The document summarizes IBM's leadership and changes under three CEOs from the early 1990s to present: 1) Louis Gerstner transformed IBM's organizational structure in the 1990s from mechanistic to organic and customer-centric, removed bureaucracy, centralized product development, and focused on market trends over internal rules. 2) Under Sam Palmisano from 2004-2011, IBM decentralized power and had thousands of leaders work collaboratively globally. ValuesJam encouraged independent thought among employees. 3) Virginia Rometty since 2011 has enhanced growth markets, bolstered services, and outsourced jobs to India, while acquiring Green Hat for $20 billion with no change in strategy.

1. Group 9
Ashutosh | Vasu | Anirbed | Tarun | Akhil | Kashvi | Nikil
IIM Lucknow

2. PRE LOUIS GERSTNER (EARLY 90S)
 Organizational Structure
-
Mechanistic structure
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Vertical and tall structure – ineffective communication within divisions
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Centralized product development
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Focus on internal rules rather than market trends and demand
 Organizational Culture
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Bureaucracy
-
Low stock ownership – strong property rights tied to employee longevity rather
than performance
 Product Line
-
90% earnings from mainframe business

3. IBM UNDER LOUIS GERSTNER (1993-2003)
 Factors for change
o Four clear priorities of 1993 - To be profitable, more competitive, increase
shareholder value and grow
o As an outsider, Gerstner had no emotional attachment
o Low focus on marketing techniques and public relationship
o Research department and market activities were not connected
o Customer relationships were deteriorating
o Executive – customer disconnect
o Overhead costs were high – Incurred high losses in 1992 and 1993
o More employees than needed

4. IBM UNDER LOUIS GERSTNER (1993-2003)
 Organization Structure Changes
o Organic structure
o Eliminated bureaucracy by decentralization – more authority to divisions
o Eliminated non-performing units – benchmarking against competitors
o Changed emphasis from Product centric to customer-centric
o ONE IBM - Consolidated its many advertising agencies down to one
, Ogilvy & Mather
 Organization Culture Changes
o Removed strong property rights – performance based culture
o Brought customer oriented culture in the organization
o Removal of White Shirt-Tie dress code

5. IBM UNDER LOUIS GERSTNER (1993-2003)
 Product Line changes
o Hardware and Software solutions
o Realized the IBM’s ability to provide integrated IT solutions to customers
o Avoided splitting of IBM into autonomous business units
 Effects of changes
o Ingrained corporate culture – mediocre workforce to excellent employees
o Recovered profits – growth of 12% in 1995 profits
o Shareholders richly awarded – earning per share rose by 44%

6. IBM UNDER SAM PALMISANO (2004-2011)
 Organization Structure Changes
Corporate Executive
Committee
Corporate Executive
Committee
Power
Centre India
Before:
• Power concentrated at the
centre
• Top down management structure
Power
Centre USA
Power
Centre …
After:
• Structure changed from one – point central
authority.
• Thousands of leaders work collaboratively
from across the globe
• Fulfil diverse customer requirements

7. IBM UNDER SAM PALMISANO (2004-2011)
 Organization Culture Changes
o ValuesJam
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Mega online chat for about 100,000 employees
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Redraft 100-year-old values
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Everyone has a platform to voice their opinions
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Encourage independent thought
 Product Line changes
o Decision of IBM to sell off its PC division to Lenovo
o Relatively small deal, worth less than $2 billion
o Lenovo licensed the rights to continue to use the IBM brand for a while

8. IBM UNDER SAM PALMISANO (2004-2011)
 Effects of changes
o Close in the trust gap between the clients and the company
o “$100 million trust fund” - $5000 fund to all managers to help
develop business or client relationship
o Innovation that matters – for the company and the world
o Trust and personal responsibility in all relationships
o Stock prices rose by 125%; sales raised from $81 billion to $107
billion

9. IBM UNDER VIRGINIA ROMETTY (2011PRESENT)
 Organization Structure Changes
o A Series of Management changes proposed
- Enhancing presence in growth markets
- Bolstering service business
o Outsourcing model adopted
- US workforce reduced by 30,000 while Indian workforce grew
from 9,000 to 75,000
 Organization Culture Changes
o Executive compensation aligned to earnings per share targets
o New Acquistion of Green Hat for $20 bn – no changes in strategy

10. FINANCIAL PERFORMANCE

11. THANK YOU