Carlos Sada (15988448), Donaldo Suazo (15952798), Dragi Pejcinovski (15006480), Kati Pekonen...

Carlos Sada (15988448), Donaldo Suazo (15952798), Dragi Pejcinovski (15006480),

Kati Pekonen (16387277) & Thomas Frivold (16394403)

Business Improvement MethodsBUA5BIM

• 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

Agenda


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

Source: Annual Report 2009


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


Why/When to change?

• Development of share price 1962-2010

Sep 1993:10,50 USD


Why/When to change?

• Development of share price 1990-2010

Mintzeberg’sMintzeberg’s

Decisional

Disturbance handler responsible for correcting actions

…will do things the IBM way or work somewhere else (Louis Gerstner 1993).

InterpersonalLeader

Thomas J Watson (1935) enabled the individual within IBM by created the mantra of THINK


Organisational Behavior - Theory

What needs to happen?

"Work out how you can abolish yourselves before someone else does it for you.“ (Bruce 1994)


Organisational Behaviour - Theory

IBM being very successful organisation caused people not understand that it didn't work any more.


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)



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?"



Herzberg’s “Two Factor Theory” (1968)

Does anyone know when and where it was initiated?


Application of motivation - Theory

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.


Application of motivation

IBM never really understood that total quality:IBM never really understood that total quality:

stage 1; which is reducing defects stage 1; which is reducing defects stage 2; which is pleasing the customer more than stage 2; which is pleasing the customer more than anyone anyone stage 3; having employees who enthusiastically stage 3; having employees who enthusiastically contribute contribute

At IBM layer after layer of hierarchy had been built up, At IBM layer after layer of hierarchy had been built up, slowing down the decision-making processslowing down the decision-making process



Will IBM be able to move into the 21st Will IBM be able to move into the 21st century business community as a proven century business community as a proven leader and create a successful product? leader and create a successful product?

New Culture or Back to Roots? New Culture or Back to Roots?

IBM: Decline or resurrection?IBM: Decline or resurrection?

IBM's comeback may be a IBM's comeback may be a mirage.mirage.


mini Conclusion

IBM uses the best of its recruits to IBM uses the best of its recruits to create better managers. create better managers.

The foundation of IBM’s decision The foundation of IBM’s decision making process; individual decisions making process; individual decisions matters- Think.matters- Think.



65% (40,850) account for women in executive 65% (40,850) account for women in executive position in IBM. position in IBM.

Management say they want women to come to Management say they want women to come to IBM and aspire to reach executive levels.IBM and aspire to reach executive levels.

They recognise that people have a life outside They recognise that people have a life outside work. work. (Tsadik 2007).(Tsadik 2007).



““Individual organizations are largely Individual organizations are largely motionless, like bacteria, change occurs in motionless, like bacteria, change occurs in the population as a whole as old forms are the population as a whole as old forms are

replaced by new ones that better fit the replaced by new ones that better fit the

changed context”changed context”

(O'Reilly III, Harreld &Tushman 2009).(O'Reilly III, Harreld &Tushman 2009).


Organisational Change


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.”


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.


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”.


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”


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


Corporate Culture – Company Values

• Values created with the employees - “JAM 2003”

Dedication to every clients successInnovation that matters – for our company and for the worldTrust 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


Corporate Social Responsibility

““innovative products and services innovative products and services are the driving forces behind IBM’s are the driving forces behind IBM’s vision of a smarter planet”vision of a smarter planet”

EducationEducation Disaster ResponseDisaster Response Veteran AssistanceVeteran Assistance Humanitarian SupercomputingHumanitarian Supercomputing


Community

KidSmart Young Explorer softwareKidSmart Young Explorer software– 45,000 units in 60 countries45,000 units in 60 countries

Reading Companion®Reading Companion®– 1,000 schools in more than 20 countries1,000 schools in more than 20 countries

EX.I.T.E. (Exploring Interests in Technology and Engineering)EX.I.T.E. (Exploring Interests in Technology and Engineering)– 6,000 girls6,000 girls


Education

Donated money, time, and technologyDonated money, time, and technology

Provide critical capabilities that enable Provide critical capabilities that enable faster and smarter responsesfaster and smarter responses

• Software for missing persons registries

• Asset tracking• Logistics management


Disaster Response

2001 2001 – new York City, September 11new York City, September 11– Gujarat, India, earthquakeGujarat, India, earthquake

20042004– Thailand, India, Indonesia and Sri Lanka Thailand, India, Indonesia and Sri Lanka

tsunamitsunami

2005 2005 – U.S. Gulf Coast, U.S. Gulf Coast, – hurricanes Katrina and Rita Mexicohurricanes Katrina and Rita Mexico– Pakistan, earthquakePakistan, earthquake

20062006– Indonesia, Mt. Merapi, Indonesia, Mt. Merapi,

Volcano/earthquakeVolcano/earthquake– Guinsaugon, Philippines, landslidesGuinsaugon, Philippines, landslides

2007 2007 – San Diego, wildfiresSan Diego, wildfires– Peru, earthquakePeru, earthquake– Tabasco, Mexico, floodingTabasco, Mexico, flooding

2008 2008 – China, earthquakeChina, earthquake– Bihar, India, floodingBihar, India, flooding

2009 2009 – Mexico, H1n1 responseMexico, H1n1 response– Indonesia, earthquakesIndonesia, earthquakes– Vietnam, floodingVietnam, flooding– italy, earthquakeitaly, earthquake– Taiwan, typhoonTaiwan, typhoon

2010 2010 – Haiti, earthquakeHaiti, earthquake– Chile, earthquakeChile, earthquake


Disaster Response

1. Energy conservation and climate 1. Energy conservation and climate protectionprotection

2. Process stewardship2. Process stewardship

3. Product stewardship3. Product stewardship


Environment

IBM – Business Improvement

Energy conservation and climate protection

As of January 31, 2010As of January 31, 2010

IBM eliminated all known uses of:IBM eliminated all known uses of:– perfluorooctane sulfonate (PFOS)perfluorooctane sulfonate (PFOS)– perfluoro octanoic acid (PFOA)perfluoro octanoic acid (PFOA)

Invention of a new type of fluorine-free Invention of a new type of fluorine-free photoacid generatorphotoacid generator


Process Stewardship

Product and data center energy Product and data center energy efficiencyefficiency

Product packagingProduct packaging ““Green” chemistry for increased Green” chemistry for increased

recyclingrecycling Product end-of-life management Product end-of-life management

(PELM)(PELM)


Product Stewardship


Product end-of-life management

Effective Marketing ToolEffective Marketing Tool– Recognition of Recognition of

involvementinvolvement– Brand differentiationBrand differentiation

Reputation builderReputation builder– Attracts more Attracts more

customerscustomers– Entices quality Entices quality

employeesemployees– Increases job Increases job

satisfactionsatisfaction

Preventive StrategyPreventive Strategy– Avoid negative media Avoid negative media

exposureexposure– Fortifies relationships with Fortifies relationships with

community and NGO’scommunity and NGO’s

(Redman 2005)(Redman 2005)


CSR as a Business Improvement Method

Adds value to products and servicesAdds value to products and services Adds to consumer preferenceAdds to consumer preference Higher job satisfaction leads Higher job satisfaction leads Creates a competitive advantageCreates a competitive advantage

(Keinert 2008)(Keinert 2008)


CSR and Company Performance

Green ITLet’s Build a Smarter Planet

3 big ideas to build 3 big ideas to build one smarter planetone smarter planet

3 big ideas to build 3 big ideas to build one smarter planetone smarter planet

Let’s Watch a Video

IBM 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 To realize the benefits of environmental sustainability, “we” must take a systemic view of its systemic view of its value chainvalue chain….….

WORKFORCE

MANUFACTURING

SUPPLY CHAIN

IT CUSTOMERS

TRANSPORTATION FACILITIES

– Green infrastructuresTake out cost and

improve the efficiency of IT and other infrastructure.

Manage environmental impact of assets.

– Intelligent systemsUse predictive analytics

for water management.Optimize power grid

performance; automate, monitor and control two-way flow of energy from power plant to plug.

1 2 3– Sustainable solutionsIncrease organizational

efficiency, abating impact of processes, products and people.

Decrease employee environmental impact with remote work and collaboration strategies.

IBM Green Infrastructure is an instrumented and interconnected system enabled by intelligent energy management.

Data Center

Accurate thermal and energy usage assessments Extend life of existing infrastructure Rationalize infrastructures across company Design flexibility into new data center infrastructure

IT Equipment

Energy efficient hardware Virtualization and consolidation Active energy management Tiered storage

Applications and Data

Trend analysis and building maintenance diagnostics Building management systems integration Process management automation Dashboard reporting

Real estate and facilities

Lifecycle management, retention, archiving of data Optimization of application servers Application performance monitoring Data deduplication, compression and clean up

IT and Infrastructure interfaces Threshold controls Optimize assets for energy efficiency Track and verify energy efficiency

EnergyManagement

1

2 Sustainable solutions -help IBM account for the environmental and social impacts of doing business.

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

Governance & Business Strategy

Apply lean and six sigma principles to reduce energy and water usage, CO2 emissions and waste generation

Model, simulate, redesign and automate processes for energy efficiency and environmental impact

Reduce use of paper in business processes

Monitor & analyze green KPIs across operations

Adapt processes dynamically to environmental challenges that affect operations

Business Process Management

Optimize the supply chain for service levels, quality, cost, and CO2 emissions

Product Lifecycle Management

Product & Supplier Management

Optimization strategies to balance environmental impact and cost

RFID tagging and tracking systems Networked sensors and meters for

environmental data collection

Distribution & Logistics

Travel reduction and work from home strategies

Distributed employee collaboration via email, instant-messaging, online conferences, and other tools

Online events and collaboration Jams

Workforce & Stakeholders

Intelligent systemsIntelligent systems gather, synthesize and apply gather, synthesize and apply information information

to change the way entire industries operate.to change the way entire industries operate.Smart waterSmart waterApply monitoring and Apply monitoring and management management technologies to help technologies to help reduce the use of water, reduce the use of water, as well as related as well as related energy and chemicals.energy and chemicals.

3Smart trafficUse real-time traffic prediction and dynamic tolling to reduce congestion and reduce CO2 emissionswhile positively influencing related systems.

Smart energyOptimize grid performance; automate, monitor and control energy flow, prevent outages, restore outages faster and allow consumers to manage energy usage.

Water

Energy

Chemicals

Carbonemissions

Congestion

Publictransportation Smart home

Carbonemissions

Energysources

Energy grid

Energy

Noisepollution

IBM only just begun to uncover what is IBM only just begun to uncover what is possible on a smarter planet.possible on a smarter planet.

The world will continue to become smaller, The world will continue to become smaller, flatter and smarter. We are moving into the flatter and smarter. We are moving into the age of the globally integrated and intelligent age of the globally integrated and intelligent economy, society and planet.economy, society and planet.

Through green infrastructures, sustainable Through green infrastructures, sustainable solutions and intelligent systems, smart solutions and intelligent systems, smart organizations can achieve real business organizations can achieve real business benefits while still driving growth. benefits while still driving growth.

Managed to change and improveManaged to change and improve Different actions can create Different actions can create

improvementimprovement Biggest changes:Biggest changes:

Cultural changeCultural changeFocus on customersFocus on customersChanges in productsChanges in productsCSR / More than shareholder valueCSR / More than shareholder valueLong term strategiesLong term strategies


Conclusion


Conclusion

Bruce, L (1994). Bruce, L (1994). IBM: Decline or resurrection? The Management Decision inteIBM: Decline or resurrection? The Management Decision inte. . Management Decision. London: 1994. Vol. 32, Iss. 8; pg. 5, 6 pgsManagement Decision. London: 1994. Vol. 32, Iss. 8; pg. 5, 6 pgsFung, B (2007). Integration of Managerial Roles. Fung, B (2007). Integration of Managerial Roles. http://www.hkma.org.hk/hkmanager/hkmgr2007v3/eng/archive/pz.asphttp://www.hkma.org.hk/hkmanager/hkmgr2007v3/eng/archive/pz.asp (cited 26th (cited 26th Aug 2010)Aug 2010) Geert Hofstede Analysis.Geert Hofstede Analysis. http://www.cyborlink.com/besite/hofstede.htmhttp://www.cyborlink.com/besite/hofstede.htm (cited (cited 25th Aug 2010)25th Aug 2010)Heller, R. (1994). IBM: Decline or Resurrection? The Management Decision Heller, R. (1994). IBM: Decline or Resurrection? The Management Decision Interview. Management Decision, Vol. 32 No. 8, 1994, pp. 5-10Interview. Management Decision, Vol. 32 No. 8, 1994, pp. 5-10John, G (1994). John, G (1994). IBM's comeback may be a mirage.IBM's comeback may be a mirage. Computerworld. Framingham: Computerworld. Framingham: Jan 31, 1994. Vol. 28, Iss. 5; pg. 35, 1 pgsJan 31, 1994. Vol. 28, Iss. 5; pg. 35, 1 pgsMoore, A (2009) Organizational Behavior And Business Management‐ IBM. Moore, A (2009) Organizational Behavior And Business Management‐ IBM. http://www.andrewpmoore.com/wp- http://www.andrewpmoore.com/wp- content/uploads/2009/12/Organizational_Behavior_and_IBM.pdfcontent/uploads/2009/12/Organizational_Behavior_and_IBM.pdf (cited 28 (cited 28thth Aug Aug 2010)2010)O'Reilly III, C, Harreld, B & Tushman, M (2009). O'Reilly III, C, Harreld, B & Tushman, M (2009). Organizational Ambidexterity: IBM Organizational Ambidexterity: IBM and Emerging Business Opportunitiesand Emerging Business Opportunities. Stanford Graduate School of Business . Stanford Graduate School of Business Research Paper No. 2025Research Paper No. 2025Tsadik, R (2007). Tsadik, R (2007). IBM Knows Mother. Incentive; IBM Knows Mother. Incentive; Mar 2007; 181, 3; ABI/INFORM Mar 2007; 181, 3; ABI/INFORM Global pg. 39Global pg. 39Redman, E. (2005), Three models of corporate social responsibility:Implication for Redman, E. (2005), Three models of corporate social responsibility:Implication for public policy, Roosevelt Review, pp. 95-108public policy, Roosevelt Review, pp. 95-108


References

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Carlos Sada (15988448), Donaldo Suazo (15952798), Dragi Pejcinovski (15006480), Kati Pekonen...

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