Organizations, small or giant corporations, are constantly changing their strategies in different situations and critical points. IBM (International Business Machines) is an American multinational technology corporation based in Armonk, New York. This company is operative in 171 countries in the world. IBM, in past decades, changed many aspects of its operational, organizational, market approach and executive strategies. Eventually, these transformational changes led IBM to remain a giant in the technology industry among many other tech giants.
This article will discuss the transformation challenges and needed organizational design changes to support changes in IBM’s strategy. Then we will depict how IBM’s new organizational structure donates to process and system strategy. Following this path, you will find the concept of the organization life cycle for IBM, and we will apply the Change Management Model to IBM. In conclusion, we will talk about our overall assessment of the change approach of IBM.
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IBM Transformation in Selling Hardware to Services
In the early 1990s, IBM’s primary strategy was selling hardware to gain profits, but the market and customers were primarily looking for solutions and services. Therefore, IBM was not making profits, and losses were accrued in some quarters. IBM executives knew a transformational change was needed to save the company and make profits. IBM competitors were working on small computers and providing solutions and services to their customers, and yet IBM was still selling hardware.
One of the most challenging needs for organizational structures for IBM was to optimize its workforce, sell strategies and find leads and prospects for its new system. As a result, executives thought about shifts in every level of IBM organizations.
Leading Change is a communal exertion performed within the context of human affinities, and IBM followed this change. According to Dr. John Kotter, there are eight steps to accomplish this change, and IBM followed each one perfectly.
Another challenging point for IBM was to recognition of needing a change. Before IBM’s massive change era in the ’90s, IBM’s sales and marketing goals were like the below information:
-Evolve into a technology-based services corporation
-Enhance client happiness
-Increase services revenue by 50 percent per year
-Recognize a combined services ROA of 15 percent
Inaugurate IBM as one of the world’s best providers of services by the mid-90s
IBM Changes Begin
IBM executives and different employees from different sectors started to change IBM’s conceptual design. As a result, IBM created a task force, including a client, platform, solution, opportunity management, and measurement and Compensation team to apply new organizational changes. All these team members were seniors in the IBM company, and this key point was crucial to implementing changes.
Each team must work on different aspects to create the possible perfect base for the change. They should have worked on Mission, roles, responsibilities, Process steps, Positions, Functional organization description and Primary skills required.
After implementing these factors, IBM started the second phase of its transformational change. Each team focused on delivering mission-critical customer resolutions via IBM consulting and systems integration courtesies, devoting new marketing strategies for their hardware and software platform company, making it more responsive and competitive by obtaining the proper expertise for good prospects and providing standings for maintained profitability and augmentation.
The Concept of Organization Life Cycle For IBM
Let us start with what is the concept of the organizational cycle. The Organizational Life Cycle is the visionary design of stages that an organization generally ensues. The Organizational Life Cycle contains four steps:
-Planning
-Growth
-Maturity
-Decline
Distinct actions and issues represent the apiece stage in the Organizational life cycle.
IBM’s organizational cycle stages and concept is interesting. Initially, IBM planned to become a technology-based company by providing hardware to its client. Second, in the growth stage, IBM became a technology giant company with millions and billions of dollars in revenue. Finally, the maturity stage became active for IBM when the company was number one in providing big old computers and hardware. Eventually, in the ’90s, IBM declined and appeared on a bigger scale than ever.
In my opinion, I would like to add another stage, and I will call it the Stable Stage. IBM is currently at this stage. We cannot see any decline or growth; we are looking at a giant tech company with thousands of systems with revenue and profit for its stockholders. There is no considerable innovation or new product or service, only stable improvements for services and solutions.
The Change Management Model For IBM
What is the change management model? Change management models are ideas, hypotheses, and methods that deliver an in-depth strategy for organizational change. They strive to offer a focus on creating transitions, guiding the transformation strategy, and providing those differences are tolerated and put into the preparation and action. For example, the experience change model consists of seven stages, and in this part of the article, we will apply this experience change to IBM.
Understand: IBM found out that the company needs a transformational change to survive and make a profit. Competitors were doing better by providing services and solutions to their customers.
Enlist: At this stage, IBM created a task force team to make changes and tackle challenges. This stage is crucial for every company which is going through transformational changes.
Envisage: IBM, at this stage, creates a plan and strategy for each task force team.
Motivate: Now, IBM, at this stage, is trying to communicate with shareholders and teams on why transformational changes are crucial at this point. At this stage, companies must create a sense of urgency for change.
Communicate: IBM, at this point, continued to stay connected with shareholders with updated data on why change is happening. Excellent and effective communication is essential at this stage.
Act: At this stage, IBM started to act with new visions and strategies. This is a moment when everyone can see a company’s actual transformational change situation.
Consolidate: In this stage, IBM will continue monitoring and improving changes until the significant change becomes a company’s culture and spirit.
IBM | 2022
Nowadays, IBM is facing new challenges. It’s not the’90s anymore, and customers and their tastes in technology are completely different. One analyst said that IBM could be more profitable than other hardware businesses in the market currently, that more than half of its revenue is periodic. Pundits predict IBM’s revenue increase to rev in 2022.
According to the IBM website, IBM will hone its direction on its open hybrid cloud platform and AI abilities. In addition, the new IBM will concentrate on providing managed infrastructure services.
Technology companies must consistently consider how they can face growth by changing old strategies and approaches. For example, IBM did a fantastic job by changing many of its processes. As a result, IBM saved itself from fading from the market, and even now, IBM is still a giant technology-based company in the United States and the world.
Conclusion
In this article, we covered IBM’s transformational organizational changes. First, we discussed the transformation challenges and needed organizational design changes to support changes in IBM’s strategy. Then we covered how IBM’s new organizational structure donates to process and system strategy. Also, we analyzed the concept of the organization life cycle for IBM, and we will apply the Change Management Model to IBM.
Finally, I would like to mention that the future world will be based on AI, Quantum Computers and Cloud-Based services. Therefore, every technology company will work on its future by making strategies to tackle these critical future segments of technology.
