Why was IBM so successful during the 1970s and 1980s?

Constant Innovations:
IBM was continuously producing a series of innovations in information storage ad
automatic calculation. It was the first company to offer components which were
interchangeable.
Good work environment
Known as one of the best places to work for.
Uniqueness of Products
IBM introduced Personal Computers. All its products were considered to be sound
solutions o a range of business problems.
Cost leadership
Making PCs less expensive by reducing cost.

What changed to undermine their success?

Structural changes
Conversion from leasing oriented business to a sales oriented business.
Excessive foreign competition and price wars
Weak customer relationships
Due to incompatibility of product lines- the mainframe products were inoperable with
emerging technologies
Movement towards client/server technology and away from mainframes led to
losses in revenue.

What were the most important actions taken by Lou Gernster

Tweaked ESOPs
o to retain key employees:
o the re-pricing wasnt given to 23 most senior executives to emphasize on
performance over collegiality
Reinventing the brand IBM
o O&Ms global advertising campaign: solutions for a small planet and going to
market as ONE IBM
o Putting a stop to the talks of splitting IBM into many companies
o Ability to integrate and deliver global solutions was a special quality of IBM
o Product rationalization and focus on brands (Think-pads)
Restoring Line Managers Accountability and Ownership
o Redesigning processes for global use to sustain cost reductions
o Make and Execute own decisions
Cost Reductions
o Layoffs numbering 40,000 to 50,000
o Sold of some non-core businesses
o Focus on not breaking up the company
o Reducing Expenses by 9% and R&D and SG&A by $6.8 billion
Organizational Changes
o Reorganized into one global organization
o Attention to Sales Organization; refining cumbersome processes

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Reduction in Board Size to one third ( conflict resolution in strategizing

organization goals)
To reduce bid preparation time: sales team split into 2- the product specialists
and Customer relationship managers
Board Restructuring

Change Management
o Directive style of management
o Executive that resisted the global approach were fired
o Operation Bear hug - Sense of responsibility in the senior executives.
Executives were personally responsible for care and feeding of particular
customer accounts