After the disappointing earnings report on April 18, IBM CEO Virginia "Ginni" Rometty released a video to all 434,000 employees in which she admitted that IBM hadn’t “transformed rapidly enough.” She called out the sales staff for missing out on several big deals. “We were too slow,” she said. “The result? It didn’t get done.”
Noel Tichy, the former head of General Electric’s (GE) Leadership Center, who’s writing a book about IBM, says Rometty’s video has already inspired a lot of feedback within the company. “With the video, she can see where her message is landing—who’s watching, who’s responding,” he says. That’s very important for a company as large as IBM, with employees spread across 170 countries.
This lack of fast customer response is not a new issue for IBM.
For example, in August 2008, Netflix’s technology infrastructure melted down. This was when the company was still known for DVDs-by-mail, and for three days it could not send discs because a crucial Oracle (ORCL) database kept malfunctioning. Reporters and customers took notice. Netflix traced the problem to an expensive, third-party storage system that went haywire after a software update. The incident still annoys Hastings. When the subject comes up in the watchtower, Chief Product Officer Neil Hunt, who’s also gathered at the table, suggests they not mention the storage-system vendor by name. CEO Reed Hastings responds, “Let IBM (IBM) have it, baby.” (An IBM spokesman declined to comment.)
In the recent IBM video, Rometty laid out a plan for IBM to respond to customers within 24 hours: “Engage management, engage leadership, and let’s deal with it.” She’s already “reassigned” the head of IBM’s computer hardware department, the source of a large portion of the sales drop. “Ginni’s a very direct, no-BS type of CEO, and she had one message that she delivered to everyone,” Tichy says. “It would be much worse if it went through the internal channels. No one wants to hear that the CEO thinks they dropped the ball through word of mouth.”
Source: Bloomberg BusinessWeek, May 13, 2013