One Fresh Face At Ibm May Not Be Enough

On Jan. 28, 1988, IBM announced what it called then its most sweep-ing reorganization since the 1950s. Big Blue was decentralizing, pushing decision-making down to the front lines so that the company could respond faster to the mercurial changes in its markets. That, said Chairman and Chief Executive Officer John F. Akers, would soon pull IBM out of the slump that had begun in 1985.

Dispatched to IBM's headquarters in Armonk, N.Y., I pumped the CEO for details of this "New IBM." As my hour ran out, I asked him one final question: Wasn't there a risk that this reorganization might have little impact if IBM didn't also bring in some outside managers--with new perspectives and new ideas? By then, I had covered IBM for 10 years and had yet to meet an executive who was not a life-long IBM employee. IBMers were bright. They were polished. They lived up to the Big Blue stereotype--white shirts and all.

Akers seemed shocked--maybe even offended--by my question. After a moment, he answered: IBM has the best recruitment system anywhere and spends more than anybody on training. Sometimes it might help to seek outsiders with unusual skills, he acknowledged, but the company already had the best people in the world.

ARMONKSPEAK. Looking back, Akers' response showed how far removed he and other IBMers had become from the rest of the computer industry--and why. For years, Big Blue's culture, as codified by its legendary CEO Thomas Watson Sr., had been its great strength. The culture helped IBM organize vast resources to deliver products and services to customers worldwide. Lush benefits and a no-layoffs "practice" inspired great loyalty among the company's rank and file.

By the 1980s, however, the IBM culture had turned insular. IBMers even had their own language. Other computer makers spoke of disk drives. IBMers insisted on "hard files." Circuit boards were "planar boards." But the culture's cornerstone, the promise of a job for life, became a millstone as the organization ballooned.

The irony, of course, is that after five years, a second, more radical restructuring, and losses totaling $7.8 billion, the IBM board declared in January that an outsider is exactly what's needed to reverse the giant company's slide. Akers' replacement, Louis V. Gerstner Jr., may be the ideal person for the job: He even lacks the prejudices about Big Blue that are harbored by rival computer executives.

STILL FOGGY. But the fresh air should not be limited to Armonk. Even now, the Big Blue lingo and the old ways it signifies persist. Last week, I asked an IBMer if his division would have layoffs. "We will continue to participatein resource programs," came the familiar, reality-obscuring jargon. And after decades of painstakingly pursuing consensus, the impulse among IBMers is still to call a meeting, not make adecision.

IBM needs lots of Gerstners now. The new CEO's arrival coincides with IBM's first layoffs. That spells the end of the old culture, giving him a chance to bring in more fresh blood as well as uncover the talents of IBMers who remain. It can be done. Look how American Telephone & Telegraph has shaken its Ma Bell mentality.