Ibm's Organizational Change

Organizational change is when an organizations overall strategy for success changes and changes the way in which it operates. Organizations must undergo significant change in order for the organization to develop. Change should be done to accomplish some overall goal. “Usually organizational change is provoked by some major outside driving force, e.g., substantial cuts in funding, address major new markets/clients, need for dramatic increases in productivity/services, etc.” (McNamara) There are usually conflicts to change because people are afraid of the unknown. In order for organizational change to be carried out the leader should meet with all managers and staff to explain reasons for the change.(McNamara) There are at least four levels or organizational change: shaping and anticipating the future, defining what businesses to be in and their core competencies, reengineering processes, and incrementally improving processes. Level one is shaping and anticipating the future. At this level organizations start out with a few assumptions about the business itself, like what it is good at and what the future will be like. Level two is defining what business to be in and their core competencies. At this level strategic planning starts and a basic mission has to be defined. Level three is reengineering your processes, which means that at this level work focuses on fundamentally changing how work is accomplished. Finally at level four is the incrementally changing your processes; these organizational changes are focused on making many small changes to existing work processes. (Chaudron, 2003) One organization that had to go through organizational change is IBM. IBM is a multinational computer, technology and IT consulting corporation headquartered in Armonk, New York.

In 1990, IBM earned approximately $6 billion, but three years later IBM has exceeded at least $8 billion in losses. IBM realized that it was important to change their market strategy and product line architecture. The most important aspect of IBM’s turnaround was market innovation. Market innovation basically means how the company changed the way it segmented its markets, defined compelling user needs and frustrations, and drove these into new product designs in both hardware and software. So IBM decided to start an e-business with consumers and focus with specific vertical markets, whereas before they had a transaction processing orientation for all large corporate users. Next technological innovation was the second more important change. IBM first wanted to replace its old 31-bit bipolar architecture with 31-bit CMOS designs. These bipolar processors were used for task management, computing, and input/output to storage devices or communication networks. The 31-bit bipolar circuits cost way too much to keep up because they required constant electric charge and extensive cooling. When IBM switch over to the CMOS processor this changed everything and also saved a lot of money. The CMOS processor required much less electricity and cooling. “This reduced significantly the electrical power and physical size requirements of the first generation of IBM’s new mainframes.”(Meyer, 2005) In 1994 the new mainframe architecture was introduced. With just one year into the launch of the new architecture, “IBM assembled the ‘”best and brightest”’ from across the company to develop an even more powerful systems architecture and market strategy, focused expressly on the client server, Web-centric world.”() Senior management put together a team that consisted of mid-level managers with proven records of accomplishment in technology and product line performances. This team was called the ES2000 team. The ES2000 team was in charge of the next generation hardware and open systems software. In just three months the ES2000 team has completed their work and delivered a plan to the senior management in the spring of 1995. Since then IBM had been trying to execute that plan. They first...


References: Chaudron, David PhD. (2003) “Begin at the Beginning in Organizational Change” Retrieved from http://www.organizedchange.com/decide.htm
McNamara, Carter. “Basic Context for Organizational Change” Retrieved from http://managementhelp.org/mgmnt/orgchnge.htm
Meyer, Marc H., Mark Anzani, and George Walsh (2005) "Organizational change for enterprise growth: IBM had to change its organization and development processes to survive the 1990s." Academic OneFile. Retrieved from http://find.galegroup.com.prx-01.lirn.net/gtx/retrieve.do?contentSet=IAC-Documents&resultListType=RESULT_LIST&qrySerId=Locale%28en%2C%2C%29%3AFQE%3D%28KE%2CNone%2C29%29IBM+and+organizational+change%24&sgHitCountType=None&inPS=true&sort=DateDescend&searchType=BasicSearchForm&tabID=T002&prodId=AONE&searchId=R4¤tPosition=3&userGroupName=lirn_main&docId=A138705381&docType=IAC