IBM Revolution That Saved The Company

Back in 1980’s, it was hard to imagine more successful IT company than IBM. They were revolutionary at the time: while Apple built every piece of hardware and wrote software by themselves, IBM shipped PC, created with hardware components from small manufacturers. For decades IBM ruled every phase of the PC development of the industry — except software, which was done by Microsoft. It was the key decision, which eventually doomed IBM, as soon cheap PC clones flooded the market, running the same software from Microsoft. The large and lumbering IBM was slow to innovate. The result was one of the biggest losses of capitalization in history, caused by increased competition and a changing market. The large and lumbering IBM was slow to innovate, allowing nimble competitors to undercut its prices. It lost money, it lost market share and became a company in denial. It couldn’t believe it was no longer the dominant force in computing.

The company, which encompassed all IT revolutions of past century, came to the choice: innovate or die. The decision was to abandon the very core of IBM strategy – hardware. Now, instead of building and selling PC, printers and other devices, IBM focuses on providing IT expertise and computing services to other companies.

IBM bought hundreds of IT companies and invested in server business, becoming one of the biggest seller of enterprise server solutions. Most of the workforce is also new to the company: 50% of IBM employees were hired in last five years. In addition to modernizing its workforce, IBM has adopted the new way to design new products. The new approach to creating enterprise solution is similar with consumer products. As such, designers were moved to open space and their work is now judged by internal net promoter scores.

One of the biggest later failures of IBM is the complete disregard of cloud computing, which greatly improved Amazon and Microsoft. To prevent this from happening again, IBM became a pioneer in blockchain and quantum computing.

As the result, the company basically reinvented itself — its organizational structure was radically flattened, which significantly sped up internal processes.