company she is trying to help.
It’s not a job I would want.
What about HP(E)? any comments on them?
HP is just as screwed as IBM. Having split one big weak competitor into two smaller weak competitors there’s not much positive to be said. I suppose I should have thrown Meg Whitman onto my list but the column was already too long.
Bob, you could just do a mini-post of the HP Inc and HPE split and cover both Meg’s position in this current post as well as any other thoughts about HP and ex-EDS (now called HPE).
Let the article go long, Mr X. I’ve got time. I really want to read your analysis of HPE. How about making this a multi-part series?
Also, how do you envision that IBM can ever leapfrog Microsoft to become #2 in cloud behind AWS? I can’t imagine how that could ever happen. Public cloud is a fast-moving, low margin, high volume business. IBM is none of those things.
Only thing I can think of is this: sell GTS to China and, in exchange, get some exclusive rights to build out an IBM cloud there. This is basically what they did when they sold the X Series business to Lenovo and got some GTS business in China out of it.
Your thoughts?
I never wrote that IBM WOULD leapfrog anyone, that’s just their goal. It won’t work.
Please do one on Meg Whitman’s presentation of HPE’s logo! Please show why the logo is irrelevant to HPE’s future!
It’s a hollowed out square. 🙂
She also went to great length why the two “t”s were joined. I don’t know why you’d miss how symbolic that is, and its obvious meaning… 🙂
Let’s say that IBM’s “bet the farm” strategy on Enterprise cloud fails (likely scenario). Who benefits the most?
HP – no way.
Microsoft – their cloud business would gain significantly. The rest of the company, not so much.
Amazon – incrementally but they are/will be the leader anyway and one less competitor could let them raise prices and get better margins.
Dell – big winner. If they successfully integrate EMC they have the potential to become a turnkey provider of HW and services that Enterprises still need and IBM has been failing to deliver.
Oracle – not so much. But maybe they would buy some pieces on the cheap.
Did I miss anyone?
Maybe IBM should buy out Yahoo!?
It would be a match made in heaven!
nobody should buy Yahoo. there is no reason for being for the company that, in the 1990s, had a reason for being. invert the operation, call that Y Asset Holdings Management I LLC or what the hell ever, and just can the Yahooligans. park the URLs until everybody forgets them and then stop paying the fees. what the hell is all this “Megashoosis should buy Defunctland!” nonsense, anyway? why blow good money on a crap competitor when you can outmaneuver them and let them die for free? that’s as silly a business strategy as “hey, I got a big tax break, I will hire another 10,000 people instead of buy another island.”
As for IBM… geez, it’s another Harvard business school case study! “The Black Hole of Neglect” or whatever. bye.
If you’ll read my IBM book you’ll see that the Harvard Business Review LOVES IBM. I think they are wrong but couldn’t ignore the analytical competition.
Robert, you have been awfully quiet about the one usually break-even part of IBM, z Systems (this week’s name). What do you see WRT to that line of business? Remember, 90% of the world’s finance goes through z/OS, z/TPF, z/VM, z/VSE, or Linux on z.
Good counter-argument to Bob’s doom and gloom scenario for IBM: https://www-03.ibm.com/systems/z/ . I wonder if or when Bob expects 90% of the world’s finance to jump ship.
Why would they jump ship? Z-Systems is a nice business for IBM with 25 percent of sales and half the company’s profits if you include the full ecosystem. But it’s insulated in many ways from the rest of the company and is also unlikely to get much bigger. So that $40 billion IBM will probably sell mainframes, too. If there’s a mistake here it’s in believing IBM’s BS that mainframes are going to somehow play in the cloud space but they can’t. The cost per transaction is 10X higher than Intel servers and that isn’t going to change.
Re: “Why would they jump ship?” The impression I got from all of your previous IBM articles, is that IBM is cutting costs to increase EPS, thereby losing customers, which I assumed included the financial institutions. Is that too broad of an assumption?
The mainframe business is entrenched. It is very difficult and expensive to move applications from the mainframe to another platform. For year to come IBM can expect more business from those customers.
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IBM has been cutting heavily in its “services” divisions. This is where IBM’s customers are fleeing in large numbers. These are both mainframe and non-mainframe companies. The mainframe customers are keeping the mainframes (because they have to) and are finding others to support them. The non-mainframe customers are completely leaving IBM.
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Who are IBM’s customers for the cloud and other strategic services? They are the companies who run most of their applications on Windows and/or Unix. THOSE are the customers who are the most impacted by IBM’s poor “services” business. They’ve experienced IBM’s services first hand and made the painful decision to flee. How open are they to return to IBM?
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Fool me once, shame on you. Fool me twice, shame on me.
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Rethink that cost per transaction, please.
Yes, for small businesses the mainframe platform doesn’t make sense financially, but for large and medium growing enterprises, especially with the growth of Linux (see Nationwide Insurance, for example), the reduced personnel requirement of a z box versus a bazillion Intel-based servers drives the cost way down.
Show me the numbers. Specifically, give me THREE examples of IBM mainframe customers who will document their transaction costs. I can see a circumstance where what you write might be true but it would have to be an enormous company with far more varied IT usage than is the norm. Mainframes are expensive on a per-transaction process compared to Intel servers but they can save labor costs for the right customer and it’s saving labor costs that is driving big companies toward the cloud.
In a response under your earlier Z-Systems post, Bob said “Z-Systems is a nice business for IBM with 25 percent of sales and half the company’s profits if you include the full ecosystem. But it’s insulated in many ways from the rest of the company and is also unlikely to get much bigger.”
Former IBMer with 21 years in STG working primarily on 2 entrenched platforms: AS/400 & System z Mainframes. Both successful. The AS/400 cash cow died a slow death. Mainframes will die a slower death, but that too will come.
You would be shocked and appalled if you knew how little IBM invests in that business. The people in charge at IBM are simply not equipped to run a technology business.
If GTS is such a big profitable business with unhappy customers and scads of qualified and frustrated employees being turned out, why isn’t some company picking up both employees and customers and competing with IBM by offering higher quality services? Is this business based on obsolete hardware such that replacement WITH newer stuff reduces the need for the GTS services?
Because the other competing companies suck at providing services almost as much as IBM. That entire sector has been in a steady race to the bottom. They fire older experienced workers and replace them with cheap offshore workers. The results are terrible across the board.
The race to the bottom is mainly in terms of quality. Paradoxically revenue goes up.
If you employ experienced, battle grizzled veterans. A greybeard comes in, sorts out the problem and moves onto the next job by the end of the week. Not great for revenue, nor profit.
So the management “resource adjusts” him – and hires some H1B’s at a third the salaries. The “team” comes in to the client. By the end of the week, they have barely figured out to operate the coffee machine. By then of the month they make some progress, but not enough. So they pull in a project manager to manage customer expectations. How I love that term &-( They put on more “resources”. By the end of the quarter they have convinced the client that the problem is really complex and that additional hardware is required, and then software and then packages. By the end of the year, they have 40 people working flat out. Still nothing usable delivered. Now that’s how you have a big profitable business. Shame about hardly ever delivering results: http://spectrum.ieee.org/static/the-staggering-impact-of-it-systems-gone-wrong
In the past decade I was a big IBM GS customer and this is exactly how it goes. Once being a proud member of the IT industry, I felt sick about the attitude and stopped talking (passionately) what I do for a living. Fast forward 10 years and I almost jumped ship. However I don’t know much else in order to make money. Now being self-employed, serving a niche completely neglected by the IT corporations and having a blast.
In another life, I was one of those IBM GTS battle grizzled veterans who went in and cleaned up the mess, and you are correct, this is exactly how it was. Fortunately I left of my own choosing before they had the chance to slap me with an RA phone call. Wow, drafting and delivering that 2-week notice was pure joy.
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I agree with Cring, they are complete toast as a company. The same miserable (non-technical-corporate-politician) management team spinning repeated prognostications of their ‘strategic initiatives’ and ‘moving to higher value’ is enough to cause digestive malfunction. Amazing that for this long, Wall St. has bought this garbage but my intuition says this is changing. For anyone having spent more than a few years on the inside, the charade is as clear as looking through a glass of spring water.
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Even worse, they will continue to try and sell this stuff to companies whom they have royally pissed off in the past 10-15 years. Not sure if that is narcissism, denial, desperation, or a combination of all three.
> @Peter B: Once being a proud member of the IT industry, I felt sick about
> the attitude and stopped talking (passionately) what I do for a living.
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I’d definitely discourage my daughter from working in the computer field. Unfortunately I’m too old to start working with the highway department, but at least that would be HONEST work…
Indeed, nice synapsis of the IBM GTS SO contract “delivery”.
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As a now-retired 5-year IBM employee, I experienced this firsthand and observed many other iterations of it. In my case, I was one of 120 who were re-badged to IBM as a part of the SO contract terms. Roughly 85% of us had a 1-year employment guarantee, and those deemed “business critical” had 2-year. Immediately they downgraded some from exempt to non-exempt, and within 1-2 *quarters* they began dumping people as the work was moved offshore.
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I moved into a new position of my own choice, and after 1.5 years that job was offshored. Management moved me into a job I hated, then after only 6 months I was RAed. The very same day I was un-RAed, and management again moved me into a similar job that I also hated. Fortunately I was able to retire within a few months.
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Horrific, though I know it was worse for others.
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BTW, the internal GTS tools and procedures were nightmarish. Cases in point: SA&D, ITIM Vault, CIRATS, RCA.
Hahaha SA&D and ITIM Vault ugh what STUPID tools. Total waste of time to satisfy internal auditors. You could enter garbage into those dumb tools and no one would notice the difference. More time was spent on dumb tools and procedures than actual work. I am so glad that I left IBM. I hate even thinking about my time there. Such a waste of my time. I hope they crash and burn. Especially that peroxide queen they have running it. The customers were the real losers. If they only knew how much time was wasted on nonsense and what little work was actually done.
It’s hard to pick up IBM employees to serve existing customers. Part of the severance package is a one year waiting period before you can work for anyone that is involved in IBM deals. This kicked my ass in the resource action I got caught up in about 2 years ago. IBM business partners would go down the road and get ready to hire and then that clause would come up, bye bye offer. Some skirt around it if they’re big enough but small business partners don’t have the juice. Starting something up will get the army of IBM lawyers crawling up your ass – notable exceptions exist if that startup is serving a really big customer (like PWC, yeah, I heard about that).
Actually business partners of IBM win. Lower rates than GTS, less bureaucracy, more delivery. And sales outside the Fortune 100 will move there too, as the GS&A costs are lower as well. Many RAed IBMers are ending up at business partners as well. Some good IBMers are even leaving for partners, and I’m not sure it is a bad move for them!
First thing that comes to mind when IBM’s CAMSS (cloud, analytics, mobile, social, security) is mentioned is that it is an anagram for SCAMS.
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Interesting column as usual, Bob! Thanks!
So when Yahoo dissolves, what will happen to all those @yahoo.com email accounts — like mine???
re: Yahoo emails, I’m thinking the “solvent green” metaphor is *really* apt…
I would guess those email addresses are a company asset which could be sold to Google, Microsoft, or even a domain name provider like Network Solutions or GoDaddy. You would see their ads or pay them instead of Yahoo.
Well, best case scenario, they stopped getting hacked sending out spam on an ongoing basis 😉
As it happens, in sports, changing leadership doesn’t reliably improve performance (here football, not baseball): http://freakonomics.com/2012/12/21/is-changing-the-coach-really-the-answer/
“We find that for particularly poorly performing teams, coach replacements have little effect on team performance as measured against comparable teams that did not replace their coach. However, for teams with middling records—that is, teams where entry conditions for a new coach appear to be more favorable—replacing the head coach appears to result in worse performance over subsequent years than comparable teams who retained their coach.”
I somehow think changing company management has a much greater chance of being impactful than for a sports team, so maybe the whole metaphor just needs to go.
Perhaps Flickr could be spun off into an independent company. A Flickr Pro account is still worth getting, the copyright management tools are very good, and it’s generally a very good online photo management site.
I’m not sure Amazon is so strong there as you imply. Google is cloud. It’s just not doing what Amazon does, selling cloud. Google gives it away, which may actually be the future. It’s like people used to pay for email, companies did anyway. I use AWS, but I’m hardly loyal. It’s not like say learning Java and you don’t want to switch to C#. It’s more like Ford and GM. Some large companies might have a hard time switching, like the post office has a contract with GM that goes back decades. But the big companies using AWS, like Netflix, aren’t so well established. Indeed, Netflix was one of the post offices biggest customers a few years ago. Netflix probably peaked already. Amazon has their own streaming but do they make money? The situation reminds me of the dot.com bubble when certain things seemed set but they were all dependent on each other.
A point missing from the above discussion is – what do these women have in common(aside from the fact that they are all blondes)? Answer – They are all in thrall to Wall St. This has nothing to do with the fact that they are women. Their predecessors were all men – none of them blonde – but equally willing to jump as high as Wall St demands(in his book about IBM’s demise, Mr. Cringely emphasizes this). Volumes have been written about the inverse correlation between CEO compensation and company performance. They have no stake in the company, the community or the country – only in the stock price. Some even say that only sociopaths have the prereqs to qualify for the corner office in the modern corporation.
This is of interest because Bezos – who made his bones in the financial business and by all accounts is no angel – doesn’t give a damn about Wall St. One can’t even be sure he cares about the cloud business per se – after all, it’s merely an adjunct of Amazon’s core competency, ie, selling stuff to us at the lowest price, undercutting the competition and growing market share. He claims that all of that is only a means to his real end – space exploration.
Perhaps these folks should emulate him. Their notion that selling their companies off in pieces will somehow save their sorry butts reminds me of the desperate conversation between George Bailey and Mr. Potter – “ George, you’re worth more dead than alive “. George, at least, had the good sense to resist Mr. Potter’s grasp. Tis the season.
GhostofTJW
This is a good point. I don’t think it’s any mental problem though, they just do what they’re paid to do. People always do, one way or another.
Re: “Amazon’s core competency, ie, selling stuff to us at the lowest price”. I often find lower prices, including tax and shipping, by Googling the product, and looking at all the top hits (ignoring the ads of course). Amazon is just a marketplace, like eBay, but due to it’s popularity often shows up as a top hit. If you really want the lowest price, you have to do comparison shopping on the web. All of the top Google hits, below the ads, are there for a reason, people go there, so you need to find out why.
“What remains of Yahoo after this process is complete won’t be an Internet company but rather a very wealthy financial entity worth $50 billion or so. In short, a completely different company and one Mayer probably wouldn’t even want to run.”
………..and this morning,s news:
“SAN FRANCISCO — The board of Yahoo will discuss potentially selling off the beleaguered Internet company’s core business during a series of meetings this week, people briefed on the plans said on Tuesday.”
……….so, the question is:
“Was Bob invited to the Board’s meeting to layout the details of the plan?”
No invitation yet, though my plan has been presented here and is easy to find. I’m just thrilled to have beaten the Wall Street Journal to the story by two days, which was a stroke of luck given I’ve been so busy building Mineservers and had been sitting on the Yahoo story for a week!
Can somebody please name five (5) female CEOs who successfully presided over dynamic, growing companies, in the history of the world? Meg Whitman is the only one I can think of, and even her track record is suspect given HP’s current fortunes. The best any of the others seem to do is skillfully manage corporate decline. The idea that Carly Fiorina is actually being considered as a candidate for President is especially amusing, given that she presided over HP’s crash and burn.
She’s just the token female candidate so that the Republican party appears less sexist as they run their smear campaign against Hillary Clinton. Watch for her to stay in the race even as male candidates with higher polling percentages drop out of it. She’ll get a cabinet job–Secretary of Labor, perhaps–or even the vice presidency for her show of loyalty to the GOP.
LOL, you hardly need Carly Fiorina to facilitate “smearing” Hillary. Hillary smears herself. If she didn’t have the media running cover for her 24/7/365 she wouldn’t stand a snowball’s chance.
You mean “it was the video” Hillary. No smear necessary – just remember 4 dead Americans because she refused add’l security requested. What was it – 600 times?
Here are 50 woman CEOS of INC 500 companies. These are very high growth companies and most of them you won’t recognize but they are very successful: https://www.inc.com/elaine-godfrey/2015-inc5000-the-50-fastest-growing-women-led-companies-in-america.html
Here are woman CEOs from the S&P 500, so these are larger companies. You’ll recognize many: https://www.catalyst.org/knowledge/women-ceos-sp-500
Here are women CEOs of Fortune 500 companies: http://wexpo.biz/women_ceos
Thanks for the links.
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It should not matter if you are a man or woman, or work for a man or woman. Unfortunately people do behave differently and that is a problem. When you fail to listen to half of your employees or customers, you’re setting yourself up for big problems. I work for one of the three woman mentioned in this column. I’ve seen her in person. I’ve seen her warm up to other women employees and look through men as if they weren’t there.
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Back in 2002-3 IBM came up with the next big thing — utility computing. They called it “On Demand” computing. They invested billions into it, sold the crap out of it. Quietly a few years later they stopped offering it as a service and moved the customers to the outsourcing division for support. The problem was “On Demand” was neither cheaper or better. A simple financial model on a spreadsheet would have shown this. No one in Armonk wanted to hear about it.
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One of the lessons from “On-Demand” was it would take several YEARS to develop the market. Today’s big thing is “the Cloud” and IBM is about 6 years into this business. The business hasn’t grown as fast as IBM needs. Yes, IBM has claimed big year-to-year increases in its cloud business. Unfortunately a big percentage increase on a small number is still a small number. IBM needs “cloud” to be making many Billions of dollars and it isn’t. It could be another 5 to 10 years before IBM’s cloud business will be big enough. One of the lessons I learned early in business is you don’t kill your chicken until you have a better source of eggs. There was a clear and obvious lesson from IBM’s On Demand experience, you will need your legacy businesses for at least 10 years before your next business can sustain the company. IBM is not only killing its egg laying chicken, it is infuriating its customers who buy its products.
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One more business lesson, your new egg supply must be able to provide MORE eggs CHEAPER than your chicken did. For IBM to be a major cloud supplier it will need to continue to make massive infrastructure investments. Given the fact they need MORE capacity, with MORE investment, and then sell it CHEAPER — its not going to be easy. A simple financial model on a spreadsheet will show the challenge.
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Executives fail when they don’t listen and when they don’t do the basic arithmetic to see if a business idea is sound or not. Just because you promise something doesn’t make it real. We need executives who can think and figure things out. Neither gender has an advantage on those skills. Both genders are capable of making promises they can’t meet.
Seriously? You’re going to make this about women’s ability as leaders in general? Give me a break. I work for one of the companies in mentioned this post, and while I am deeply (deeply) dissatisfied at the current state of affairs internally, it started long before she took the helm. At least we all know for sure that sexism is alive and well in the 21st c.
Marilyn Hewson is doing splendidly well as President & CEO at Lockheed Martin, the world’s biggest defence supplier.
She unexpectedly got the top job away from the old boys club, and has been using her skills in consensus building and cooperation to achieve exceptionally positive results.
I watched Meg Whitman doing a presentation on the new structure of HP and the new HP Enterprise. She concentrated on the new logo, pointing out various factors in it’s design. Specifically how the two Ts are joined to symbolise something that I can’t remember. So you know how important that was.
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I knew then HP are doomed.
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Going on about crossing the Ts when it should have been dotting the Is. Investment. Innovation. Ideas. None of those got mentioned. She must have a superb team behind her because the talent isn’t with her!
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And I really have to add that as bad as she seems, she seems far better than her predecessor Léo Apotheker. Maybe that’s all you need?
Remember, Leo wanted to split the company, and that led to his ouster. I’m not convinced that Meg didn’t want to split the company then, either, but we’ll never know.
Sad to see a prediction of more layoffs especially at this time of year; eventually this becomes a loop. Fewer consumers have a job reducing demand causing the big corporation to miss revenue targets resulting in more stock buybacks, more layoffs and purchasing of smaller companies with great products so you can take out the competition. The death spiral continues to the beat of the Wall Street drum, forget the customers you better spend your capital and reduce your overhead to keep those stock prices high.
Welcome to American Capitalism. Remember in the 1987 movie “Wall Street” when Bud realizes Gecko is going to dismantle Blue Star and throw the entire workforce out on the street, all the while making himself $50-$60 million in the process. So Gecko says to Bud “…now you’re not naive enough to believe we are living in a democracy, this is the free market.”
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This is why practically all capitalist societies, over time, morph into socialism in one form or another. As the wealth accumulates to the minority 1% while the growing masses of poor get an ever smaller piece of the pie, the majority eventually realizes it can *vote* itself more benefits to offset the growing divide.
“This is why practically all capitalist societies, over time, morph into socialism in one form or another. ”
Capitalism, aka Free Market economics, has been practiced for thousands of years. Socialism and communism, on the other hand, are 20th century inventions. So your statement as written doesn’t really stand up to scrutiny.
Democracy, on the other hand, does lead to socialism, precisely for the reason you stated: once the majority realizes it can use their votes to steal the public purse, the society enters a downward spiral. The inventors of democracy, the Greeks, discovered this unfortunate fact a few thousand years ago.
It’s one of the reasons that the United States Constitution created a Republic, not a Democracy. Unfortunately, thanks to the 16th and 17th amendments, our Republic was transformed into a Democracy, which has inevitably led to the United States being transformed into a socialist state.
https://www.americanthinker.com/articles/2013/07/how_to_repeal_the_16th_and_17th_amendments.html
I work in IBM Security. Our GM got fired for missing the revenue number by 40%. Our new GM is a Ginni Rommetty suck up who doesn’t know anything. Employees are leaving as fast as we can find a job. Customers are unhappy. Our products don’t work. Even IBM corporate is going to outsource to another security company. Check it out if you don’t believe me.
I saw this in person. I left a few years ago when I finally found another job. Back then, everyone I knew was looking for a way out of the sick place, either through another job opportunity, retirement or maybe even a package. Nobody was happy or productive, how can you be when every time the phone rings, you wonder if it’s your RA punch card.
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Just so happened I jumped to a *very* unhappy IBM customer. It was a running joke that when you called IBM for support, you never knew if you would speak to the head (knowledgeable) or the ass (usually offshore reading from a script.) More and more we got the ass.
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So the strategy was evolving daily to ‘move away from IBM at every opportunity.’ It was an easy feat with the VM farm blades and eventually the UNIX workload. The mainframe was and remains a challenge but as mentioned above, workload was moving off this platform with absolutely nothing moving on, so it’s days are numbered, the clock ticking.
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What a joke when IBM tried to come in and displace OEM software with some of their garbage. We would sit across the table and practically laugh at the presentation with a final ‘thanks but no thanks.’ And they think we will buy their Analytics or Cloud platforms? Not a snowball’s chance in hell, there are much better options available in the market.
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Interesting about your new security GM. When I was there, most of the GMs I ran into did nothing more than yell at folks on conference calls. Talk about zippo value for the outrageous salaries and stock they were being paid.
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Having been gone for a few years, I can tell from various posts that it has only grown more dysfunctional. What a sad fate for a once great company. Just call it what it really is, a company being killed by its own myopic management team.
And to think, when I read the headline, I thought this was going to be about the decision to let women into all parts of the military and add them to the draft.
[…] Cringely (I thought he retired or something) on Yahoo, IBM and Google (with HPE in the comments) […]
And this just out: https://www.wired.com/2015/12/yahoos-keeping-it-alibaba-stake-and-spinning-off-the-rest/
How about your assessment of Ursula Burns, Chairman and CEO of Xerox Corporation ?
Any comments on Drawbridge’s CEO Kamakshi Sivaramakrishnan ?
Cloud is just retailing access to hardware by timeshare. Amazon is already doing what you say Google can’t do. Since Google operates at a larger scale, they should be able to compete on price. Amazon makes an large effort to market their services, because they need to overcome the inertia that still exists in many businesses. In the long run that helps all cloud providers.
My employer wants low latency. It’s looking likely that we will move a bunch of servers from AWS to Azure once they have a datacenter in our region, simply to achieve lower latency.
It is really old history. The book Strategic Management by Hitt, Ireland, and Hoskisson uses Patti S Hart from Excite@Home as an example of flawed strategy. It happens.
VODAFONE TELEVIZYONLU İNTERNET KAMPANYASI
Vodafone Televizyonlu İnternet 16 Mbps internet ve filbox tv paketi ikisi bir arada tek fatura. Üstelik ekstra ücret vermeden Tüm ulusal kanallar ve FİLM, DİZİ ve 19 adet Premium Kanallar ile birlikte.
Dilerseniz sabit telefon hizmetinizi de ekleyerek, 3 hizmeti tek faturada kullanabilirsiniz. Ayrıca dilerseniz 30 Mbps internet, 60 Mbps internet, 100 Mbps internet ile birlikte filbox tv paketlerinide satın alabilirsiniz.
Sinemayı evinize kadar detiriyoruz. Kendi koltuğunuzda evinizde Vodafone Televizyonlu İnternet kampanyası ile vizyona girmiş son filmleri izleyebilirsiniz. Vodafone kalitesi ile eşsiz ayrıcalıklar ile iyi seyirler dileriz…
Mimarlık Bölümü öğrencilerine Yönelik yurtdışı PORTFOLYO HAZIRLIK Çalışmalarımız Devam Ediyor…
Yurt Dışında, Mimarlık Bölümünde MASTER Başvurusu Yapmak isteyen Öğrencilerin Lisans Projelerinden Oluşan Kişisel Portfolyolarını Dijital Ortamda, Alanında Uzman Eğitmenlerimiz Tarafından Hazırlanmaktadır.
Taksim Resim Kursu ile hayallerinize bir adım daha yakınlaşıyorsunuz.
Detaylı için bizi arayabilir, kursumuzu ziyaret ederek eğitmenlerimiz ile birebir görüşebilirsiniz.
https://www.arkhesanat.com/
Ignore the last two Turkish comments – they are just spam ads.
Another 30,000 laid off? Is that on top of the 26 percent you said would be laid off a year ago?
(IBM’s big layoff-cum-reorganization called Project Chrome kicks-off next week when 26 percent of IBM employees will get calls from their managers followed by thick envelopes on their doorsteps. By the end of February all 26 percent will be gone. https://www.cringely.com/2015/01/22/ibms-reorg-hell-launches-next-week/)
Evinizdeki internet kasıyorsa ve siz buna bir çözüm üretemiyorsanız hemen bizi arayın Türkiye’nin dünyaya açılan markası güvencesi ile sizlere hizmet verelim. Telefonlu eviniz için çok uygun tarifeler ile sizlerleyiz superonline adsl ile 3000 konuşma dakikası internetiniz üzerinden hediyemiz konuşturarak kazandırıyoruz, kullandırarak kazandırıyoruz. Superonline yalın internet ile dilerseniz telefon bağlantısı olmaksızında interneti doyasıya kullanabileceksiniz.
Turkcell sunmuş olduğu platformlar ile ihtiyaçlarınıza en kısa sürede karşılık vermektedir.
Türkiyenin dört bir yanına vermiş olduğumuz hizmet ile çekim gücü kalitesi en ideal olan alt yapısı sayesinde Bulgaristan’da bile internet sıkıntısız çekmektedir.
https://www.superonlinenet.net/superonline-adsl.html
https://www.superonlinenet.net/superonline-yalin-internet.html
Telefonlu evinize bir masrafta internetten çıksın istemiyorsanız telefon ücretiniz bizden olsun internet ise sizden ne dersiniz ?
Vodafone adsl ile 3000 dakika telefon konuşması internetinize ek ücretsizdir ayrıca internet faturanıza ek bir masraf geleden.
Siz neden bizi tercih etmeyesiniz ki ?
Sizleri HOŞGELDİN 2016 kampanyası ile aramızda görmek , müşterilerimiz iseniz yeni seçenekler ile sizlerleyiz.
Not to defend her in any way but Ginni turns 60 on July 29th, 2017. IBM will boot her that year by longstanding 60 and out policy for their CEOs. Given that their bench is too old to assume the post I will
assume that the next move is from outside IBM. Good CEO vetting last 9-12 months (unless you are HP who mails it in) so her upcoming departure is really much ado about nothing….or perhaps a few months of acceleration at the most. Does anybody even care about this company anymore except for those hired by IBM in the 60s and 70s. All the others just grind their axes and have moved on.
A wonderfully accurate assessment of IBM and why I left after 25.5 years for another profession entirely. The beginning of the end arrived much earlier than most would assume. About the same time “Data Processing” was at first replaced with “MIS” and before the term “I/T” had come into general use. That IBM has been able to survive for this long at its current size and scale says much about inertia and how bodies in motion tend to remain in motion. But alas, nothing lasts forever and I can envision a point in the not-too-distant future when the company goes supernova and completely disintegrates within the span of a few short months. The only remaining question being the reaction within government about the effects the companie’s demise will have on national security.
Sanat eselerini bizlerle üretmeye ne dersiniz ? Bakırköy güzel sanatlara hazırlık kursları alanında sektörün öncü firması olan ruyaavcısı ile 30 yıllık tecrübesi sizlerle .
Avcılar ve Esenyurttaki şubesi ile eğitimlerine devam eden ekibimiz yeni yıl kayıtlarına başlamıştır sizleride aramızda görmek bize mutluluk verir…
http://ruyaavcisi.com/
Sanat eserleri üretmek hiç bu kadar zevkli olmamıştı. Güzel sanatlara hazırlık konusunda eşsiz bir eğitim seçeneği sunan arkhesanat taksim resim kursu adı altında eğitim vermektedir.
Kişisel gelişiminizi bizlerle tamamlamak istiyorsanız irtibata geçiniz.
https://www.arkhesanat.com/