THE IMPORTANCE OF TRUST – #92

It would be easy to blame the distinguished Board of Directors of IBM for the demotion of Ginni Rometty as CEO of IBM.  The Board of Directors had given enough of a chance to Ginni – they stood by Ginni for all 8 years of her tenure as CEO of IBM.  When I attended last years annual meeting, I was told by members of the Board that they had an extreme trust in Ginni. That trust was challenged by major share holders throughout the eight years, where profit was missing from all but a few quarters. During that 8 year period, Ginni was a perfect fit to IBM’S need for her proven ability to manage the cultural changes that IBM had to endure in a hardware only mentality and adapt to the softer side of consulting and software that was connected to other business opportunities. She has done a hell of a job in keeping a focus on WATSON as a basic platform for numerous capabilities in various markets.

Ginni is ending a tough tenure in that she has done all the heavy lifting at IBM during this time – while competition made inroads to IBM’s hardware side as well as other businesses. Her motto was simple for over a century, IBM has reinvested itself again and again to help its thousands of clients to move from one era to the next. During the last 8 years, IBM has faced the majority of all transitional challenges including the major ones, dealing within the bounds of establishing a smarter business. All companies need an enterprise – strength cloud platform.  They need AI capable of understanding all their data. They need services grounded in their professions and industries. They also need a technology infrastructure which has a high degree of intelligence, protected with advanced security, and bullet proofed against future new breakthroughs and risks. That is why they need today’s IBM.

Thanks Ginni for getting IBM back on track as leader in many areas, and congratulations for adding RED HAT, the biggest IBM acquisition at $34 Billion. It is this last acquisition that forced you out of your job; what were they going to do with MR. Whitehurst Chairman of the Board at RED HAT? On the other hand, the Board is just wanting some profits. Here’s hoping that Mr. Arvind Krishna will do as well as you did in the next eight years as he joins a new shared management structure at IBM.  He currently heads up IBM’S cloud and cognitive –software division – and will act as CEO. While Mr. Jim Whitehurst, former Chairman of RED HAT, will act as President of IBM. This is the first time IBM will separate the President and CEO. They form a dual executive team (team is a four-letter word) one member with deep IBM experience and another new to the company – focused on reviving it’s fortunes.

Ginni, thanks again for the excellence and for being a role-model to the graduates of McCormick School of Engineering at Northwestern University. We are proud of your achievements at IBM, and wish you continued success. Enjoy your role as Ms. Chairman of the Board, for the remainder of the year.

MANAGEMENT LESSON:

PROFIT IS THE NAME OF THE GAME. WHEN GINNI COULDN’T GENERATE QUARTERLY PROFITS, THE OPPORTUNITY TO MAKE A CHANGE BECAME VERY EVIDENT WHEN GINNI FINALIZED THE ACQUISITION OF RED HAT. SHE DID A HELL OF A JOB IN SEETING THE TABLE FOR THE NEW MANAGEMENT TEAM.