IBM, Still Going at 100 Years 2

Good business practices are good for people too.

This series started out discussing IBM's 100th birthday.  Although people think of IBM as a technology company, that's not how IBM sees itself.

IBM's focus is on identifying and solving customer problems by whatever means necessary.  Over the years, IBM sold time clocks, meat scales, punched card equipment, and typewriters, dominating each of those markets by solving customer problems very well.  Since they weren't married to any of these technologies, however, they were able to abandon them as punch cards and typewriters no longer solved customer problems.

IBM isn't perfect.  They dominated mainframe computers for so long that they became a technology company focused on selling mainframes regardless of customer need.  They nearly went under in the mid 1990's when the mainframe market came under attack by smaller computers.

Louis Gerstner took over as CEO in 1993.  He focused IBM on its still-strong relationships with longstanding customers.  Finding that these large customers wanted a large vendor to make sense of all the different technologies they had to master, IBM focused on consulting services to help customers solve technical problems whether they needed mainframes or not.

I was working for Ford Motor Company at the time.  Having deep affection for IBM, I mourned the fact that they might go under.  When a Ford IT manager told me with some astonishment that IBM had agreed to manage Ford's entire PC network, including devices made by any vendor at all, both he and I realized that IBM had regained its focus on customer needs and was likely to make it.

IBM's near death experience shows what can happen when any company, no matter how big, no matter how wealthy, loses track of customer needs.  Getting employees to focus on customer needs rather than on their selfish internal intersts is management's main job.  This article discusses some of the elements of doing that.

Be Honest with Vendors

No company can do everything by itself.  Once upon a time Ford Motor Company tried - it owned everything from iron-ore mines and rubber plantations, to shipping companies for moving the resources around, to car dealerships and mechanics that sold the cars - and of course the factories which made them.  The famous River Rogue factory in Detroit took in shiploads of iron ore and raw rubber, and spat cars out the other end.

Modern manufacturing of anything fancier than a toothpick, if even that, has become simply too complex for any one company to be the master of each and every aspect.  It's far more effective just to buy the best of whatever you need from whoever offers it at the best price.

Since almost no modern company can make anything for sale without buying supplies from someone else, vendors are as important as customers are.  You cannot deliver excellence to customers unless vendors deliver excellence to you.

Vendors are people too: a company which is honest and fair with its vendors will earn their best efforts.  Japanese automobile companies are famous for forging long-term relationships with suppliers whereas American manufacturers switch vendors readily.  Which automobile companies are going to receive the vendors' best efforts?

Having vendors work so hard on their behalf became such a competitive advantage for Japanese firms that in 2002, Nick Scheele, President of Ford Motor Co., urged his employees to treat suppliers better:

"If we are not our suppliers' customer of choice, they will dedicate their best people, invest their best resources, and offer the newest technology and innovation to our competitors -- putting Ford at a competitive disadvantage."

Mr. Scheele was right - Ford ended up at a severe competitive disadvantage.  Only now are they, slowly, recovering, in part because their two hometown competitors were even worse at vendor relations and at customer relations.

IBM works hard at nourishing and cherishing vendors.  Most companies have a code of conduct which speaks airily about integrity, honesty, and truth, but few enforce it.  One of the fastest ways to get fired from IBM is to mislead or mistreat a vendor - IBM needs its vendors far more than it needs any individual employee.

Developing Good People

A modern company has to be equally careful to nurture employees.  In the days when most workers neither had nor needed any particular skills, no individual worker was of any importance - a new uneducated wage-slave could fill any empty spot on the line by this afternoon.  There are still a very few jobs like this, but not enough to populate a major company.

Collectively, employees are the most important vendor of any modern company.  Employees are people who trust their employer with their careers and their lives, at least for a time.  Their employer needs to earn their trust by helping them arrive where they want to be over the next year, the next three years, and the next five years.

Each person is a career path.  Each job not only pulls its weight, it teaches something that will be useful later.  The goal is to match people and jobs so that each person is the very best for their particular job while getting ready for the next promotion - or if no promotion will ever come, at least attempting to keep them satisfied at doing a good job where they are.  Being the best at what they do helps people feel good about themselves and confident of being able to support any and all customers.

A well-run company tells people where the company is going as best as it can and tries to anticipate the needed technology so employees can educate themselves before the new skills are needed.  Working out individual career plans and job descriptions for each employee is a lot of work but it's the best way to develop people.

Developing people is the most vital competitive strategy of all.  If employees are on the ball and have an attitude of making progress all the time, we can handle anything the economy or our competitors throw at us.  If they're stuck in dead-end jobs or feel that they're being treated unfairly, why should they put themselves out to help the company in time of trouble or in time of opportunity?

Employees are as human as anyone else.  It's human nature to tend to focus on internal issues of office politics unless upper management distracts them from internal issues by keeping everyone focused on customer needs.  Customer needs are far more interesting than internal politics so this tends to be self-reinforcing, but politics can rear its ugly head at any time.  Management must always be alert to the need to refocus people on customers.

All companies say "People are our most important asset" but few follow IBM's policy of rewarding managers when their subordinates take courses.  IBM nourished employees with high salaries, benefits like country clubs, stock purchase plans, pensions, and never laid off anyone for the first 70 years or so of their existence.  "But," I've heard peple say, "IBM was hugely profitable, that's why they were able to pay so lavishly."

People who make that argument have it backward.  IBM made it possible to take good care of its people by motivating them to take very good care of customers.  Satisfied customers took care of IBM; IBM could afford to take care of its people.  This virtuous circle broke down when IBM lost customer focus and couldn't afford its employees any more.

The layoffs were traumatic, but IBM regained customer focus and recovered.  Employers who cheap out on people end up giving lousy customer service and eventually go under.

Employment, by definition, is a person renting his body at so much per hour.  If you're physically present on the job for eight hours a day, the law says that you must be paid for your time.

The law says nothing about the brain inside the body, but most people are willing to throw in their brains free if somebody shows them how.  Public schools teach students to do their own thing.  An employer wants people to do the employer's thing, and management has to teach employees just what that is.  If they don't, who will?

What each employee needs to know depends on the job and on the career plan, but there are fundamental truths of employment and value that apply to any job no matter how high or low.  Over its century of life, IBM has been very good at employee education at its most basic.

In the next article in this series, we'll further explore foundational beliefs that were traditionally taught to IBM employees that made them better employees, and in doing so, made IBM a better and more successful company.

Will Offensicht is a staff writer for and an internationally published author by a different name.  Read other articles by Will Offensicht or other articles on Business.
Reader Comments

"Public schools teach students to do their own thing"

Rather, they teach students to the **Democrats** thing. If only public schools taught kids to think independently we'd be much better off.

June 23, 2011 8:23 AM

"Rather, they teach students to the **Democrats** thing."~Ifon

Yea Ifon? then how do you figure half the population ends up Republican?

What the public schools actually do is program the mind in the Hegelian Dialectic. Only this duality is propagated, thinking outside of the left/right box is disparaged--thus the Red and Blue teams fighting one another rather than the despotic system.

June 23, 2011 1:05 PM

"Yea Ifon? then how do you figure half the population ends up Republican?"

Easy - it's called 'life'.

Public schools and the MSM teach children to be Democrats. Life teaches them to be Republicans.

Remember what Winston Churchill said?

June 23, 2011 1:08 PM

"Public schools and the MSM teach children to be Democrats. Life teaches them to be Republicans."

Balloney. It is the MSM itself that creates the divide. You got your FOX news, your Rush Limbau, and all the other right wingnuts pulling for one side while you have CNN and the others defining the box YOUR head is in.

If you were really thinking for yourself Ifon, you would recognize this systemic scam.

June 23, 2011 2:41 PM

Why is it that "thinking for yourself" means agreeing with certain fringe conspiracists?

Have you personally traveled Europe and researched/interviewed the House of Rothschild? The Bilderbergs? Etc?

If you have, for how long? What specific evidence have you, yourself Mr. Whitten, uncovered?

If you haven't (which is obviously the case), then how is any of the nonsense you espouse more "thinking for yourself" then the stuff I espouse? You're quoting others, you're relying on second hand information, you're reading websites and books.

Why is it that your alternate narrative about a Secret World Order is more correct than conventional wisdom, even though you can only quote others to prove it? Occam's razor says you're wrong. (Oh wait-- Occam must have been a plant too)

Think about what I just said slowly...

You believe that you're justified in what you know to be true with 100% certainty, BASED OFF OF WHAT OTHERS HAVE TOLD YOU, but anyone that relies on conventional wisdom (and the myriad axiomatic evidence for believing in it) is a puppet and moron and blind rabbit and blah, blah, blah. You're right based on unproven, unsubstantiated third-hand information but everyone else is wrong.

Now look. You've clearly made your point - in every article you offer the same tired abstract over and over again - so no one is unclear of where you stand. If we're all stupid puppets, and you're not, we understand that position by now.

Give it a rest.

At this point, the only case you're making is to prove Petrarch's earlier article correct about how conspiracy theories are just lazy excuses to distract society into being jaded. You're making that point more clearly than Petrarch ever could. That probably wasn't your intention, but it's the only point you're reinforcing now.

You say you're here because your own blog is "preaching to the choir". Fine, but this new congregation has heard you, rejected it and that cycle has repeated itself 100 times over. Move on to other congregations that might be swayed by words like "sheeple" and "Amerika" and so forth. If nothing else, you'll get more bang for your written buck.

June 23, 2011 3:07 PM

Willy, you did not answer his questions. Just as you have done with some of my previous comments, you dance around the facts/questions and turn around and start name-calling and telling us that we are mindless drones. Maybe we would listen to you more if you showed some respect, but if Scragged was to "gain in readership" more of your kind who would post incessantly the same point over and over, I would have to unsubscribe.

And most of all, as lfon said, "Give it a rest". You talk about the system and its hold over our government, but you fail to recognize that the politicians are the system. While there probably are bankers lurking in the shadow, Obama is a man who wants his own power and while he placates those he needs in order to retain his power, he is doing it for his own self-interests not for the interests of any such banking cabal.

I am not attacking your point of view, as you are entitled to your opinion, but it's your approach that is unnecessary.

June 23, 2011 4:16 PM

I know I should stop banging my head against the wall, because I am getting a headache, but your assumption that I "did not grasp" what you were saying is somewhat derogatory. We do "grasp" your tedious comments, but we have the choice to not accept your point of view and disagree. It seems that nobody can disagree with you and we all should see it your way. Sounds like in your group there is a lot of groupthink going on. And I don't need some philosophical mumbo-jumbo to understand life, I know that there are people on the other side of the isle, and I choose to sit on the right side. See? it is as simple as left vs. right.

June 23, 2011 6:12 PM

Rush Limbaugh and the MSM hate each other. At least, they appear to. Are you seriously suggesting that Rush and Keith Olbermann secretly get together in a private paneled clubroom somewhere and lift a brandy, chuckling at how they've conned us into thinking they're enemies? Please. The MSM and the rightist new-media have genuine philosophical differences in which they staunchly believe and which they push to the best of their ability.

June 23, 2011 10:20 PM
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