Uncommon Wisdom

Jun 16 2011   6:23PM GMT

IBM at 100: Vendors and competitors should take a lesson

Tom Nolle Tom Nolle Profile: Tom Nolle

IBM, a company now known for computers but once in the more pedestrian business of time-clocks and scales, turns 100 years old today. If you consider this for a moment you’ll see that makes IBM perhaps the longest-standing tech success in all of history. Considering the tumult that it’s undergone (you don’t switch from scales to supercomputers without generating some stress), it’s success is even more remarkable. In a time when many tech companies seem to be floundering, it’s worth a moment’s consideration of how IBM managed to do what it did.

I’ve been involved with IBM in some way since 1964, and I’ve seen almost half its corporate life and much more than half of its life as a computer giant, so let me offer some perspectives that might help others who would like to see their own hundredth birthday.

  1. IBM was never hidebound. Early in its computer age, IBM released a mainframe based on what was the state of the art at the time. Within a year, a revolutionary new option was discovered. So did IBM feed off the revenues of its just-released product as long as it could and then bring out the new? No, it brought out the new immediately and wrote off all it had invested in that older model.
  2. IBM was always intensely aware of the buyer’s side of the value proposition. At every step in their sales and marketing, they supported the decision process from building the business case to installing the technology. This total-value-chain marketing meant that IBM had a truly unique multi-layered engagement model with the customer, a model that they’ve sustained for 50 years or more. A model that I argue no one else has ever successfully copied.
  3. Finally, IBM has always known the value of and the need for ECOSYSTEMIC technology. Computers and networks and appliances and other tech elements are not isolated boxes; they’re components of something bigger. A system of devices needs something to systematize it.

Look in contrast at IBM’s competitors. Sperry Rand, then Unisys, isn’t a computer vendor any more. NCR isn’t either. Digital Equipment Corporation was bought by a PC company. Compaq, which was then bought by HP is the only one of the early players still sharing the computing stage with IBM. But everything that IBM has done well, HP has done less well. HP has far weaker strategic relationships with its customers, and it has made what seems an endless series of critical blunders in tech evolution—WebOS might be the latest—and it has mistaken the adoption of a catchy slogan or two as the creation of an architecture and an ecosystem.

You could argue that Cisco, in the network space, is now at a crossroads, a point where it decides whether to be HP or IBM. Both HP and Cisco have expanded their portfolios without having a strong ecosystemic tie to link their broader line with broader value. Both HP and Cisco have hunkered down on low-margin products that are becoming lower-margin all the time, just because they are products they’ve become known for. Both HP and Cisco had charismatic management that everyone knew, but that built sales and company bulk without creating a longer-term model for success. So which road will you take, Cisco?  Today would be a nice symbolic day to make that choice.

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