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A Transformational Change at IBM

SECOND EDITION

Susan Bivins

USA
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Introduction

Back in the early 1990s, IBM was in trouble. Its sales force was selling hardware when customers wanted solutions; it was posting losses instead of profits; and, for the first time, lifetime employment was replaced by downsizing initiatives. Some executives realized IBM needed to transition from selling hardware to providing services, but that transition had not yet begun. This paper addresses an organizational change management project implemented in one geographic area in the early 1990s to transform part of IBM from selling hardware to delivering solutions.

Although it happened a while ago, the project still exemplifies the elements of successful transformational change. Despite the passage of time, the people aspects of change remain the same. The project redefined the strategy in one geographic area, turned the strategy into tactics, and incorporated a new opportunity management process that looked a lot like an early form of portfolio management. This paper discusses the organizational approach, processes and management systems developed to transform our business from selling hardware to delivering customer solutions. It contains no IBM confidential information. The author is now retired from IBM; everything written represents her own views rather than IBM’s. This is the true story of a major change initiative in a large company and identifies some common elements needed for successful organizational change.

Examples of Current Transformational Change Research

Executives know that their organizations must anticipate and respond to external and internal factors that cause their strategies to change. These factors may include increased competition, first-of-a-kind technology, economic downturn or best of all, anticipation of a market need and leadership in developing solutions. Change can turn our worlds upside down or be a small bump in the road; it can be incremental or transformational. For organizations, every new strategy involves transformational change.

But change isn’t just driven by executives. Every project involves organizational change. By its very definition, a project delivers a new capability to the organization. The new capability is embraced by stakeholders (good) or not (bad). Every project manager must therefore understand how to lead positive change and avoid the pitfalls. A recent study of 1,500 change practitioners worldwide found that success in transformation projects hinges primarily on people rather than technology; that “changing mindsets and attitudes” and “corporate culture” were the two most significant challenges reported by the practitioners; and that this “soft stuff is the hardest to get right”, (IBM 2008b, p. 12). The study also found that about 60% of change efforts fail.

Worse, according to McKinsey & Company (Keller, 2008), Kotter (1995) and research by others, about 70% of major change initiatives fail. After almost two decades of intense change from corporate reorganizations, new software systems, and quality-improvement projects, the failure rate remains at 70%. A whole new field of change management consultants, with accompanying models, has arisen to try to improve this failure rate. Here a few examples of transformational change research and attending models.

More…

To read entire paper (click here)

Editor’s note:  Second Editions are previously published papers that have continued relevance in today’s project management world, or which were originally published in conference proceedings or in a language other than English. This paper was originally presented at the 7th Annual UT Dallas Project Management Symposium in Richardson, Texas, USA in August 2013.  It is republished here with the permission of the author and UT Dallas.

About the Author

flag-usaSusan-S-BivinsSusan Bivins

Missouri, USA 

Susan S. Bivins, MSPM, PMP, has more than twenty-five years of management and leadership experience dedicated to delivering successful information technology, organizational change management, and professional consulting services projects for major global corporations. She specializes in project and portfolio management; international, multi-cultural and multi-company initiatives; and business strategy integration in the private and public sectors.  During her career with IBM, Sue managed multiple organizations and complex projects, including operations and support for the Olympics, and a strategic transformational change program. Since retiring from IBM, she has led multi-company joint initiatives with Hitachi, Microsoft and Sun Microsystems, and served as Director of Project Management at Habitat for Humanity International. She is co-author of the book Mastering Project Portfolio Management (J. Ross Publishing, Inc.) and several articles on project portfolio management.

Sue earned her Master of Science in Project Management from the Graduate School of Business at The George Washington University, where she received the Dean’s Award for Excellence and was admitted to the Beta Gamma Sigma business honorarium. A member of PMI, she contributed to the PMI Standard for Portfolio Management and is currently serving on the OPM3 Third Edition team. She and her husband live in Missouri. Sue can be reached via e-mail at [email protected].