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. In doing so he turned the business of IBM around from the brink of bankruptcy. Gerstner opened channels of communication and send regular e-mails to employees across the globe keeping them aware of the process changes. Before this IBM had maintained a very shortsighted view reflecting that with the lowering of prices IBM will gather less profit and revenue. 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. Best title for research paper about social … (Chaudron, 2003) One organization that had to go through organizational change is IBM. Gerstner’s transformation of IBM was one of the most successful corporate turnarounds story of the century. Lou Gerstner initiated the on-demand concept (or solution offering). 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. 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. Before joining IBM, he had worked on various consulting assignments at McKinsey and led successful organizational changes at American Express and RJR Nabisco. 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. Gerstner discovered that the employees working in the European geographical region used to receive only selected communication from Gerstner. 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. What Should You Include in a Companies Operating Agreement? Also the stock price of the company during that period increased by 8 times. Louis Gerstner was the chairman and CEO of IBM from April 1993 to March 2002. 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. 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. “Who Says Elephants Can’t Dance” describes how Louis Gerstner lead the organizational turnaround at IBM when it was at the verge of extinction. This helped business opportunities to increase. 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. In 1990, IBM earned approximately $6 billion, but three years later IBM … 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”. Gerstner repositioned corporate strategy of IBM to keep IBM together and pulled off a successful turnaround for IBM. 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. The value of business lifestyle: how it affects organizational habits and how it influences efficiency for … 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. Gerstner set new goals, newer direction and newer priorities for IBM by starting IBM Global Services. IBM Corporation Turnaround Case Solution. Odia essay … Required fields are marked *. As summarized in “Who Says Elephants Can’t Dance?“, these principles are: Later, he formulated a strategic vision for IBM around “Services-Led Model”. For organizations, every new strategy involves transformational change. Abstract: Managing change effectively is a main challenge in the sphere of change management. 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. Gerstner provided a complete facelift to IBM. 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). Sell under-productive assets in order to raise cash – Under this strategic objective, IBM sold off unproductive assets to raise cash. Your email address will not be published. This cultural trait continues as a major influence in the company’s development … 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. IBM was obsessed with conflicts and internal rules, each employee trying to be overpower the other. Learn how your comment data is processed. How to start dialogue in an essay organizational case Ibm study change quality and performance improvement in healthcare chapter 4 case study answers. 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. 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”. Employees were apprehensive and not familiar about issues such as consensus building, corporate protocol and risk taking. 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 … GRAB THE BEST PAPER We use cookies to create the … Stock-based compensation was also provided and the bonus was linked to overall IBM’s performance. Gerstner changed the “we are the best” attitude which the employees reflected despite IBM’s faltering health. 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. This site uses Akismet to reduce spam. This was formulated by inspiring employees to be motivated toward customer-defined success. He focused on customers–and he used his ability to drive the focus into the employees by holding the leadership and management accountable. Get help on 【 IBM Case study 】 on Graduateway Huge assortment of FREE essays & assignments The best writers! The present study explores how change factors affect individuals, organization as whole and its stakeholders. IBM shifted its focus towards selling optimized solutions rather than just products alone. (Revised November 2000.) Gerstner recommended a price-reduction plan for its customer, which he thought was most essential way to remain competitive in the mainframe market. Overall, the changes which Gerstner introduced in the organizational processes were vital in improving the speed of organizational processes. 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. Over the next ten years, the CSC had grown to be the largest corporate assistance program in the world, sending nearly 500 IBM … Customers were compelled to buy IBM’s products. Gerstner led IBM’s transformation from geographical organization to a global, customer-oriented organization. We are sensitive to the needs of all employees and to the community in which we operate. His vision was to position IBM as technology integrator in this industry. In one of his first meetings at IBM, Gerstner saw that all participant employees were wearing stark white-collared shirts except him. The toughest challenge in the effort to change IBM’s culture which Gerstner faced were the employees and management at IBM. 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. Another of the Gerstner insight was that every big industry is built around open standards. 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… This study… IBM’s success in the 1970s and 1980s can be attributed to the organizational … Radical Thinking.Radical thinking is the primary and most defining characteristic of IBM’s organizational culture. He had laid a vision on what should be the focus areas for the company in the future. 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 teams spent more time debating on the transfer-pricing terms rather than incorporating a smooth product transfer system for its employees. 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. Another bottleneck in the IBM process was the management committee which comprises of six powerful IBM employees. The case explores senior management's perspective on the process of organization change. So the services and consulting led growth had now catapulted the company back to its glorious days. Gerstner’s single-minded focus was how IBM should respond to marketplace needs. 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. IBM Case Study 1130 Words | 5 Pages. What was IBM’s strategy that made them so successful during the 1970s and 1980s? change. Organisational change is typically conceptualised as moving from the status quo to a new, desired, configuration to better match the environment.

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