IBM 2000 to 2010: continuously transforming the corporation while delivering performance

Abstract

Purpose

The strategic initiative IBM undertook to resurrect itself after the dot.com era of a decade ago provides meaningful lessons for other multinational corporations looking to pursue higher margins, globalize their operations, and change and reduce their cost structures. This paper aims to look at these lessons.

Design/methodology/approach

This case describes how IBM executed a number of strategic shifts – from investing billions of US dollars in strategic acquisitions and new markets, such as India, China and Brazil, to aggressively driving costs out of selling, general and administrative expense (SG&A) – to create a stronger portfolio of offerings and a more efficient operating model.

Findings

IBM achieved success by executing toward four strategic goals: Capture higher value: migrate to more attractive customer segments as well as higher‐value products and service offerings; invest for growth: take advantage of the global footprint to benefit from global growth, as well as invest in new market offerings; shift the operating model to drive productivity: improve operating performance by globally integrating, while pushing decisions further down into the organization; and apply shared values and performance management

Research limitations/implications

This is an internal case analysis.

Practical implications

IBM has shifted substantial focus and investments to growth markets in recent years and created an operating unit dedicated to the world's growth markets in 2008. The newly established growth markets unit generated more than twice the revenue growth of IBM major markets operations in 2008.

Originality/value

Enabled by global integration, supported by increased visibility and driven by an integrated management team, the IBM operating model investigated here provides the capability to understand and balance not only what is needed to perform today, but also to meet the needs of the future. It creates a dynamic that gives managers and senior leaders the ability to both lead and follow the enterprise's aspirations and each other.

Citation

Bramante, J., Frank, R. and Dolan, J. (2010), "IBM 2000 to 2010: continuously transforming the corporation while delivering performance", Strategy & Leadership, Vol. 38 No. 3, pp. 35-43. https://doi.org/10.1108/10878571011042096