IBM's Palmisano Credits 'Culture' for Big Blue's Success

By Darryl K. Taft  |  Posted 2011-06-17

IBM's Palmisano Credits 'Culture' for Big Blue's Success

YORKTOWN HEIGHTS, N.Y.--To celebrate its 100th anniversary IBM threw itself a party and, oh, what a bash it was.

In attendance at the signature event here were former IBM CEOs and chairmen, IBM Nobel laureates, IBM board members, CEOs and representatives of IBM's major customers, former top IBM executives and engineers, more than 20 IBMers who helped pioneer space travel working with NASA, 2,000 lucky IBM researchers and one lucky stowaway reporter.

As IBM CEO Samuel J. Palmisano put it, it was "like a coming home party or college reunion." There were some who, bent with age, had to be helped to their seats. But they came, nonetheless. Former IBM CEOs Lou Gerstner and John Akers made the trip and were recognized by Palmisano, who thanked them for their service. Former IBM CEO John Opel was scheduled to attend, but later notified Palmisano that he would be unable to come.

The celebration was aptly held at IBM's Thomas J. Watson Research Center--named after IBM's founder and initial CEO-because research and innovation has been such a driving factor for IBM over its 100 years. And more than 30 members of the Watson family were in attendance at the event.

Reflecting on IBM's 100 years, Palmisano wasted no time in getting to what he and many observers believe to be the crux of what has enabled IBM to withstand change and to last so long as a company: Its culture.

Thomas J. Watson Sr. instilled a set of core beliefs or values into IBM. Of those values, Steve Hamm, co-author of the new book on IBM's 100 years in business, "Making the World Better," wrote: "Since its early days, IBM has been operated based on a set of core beliefs. IBM would distinguish itself with its respect for the individual, its pursuit of excellence in all things and its commitment to providing the best customer service. These values were baked into the core DNA by Thomas Watson Sr., who built the near-failing organization of 1914 into an industrial giant with staying power. And that DNA has taken hold in millions of employees over the course of 100 years."

At the event, Hamm reiterated his position. He said IBM's is "an intentionally created culture. For any company to survive for 50 years, you have to have a set of beliefs you hold dear. And you have to be willing to change everything else in the company."

Palmisano said IBM owed much to one family, especially one father and one son-Thomas J. Watson Sr. and Jr., who ran IBM for its first 57 years. Palmisano noted that the Watsons are credited with recognizing that future economic value would lie in the information age, "But as bold and as visionary as both were, their greatest innovation or contribution was a culture or a way of doing things," he said. "You hear of the IBMer. You don't hear the Googler, or the Facebooker or Mr. Softie..."

Meanwhile, Kenneth Chenault, chairman and CEO of American Express and an IBM board member, was on hand to talk from a client's perspective about the difference IBM has made. Chenault spoke of how after 9/11, Amex's headquarters were damaged and the company had to operate for months out of several dispersed locations, IBM worked with Amex to ensure that their operations remained up and running.

"IBM was right behind us the whole time," Chenault said. "The ultimate test of any company's values happens during time of crisis. You walked the walk with us. You helped us recover."

Chenault, who has been on IBM's board of directors for 12 years, said IBM (known as C-T-R at the time) was founded in 1911 and American Express made its first purchase from the company in 1912 - a clock. But as the financial services giant's needs evolved, IBM has always been able to deliver. The relationship between IBM and Amex has existed for so long because the companies share a common culture that involves respect for customers and for colleagues alike, Chenault said.

"The greatest invention ever created by IBM is the IBMer," Chenault said. And he noted that IBM is marked by "Reinvention and constant values - unchanging change. It may sound like an oxymoron but it's at the heart of IBM." 

IBM's Palmisano Credits 'Culture' for Big Blue's Success

title=IBM's 'Wild Ducks'}

IBM also debuted its "Wild Ducks" film, a tribute to IBM clients who have defied conventional wisdom through new approaches to building their businesses. They include Howard Shapiro, chief scientist at the Mars Corp., and Sunil Mittal, founder and CEO of Bharti Enterprises, the largest telecom company in India. "Wild Ducks" was directed by Davis Guggenheim, an Oscar winner for the documentary "An Inconvenient Truth." The new film follows two other IBM Centennial films this year: "100 x 100" - a fast-paced, year-by-year chronicle of IBM's history, and "They Were There," which explores significant moments in IBM history told through first-person accounts by key innovators, including the invention of the UPC code, helping to put a man on the moon and developing the personal computer.

Thomas J. Watson Jr. introduced the concept of wild ducks at IBM in 1959. Watson is quoted as saying: "We are convinced that any business needs wild ducks, and in IBM we try not to tame them... You can make wild ducks tame, but you can never make tame ducks wild again."

John E. Kelly III, IBM senior vice president and director of IBM Research, said he has 3,000 wild ducks all over the world, referring to IBM researchers, who are encouraged to think out of the box. Kelly then moderated a panel of IBM researchers on the future of innovation.

The IBM Centennial celebration came as the company is reportedly on the lookout for the successor to Palmisano as CEO. At the start of the event, IBM highlighted several VIPs, including IBM's senior vice presidents who marched in as a group. Yet, only one of them, Virginia "Ginni" Rometty, senior vice president and group executive, IBM Sales, Marketing and Strategy, got onstage to address the audience. Rometty is reported to be the front-runner for the CEO slot, ahead of Michael E. Daniels, senior vice president and group executive for IBM's services unit, and Rodney C. Adkins, senior vice president of IBM's Systems and Technology Group. The stint at the centennial event gave Rometty an opportunity to address the entire IBM Nation, as the proceedings were broadcast to IBMers all over the world. She talked about IBM's dedication to every client's success.

For his part, Stan Litow, vice president of corporate citizenship and corporate affairs at IBM, discussed IBM's global Centennial Day of Service, in which 300,000 IBMers around the world -- close to three quarters of its global workforce -- volunteered in more than 5,000 projects in 120 countries, meeting civic and societal challenges and serving millions in need.

Palmisano returned to the stage for closing remarks and to talk about IBM's future of leadership. He spoke of how IBM as a global company needed to evolve its values and in 2003 he decided to call on IBMers around the world to participate in that process. That resulted in three new values: Dedication to every client's success; Innovation that matters - for our company and for the world; and Trust and personal responsibility in all relationships. Those values carry IBM into its next century.

However, before departing, all 2,000 IBMers present at the event stood to sing the IBM rally song, "Ever Onward."

Yet, of IBM's landmark anniversary, perhaps Ken Chenault summed it up best when he said: "Even at 100 years old, IBM will remain one of the youngest companies on this ever smarter planet."

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