IBM and the Value of Succession Planning

By Charles King, Pund-IT®  April 8, 2020

It’s easy to define successful business leaders by one or two characteristics—resolution, imagination, compassion—and by the successes or failures for which they are best remembered. However, it’s also futile to consider these points without keeping broader context in mind. After all, companies and their leaderships don’t operate in a vacuum. Like individuals and families, they are swayed and buffeted by events and chance.

But just as important as acting and reacting to present circumstances is the ability to sufficiently plan for upcoming challenges. Clearly, no one can see the future but as Mark Twain once noted, “History doesn’t repeat itself, but it often rhymes.” So, understanding the past while evaluating current events and emerging trends can help to prepare organizations for what’s ahead, including choosing the executives and managers best suited to those tasks. These points are worth considering this week as Arvind Krishna succeeds Virginia “Ginni” Rometty as CEO of IBM.

Ginni Rometty – Beginnings and legacy

In her nearly four decades at IBM, Rometty served in a variety of technical, management and leadership roles, including a long stint in the company’s Global Business Services (GBS) organization. During that time, she championed the $3.5B acquisition of PricewaterhouseCoopers (PwC) consulting group, a deal that fundamentally altered and improved IBM GBS. Rometty was also one of the executives who developed the company’s “2015 Roadmap” which outlined a shift in focus from hardware to software, services and other businesses.

That document provided a blueprint Rometty followed after she succeeded IBM CEO Sam Palmisano in 2012. During her tenure as CEO, Rometty pursued a wide range of efforts that reshaped IBM’s organization and go-to-market strategy, including:

  • Making multi-billion-dollar investments in new “strategic imperative” businesses (cloud computing, analytics, security, mobile and social)
  • Divesting $9B in annual revenues to focus IBM’s portfolio on high value, integrated services and solutions
  • Supporting substantial R&D efforts to develop solutions in emerging areas, like quantum computing, artificial intelligence (AI) and blockchain
  • Driving 65 corporate acquisitions, including the $34 billion Red Hat deal, one of the largest technology purchases in history

Rometty also supported efforts that complemented IBM organizationally and strategically, including taking a lead in business ethics and data stewardship issues, and supporting diversity and inclusion programs. Additionally, she was a strong advocate for “New Collar” jobs – positions that arise from specialized training programs that don’t require four year degrees – and of reinventing global education programs, such as six-year Pathways in Technology (P-TECH) Early College High Schools.

Finally, as the first woman to ever lead IBM, Rometty stood as a symbol for what women can and should achieve in technology and elsewhere. Last December, she was the only technology executive to be included in the Top Ten of Forbes’ 2019 list of the World’s Most Powerful Women.

Arvind Krishna – Blending technical and business expertise

It’s safe to say that few executives have endured the baptism by fire that Arvind Krishna is now experiencing as global businesses and markets are rocked by the COVID-19 pandemic. After his appointment as CEO was announced on January 30th, Krishna worked with Rometty to organize a task force that has pooled over 330 petaflops of supercomputing resources from research labs and IT vendors for use in global coronavirus research.

During Krishna’s first day on the job (April 6th), IBM announced substantial leadership changes designed to amplify and refine the company’s efforts on meeting customers’ hybrid cloud and cognitive computing needs. Those shifts include altering or expanding the responsibilities of existing senior executives and managers, along with welcoming new additions to the company’s team. For example, Jim Whitehurst, who was appointed president of IBM at the same time Krishna’s appointment was announced, will also head IBM’s Strategy and the Cloud and Cognitive Software unit. New appointees include Howard Boville (formerly Bank of America’s CTO) who will be IBM’s SVP of Cloud.

The company also announced plans to build a new “4th platform” (complementing mainframe, services and middleware) to make hybrid cloud “ubiquitous and enduring” and deepen its offerings with Linux, containers and Kubernetes. The effort also includes a $200M+ investment in IBM’s partner ecosystem to drive global adoption of IBM Public Cloud.

This pointed emphasis on cloud will come as no surprise to anyone who has followed Krishna’s career. Along with being one of IBM’s most technologically astute and accomplished executives, Krishna spent over five years in senior management positions in the IBM Cloud group, helping to grow the organization whose $21B in annual revenues lags only AWS and Microsoft Azure. Krishna also led the Red Hat acquisition effort, a deal that complements and will substantially enhance the IBM Cloud portfolio.

As the COVID-19 pandemic continues to roil businesses and markets, resilient, secure and scalable cloud services and solutions are likely to become business-critical for companies of every kind. IBM innovations should be increasingly important to its customers and partners. Under  Krishna’s leadership, expect IBM to stand steadfast beside its clients, help improve the IT infrastructures their businesses depend on and help them weather and emerge from the COVID-19 crisis.

Final analysis

Despite best intentions and efforts, things don’t always go as executives and their organizations plan or without controversy, including IBM. Many disputed the business divestments Rometty orchestrated, including the sales of its System x server organization (to Lenovo) and microprocessor business (to GlobalFoundries). Plus, some new businesses and acquisitions, like those supporting digital marketing were closed down or sold after they failed to deliver hoped for benefits.

However, the Strategic Imperative efforts Rometty championed now drive over half of IBM’s annual revenues. She was also instrumental in supporting the company’s substantial investments in emerging technologies and other research (IBM has been #1 in patents for 27 years). Overall, Rometty is leaving IBM a well-prepared and future-focused organization that will be an increasingly valuable ally to its customers and partners.

But it’s also worth noting that evolutionary efforts at IBM are still developing. By most measures, the market for hybrid cloud computing is a fraction of what it will eventually become, especially as enterprise continue to modernize and cloud-enable production applications and processes. The potential value of other new technologies, such as AI, is a work in progress for most customers. Those that portend massive changes, like quantum computing, are essentially experimental at this stage, though highly promising.

Charting a successful way through these developments requires the steady hand and insights of a deeply experienced technologist and, for IBM, Arvind Krishna surely fits the bill. While the dual leadership model (with Krishna as CEO and Whitehurst as president) IBM has chosen has been questioned by some, it has worked well in other IT companies. All in all, Krishna and Whitehurst should provide the valuable insights and necessary oversight IBM needs to continue to actively evolve.

The way forward will not be easy, especially given the systemic and potentially long-lasting effects the COVID-19 pandemic will have on global markets. However, in Arvind Krishna and his team, IBM appears to have found the right people with the right experience and skills to effectively manage the company now and lead it successfully forward.

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