A few months ago the Harvard Business Review did a piece on CEOs and pointed out the average tenure of an external CEO was 18 months, which suggests that a lot of CEOs are simply not qualified for the job they were selected for. Recently the HP board came to the conclusion that their high profile CEO, Carly Fiorinia, wasn’t doing her job and took the incredibly painful path of replacing her with another who had a proven track record in the specific areas they felt HP needed more work.
Unfortunately Parmesano is a salesman, not a business strategist. His great idea, which he likened to Tom Watson's commitment to S/360, is On Demand, has failed dismally in the marketplace. When Parmesano talks of industry leadership, he displays the old IBM arrogance that implicitly admits that customers aren't begging for the product today. (All it needs is a lot of old-time selling and persuasion, and the customers will start demanding On Demand in droves.) As far as many IBMers are concerned, Parmesano has blown it with On Demand, and the excessive bonus he accepted this year indicates that he believes his time with the corporation is now limited. Now Parmesano is playing a financial game. The low-wage temptation of offshore is just too strong to resist, and we're bound to see many US corporations shift jobs from the West to the Orient. The getting rid of 13,000 this quarter is a taxation play: IBM knew they would be receiving a billion from the Chinese for Lenovo, so the paying out of a billion on redundancy payments this quarter saves IBM a lot of tax.
Having been an employee with IBM for a number of years myself, I would like to present a different slant on IBM's problems. It is true that IBM has sold off various divisions and the result has usually been a short term financial gain. The problem, from my insight, is that there seems to be no apparent long term strategy. The divisions get sold and there are no plans to replace the "top line" dollars. IBM spends in excess of $5B on research, yet it has no method or process of moving successful research discoveries into a pipeline of new technologies that would improve the "top line." It has been a source of frustrated discussion, and therefore career ending opportunities for many, myself included. I am of the opinion that there needs to be another "house cleaning" only this time it needs to be done at the middle levels of IBM. The thinking needs to be more creative and the company needs to use the technology they have already "paid" for, from research, to put IBM back in an Industry Leadership role.
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IBM Cuts 13,000, but Maybe It Should Have Laid Off One
Posted by: Rob Enderle May 9, 2005 05:00 AMA few months ago the Harvard Business Review did a piece on CEOs and pointed out the average tenure of an external CEO was 18 months, which suggests that a lot of CEOs are simply not qualified for the job they were selected for. Recently the HP board came to the conclusion that their high profile CEO, Carly Fiorinia, wasn’t doing her job and took the incredibly painful path of replacing her with another who had a proven track record in the specific areas they felt HP needed more work.
Now Parmesano is playing a financial game. The low-wage temptation of offshore is just too strong to resist, and we're bound to see many US corporations shift jobs from the West to the Orient. The getting rid of 13,000 this quarter is a taxation play: IBM knew they would be receiving a billion from the Chinese for Lenovo, so the paying out of a billion on redundancy payments this quarter saves IBM a lot of tax.
IBM spends in excess of $5B on research, yet it has no method or process of moving successful research discoveries into a pipeline of new technologies that would improve the "top line." It has been a source of frustrated discussion, and therefore career ending opportunities for many, myself included.
I am of the opinion that there needs to be another "house cleaning" only this time it needs to be done at the middle levels of IBM. The thinking needs to be more creative and the company needs to use the technology they have already "paid" for, from research, to put IBM back in an Industry Leadership role.