Business Improvement Methods
BUA5BIM
Carlos Sada (15988448), Donaldo Suazo (15952798), Dragi Pejcinovski (15006480),
Kati Pekonen (16387277) & Thomas Frivold (16394403)
IBM – Business Improvements
Agenda
• History
• Present
• Why and when change?
• Organizational behaviour\Change Management
• Corporate Culture
• Corporate Social Responsibility and Innovation
• Example of Product Development/Strategy
• Conclusion
IBM – Business Improvements
History
• Computing Tabulating Recording Corporation incorporated 1911
•1924 IBM name for the whole company
•1940’s international expansion
•1950-60’s developing electronic computer technology + business & social
innovations
• Turmoil late 1980’s
• 1990’s moves into new growth businesses
-> E-business solutions!
Source: IBM homepage
IBM – Business Improvements
Present
• Manufactures and sells computer hardware and software
• Infrastructure, hosting and consulting services (from
mainframe computers to nanotechnology)
• ~400 000 employees
• Net income USD 12.334 billion
• Business units:
•Global Technology Services
•Global Business Services
•Software
•Systems & Technology
•Global Financing
Source: Annual Report 2009
IBM – Business Improvements
Why/When to change?
• Development of share price 1962-2010
IBM – Business Improvements
Why/When to change?
• Development of share price 1990-2010
Sep 1993:10,50
USD
IBM – Business Improvements
Organisational Behavior - Theory
Decisional
Disturbance
handler responsible
for correcting
actions
…will do things the
IBM way or work
somewhere else
(Louis Gerstner
1993).
Interpersona
l
Leader
Thomas J Watson
(1935) enabled
the individual
within IBM by
created the
mantra of THINK
Mintzeberg’s
IBM – Business Improvements
Organisational Behaviour - Theory
What needs to happen?
"Work out how you can abolish
yourselves before someone
else does it for you.“ (Bruce 1994)
IBM – Business Improvements
Organisational Behaviour – Individual
Roles
IBM being very successful organisation caused people
not understand that it didn't work any more.
IBM – Business Improvements
Organisational Behaviour – Individual
Roles
Why does this happen?
“school bully complex….
people follow the behaviour patterns ….
managers have been used to a command-and-control.”
(Heller 1994)
IBM – Business Improvements
Organisational Behaviour – Individual
Roles
Learning comes from "doing", but all the reward
systems were geared to selling.
"What is the point of making the product defect free if
the customers doesn't want it?"
IBM – Business Improvements
Application of motivation - Theory
Herzberg’s “Two Factor Theory” (1968)
Does anyone know when and where it was initiated?
IBM – Business Improvements
Application of motivation
Job enlargement created in the 1940’s by IBM .
It was about adding more judgement and skill.
Arose from a practical sense and had less to do
with theory.
IBM – Business Improvements
Application of motivation
IBM never really understood that total quality:
stage 1; which is reducing defects
stage 2; which is pleasing the customer more than
anyone
stage 3; having employees who enthusiastically
contribute
At IBM layer after layer of hierarchy had been built up,
slowing down the decision-making process
IBM – Business Improvements
mini
Conclusion
Will IBM be able to move into the 21st
century business community as a proven
leader and create a successful product?
New Culture or Back to Roots?
IBM: Decline or resurrection?
IBM's comeback may be a
mirage.
IBM – Business Improvements
Application of motivation
IBM uses the best of its recruits to
create better managers.
The foundation of IBM’s decision
making process; individual decisions
matters- Think.
IBM – Business Improvements
Application of motivation
65% (40,850) account for women in executive
position in IBM.
Management say they want women to come to
IBM and aspire to reach executive levels.
They recognise that people have a life outside
work. (Tsadik 2007).
IBM – Business Improvements
Organisational Change
“Individual organizations are largely
motionless, like bacteria, change occurs
in the population as a whole as old forms
are replaced by new ones that better fit
the changed context”
(O'Reilly III, Harreld &Tushman 2009).
IBM – Business Improvements
Corporate Culture
“Is significant in the behavior of everyone with in an
organization and, if carefully crafted, can have a
significant positive effect on organizational success.”
IBM – Business Improvements
Corporate Culture - Background
• Lost of $16 billion in three years (1990-1993)
• Lost Halve its share value in eight years
• 175,000 employees lost their jobs.
IBM’s corporate culture at that moment was the product of two predominant
forces:
•(1) the run away success of System/360, and
•(2) IBM’s focus (pre 1993) was highly product centric, and product
development was tightly confined in different separate business units.
IBM – Business Improvements
Corporate Culture - Reinvention
Louis Gerstner
- CEO from 1993 to 2002
- Never worked in the computer business, was brought in to rescue
IBM.
- Quickly set IBM in a new course, based the new corporate culture
on the belief that “The whole IBM was worth far more than the sum
of its parts”
- Defined corporate culture as “the collective capacity of its people to
create value”.
IBM – Business Improvements
Corporate Culture - Change
•Main goal was the Reinventing of IBM as retraining corporate “Memory”
•Communicating to Create a Sense of Urgency
•Introduced concepts: “Win, Execute, Team”
•Shift the fundamental power base in side IBM (Reorganize the company based on Global
Industry teams to deliver value to customers)
•Change Executive Incentives
•Declared e-business as the “moon shot”,
•Invested more than $5 billion in e-business marketing and communications
•Placed IBM as a Service-led company, not technology-led. “Do everything possible to create
value for the customer”
•Refocused in research, “Research is the foundation for IBM’s competitive advantage”,
”Research is the future”
IBM – Business Improvements
Corporate Culture – Result
Samuel Palmisano (current CEO)
•Continues the same philosophy
•Focusing on CC
•Emphasising on CSR matters
Corporate culture today in IBM is shaped around investing in the IBMer (aprox.
400,000).
–Personal learning account program
–Competitive compensation
–Innovation in benefits and wellness
–Diversity/ Gay rights
IBM – Business Improvements
Corporate Culture – Company Values
• Values created with the employees - “JAM 2003”
Dedication to every clients success
Innovation that matters – for our company and for the world
Trust and responsibility in all relationships
JAMs
• 2004 to survey on best practices among 52, 000
employees.
• 2008 global innovation Jam with employees, clients,
business partners and academics
IBM – Business Improvements
Corporate Social Responsibility
IBM – Business Improvements
Community
 “innovative
products and services are
the driving forces behind IBM’s vision
of a smarter planet”




Education
Disaster Response
Veteran Assistance
Humanitarian Supercomputing
IBM – Business Improvements
Education



KidSmart Young Explorer software
– 45,000 units in 60 countries
Reading Companion®
– 1,000 schools in more than 20 countries
EX.I.T.E. (Exploring Interests in Technology and
Engineering)
– 6,000 girls
IBM – Business Improvements
Disaster Response


Donated money, time, and technology
Provide critical capabilities that enable
faster and smarter responses
• Software for missing persons
registries
• Asset tracking
• Logistics management
IBM – Business Improvements
Disaster Response

2001
–
–


U.S. Gulf Coast,
hurricanes Katrina and Rita Mexico
Pakistan, earthquake

–
–
Indonesia, Mt. Merapi,
Volcano/earthquake
Guinsaugon, Philippines, landslides

China, earthquake
Bihar, India, flooding
2009
–
–
–
–
–
2006
San Diego, wildfires
Peru, earthquake
Tabasco, Mexico, flooding
2008
–
–
2005
–
–
–

Thailand, India, Indonesia and Sri
Lanka tsunami
2007
–
–
–
2004
–


new York City, September 11
Gujarat, India, earthquake
Mexico, H1n1 response
Indonesia, earthquakes
Vietnam, flooding
italy, earthquake
Taiwan, typhoon
2010
–
–
Haiti, earthquake
Chile, earthquake
IBM – Business Improvements
Environment
1. Energy conservation and climate
protection
2. Process stewardship
3. Product stewardship
IBM – Business Improvement
Energy conservation and climate
protection
IBM – Business Improvements
Process Stewardship



As of January 31, 2010
IBM eliminated all known uses of:
– perfluorooctane sulfonate (PFOS)
– perfluoro octanoic acid (PFOA)
Invention of a new type of fluorine-free
photoacid generator
IBM – Business Improvements
Product Stewardship
 Product
and data center energy
efficiency
 Product packaging
 “Green” chemistry for increased
recycling
 Product end-of-life management
(PELM)
IBM – Business Improvements
Product end-of-life management
IBM – Business Improvements
CSR as a Business Improvement
Method


Effective Marketing Tool
– Recognition of
involvement
– Brand differentiation
Reputation builder
– Attracts more
customers
– Entices quality
employees
– Increases job
satisfaction

Preventive Strategy
– Avoid negative media
exposure
– Fortifies relationships with
community and NGO’s

(Redman 2005)
IBM – Business Improvements
CSR and Company Performance




Adds value to products and services
Adds to consumer preference
Higher job satisfaction leads
Creates a competitive advantage

(Keinert 2008)
Green IT
Let’s Build a Smarter Planet
3 big ideas to build
one smarter planet
3 big ideas to build
one smarter planet
Let’s Watch a Video
IBM
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IBM’s comprehensive global environmental management system in place
since 1970s
42% of IBM’s employees do not regularly come into an office saving $100M
annually in real estate costs
Improvements in chip making process saving 20M gallons of water, 15K
gallons of chemicals and over 1.5M kilowatts of electricity annually…
achieving $3M in annual savings while increasing production over 30%
Recycled 1 metric ton out of 2 metric tons of IT equipment manufactured
and sold
IBM is a charter member of Chicago Climate Exchange, Green Grid, EPA
Climate Leaders, WWF Climate Savers, WRI’s Green Power Market
Group, and many other organizations
To realize the benefits of environmental sustainability, “we” must take a
systemic view of its value chain….
1–Green infrastructures
Take out cost and
improve the efficiency of
IT and other infrastructure.
Manage environmental
impact of assets.
2– Sustainable solutions 3– Intelligent systems
Increase organizational
efficiency, abating impact
of processes, products
and people.
Decrease employee
environmental impact with
remote work and
collaboration strategies.
IT
MANUFACTURING
WORKFORCE
Use predictive analytics
for water management.
Optimize power grid
performance; automate,
monitor and control twoway flow of energy from
power plant to plug.
SUPPLY CHAIN
CUSTOMERS
TRANSPORTATION
FACILITIES
1
IBM Green Infrastructure is an instrumented and interconnected
system enabled by intelligent energy management.
IT Equipment
Applications and Data
 Energy efficient hardware
 Virtualization and consolidation
 Active energy management
 Tiered storage
 Lifecycle management, retention, archiving of data
 Optimization of application servers
 Application performance monitoring
 Data deduplication, compression and clean up
Data Center
Real estate and facilities
 Accurate thermal and energy usage assessments
 Extend life of existing infrastructure
 Rationalize infrastructures across company
 Design flexibility into new data center infrastructure
 Trend analysis and building maintenance diagnostics
 Building management systems integration
 Process management automation
 Dashboard reporting
Energy
Management
 IT and Infrastructure interfaces
 Threshold controls
 Optimize assets for energy efficiency
 Track and verify energy efficiency
2
Sustainable solutions -help IBM account for the environmental and
social impacts of doing business.
Governance & Business Strategy  Develop CSR and sustainability strategies
 Benchmark for sustainability and corporate social responsibility (CSR)
 Develop strategies to reduce energy and CO2 emissions
 Provide reliable and verified collection and reporting of energy and environment
data to streamline compliance
Business Process Management
Product & Supplier Management
Workforce & Stakeholders
 Apply lean and six sigma principles to
reduce energy and water usage, CO2
emissions and waste generation
 Optimize the supply chain for service
levels, quality, cost, and CO2 emissions
 Product Lifecycle Management
 Travel reduction and work from
home strategies
 Model, simulate, redesign and
automate processes for energy
efficiency and environmental impact
Distribution & Logistics
 Reduce use of paper in business
processes
 Monitor & analyze green KPIs across
operations
 Adapt processes dynamically to
environmental challenges that affect
operations
 Optimization strategies to balance
environmental impact and cost
 RFID tagging and tracking systems
 Networked sensors and meters for
environmental data collection
 Distributed employee collaboration
via email, instant-messaging, online
conferences, and other tools
 Online events and collaboration
Jams
Intelligent systems gather, synthesize and apply
information
to change the way entire industries operate.
3
Smart water
Apply monitoring and
management
technologies to help
reduce the use of water,
as well as related
energy and chemicals.
Smart traffic
Use real-time traffic
prediction and dynamic
tolling to reduce congestion
and reduce CO2 emissions
while positively influencing
related systems.
Smart energy
Optimize grid performance;
automate, monitor and
control energy flow, prevent
outages, restore outages
faster and allow consumers
to manage energy usage.
Congestion
Water
Energy grid
Chemicals
Energy
Carbon
emissions
Carbon
emissions
Noise
pollution
Energy
Public
transportation
Energy
sources
Smart home
IBM only just begun to uncover what is
possible on a smarter planet.
The world will continue to become smaller,
flatter and smarter. We are moving into the
age of the globally integrated and intelligent
economy, society and planet.
Through green infrastructures, sustainable
solutions and intelligent systems, smart
organizations can achieve real business
benefits while still driving growth.
IBM – Business Improvements
Conclusion
 Managed
to change and improve
 Different actions can create
improvement
 Biggest changes:
 Cultural
change
 Focus on customers
 Changes in products
 CSR / More than shareholder value
 Long term strategies
IBM – Business Improvements
Conclusion
IBM – Business Improvements
References
Bruce,
L (1994). IBM: Decline or resurrection? The Management Decision inte.
Management Decision. London: 1994. Vol. 32, Iss. 8; pg. 5, 6 pgs
Fung, B (2007). Integration of Managerial Roles.
http://www.hkma.org.hk/hkmanager/hkmgr2007v3/eng/archive/pz.asp (cited 26th
Aug 2010)
 Geert Hofstede Analysis. http://www.cyborlink.com/besite/hofstede.htm (cited
25th Aug 2010)
Heller, R. (1994). IBM: Decline or Resurrection? The Management Decision
Interview. Management Decision, Vol. 32 No. 8, 1994, pp. 5-10
John, G (1994). IBM's comeback may be a mirage. Computerworld. Framingham:
Jan 31, 1994. Vol. 28, Iss. 5; pg. 35, 1 pgs
Moore, A (2009) Organizational Behavior And Business Management‐ IBM.
http://www.andrewpmoore.com/wpcontent/uploads/2009/12/Organizational_Behavior_and_IBM.pdf (cited 28th Aug
2010)
O'Reilly III, C, Harreld, B & Tushman, M (2009). Organizational Ambidexterity:
IBM and Emerging Business Opportunities. Stanford Graduate School of Business
Research Paper No. 2025
Tsadik, R (2007). IBM Knows Mother. Incentive; Mar 2007; 181, 3; ABI/INFORM
Global pg. 39
Redman, E. (2005), Three models of corporate social responsibility:Implication for
public policy, Roosevelt Review, pp. 95-108
Thank you!
Questions?