IBM saved by development plan

Computer giant IBM was saved from collapse in the 1990s after an overhaul of management development and succession planning, a consultant who worked with the company has revealed.

Mary Fontaine, general manager, Hay Group, McClelland Center for Research & Innovation, told conference delegates that the new approach – based on 10 management competencies – was introduced when IBM executives were unable to implement incoming chief executive Lou Gerstner’s strategy shift from decentralisation, to selling “integrated global solutions”, in 1993.

The company developed the competencies in 1995 with the help of the consultancy. This followed in-depth interviews with 17 executives who were succeeding in the new strategy.

Other interviews with failing executives revealed problems, including competition between departments, a lack of passion for IBM’s business, and no objective performance measures.

Low morale was reflected in the amount of bad language used during interviews. Fontaine said: “We found that there were more curse words than you found in most ‘gangsta rap’.”

A senior leadership team was set up to develop individuals who were change agents, with membership reviewed twice a year. The company also overhauled its succession planning.

A 2003 study by consultancy Hewitt Associates, for CEO Magazine, found that IBM was the best company for developing leaders. However, global executive and organisation capability director, Elizabeth B Wood, conceded that the transformation envisioned by Gerstner had not yet been achieved.

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