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January 4 2012 Posted by: Mark Fidelman in: Enterprise 2.0

Why Every Company Needs to be More Like IBM and Less Like Apple

imageI was thirteen years old when I first saw it on TV.

An army of blue-gray drones march in lockstep through a long tunnel into an auditorium filled with more drones dressed in futuristic, grey drab. All eyes are transfixed on a big-blue image of a man speaking from a theatre-sized screen, extolling the virtues of its ‘Information Purification Directives.’ Suddenly, a woman in orange shorts and a tank top runs into view carrying a large sledgehammer. She spins to gain momentum and hurls it at the image, causing a large explosion.

Confused, I turned to my dad and asked what this was all about. He said something like: “Well, IBM is being portrayed as a Socialist company that controls minds and stifles creativity, and we’re supposed to reject that.”

The TV scene was from Apple’s 1984 Superbowl ad, and it was a clear shot at Big-Brother, IBM. Apple portrayed itself as the small, underdog hero and IBM the Orwellian, thought police.

But this does not represent today’s IBM – or Apple for that matter.

Today’s Big Blue is the antithesis of Big Brother. It’s ‘Big Open’. A transparent, nimble, collaborative organization known more for listening and engaging customers than for dictating to them. While ironically, some say Apple now resembles Big Brother given their propensity for tight controls.

And that’s why IBM — not Apple — represents the future workplace.

While Apple has been wildly successful, IBM’s Social Business is much more attainable and sustainable than what Fortune’s Adam Lashinsky describes as Apple’s genius led, culture of fear. For the genius is always, as Benjamin Disraeli and later Peter Drucker predicted, succeeded by a “lieutenant of Marines” who understands the business but nothing else. So the company is only left with an innovation vacuum.

In IBM’s social business culture, the genius lies in the 400,000 employees who are free to create circumstances that enable their associates to build on each other’s ideas. Its genius lies in fostering innovation through co-creation with its employees, suppliers, partners and customers. Remove one genius, and there are thousands more in the network to fill the vacuum.

Bottom line: IBM’s Social Business is creating real shareholder value. Allow me to make the case.

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Two years ago, had you invested $10,000 in IBM, your investment would be worth over $14,000 today. That means in just 2 years, IBM has created over $60 billion in shareholder value. To put that in perspective, that’s more than the total market value of Hewlett Packard.

The company has been so successful it attracted the world’s most successful investor, Warren Buffett who has long avoided investing in technology stocks. Buffett felt IBM’s management had done “an incredible job” and subsequently accumulated more than 64 million IBM shares, which represents a stake of 5.5 percent.

Another sign of success is how IBM’s competitors are reacting to it. After Oracle missed its latest revenue expectations, Business Insider’s Matt Rosoff wrote about Larry Ellison trash talking IBM. That’s usually a sure sign of fear.

IBM has been so successful in its last few years, that it’s outperformed the S&P 500, Hewlett Packard, Microsoft, Google and Oracle. Among the world’s largest technology companies, only Apple under Job’s stewardship has outperformed IBM. But without Jobs at Apples helm, where would you invest your money?

Is IBM’s Social Business the Reason for IBM’s Success?

To hear IBM’s Vice President, Sandy Carter’s perspective, IBM’s social culture is partially if not directly responsible for IBM’s success: “Our employees use social computing tools to foster collaboration, disseminate and consume news, develop networks, forge closer relationships, and build credibility. As a result, they’re better informed and prepared to take action on behalf of IBM.”

Carter also likes to cite an IBM Business Value Study where companies that use social business tools outperform the non-social group (in terms of EBITDA) by 57 percent. She takes it a step further to say that, “If you’re not transforming your company into a social business, plan to be out of business.”

I believe IBM’s Luis Suarez agrees with Carter, citing how the 8 million strong IBM-run developerWorks customer community is helping IBM technicians improve IBM’s products: “It’s a rich innovation ecosystem with a direct channel of communication between customers and developers on how to fix IBM products and make them better.”

Leading By Example

Work creates a unique social bond – it is the interface between people, technology and culture. Work’s social bond must also evolve. It must responds to market conditions and customer demands. There isn’t a large company that does this better than IBM.

It may be too early for some organizations to come to grips with social business as a strategy. They are stuck in a corporate dystopia, ruled by the equivalent of an Orwellian inner party which condemns individuality and transparency as thought crimes.

But I’m having a great deal of fun with the knowledge that we’re watching a near-extinct species: the command and control organization. I understand how a business historian must feel when she observes a corporate anachronism; much like the giant music publishers, unaware of the digital disruptors that built new business models and ultimately forced the publishers to play by the new rules.

This in fact is my key takeaway from 2011. That old business must evolve into Social Business. That companies need to be social internally and externally. That business leaders need to create and foster a culture of collaboration and transparency, without retribution. That social organizations outperform their non-social competitors. That rapid innovation is the key to future business success.

That is IBM.

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