Cutting ‘Old Heads’ at IBM
IBM has one main problem:  They are a sick culture.  One consequence is that they are a sick company.  Their sickness causes them to do self-destructive things which makes them an even sicker company.<p>Here are some parts of the sick IBM culture:<p>(1) Marketing.<p>&quot;You might think that IBM is a technology company or a computer company, but you would be wrong.  IBM is a marketing company:  They look for opportunities to sell.  They might get into grocery stores tomorrow if they thought that there was money to be made there.&quot; -- IIRC from a manager of a large IBM branch office.  Same guy, IIRC: &quot;You might think that IBM research comes up with powerful new technology.  IBM development turns this technology into good, new products.  Then IBM marketing sells these products and makes money.  That&#x27;s exactly backwards:  Instead, IBM marketing comes up with what new products can be sold at a profit.  IBM development builds these products and gets them ready for the market.  If development has trouble, they may go to IBM research for solutions.  What IBM charges for the products has nothing to do with what IBM&#x27;s costs are:  Instead, IBM sells the products for what the customers are willing to pay.&quot;<p>Consequences: (A) IBM respects people who do well managing marketing efforts.  (B) IBM does not much respect technical people or people not in management.  (C) The decision makers in IBM are marketing people who are not very technical.  So, these people are slow to see the market and marketing potential of new technology.  (D) Long IBM&#x27;s approach to what to sell was that their main customers, large banks, insurance companies, manufacturing companies, would grab their IBM marketing representatives and scream about problems they had.  With enough screaming with clearly enough market potential, finally IBM would develop and sell a solution.<p>(2) IBM Management<p>In this way, part of the IBM culture was the primacy of the middle and upper managers.  High stability was valued.  Innovation was not.  The higher managers had staffs to thoroughly study each decision.  Then the manager had plenty of  cover for the decisions they did make.<p>IIRC, an early remark of IBM CEO Lou Gerstner was that &quot;IBM is the most arrogant, inwardly directed, process oriented company I&#x27;ve ever seen, and I&#x27;ve seen a lot of companies.&quot;.<p>(3) Stuck with Mainframes<p>So, these attitudes caused IBM to miss out on essentially everything past 3270 terminals connected to CICS (customer information control system -- for building and running interactive applications, e.g., for order entry) on an IBM 370 family <i>mainframe</i>.<p>So, sure, can see this situation as a case of &quot;The Innovator&#x27;s Dilemma&quot;.  I.e., IBM was slow to get into lines of business that would compete, under sell, undercut, beat IBM&#x27;s mainframe, cash cow business.<p>(4) IBM Missed out<p>Long a standard attitude in IBM
was that IBM needed only high
margin businesses and should not
try to compete in low margin businesses.  So, with this thinking, IBM passed on the businesses of Intel, Microsoft, Cisco, Oracle, Google, Qualcomm, Apple, etc.<p>So, IBM missed out on the growth of TCP&#x2F;IP, Cisco, Intel, Microsoft, the Internet, Web browsers, Google, Facebook, Amazon, Apple, etc.<p>With high irony, IBM long made the crucial, core chips used in the high end routers of Cisco and Juniper.  Why?  IBM had a microelectronics division, and they saw those chips as a business opportunity.  But IBM did not pick up that ball and run with it to compete against Cisco or Juniper in high end routers.  Due to J. Cocke and his 801 computer, IBM Research was early in RISC.  There was some usage of RISC in some IBM mainframe I&#x2F;O subsystems and in IBM&#x27;s AIX workstation lines, but RISC became a big thing (e.g., the current Hennessy, Patterson Turing award that claims that now 99% of processors are RISC) but apparently not for IBM.  IBM was ahead in magnetic recording with giant magneto resistance disk heads, but Western Digital, etc. were successful with disks but not IBM.  IBM had high end research on architecture, algorithms, and software for high end disk clusters, but, IIRC, EMC made the big bucks there, not IBM.  IBM Research was early into &quot;wearable&quot; computers, but Apple got rich with the iPhone, etc., not IBM.  At one time, IBM actually ran all of the Internet, but they never saw the opportunity there until too late.  IBM had an early Web browser but let others get big leverage in the browser wars.  At one time, IBM had the TCP&#x2F;IP stack in chip hardware, but they failed to make big bucks with that.  At one time, maybe still, much of the backbone of the Internet needs an IBM-invented amplifier that amplifies the optical signals on the optical fibers without converting back to digital; that was great leverage over the backbone of the Internet, but IBM didn&#x27;t take that opportunity.  The chip manufacturers are only just now moving to extreme UV for their light sources, but parts of IBM saw the point back in the 1980s or so and built a cyclotron as an X-ray source for a microelectronics lithography light source.  Today there are lots of chip companies -- Intel, AMD, Qualcomm, etc. -- and several high end chip foundries but apparently IBM is not a major player there.  IBM was early into social computing, with Prodigy, etc., but AOL and later Facebook did well.  Prodigy was also with Sears and for on-line selling, but Amazon made the big bucks there.  IBM was early into really good work in virtual machines, e.g., the 360&#x2F;67 of 1967 and its CP&#x2F;67 virtual machine software.  But VMware made the big bucks with virtual machines.  IBM was a leader in relational database, with System R and DB&#x2F;2 and the software on the System&#x2F;38, etc., but Oracle, SQL Server, etc. are the database  success stories now.  IBM had object oriented software in firmware in 1970 or so, but apparently IBM never became a leader in object oriented computing.  PCs?  IBM was essentially the leader, but  Microsoft and Intel made the big bucks from PCs, not IBM.  Cloud computing?  I&#x27;ve heard of Amazon, Microsoft, and Google but much less about IBM.  Laser printers?  Same song, next verse.<p>(5) Defeat from Jaws of Victory<p>It goes on this way:  In plain terms, from 1980 to 1990, IBM was essentially the technology leader in essentially everything in computing, but the IBM top managers never saw how to make money with that technology.  So, 1990 computer and Internet technology, the open door for likely the biggest step up in technology, economic productivity, and more in all of human history, and IBM was determined to ignore it.<p>It appears that generally IBM is a massive case of organizational behavior goal subordination:  The middle and upper managers want to crush anything new; they are not successful in this effort outside  IBM but quite successful inside IBM.<p>For many years, the IBM division managers would meet at the Armonk HQ, give their financial results, nicely ahead of projections, and project even better results for the next year.  But near 1990, somehow the results were commonly less good than the projections.  The consensus was that &quot;God had ceased to smile on IBM&quot;.<p>(6) For Individuals<p>For a worker in the US economy, for a good job, income, and financial security, it is their responsibility to get that done.  A very common approach is to start and run a successful business.  An electrician who has a truck and an assistant and who stays busy can do better financially than 80% of the US IBM  employees.  Same for a guy who has several crews mowing grass and plowing snow; same for a guy doing well running several McDonald&#x27;s, Burger Kings, or Wendy&#x27;s.  Same for a dentist.  A K-12 school teacher or a nurse has a more stable career than nearly anyone in IBM.<p>(7) Firing People<p>IBM fires lots of people because IBM management doesn&#x27;t know how to organize work for those people in ways that make money.  IBM likes to fire older people so that they can blame the failures on the older people being &quot;behind&quot; in technology.  Also the managers don&#x27;t like the older, technical people as subordinates because the older people know too much and can challenge the manager.  In particular, the managers don&#x27;t like technical people and don&#x27;t want any technical people who know more about technology than the managers.  Since the managers with respect are marketing people with poor technical qualifications, those marketing managers  like to fire to older experts in technology.  It&#x27;s dysfunctional organizational behavior goal subordination, arrogant, inwardly directed, process oriented, etc.<p>(8) Future of IBM<p>The solution?  Sure, Darwin is on the case:  Slowly IBM will shrink and disappear.  Maybe near the end, Bill Gates will buy all of it and put what is left of it in a museum.