Lou Grestner will always be remembered as the architect of one of the world’s most successful corporate turnaround stories. The failure of organizational change. Customers were compelled to buy IBM’s products. IBM’s success in the 1970s and 1980s can be attributed to the organizational … "IBM Corporation Turnaround." Gerstner saw a need to make changes in some of the existing processes in IBM. We are sensitive to the needs of all employees and to the community in which we operate. However, O'Reilly and his coauthors see it differently. Lou Gerstner was a pragmatic leader who took action based on good quality information and who showed great respect for the collective knowledge that existed in an organization on the brink of collapse. Gerstner handled the severe financial crisis of IBM and kept IBM financial health solvent. Virtual worlds are associated with games; we explore their use in the novel conduct of social interactions in meetings, rehearsals, and brainstorming, and we argue that organizational … Gerstner provided a complete facelift to IBM. Gerstner delivered results for IBM. The new thrust in IBM was for the on-demand solutions. This instance assists trainees comprehend two points. Gerstner immediately confronted him and made him aware that employees were not his personal property, they belonged to IBM. IBM CASE STUDY: LEADING AND MANAGING CHANGE Name Course Tutor Date IBM Case study: Leading and Managing Change Summary Between 1992 and 2002, IBM went through immense transformation and organizational change. This article focuses on understanding the core concept of organizational change, how it works, forces that drive change and resistance to change. This realization by Gerstner led IBM software products to enable and to build upon open standards in a network-centric world. How is the Strategy and Structure of IBM linked. Gerstner was instrumental in shifting the mental model of employees from self-centric to customer-centric. 12/9/2002 IBM was in deep trouble when Louis V. Gerstner came on board as chairman and CEO almost a decade ago. The new study, titled "Making Change Work," developed by IBM Global Business Services' Strategy and Change consulting group, provides analytical perspective on the change-related … “Who Says Elephants Can’t Dance” describes how Louis Gerstner lead the organizational turnaround at IBM when it was at the verge of extinction. Change could, therefore, be seen as a departure from … Gerstner remodeled the IBM structure so that IBM could cater to e-business requirement of its customers ( IBM IT On Demand, grid computing and autonomic initiatives). Abstract: Managing change effectively is a main challenge in the sphere of change management. Your email address will not be published. Gerstner realized that IBM needed not only a corporate makeover. IBM shifted its focus towards selling optimized solutions rather than just products alone. Only one in five change … Also the stock price of the company during that period increased by 8 times. What Makes a Successful Business Website? The compensation system at IBM was revamped. He also made a bet towards “network-centric computing” which later gave rise to “e-business” – the convergence of internet and business. He focused on customers–and he used his ability to drive the focus into the employees by holding the leadership and management accountable. Despite all this attention, a recent study by Aiken and Keller (2009) mentioned that very little seems to have changed or improved, and they suggested a different framework. Change management moderates the risks that can cause failure (Jeff and Creasey, 2003). As a result, the purpose of the management committee was no more than a rubberstamp formality for a proposal. IBM’s latest Making Change Work study, which surveyed almost 1,400 individuals responsible for designing, creating or implementing change across their respective organizations, answers these questions and identifies a select group of companies — Change Architects — that have found the keys to making change work … Change … As the 50 year anniversary of one of their most popular products was quickly approaching, they knew it was time to transform the brand and reposition their offering. What was IBM’s strategy that made them so successful during the 1970s and 1980s? The focus of compensation shifted to a total corporate performance from a unit performance. Earlier, IBM used to have multiple advertising agencies hired by various product managers. Required fields are marked *. He introduced a re-engineering initiative which drastically reduced the overhead expenses of IBM. There was unhealthy competition among teams which led to lost productivity. Change the fundamental economic model – This strategy started by comparing expense-to-revenue of IBM with its competitors. Those involved in organizational project management must understand how to lead positive ch… Soon after his appointment as CEO, Gerstner identified that the unique competitive advantage of IBM was due to its scale and broad-based capabilities, and therefore advocated that “keeping the company together” will help IBM to utilize this unique advantage by positioning itself as software integrator. IBM is a multinational computer, technology and IT consulting corporation headquartered in Armonk, New York. In 1995, John Kotter published his groundbreaking work Leading Changeand since then, much attention has been devoted to the subject and literally thousands of articles and books have been written. Understanding Different Types of Supply Chain Risk, 4 Key Things Employees Are Looking for From Their Next Workplace, Supply Chain Integration Strategies - Vertical and Horizontal Integration, How to Motivate Your Team Through Mobile Messages, Supportive Communication - Meaning and Attributes, aspect of IBM’s strategy was its marketing strategy. In order to keep a strong focus on the existing IBM portfolio, he divested the application software business which opened partnership doors with application software leaders such as Seibel. So the services and consulting led growth had now catapulted the company back to its glorious days. The value of business lifestyle: how it affects organizational habits and how it influences efficiency for … The IBM Better Change methodology is a robust, structured framework delivered by IBM Global Business Services to address a range of organizational change management (OCM) needs, from transformational change to more operational and tactical change… Employees were apprehensive and not familiar about issues such as consensus building, corporate protocol and risk taking. Gerstner appointed as Chairman and CEO of IBM set out a vision for IBM which led to the major cultural changes and subsequent financial turnaround of the organization. IBM case study: An analysis of the changes that Palmisano began implementing at IBM in 2005 using the Tushman-O-Reilly Congruence Model According to the Tushman-O-Reilly Congruence Model, for an organization to "successfully transform for the next generation, its four key organizational building blocks of critical tasks, people, organizational … In one of his first meetings at IBM, Gerstner saw that all participant employees were wearing stark white-collared shirts except him. How Innovation Contributes to Competitive Advantage? The teams spent more time debating on the transfer-pricing terms rather than incorporating a smooth product transfer system for its employees. By their very definitions, projects, programs, and portfolios deliver new capability, which is embraced by stakeholders (good) or not (bad). Research on resistance to change in developing countries and in a large wood processing organisation in Ghana, however, is relatively few. Gerstner quotes “So keeping IBM together was the first strategic decision, and, I believe, the most important decision I ever made – not just at IBM, but in my entire business career”. During the early nineties, IBM was rapidly losing its market share in most of the markets it catered to its competitors. This paper provides an overview of key considerations in planning and implementing major organizational … Perhaps the most telling symbol of the negative change was IBM’s announcement of first-ever forced employee layoffs in 1991 and continuing layoffs in 1992 and 1993. Gerstner believed that most of the customers preferred a one-stop shop that offered all of the services at a single door. Another bottleneck in the IBM process was the management committee which comprises of six powerful IBM employees. The marketplace is the driving force behind everything we do, At our core, we are a technology company with an overriding commitment to quality, We operate as an entrepreneurial organization with a minimum of, We never lose sight of our strategic vision, Outstanding, dedicated people make it all happen, particularly when they work together as a team. In the early ’90s financial position of IBM was precarious. Gerstner viewed the dress code at work as a severe cultural problem that the IBM employee faced. Radical Thinking.Radical thinking is the primary and most defining characteristic of IBM’s organizational culture. Over the next ten years, the CSC had grown to be the largest corporate assistance program in the world, sending nearly 500 IBM … Known as Big Blue, IBM has an organizational structure that reflects the priorities of the business. How to start dialogue in an essay organizational case Ibm study change quality and performance improvement in healthcare chapter 4 case study answers. Later, he implemented a strategy to further strengthen the IBM’s software business by acquiring middleware firms as well as product firms such as Lotus. One of Senior Executive quotes “Reengineering is like starting a fire on your head and putting it out with a hammer.” IBM needed a top-to-bottom overhaul of its basic business operations, which Gerstner implemented. This article examines how applicable these two frameworks apply to the specific case of a Swedish construction company. Sell under-productive assets in order to raise cash – Under this strategic objective, IBM sold off unproductive assets to raise cash. Lou Gerstner introduced flexibility in dress at the work, giving employees the freedom to choice to wear what made them most comfortable provided they adhered to decency. Gerstner changed the “we are the best” attitude which the employees reflected despite IBM’s faltering health. He was convinced that it wasn’t wise to divide IBM into smaller units. When Gerstner came on board, the conventional advice and wisdom, from both IBM followers and industry experts as well as most of the IBM executives, was that the only way IBM could be saved from eventual bankruptcy and massive disaster was to break IBM apart into smaller companies. Gerstner analyzed and came to a conclusion that mainframes are indispensable in critical businesses like airlines and credit cards. Gerstner repositioned corporate strategy of IBM to keep IBM together and pulled off a successful turnaround for IBM. In a case like this where a company is struggling to survive, it is easy to understand and accept such change intellectually. Keep the company together – This strategy was implemented in order to help IBM to utilize its competitive advantage (resulting from its scale) and offer integration services to clients. This was formulated by inspiring employees to be motivated toward customer-defined success. Case study on IBM regarding leading and managing change. Personal essays about computer science dissertation on cyber crime pdf organizational case study change Ibm financial management topics for dissertation. In 2007, IBM launched the Corporate Service Corps (CSC), a global pro bono consulting program. An organization can be termed as a collective capacity of its employees to create value for itself and customer. The whole industry is abuzz with moving all information to the cloud, which can quickly make a product like IBM’s mainframe, seem irrelevant. What Should You Include in a Companies Operating Agreement? The case examined management’s perspective on the process of organizational change. In order to resolve this problem, Gerstner introduced a new organizational structure to improve the decision making process and enhanced the information flow  within IBM. In doing so he turned the business of IBM around from the brink of bankruptcy. Another of the Gerstner insight was that every big industry is built around open standards. For example, the Pathfinder tool enables the CASE STUDY 4 managers at IBM to be aware of the information related to every employee. Organisational change is typically conceptualised as moving from the status quo to a new, desired, configuration to better match the environment. Most studies and theories on change initiative, implementation and management have been carried out in developed countries and in other industries. Gerstner ended the concept of management committee since he found that IBM people have learned how to exploit the system to promote their own agendas. Lou Gerstner initiated the on-demand concept (or solution offering). One such process was the slow decision making and information flow among various business units (and headquarters) due to clashes between geographic units as well as product teams. Your email address will not be published. IBM Corporation Turnaround Case Solution. Gerstner set new goals, newer direction and newer priorities for IBM by starting IBM Global Services. This site uses Akismet to reduce spam. For example, emphasis on continuous innovation and product development is represented … Gerstner’s most important accomplishment was to establish a culture that brought employees of IBM closer to its customers. Gerstner led IBM’s transformation from geographical organization to a global, customer-oriented organization. IBM TIMELINE 1910 1950 1993 2002 Focus on large scale tabulating solutions for customers First slogan … Let us write or edit the case study on your topic "Organizational behavior in International Business Machine (IBM)" with a personal 20% discount. As summarized in “Who Says Elephants Can’t Dance?“, these principles are: Later, he formulated a strategic vision for IBM around “Services-Led Model”. In his 9 years at the helm, the company had grown by around 40% with the majority of the growth coming from the services and consulting division. He had laid a vision on what should be the focus areas for the company in the future. This helped business opportunities to increase. Before Gerstner joined, IBM had a tendency to use data and indices (subjective product milestones and customer satisfaction numbers), but Gerstner changed all these processes of measurements. Gerstner recommended a price-reduction plan for its customer, which he thought was most essential way to remain competitive in the mainframe market. The present study explores how change factors affect individuals, organization as whole and its stakeholders. This cultural trait continues as a major influence in the company’s development … Learn how your comment data is processed. Many transformational change efforts fail. By combining Kot… Gerstner felt that from a customer’s point of view, it would be highly cumbersome for them to go through a plethora of suppliers and zero in on a single one. Besides, through this application, the employees are now … Gerstner realized that IBM had a unique and expert capability to “genuine problem solving, the ability to apply complex technologies to solve business challenges and integration.” These sustainable value proposition enabled Lou Gerstner to bring IBM back from the verge of near extinction. Gerstner helped IBM to turnaround as a dominating technology landscape player at the start of the current century, just as IBM was in most of the last century. Best title for research paper about social … Gerstner basis for building IBM Global services was that an integrator, acting in a service role, and this integrator controls every other major industry. Employees were confused whether it was their teamwork or their individual aspirations that will help them get top management’s appreciation. Lou Gerstner created a Global Enterprise based on capitalizing IBM’s ability to “integrate all the parts” for the customers. Lou Gerstner observed that there was a great amount of jealousy among employees, each employee fiercely protecting his own privileges. Gerstner maintained his stand not to divide IBM as opposed to the views of many top IBM management officials who favored the division of IBM into smaller and supposedly manageable units. At IBM, employee aren’t just not resources but the main revenue generator. This study highlights the importance of change management in an organizational perspective. (Chaudron, 2003) One organization that had to go through organizational change is IBM. Another important aspect of IBM’s strategy was its marketing strategy. The transformation will be evaluated based on … Harvard Business School Case 600-098, March 2000. Gerstner changed the attitude of those in senior management at IBM who were more used to getting work done rather than getting to work. Gerstner hired Abby to analyze the marketing strategy of IBM and she suggested a need to consolidate all of the IBM’s advertising relationships into a single agency. The case explores senior management's perspective on the process of organization change. The pay structure was made performance based and variable component was introduced in the pay structure. Get help on 【 IBM Case study 】 on Graduateway Huge assortment of FREE essays & assignments The best writers! This study… For organizations, every new strategy involves transformational change. He found that most important aspect of organizational change at IBM was its culture — “I came to see, in my time at IBM, that culture isn’t just one aspect of the game–it is the game”. This approach not only saved the unnecessary huge advertising expenses resulting in confusing message for customers but it also gave rise to innovate advertising (“Solutions for a Small Planet”) which helped IBM transform its brand image to a global centralized firm with the ability to become world class integrator. With increased competition in the marketplace, there were better bargains that customers were getting without having to rely on IBM. The reason behind this was IBM’s software was compatible only with IBM hardware. Louis Gerstner was the chairman and CEO of IBM … Before Gerstner, in IBM there was internal resistance in form of internal department ego clashes, process driven culture and excessive decentralization which leads to slow decision making which was leading to strategy becoming non-implementable. The task involved the research and writing a case study report on the Information System Project Management A5 of theme park company.... Frank's All-American Barbeque Business Case Study. His vision was to position IBM as technology integrator in this industry. In July 1993, Gerstner identified (and later implemented) four major strategies for the recovery of IBM; In September 1993, Gerstner articulated the eight principles which will define the priorities of “new” IBM. Gerstner’s market-driven approach of doing business really helped to develop the “new” IBM culture. The mainframe business of IBM accounted for more than 90% of IBM’s revenue was fast deteriorating. Culture and Leadership at IBM Case Solution. The toughest challenge in the effort to change IBM’s culture which Gerstner faced were the employees and management at IBM. Gerstner had a sheer knowledge and attention of customers’ notions of success. Many insiders and Industry experts criticized IBM for selecting a CEO with non-technology background. GRAB THE BEST PAPER We use cookies to create the … Case Study: IBM’s Turnaround Under Lou Gerstner, Johnson and Scholes Cultural Web Model of an Organization, Case Study of IBM: Employee Training through E-Learning. Franks all-American BarBeQue is a successful business due to the owners principle of offering best food that attracted and retained the customers... Marketing Strategy Mercedes Benz Should Employ In Oman. Overall, the changes which Gerstner introduced in the organizational processes were vital in improving the speed of organizational processes. IBM’s people were one of the Gerstner’s targets for change. Gerstner’s quotes, “fixing IBM was all about execution” and “ IBM needed – an enormous sense of urgency.” Gerstner’s approach which is quoted as “Drive all we did from the customer back and turn IBM into a market-driven rather than an internally focused, process-driven enterprise.” IBM turnaround was all about execution and after that it was optimal ways to measure its effectiveness. According to IBM’s study, almost half of all organizational change efforts deliver less than half of their expectations. The management was planning to break the organization into individual businesses. Gerstner established the process of setting standards that enabled IBM’s solutions to be compatible with competitor’s products. But as he told MBA students at Harvard Business School, he wasn't the only one responsible for the change… Some organizational researchers question whether businesses can adapt and see IBM's recovery as an anomaly. The change management process. Gerstner’s single-minded focus was how IBM should respond to marketplace needs. IBM constitutes an interesting and representative case regarding a radical and simultaneously, successful transformation of a big, complex enterprise. Gerstner led IBM to abandon proprietary development and to embrace open software standards (J2EE and Web Services). The criteria’s for promotions were vastly reformulated. Mainframe business involves huge data processing and security and it cannot rely on desktops and business needed mainframes for this. At the end of Gerstner’s reign as the Chairman and CEO, the company employed 65,000 more people and the US$13 billion in losses notched up in the two years prior to his arrival turned into huge profits. Gerstner believed that the key to fixing IBM’s problem was “All about execution”. Gerstner opened channels of communication and send regular e-mails to employees across the globe keeping them aware of the process changes. When Gerstner took up the assignment of Chairman and CEO of IBM, he found that IBM had an unclear culture. The customer-facing parts of the organization were ready for change and agreed with … Case Study: IBM’s Turnaround Under Lou Gerstner “Who Says Elephants Can’t Dance” describes how Louis Gerstner lead the organizational turnaround at IBM when it was at the verge of extinction. Every project involves organizational change. “I knew that if IBM could serve as the foremost integrator of technologies, we’d be delivering extraordinary value.,” affirms Gerstner. IBM Case Study 1130 Words | 5 Pages. Re-engineer how business was done – Gerstner saw that the IBM processes were cumbersome, highly expensive as well as redundant. Gerstner decided to analyze the behavior of company’s employees and customers and apply his own interpretation of the company’s inherent strength. Hence, Gerstner concluded that it was the price and not the product that really mattered to the customer. Ibm case study 1. International Business Machine Case Study Nusaibah Roslan 2. The man largely responsible for this change … On analyzing performance of IBM during Gerstner’s reign, Gerstner was definitely the right choice for the job. The next major issue was keeping IBM intact as a single entity. Louis Gerstner was the chairman and CEO of IBM from April 1993 to March 2002. Gerstner focused on the idea that customers always wanted bundled solutions of services, software and hardware customized to the requirements of company and industries rather than a sheer catalog of standard products. The main reason behind this was that the IBM head in European region intercepted his e-mails. Gerstner addressed to resolve these problems by fostering more collaboration among teams and employees. Before this IBM had maintained a very shortsighted view reflecting that with the lowering of prices IBM will gather less profit and revenue. But change isn't just driven by executives. We are an established and reputable company, with over 10 years in the essay business. The case examined management’s perspective on the process of organizational change. Lou Gerstner argues that the most valuable technology and service companies are those OEM suppliers who leverage their technology wherever they find a huge opportunity; therefore, he remodeled IBM so that it can actively license its technology to be successful in the market place. IBM was obsessed with conflicts and internal rules, each employee trying to be overpower the other. 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John Akers, IBM's chairman, must confront how to transform a $60 billion, full line, global computer company that is the leader in every market it serves, yet losing share across the board. Gerstner’s transformation of IBM was one of the most successful corporate turnarounds story of the century. Gerstner discovered that the employees working in the European geographical region used to receive only selected communication from Gerstner. Gerstner focus was to stimulate the turnaround internally for IBM’s employees. Due to higher expenses at IBM as compared to competitors, a massive program for expense reduction was launched. Stock-based compensation was also provided and the bonus was linked to overall IBM’s performance. John Akers, IBM chairman, shall provide, as a full line of $ 60 billion, global computer company that is a leader in every market is turning, even losing share across the board. Another important feature that figured on the employee list of IBM was the dress code at work. Explain its various elements as described in the case? change. Managing Organizational Change– A Case Study on Huawei Abstract Leading and managing change in organizations is a process that involves initiating a change, sustaining it, giving it direction and purpose such that all employees are committed to it. "The IBM EBO process is simply one illustrative example for how multilevel selection can operate to help an organization … Lou Gerstner made the firm decision to keep IBM intact, and he changed its fundamental economic model, re-engineered how the company did business, and sold the under-productive assets. (Revised November 2000.) Austin, Robert D., and Richard L. Nolan. Gerstner realized that a difficult, painful and massive re-engineering effort was required to get IBM to dedicate resources in bringing value to the customer in the competitive marketplace. Gerstner helped IBM concentrate on the higher end of customer solutions consulting rather than the lower end outsourcing business. Gerstner developed the theme of the “new” IBM. The turnaround process at IBM began with a thorough analysis of profiles and needs of IBM’s customer. Many Senior executive referred to Re-engineering process in a humorous way. In 1990, IBM earned approximately $6 billion, but three years later IBM … Information System Project Management A5 Case Assignment. Lou Gerstner looked beyond the advice of splitting IBM but rather opted to preserve the real strength of IBM which was to understand the needs of its customers. And these steps helped IBM turn around and rise above all the expectations. In IBM s products change … IBM corporation turnaround case Solution consensus building, corporate protocol and risk taking catapulted! Their individual aspirations that will help them get top management ’ s employees realization! 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