When Sam Palmisano became CEO of IBM in 2002, he was, in many respects, a predictable choice to run a major company. His pedigree included stints running a number of IBMs key divisions, including the Enterprise Systems Group and IBM Global Services.
Its a background Palmisano shares with a number of technologys heaviest hitters, including CEOs John W. Thompson of Symantec Corp., Michael Lawrie of Siebel Systems Inc. and John Swainson of Computer Associates International Inc. While Palmisano rose through the ranks to the ultimate IBM post, the others chose to take their talents and experience on the road. All, however, are evidence of a growing industry phenomenon: the Big Blue boss.
The steady stream in recent years of top IBM executives—many of them veterans of 25 years or more with the company—leaving for the corner office at other major technology companies is not the result of coincidence. Industry observers and former IBM employees say its the direct result of a corporate culture that emphasizes experience; loyalty; initiative; and, above all, focus on customer needs.
Many companies, both in the IT industry and other markets, profess similar values. But beginning with IBM founder Thomas Watson and continuing for the nearly 100-year history of the company, it has consistently pushed these tenets on its hires, resulting in a cohesive employee base around the world. In recent years, that system has developed into what amounts to a Triple-A system for aspiring CEOs, analysts say.
The result is an industrywide distribution not only of IBMs corporate culture but also of its business thought processes. For good or ill, the IBM penchant for partnership, appetite for acquisition and intolerance for sluggish performance are all becoming the norm in executive suites well beyond Armonk, N.Y.
Swainson, IBMs former vice president of Worldwide Software Sales, took the helm of scandal-ridden CA last month with the goal of restoring credibility to the embattled Islandia, N.Y., company. Early on, Swainson said, he became aware of the stark contrast between IBMs well-defined culture and the lack thereof at CA.
"Its a function of being built by acquisition over the course of a relatively short period," Swainson said of his new employer. "IBM had a chance over 100 years to build a strong culture.
"Im not consciously trying to bring any parts of IBM culture to CA. Unconsciously, I cant avoid it, I suppose. I certainly was heavily indoctrinated with it," said Swainson, who ran a unit in IBM with more employees and higher annual revenues than CAs.
"IBM does a lot of good things around process and focus on customers and making sure the customers are satisfied," Swainson said. "Those are clearly messages I would bring to CA. They are not unique to IBM. Every successful company has a view of what it takes to satisfy customers."
As successful as IBM alumni such as Swainson, Thompson and others have been, there was a time, not so long ago, when other companies wanted little to do with hiring an IBM executive as CEO. The problem, observers say, was IBMs rigid hierarchical culture that prevented all but the top tier of executives from gaining any meaningful management experience.
"Things have changed now, but the culture was extremely rigid under [former CEO John Akers]. They literally had people carrying the bags of senior executives," said Frank Dzubeck, president of Communications Networks Architects Inc., in Washington, and a longtime IBM observer. "The result was that the lower-level guys couldnt manage their way out of a paper bag. That changed under [Louis] Gerstner [Palmisanos predecessor]. Executives have become more involved and hands-on."