by Cornelius Mellino (0832200222) K.

Joko Maryono (0912200426) Fera Setyawati Tanuwidjaya (0912200451) Aloysius Abel (0912200520) 04 MAM

SOLUTION PROBLEMS

LESSONS LEARNED

CASE SUMMARY RAISON D·ETRE

3 KEY DECISIONS

1

‡ Appointing Gerstner the CEO ‡ Gerstner·s diagnostic steps ‡ Gerstner·s sustainable implementation measures

2

3

Watson (1914 ² 1952): Shaping the fundamental culture; guiding to the threshold of computer era

Watson Jr (1952-1982): Computer era; IBM being the world·s leading IT company

John Akers (1985-1993): Starting in peak condition; ending up in deep crises

Gerstner (19932002): Turnaround

Palmisano (2002-): Sustainability

1911

j Founded; merger of three companies dating back to 1890 j Shaping culture of: 1) ´Darksuited salespeopleµ; 2) Corporate pride and loyalty; 3) Implied lifetime employment; 4) Work ethic: ´THINKµ j Guiding to the threshold of computer era

5

Thomas J. 1914 Watson (·14·52)

6-7

Watson Jr (·52-·82)

1952 ² late 1960s

j Computer era j World·s dominant player in the growing IT industry

7

j $5 billion investment for System/360; the biggest privately financed commercial project ever j The first family of products based on an integrated semiconductor chip and offering interchangeability of components j Innovations: FORTRAN, hard disk, floppy disk, IBM supermarket checkout station, early version of ATM by 1980-1981 j IBM PC: most successful technology introduction with sales of 241,683 unit in a single month, exceeding the five-year forecast. j Sold through: retailers, distributors, and value-added resellers j Known as ´the best place to workµ 1984 j Early signs of trouble: sales, assets, and equity began to decline; believed to be the impact of changing from leasingoriented business of mainframes into sales-oriented business inefficiency j The customers· need to interconnect the mainframe with other components led to the fall of mainframe sales j PC sales didn·t even increase

8, 13

John 1990 j Akers (·85·93) j

The second most profitable company in the world (Net income: $6 billion; Revenues: $69 billion) Completing the transformation designed to position it for success in the next decade j Feeling pretty good but not so great; deep structural problems remain

5

¶91- j Earnings dropped to negative $2.8 billion (146% 5, 8 ¶93 drop) j Suffering from substantial losses (total loss: $16 billion) j Reasons: 1) Blinded by hubris (dibutakan oleh ambisi berlebihan); 2) Out of touch with customers; 3) Internal problems

Gerstner 1993 j Akers was dismissed, believed to be 5-6 (·93-¶02 responsible for the declining financial results j April Fools' Day of 1993, Gerstner from Nabisco (no technology background, but promising capability to break it up for sale) took charge of CEO; learning much from customers, analysts, employees (p. 6) 1994 j Turnaround; first time gain since 1990 by ¶95 j Turnaround started: began to recover 6 j Rate; slower than IT industry as a whole ² not yet getting to ´The Next Big Thingµ j Successful revitalization widely known as turnaround (titik balik), though not so revolutionary, but steadily.

1

‡ Lack of customer intimacy ‡ Inefficiency

2 3 4

‡ Lights-on high cost ‡ Too big organization ‡ Too long time to market

‡ Culture: too long celebration of past success ‡ Weak corporate leadership

1

‡ Improve efficiency

2 3 4

‡ Improve speed: time to market ‡ Clearly translate innovative technology concepts ‡ Streamline the organization

Customer losses

‡ Keep customer intimacy ‡ e-commerse: B2B ‡ Selling leasing
Cut non-performing investments Reengineer processes (125 3 megacenters) Streamline organization (e.g 128 1 CIO) Employee lay offs (40000)

‡ ‡ Inefficiency ‡ ‡

Financial losses

‡ Boost up sales ‡ Effective sales team ‡ Knowledge management ‡ Research and translating results more effectively. ‡ Invest on performing projects ‡ Software integration and networking

Technology

CONTOH AKSI NYATA GERSTNER
1 2 3 4 5 6 7 8 ‡ Change meeting culture ‡ Lay off 40.000 employees ‡ Consensus-based knowledge-based decision making processes ‡ Encourage people to keep on integrating and create solutions to customer needs (p. 17) ‡ Encourage people to think from the business matter; forming CEC, DMC, global sales team, CR manager, etc (pp 18-19) ‡ Financial, cultural, and business transformation (p. 22) ‡ Internet: Olympic Website, B2B network computing, etc. (p.23) ‡ Outsourcing and recruitment

Refer to the bottom-line, always

Strategic thinking : From business strategy to IT actions; Keep close to customers and keep an eye on competitors· pivotal movement

Be creative in product innovation and translate it into the customer needs;

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