IBM: Case Study

Introduction This report is a case study on IBM from 1993 to the present. The reporters’ objectives were to define the problems within IBM in 1993; management tools used to remedy these problems; if these solutions will lead to a sustainable competitive advantage; and what kind of innovators IBM is and what streams of innovation IBM is involved with today. This report is from a managerial science perspective, with a focus on innovation. Executive Summary This case involves IBM, an international computer hardware, software and services company. The head of this organization in 1993, since 1985, was John Akers. Akers was replaced that year by Louis V. Gerstner, Jr. During Akers’ reign, the company had gone from a workforce of 407, 000 in 1986 to 300, 000 in 1992 ; the stock had dropped from a peak in 1987 of $1757/8 to $25 (split adjusted) in 1993 ; and a loss of $2.8 billion in 1991 to be followed by a loss of $8 billion in 1993 . Akers’ effect on the structure of the company resulted in, among other things, two outcomes; 13 highly defined divisions that were theoretically autonomous from one another and many job losses. Gerstner was brought in to remedy IBM’s fiscal situation and bring IBM back into the black and back on top of their industry. Problems within IBM in 1993 Focus One of the most notable problems within IBM was their focus. It seemed that inter-politics within the organization overshadowed what should have been their prime directive: the customer. They had dismissed the priority of putting the customer first and letting the customer drive their innovation and, in turn, ended up trying to drive their own innovation and directing the customer to what IBM thought they would need. In an article in Communications Weekly, John Mulqueen states that IBM was more concerned with “pushing inter-networking solutions as a means to control the customer.” John Joback, the president and CIO of First Virginia Services Inc noted that “they were more focused on

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