IBM's Rometty to Take Big Blue Into Next 100 Years as New CEO

IBM names Virginia "Ginni" Rometty as president and CEO of IBM to succeed Sam Palmisano, who remains onboard as chairman. Palmisano has displayed his legacy. What will Rometty's be?

Virginia "Ginni" Rometty taking the helm of IBM is no surprise.

IBM held out that there were three to four front runners for the position, but Rometty was the clear leader. In fact, at IBM's recent THINK Forum in New York, Sam Palmisano, IBM's outgoing president and CEO, practically thrust Rometty on the scene as his successor, playing her up and playfully chiding her about a $300 million deal she completed without any input from him.

Effective Jan. 1, 2012, Rometty becomes the boss at IBM. Palmisano will remain in office as chairman of the company's board of directors. But the day-to-day decisions move on to Rometty.

Rometty, who also held a prominent position in IBM's internal Centennial celebration to commemorate its 100 years in business, represents a major step in the history of IBM, in that she is the first woman to lead the company. IBM has a history of switching CEOs out after they turn 60. Palmisano is 60 and has ceded the president and CEO roles to Rometty while retaining the chairmanship.

Palmisano has been hugely successful at IBM. Known for his execution, he initially executed on many of the ideas put forth by former IBM CEO Lou Gerstner, and then he set his own path and began to execute on it.

Palmisano reflects on IBM's first 100 years. Read more here.

Palmisano has seen IBM through times of adversity, such as economic slumps and layoffs. Yet the company is currently the second most valuable technology company behind Apple, beating out rival Microsoft for that position.

Palmisano's insistence on focusing on higher margin technologies and investing in initiatives such as growth markets, Smarter Planet, cloud computing and analytics have paid off.

Palmisano also committed to preserving the notion of an IBMer. He even revisited that notion and came up with a series of new values for the company and the IBMer: "dedication to every client's success; innovation that matters-for our company and for the world; and trust and personal responsibility in all relationships."

What remains to be seen is what mark Rometty will put on the company.

"Ginni Rometty has successfully led several of IBM's most important businesses over the past decade-from the formation of IBM Global Business Services to the build-out of our Growth Markets Unit," Palmisano said in a statement. "But she is more than a superb operational executive. With every leadership role, she has strengthened our ability to integrate IBM's capabilities for our clients. She has spurred us to keep pace with the needs and aspirations of our clients by deepening our expertise and industry knowledge. Ginni's long-term strategic thinking and client focus are seen in our growth initiatives, from cloud computing and analytics to the commercialization of Watson. She brings to the role of CEO a unique combination of vision, client focus, unrelenting drive, and passion for IBMers and the company's future. I know the board agrees with me that Ginni is the ideal CEO to lead IBM into its second century."

Industry analyst Rob Enderle said, "What is interesting is that many of us thought Steve Mills was positioned and the heir apparent. Rometty is actually a better choice because she has moved around the corporation more and therefore has a greater breadth of knowledge on IBM's various businesses. She'd be weakest on software but Mills remains as her lieutenant and his is one of the most stable and well-managed groups. Her choice was consistent with the century-long strategy of putting people in the job with the strongest breadth and therefore the best chance to do it well."

Charles King, an analyst with Pund-IT, said, "Her immediate challenges will be to keep executing on the strategy currently in place (not always as easy as it sounds in a $100B company), and to prepare IBM, its customers and partners for evolutionary market and IT changes ahead. She's taking on the CEO responsibilities at a time when many of IBM's biggest competitors (HP and Oracle, particularly) are either in some disarray or transitioning to new business models. That should provide some breathing room in the short term, but you can't expect them to be fumble-footed for long.

"IBM follows a far more structured and sustainable path in training its executives for higher position, including president and CEO," King added. "Rometty worked in roles and business units across the company, and has deep insight and responsibilities related to virtually every major IBM strategic effort of the past decade or more. Along with being a terrific choice to replace Sam Palmisano, Rometty is a great example of IBM's managerial excellence and the company's deep executive bench."

Long known for its bench, IBM has had a tradition of rotating top executives into and out of different positions in the various company business units to immerse them in the company.