Page 124 - MS Year in Review 2020
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THE CULTURAL PROBLEM AT IBM
Give the above discussion, we can now explain the cause of the cultural problem at
IBM. Specifically, the cultural problem was that IBM’s core values did not include
the last two dimensions of culture cited above, but especially commitment to
change. IBM did have strong “company process orientation,” but it was not an
explicit part of their stated culture.
Resistance to Change
What happened? The actual problem was that IBM saw itself as a “Big Iron”
company—specifically, a main-frame company. IBM, it will be recalled, set up a
separate division in Boca Raton to create its famous “PC” to compete with Apple, et.
al. and it was successful! I recall an issue of Business Week that where the cover
said: “… and the Winner is…IBM! Unfortunately, the mainframe folks at IBM would
not accept the success of the PC because it competed with their cash cow-- the
mainframe! They told customers “you don’t need these ‘PC’s; you can do everything
you want with a mainframe and dumb terminals”! and for a while this sales
message worked—until it didn’t! When it stopped working and mainframe sales
began to decline, there were serious consequences.
The Consequences of the Cultural Omission at IBM
When I visited IBM, we discussed their “no layoff practice.” One visitor erroneously
referred to it as a “no layoff policy.” He was corrected. It was a practice not
a policy! In effect, IBM reserved the right to do a layoff if and when it was
deemed necessary. And ultimately, because of the lack of willingness to change
when micro computing was developed, IBM had their first ever layoff, and went
from 425,00 people to 165,000 people, while allowing Microsoft, Intel, and Apple
among other to become giants! All due to as subtle flaw in their culture, a flaw of
omission not commission!
What was required was a culture that was committed to change and innovation—
not to resistance to change and to the suppression of innovation.
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