In Reply to: Why IBM is in Trouble posted by kunikos on 24 May 2006 at 19:13:56:
: "There is a perfectly good solution to IBM's situation, but it requires candor, courage, and personal accountability on the part of management (that would be you, Sam)."
The Randi MacDonald presentation linked to elsewhere on the messageboard seeks to make employees the scapegoat for IBM's strategic problems. But the problem goes all the way to the top. Since Gerstner left, the 'buddy' practice of employee assessment has returned with a vengeance -- i.e. "I like him therefore I'll give him a good PBC grade."
Gerstner was a guy who could sack someone for giving a poor presentation. Thankfully Palmisano, deeply unpleasant though he can be to subordinates, is not so precipitate. His problem is almost the opposite -- that he cannot bring himself to get rid of long-term associates.
A further problem, according to those who have worked close-ish to his office, is that there is little strategic analysis behind his strategic decisions. Whereas Gerstner was a cold fish, with an immense analytical reservoir gained from his Harvard MBA and time at McKinsey, Palmisano has none of that. He is an ex-sales rep, not a rounded business leader, with no experience outside the company.
And when strategies go wrong, as they are more likely to do when there is so little hard analysis behind them, no-one at the top seems to carry the can. Palmisano described 'On Demand' as a "Bet the Company" strategy for IBM. It has failed dismally, but it seems that Palmisano was prepared to bet the company, but not his job, on the outcome. IBM's share price bumps along the bottom. Even HP's share price, from the start of Fiorina's reign to its end, fared better. Palmisano is, unfortunately, CEO, President and Chairman of IBM, so there is no-one with the power and responsibility to guide him to better performance.
When Palmisano took the realms from Gerstner, he was welcomed by the press and Wall St as much more analyst-friendly. At least he knew something about the IT industry, and he could hide the awful temper that he inflicted upon employees behind a friendly exterior. But in the past year or so, with almost none of his ill-conceived strategies bearing fruit, he has become increasingly reclusive. He barely speaks to the press, and he barely converses at annual shareholder meetings.
Apart from benefitting the cost-control process improvements instigated by Gerstner's CFOs, we're getting into John Akers territory. At least Akers knew how to grow revenues.
I think Palmisano knows his number is almost up. The odd glimpse one gets of his diary as reported in the press suggests an obsession with high society engagements: of Saturday dinners at 'Chequers', and of reviews of IBM UK timed to coincide with Wimbledon.
Palmisano has run out of ideas for revenue growth, so his only option is cost control -- i.e. cutting pensions, shifting headcount to cheaper countries, and getting rid of employees for both poor and mediocre performance.