A transformational change at IBM

Published on 6th August 2019

How IBM inspired transformation changes all over the world


This is the true story of a successful Agile change initiative in a large company, such IBM transformation, and identifies some common elements for successful organizational change; it describes what they did, why, and explicitly how.

Back in the early 1990s, IBM was in trouble. Its sales force was selling hardware when customers wanted solutions; it produced losses instead of profits; and, for the first time,  downsizing initiatives replaced lifetime employment. However, the Agile Transformation was the key.

A recent study of 1,500 change practitioners worldwide found that success in transformation projects hinges primarily on people rather than on technology. The study also found that about 60% of change efforts fail.


Defining the Agile Transformation

▶ The starting point for the task force was the conceptual design (vision and framework) for the Agile Transformation prepared in late 1991 and early 1992 by the executive sponsor and the task force leader and endorsed by the general manager. The task force worked in the following groups: Client team, Platform team, Solution team, Maintenance Service team, Opportunity Management team, Measurement and Compensation team, Cross-Team issues.

The groups comprised of 100 senior, but non-managerial, people whose rank was in the top 10% in each of their current roles. Four managers were in charge of coordination of Agile progress and issues for their respective teams.

Each team had a designated lead who had a task to develop for their areas:
• Mission, roles, and responsibilities;
• Process steps;
• Positions;
• Functional organization description;
• What the functional organization is not;
• Primary skills required;
• Methodology for determining the actual result;
• Recommended specific results. (For example, the solution team needed to identify which solutions should be fielded during implementation and why.)
▶ The task force, with the help of many others who worked on special Agile teams to address specific issues, developed an organizational approach, processes, and management systems intended to transform the business into one that would:

• Deliver customer mission-critical solutions through IBM consulting and systems integration services.
• Apply new marketing approaches for their hardware and software platform business.
• Make them more responsive and competitive by bringing the right expertise to the right opportunities.
• Position them for sustained profitability and growth.

Matrixed (Project) Organization

The functional organizations in the planned scenario were responsible for skill development, career planning, and career management, providing a critical mass of expertise and delivering resources for projects or opportunity teams. The functions were: Client, Solutions, Platforms, Service operations, Business support.

They resourced projects by drawing people from the functional teams to create virtual project teams. This resource was allocated and balanced by the group of opportunity (portfolio) managers, based on the initial prioritization of an opportunity.

The objective was to move the right people, each of whom had high skills in his or her own discipline. They moved to a project that made it through the selection processor to a potential project that required such resources to properly qualify it. Also, the expectation from the virtual team was to produce better results and higher customer satisfaction, because specialists made it up with intention to bear on a complex customer need.


Opportunity Management Process

One of the most important things to understand in an Agile Transformation is that leaders need to develop substantially new mind-sets and capabilities. To support this purpose, the task force opportunity management team developed a process guide explaining the nine-step process, along with a quick reference card.

They developed and taught examples of the process in action. In addition, IT staff installed information systems to support the process, including a database to manage opportunities and an organizational knowledge repository, similar to today’s CRM systems.

Each opportunity was assigned to one of the opportunity managers (one per discipline), to qualify the lead and acquire resources to support it. In effect, the team of opportunity managers determined the portfolio. Prioritization of opportunities gone by expected financials, customer relationship (including history and growth), perceived competitiveness of the IBM solution (Can we win it?), and impact on market share.


“Devil is in the details”

By now, lots of communication had taken place. But making the transition involved detailed planning, down to the individual customer and the individual employee. Also scripted presentation was prepared, to be delivered to each customer by the current sales team.

It explained what IBM was doing, why they were doing it, and why it would be good for the customer. Written FAQs were also provided, and current sales teams were trained on how to deliver the message. Also target schedules were provided and managed to ensure rapid delivery. The transition was also defined down to the individual employee level. Also, developed complete position descriptions.


Why They Succeeded

Many large organizations are faced with the necessity of an Agile transformation and for most, this is a major challenge. The IBM Southern California Trading Area successfully transformed its business in 1993, based upon the work of the task force.

IBM revenue grew from about $64.5 billion in 1992 to $107 billion in 2011. According to the same annual report, pre-tax income grew from $9.6 billion in 2000 to $22.9 billion in 2011 (IBM, 2011).

Top management had vision and reinforced this support throughout the Agile process. Therefore, they developed a conceptual design for implementation ahead of time. Also they had the top-ranked people on the task force. They knew the “as-is” and could envision the “to be.”


What is the point

We shared this experience and example as a reminder that changes are necessary even for the most successful companies. It is also purpose to show that troubled companies can find their way back if they are willing to reinvent themselves. If they are willing to make them functional and relevant in nowadays global economy. Like IBM did it.

It is not easy and smooth to achieve this. Of crucial importance is to understand that transformation is a constant and continuous process that can never end. Furthermore, you must embrace the notion that when faced with tough times your goal must be not merely to survive but to succeed, and that success comes through leadership.

The IBM’s approach intent to help companies make their transformation successfully by combining technology and services for a customized solution. This can be long and challenging journey, but outcome will be surprisingly good!