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Ibm Decade of Transformation

Better Essays
cade of 9-805-130
REV: JULY 8, 2009

LYNDA M. APPLEGATE
ROBERT AUSTIN
ELIZABETH COLLINS

IBM's Decade of Transformation: Turnaround to
Growth
This is my last annual letter to you. By the time you read this, Sam Palmisano will be our new chief executive officer, the eighth in IBM’s history. He will be responsible for shaping our strategic direction as well as leading our operations. . . . I want to use this occasion to offer my perspective on what lies ahead for our industry. To many observers today, its future is unclear, following perhaps the worst year in its history. A lot of people chalk that up to the recession and the “dot-com bubble.” They seem to believe that when the economies of the world recover, life in the
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805-130

IBM's Decade of Transformation: Turnaround to Growth

In March 2002, Gerstner passed the reins of power to Sam Palmisano, a 31-year company veteran, to complete the transformation. Palmisano and the senior executive team were committed to returning the company to greatness. “[Our problems in the late 1980s and early 1990s] were our own fault,” Nick Donofrio, senior vice president, Technology and Manufacturing, explained. “We are driven by a passion that says: ‘Never again.’”1 IBM visionary, Irving Wladawsky-Berger was reminded of the 1950s, when a “series of technology asteroids” had created seismic shifts in the computer industry, opening the way for the IBM System/360 to become the dominant design for the next 40 years. The launch of the S/360 catalyzed a period of IT-enabled business innovation that created new industries even as it transformed established industries and the organizations that competed with them. During that period IBM was viewed as the “greatest company in the world,”
Palmisano explained. Palmisano, Wladawsky-Berger, and the executive team at IBM believed that the
Internet and associated network technologies had catalyzed a period of technological revolution that would usher in a new era of IT-enabled business innovation that would be
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