Company's centennial is marked by release of new book, worldwide volunteer effort, and succession planning for tomorrow's leaders.
This week marks IBM's 100th anniversary, and the company is celebrating the event with the release of a new business book that not only chronicles the company's long history, but synthesizes the principles necessary for every business to survive in a changing environment. The company also is marking the occasion with an unprecedented worldwide volunteer effort.
As a backdrop to the IBM centennial, the company's revered chief executive Samuel J. Palmisano, who will be 60 in July, is said to be starting to think about retirement and the implications of leaving the company in the hands of one of IBM's top lieutenants.
IBM's new centennial book Making the World Work Better: The Ideas That Shaped a Century and a Company (IBM Press/Pearson; paperback original; June 16, 2011; $29.99) was written by a team of three award-winning journalists, each of whom took a major section.
Kevin Maney, a former editor at USA Today, wrote the chapter on "Pioneering the Science of Information" in which he tells the story of how information technology has evolved over the past century since IBM was founded in 1911.
Steve Hamm, a longtime journalist who most recently worked at Business Week and currently is a writer and videographer in IBM's corporate communications department, wrote the chapter on "Reinventing the Modern Corporation." In it, Hamm focuses on how IBM business innovations helped shape the modern corporation.
Jeffrey M. O'Brien, a former senior editor for Fortune and Wired, wrote the chapter on "Making the World Work Better," in which he analyzes how society's innovators accomplish major achievements that move humanity forward.
In the course of their research, the writers apparently uncovered trends and made connections that have never before been articulated in print. "The authors uncovered not only a wealth of facts and stories, but a set of powerful ideas," says Mike Wing, IBM's vice president of Strategic Communications, who edited the book. "Though never written down, they have 'informed' the company's history from its birth to the present day."
In the book's foreword, written by Palmisano, he notes that the traditional approach would have been to write a commemorative publication marking the company's first 100 years. The decision to go beyond that and, in effect, research and produce a book of "ideas," was based on the collective belief that the company's history contains lessons for business that transcend IBM, lessons about technology and progress itself.
If anyone is aware of those lessons, it's Palmisano, who may have written the original script. His willingness to accept the realities of a changing market was key to steering IBM through the worst recession since the 1930s without a major chink in its armor. According to the Wall Street Journal, his hallmark of being willing to let go of sacred cows, such as IBM's PC unit, is a testament to his capacity for change.
Widely considered to be what the Journal terms "a sales and operations whiz," Palmisano may not be everyone's favorite chief executive, but the company has done well under his stewardship. It has regularly posted a string of earnings that predate the recession, and its stock has reached recent record levels with a 28 percent gain in the last year alone. The company's financial roadmap runs through 2015, and it's not likely there will be dramatic shifts in its direction. It has steadily disposed of what the Journal terms "commodity businesses"—personal computers, disk drives, and such—for higher-margin software and services. Its forecast includes 30 percent of its revenues by 2015 to come from emerging markets, up from 21 percent in 2010. Dealing with the volatility in the Mideast and Africa may turn out to be one of its biggest challenges.
As the surge in mobile and cloud computing gathers steam, IBM is beginning the process of selecting a new leader to fill Palmisano's shoes. While no date has been set for his retirement, the Journal quotes insiders who say that it may come within the next 12 to 18 months. In the meantime, Palmisano has asked his reports for ideas on how to make the transition a smooth one for everyone involved, from the top executives to the stockholders. The idea is to not create a slugfest where those who are considered but aren't chosen in the end quit and accept opportunities at the myriad of startups now emerging in Silicon Valley.
Following the arrest and conviction of former senior vice president Robert Moffat for insider trading, the cast of candidates for the top job at IBM was whittled down to a handful of possible candidates. Three names emerged in the Journal's investigation of potential successors. Among them are Rod Adkins, who took over for Moffat following his abrupt departure and is credited with keeping the company's hardware business on an even keel during a tough recession. Adkins recently was named to lead the initiative of pursuing new business in Africa. However, his limited experience in the services business could be a factor in whether he moves on to the next round, according to the Journal. If he were selected, he would be IBM's first minority CEO.
Another contender for IBM's top job, according to the Journal, is Michael E. Daniels, head of IBM Global Services. With a sterling reputation, superb operational skills, and the ability to inspire loyalty among teammates, Daniels could be a hard choice to pass over. Having worked for IBM much of his adult life, however, Daniels, who turns 57 this August, may not have enough runway left ahead of him to take the huge company airborne.
The shining star among potential candidates to take over Palmisano's job, according to the Journal, is Virginia M. Rometty, 53, who has worked for the company for the past 30 years. Having shown her mettle in IBM's successful integration of PricewaterhouseCoopers LLP's consulting business in 2002, Rometty has been in charge of IBM's worldwide sales force since last July and also oversees marketing and strategy. In the three quarters since she took over sales, company revenues have increased 5.8 percent, the Journal reports. Depending on her performance during the next year, she could either win or lose the chance to assume IBM's top job, according to insiders.
Whoever moves into the job will be only the ninth CEO in the company's long history to have the job.
The highlight of Palmisano's tenure may not be the company earnings and stock price for which he is credited but the huge volunteer effort IBM employees, retirees, clients, and business partners are exerting around the world to celebrate the company's centennial. Some 300,000 IBMers worldwide are volunteering on more than 5,000 projects across 120 countries to serve millions in need. Since January, IBM employees, retirees, and their families will have donated more than 2.5 million hours of volunteer service time to those in need across the globe. That is a legacy any chief executive would be proud to leave behind.
With 100 years under its belt and achievements such as its volunteerism, not to mention IBM's Watson computer solution, the company, and the people who keep it going, are having to think about what the next 100 years might be like. While most of us wonder just what the next decade will bring, IBM's engineers and scientists are working on the technologies that will help shape the future of tomorrow's cities, and mankind, beyond anything even imaginable today. For more on IBM's centennial celebration, visit www.ibm100.com.
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