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

At the signature event commemorating IBM's 100th anniversary, held at IBM's research center in Yorktown Heights, N.Y., IBM CEO Sam Palmisano said IBM's culture kept the company going for 100 years.

YORKTOWN HEIGHTS, N.Y.--To celebrate its 100thanniversary 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."