Delivering perormance through continuous transormation
By Jim Bramante, Ron Frank and Jim Dolan
“I would argue
that the rst decade o the 21st century has been aseries o wake-up calls, with a single subject: the reality o global integration. Inbusiness, global integration has changed the corporate model and the nature o work itsel…Over the next couple o years, there will be winners, and there will be losers. And though it may not be easy to see now, I believe we will see new leaders emerge who win not by surviving the storm, but by changing the game.”
– Sam Palmisano, IBM chairman, president and chie executive ofcer
In 2008, much o the industrialized world entered a deeprecession sparked by the global nancial crisis. By March 2009,share values in American rms were 57 percent o theirOctober 2007 peak.
In this environment, many chie executiveand chie nancial ocers have ocused on weathering theslump as capital continues to disappear and credit marketsremain tight. Though the crisis has been hugely disruptive,rms will ultimately emerge leaner and stronger – those thatsurvive, that is. The issues acing many mature companies are not new: stiercost competition, commoditization o products and slowergrowth in their traditional markets. The current economic andbusiness environment makes addressing these issues increasingly urgent. Agile companies, however, will persevere and – inthe end – use this economic cycle to their advantage.How can large companies eectively respond to and takeadvantage o the current business environment? IBM oers acompelling story. While some o its peers have seen in excesso 30 percent o their market values evaporate since January 2008, it has continued to perorm and resisted the broadermarket trends, actually increasing its share value by roughly 15percent over the same time period.
This recent marketperormance is the result o a transormation journey on whichIBM embarked nearly a decade ago.Entering the decade and infuenced by the dot-com collapseand attendant declines in margins and earnings, IBM began aholistic assessment o its strategic environment and concludedthat undamental shits – in technology, client requirementsand global business – would soon reshape the economic andtechnological landscape. Essentially, it concluded that the world was about to change undamentally and the company needed to adapt to excel in the new environment. This insightset in motion a number o strategic shits – rom investingbillions o U.S. dollars in strategic acquisitions and newmarkets, such as India, China and Brazil, to aggressively driving costs out o selling, general and administrative expense(SG&A) – to create a stronger portolio o oerings and amore ecient operating model.