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April 23, 2007
How the Cookie Guy and the Chicken Guy Saved IBM
Alan Deutschman, author of The Second Coming of Steve Jobs and Change or Die, is giving a pep talk to NPR executives and station managers at the NPR annual membership meeting in DC right now. He just finished telling a brief story about how IBM managed to save itself from oblivion.
How did IBM reinvent itself? The basic problem in the early 90s: it had been enormously successful but then nearly collapsed. They had the greatest talent, amazing research labs. Yet they almost became toast, losing billions of dollars, laying off 140,000 people. They realized they had great ideas but they weren't putting them to practice. New CEO Lou Gerstner noticed they were investing in ideas, but then would cut the budget just to save money that quarter. He went apoplectic, saying you can't cut investment in new business and innovation.
Lou came in from Nabisco, derided by career IBM folks as The Cookie Guy. Lots of resentment. He brings in Bruce Harreld, the co-founder of Boston Chicken - the Chicken Guy. Somehow they were going to run a high-tech company. Lou asks him, how often do we kill stuff because we're too busy defending old businesses. He found 22 new projects that got killed not because of merits but because the company was too set in its ways.
He started thinking about how children learn. First they learn from parents, then from people they respect and like. So who's respected in the company? One guy was named Rod Adkins - a career IBM guy that ran a successful unit. What motivated talented execs was revenue size and unit size. It's a status symbol, a form of recognition among peers. They used Rod as a guinea pig, asking him to start a new billion-dollar business from scratch, starting with basically no employees. Adkins new what had happened - he'd just been fired. He'd done everything right and new how to succeed. And out of the blue, blammo. He thought it was just a cover story to being fired. "What am I going to tell my mother?" he said. But Gerstner said, no, you're our only hope. We're serious about this, and the Chicken Guy can be your mentor to get started.
Adkins thought it was ridiculous, but they would get together every week for a few hours. Chicken Guy would ask him what problems he had. Adkins said I don't have any problems. His whole conceptual framework was how to look at the IBM bureaucracy. The Chicken Guy says no, all you have is problems when you start a new business. This went on for weeks, months, staring at each other. Finally they got to know each other, like each other. Adkins was able to spend the next three years forming a new business that generated more than two billion dollars in revenue. His success was used to motivate others within IBM to do the same thing. Other senior members started to go to the IBM leadership and said they wanted their own internal startup. They launched 25 new lines of business. A few failed completely, but others were successful, creating $15 billion in new revenue. So now, the prestigious thing at IBM isn't to run an established unit; it's to start a new unit from scratch and make it rock. -andy
Posted by acarvin at April 23, 2007 10:32 AM
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