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Apa Format- Cite ReferencesMiles and Snow’s Adaptive Strategies are a well-known approach to
defining the competitive style of an organization.In a 2-3 page
document, use their typology and describe which of their four strategies
was used in the resurgence of IBM as chronicled in this case history.The case history has been attached because the link won’t work
case_history.pdf

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BEST PRACTICE
Waking
Up IBM
How a Gang of
Unlikely Rebels Transformed Big Blue
Six years ogo, IBM was a hasbeen. Today, it’s an e-business
powerhouse. It didn’t turn
around by imposing change
from the top. It let ideas, initiatives, and enthusiasm bubble
Lip from below. Maybeyour
company should do the same.
BYGARYHAMEL
D o YOU REMEMBER WHEN IBM
was a case study in complacency? Insulated from the real work! by layer
upon layer of dutiful manaj;ers and
obsequious staff, IBM’s executives
were too busy fighting their endless
turf battles to notice that the company’s once unassailable leadership position was crumbling around them.
The company that held the top spot
on fortune’s list of most admired
corporations for four years running
in the mid-T98os was in dire need of
saving by the early 1990s. Fujitsu,
Digital Equipment, and Compaq
were hammering down hardware
margins. EDS and Andersen Consulting were stealing the hearts of CIOs.
Intel and Microsoft were running
HARVARD BUSINESS REVIEW
July-August 2000
137
BEST P R A C T I C E • Watting Up fBM
that the data was being provided by
Sun. And IBM didn’t have a clue as
to what was happening on the open
Internet. It bothered me.”
The fact that IBM’s mucketymucks were clueless about the Web
Missing an Olympic
wasn’t exactly news to Grossman.
Opportunity
When he had landed at IBM a few
years earlier, everyone was still usThe first match was struck in 1994
ing mainframe terminals. “I was
in the backwoods of IBM’s empire,
shocked/’ he remembers. “1 came
on a hilltop in Ithaca, New York, by
from a progressive computing envia typical self-absorbed programmer.
ronment and was telling people at
David Grossman was a midlevel
IBM that there was this thing called
IBMer stationed at Cornell UniverUNIX-there was an Internet. No
sity’s Theory Center, a nondescript
one knew what I was talking about.”
builditig hidden away in the southThis time, though, he felt embareast corner of the engineering quad.
rassed for IBM, and he was irked. He
Using a supercomputer connected
logged on to the corporate directory
to an early version of the Internet,
and looked up tbe name of
the senior executive in
of all IBM marketing,
How did a company that had lagged behind every computer charge
Abby Kohnstamm. Then he
trend since the mainframe catch the Internet wave-a wave sent her a message informing her that IBM’s Olympic
feed was being ripped off. A
that even Bill Gates and Microsoft originally missed?
few days later, one of her
minions working in Lillehammer
Grossman was one of the first people
sieged box maker to a dominant sercalled Grossman back. At the end of
in the world to download the Mosaic
vice provider. Its Global Services
a frustrating conversation, Grossbrowser and experience the graphiunit, once a backwater, grew into a
man had tbe feeling tbat one of them
cal world of the Web. Grossman’s
$30 billion business with more than
was living on another planet. Ever
fecund imagination quickly con135,000 employees, and corporapersistent, Gtosstnan tried to send
jured up a wealth of interesting applitions flocked to IBM consultants for
some screen shots from Sun’s Web
cations for tbe nascent technology.
help in capitalizing on the Internet.
site to IBM’s marketing staff in LilleBut it was an event in February, as
By the end of 1998, IBM bad comhammer, but IBM’s internal e-mail
snow dusted the groxmd around tbe
pleted 18,000 e-business consulting
system coukln’t cope with the Web
Theory Center, that hardened his deengagements, and about a quarter of
software. Tbat didn’t stop IBM’s dilitermination to help get IBM out in
its $82 billion iti revenues was Net
gent legal department from sending
front of wbat he knew would at the
related.
Sun a cease-and-desist letter, which
very least be the Next Big ThingHow did a company that bad lagged
succeeded in shutting down the site.
and might very well be the Ultimate
behind every computer trend since
Most frontline employees would
Big Thing.
the mainframe catch the Internet
have left it at tbat. But Grossman
Tbe Winter Olympics had just
wave-a wave that even Bill Gates
felt IBM was missing a bigger point:
started in Lillebammcr, Norway,
Sun was about to eat Big Blue’s
and IBM was its official technology
lunch. After everyone had come
Gary Hamel is the Thomas S. Muisponsor^ responsible for collecting
back from the Olympics, he drove
phy Distinguished Research Fellow
and displaying all tbe results.
down to IBM’s headquarters, four
at Harvard Business School, a visitWatching the games at home, Grosshours away in Armonk, New York,
ing professor of strategy and interman saw the IBM logo on tbe bottom
to personally show Kohnstamm the
nationa} management at the Lonof bis TV screen and sat througli the
Internet.
don Business School, and chairman
feel-good ads touting IBM’s contriof Strategos. a consulting firm based
bution to the event. But when he sat
in Menlo Park, California. He is the
A Virtual Team Takes Shape
in front of bis UNIX workstation
author of the forthcoming
book.
and surfed the Web, he got a totally
Leading the Revolution (Harvard
When he arrived, Grossman walked
different picture. A rogue Olympics
Business School Press), from which
in unattended, a UNIX workstation in
Web site, run by Sun Microsystems,
this article is adapted.
his arms. Wearing a programmer’s
was taking IBM’s raw data feed and
uniform of khakis and an openpresenting it under tbe Sun banner.
necked shirt, he wound his way up
To discuss this article, join HBR’s
“If I didn’t know any better,” says
to the third floor-the sanctum sancauthors and readers in the HBR FoGrossman,
“I
would
have
thought
torum of the largest computer comrum at www.hhr.org/forum.
away with PC profits. Customers
were bemoaning the company’s arrogance. By the end of 1994, Lou
Gerstner’s first full year as CEO, the
company had racked up $15 billion
in cumulative losses over the previous three years, and its market cap
had plummeted from a high of $105
billion to $32 billion. Armchair consultants were nearly unanimous in
their view: Big Blue should he broken up.
Despite Gerstner’s early assertion
that IBM didn’t need a strategy (the
last thing he wanted was to start another corporatewide talk fest), IBM
was rudderless in gale force winds.
Yet over the next six years, the company transformed itself from a be-
138
and Microsoft originally missed?
Much of the credit goes to a small
band of activists who built a bonfire
under IBM’s rather broad behind.
This is their story.
HARVARD BUSINESS REVIEW
July-August 2000
BEST PRACTICE • Waking Up IBM
pany in the world. Borrowing a Tl
line from someone who had been
working on a video project, he strung
it down the hall to a storage closet
where he plugged it into the hack of
his workstation. He was now ready
for his demo – a tour of some early
Weh sites, including one for the
Rolling Stones. As sohcr-suited IBM
exeeutives scurried through their
rounds, Miek Jagger could he heard
wailing from the closet.
In addition to Kohnstamm, two
others were present at that first demo.
One was Irving Wladawsky-Berger,
head of the supercomputer division
where Grossman worked. The other
was [ohn Patriek, who sat on a strategy task foree with WladawskyBerger. Patrick, a career IBMer and
lifelong gadget freak, had heen head
of marketing for the hugely successful ThinkPad laptop computer and
was working in corporate strategy,
scouting for his next big project.
Within minutes, Grossman had his
full attention. “When i saw the Weh
for the first time,” says Patriek, “all
the hells and whistles went off. Its
ahility to include colorful, interesting graphics and to link to audio and
video content hlew my mind.”
Not everyone saw what Patriek
saw in that primitive first browser.
“Two people can see the same thing
but have a very different understanding of the implications,” he recalls.
“A lot of people [would say], ‘What’s
the hig deal ahout the Web?’ But I
conld see that people would do their
hanking here and get access to all
kinds of information. I had been
using on-line systems like CompuServe for a long time. For people who
weren’t already using on-line systems, it was harder for them to see.”
Their passions fueled hy the Web’s
limitless possibilities, Patriek and
Grossman hecame IBM’s Internet
tag team, with Patrick doing the
business translation for Grossman
and Grossman doing the teehnology
translation for Patrick. Patriek acted
as a sponsor and a resource hrokcr.
Grossman developed intimate links
with the Net-heads in IBM’s farflung development community.
“The hardest part for people on the
street like me,” says Grossman,
“was how to get senior-level atten140
Jim Canavino, disagreed. “You
tion within IBM.” Patrick hecame
know, we could set up some sort of
his mentor and his go-between.
department and give you a title,”
After seeing Grossman’s demo,
Canavino remarked to Patrick, “hut
Patriek hired him, and they soon
I think that would be a bad idea. Try
hooked up with another Internet
to keep this grassroots thing going as
activist within IBM, David Singer.
long as possible.” Patrick needed to
Singer was a researcher in Alameda,
infiltrate IBM rather than manage
California, who had written one of
some splendidly isolated project
the first Gopher programs, which
fetched information off the Net. team. It would he easy for others at
IBM to ignore a dinky department,
Grossman and Singer started buildhut they couldn’t stand in the way
ing a primitive corporate intranet,
of a grounds well,
and Patrick published a nine-page
manifesto extolling the Weh. EntiStill, Canavino wasn’t above using
tled “Get Connected,” the manihis role as head of strategy to give
festo outlined six ways IBM could
the fledgling initiative a push. To
leverage the Weh:
avoid the danger of going quickly
from having no IBM Weh site to hav1. Replace paper communications
ing dozens of uncoordinated ones,
with e-mail.
Canavino decreed that nohody could
2. Give every employee an e-mail
huild a site without Patrick’s apaddress.
proval. Though few in IBM had any
5. Make top exeeutives available to
inkling of what the Internet would
customers and investors on-line.
hecome,
Patrick had become IBM’s
4. Build a home page to better
semi-official Internet czar.
communieate with customers.
5. Print a Weh address on every”Where’s the Buy Button?”
thing, and put all marketing
Patrick’s volunteer army was a
on-line.
widely dispersed group of Net ad6. Use the home page for e-comdicts, many of whom had no idea
merce.
that others shared their passion.
Tbe Get Connected paper, distrib”What John ended up providing,”
uted informally hy e-mail, found a
says Grossman, “was the ahility to
ready audienee among IBM’s unherarticulate and summarize what
alded Internet aficionados, The next
everyone was doing and to open a lot
step was to set up an on-line news
of doors.” In turn,
group of the sort
the Net-heads inthat allowed IBM’s
underground hack- As sober-suited IBM troduced Patrick to
the culture of the
ers to trade techniexecutives scurried Internet, with its
cal tidbits. “Very
egalitarian ideals
few people higher
through
their
rounds^
and trial-hy-fire apup even knew this
proach to developstuff existed,” says
Mick Jagger could ing new technoloGrossman. Within
gies. When tbe Get
months, more than
be heard wailing
Connected conspir300 enthusiasts
ators gathered for
would join the virfrom the closet
their first physical
tual Get Cotinected
meeting, rememteam. Like dissibers Grossman, “the question on
dents using a purloined duplicator in
everybody’s lips was. How do we
the old Soviet Union, Patrick and
wake this company up?”
Grossman would use the Weh to
build a community of Web fans that
Patrick gathered a small group of
would ultimately transform IBM.
his Get Connected renegades, inAs Patrick’s group began to blos- cluding Grossman, at his vacation
house, set deep in the woods of westsom, some argued that he should “go
ern Pennsylvania. There they cobcorporate” and turn the nascent Web
bled together a mock-up of an IBM
initiative into an officially sanchome page. The next step was to
tioned project. Patrick’s hoss, senior
get through to Gerstner’s personal
VP for strategy and development
HARVARD BUSINESS REVIEW
July-August 2000
BEST PRACTICE • Waking Up IBM
How to
start
“”Insurrection
1
Establish a point of view. In a world of people
who stand for nothing more than more of the same,
a sharply articulated POV is your greatest asset. It’s
a sword that lets you slay the dragons of precedent. It’s a
rudder that lets you steer a steady course when others
are blown about by fad and whim. And it’s a beacon that
attracts those who are looking for something worthy of
their allegiance. A powerful POV is credible, coherent,
compelling, and commercial. To be credible, it must be
founded on unimpeachable data. To be coherent, it must
be logical, laying out a bulletproof argument. To be compelling, it must speak to people’s emotions, telling tbem
why your cause will make a difference in the world. To be
commercial, it must have a clear link to the bottom line.
2
W r i t e a manifesto. Ifs not enough to have an
ideology; you have to be able to pass it on, to infisct
others with your ideas. Like Thomas Paine, whose
Common Serise became the inspiration for the American
Revolution, you have to write a manifesto. It doesn’t have
to be long, but it must capture people’s imaginations. It
must paint a picture of what is and what is coming that
causes discomfort, And it must provide a vision of what
could be that inspires hope.
3
Create a coalition. You can’t change the direction
ofyour company all by yourself. You need to build a
coalition, a group of colleagues who share yourvision
and passion. It’seasytodismiss corporate rebels when they
are fragmented and isolated. But when they present themselves as a coordinated group, speaking in a single voice, they
cannot be ignored. And remember, as you struggle to attract
recruits to your cause,you will have an advantage over top
management. Your army will be made up of volunteers;
theirs will be composed of conscripts. Conscripts fight to
stay alive; volunteers fight to win.
4
Pick your targets. Sooner or later, a manifesto has
to become a mandate if i f s going to make a difference.
Tbe movement has to get the blessing of the suits.
That’s why activists always identify and target a potential
champion-someone or a group of someones tbat can yank
the real levers of power. Ultimately, tbe support of senior
management is the object of your crusade. Make an effort
to understand tbem-the pressuresthey face, the objectives
142
Is it clear to you that your company needs
to be shaken up? Then it’s time you became
a revolutionary. Here are seven steps for
organizing a coniorate insurrection.
they have to fulfill. Find some who are searching for help
and ideas, and go after them. If necessary, bend your ideals
a bit to fit their goals. And don’t forget that leaders are
often more receptive to new thinking than are the minions
who serve them.
5
Co-opt and neutralize. Some activists further
their causes by confronting and embarrassing
their adversaries. Such tactics may work in the public
sphere, but in a business setting they’ll probably get you
fired. You need to disarm and co-opt, not demean and
humiliate. To win over IBM’s feudal lords, John Patrick
constructed a set of win-win propositions for them: Lend
me some talent, and I’ll build a showcase for your products.
Let me borrow a few ofyour top people, and I’ll send them
back with prototypes of cool new products. Reciprocity
wins converts; ranting leaves you isolated and powerless.
6
Find a transkitor. imagine bow a buttoned down
dad looks at a daughter who comes home with
green hair and an eyebrow ring. Thaf s the way top
management is likely to view you and your coconspirators.
And thaf s why you need a translator, someone who can
build a bridge between you and the people with the power.
At IBM, Patrick was a translator for Dave Grossman. He
helped the top brass understand the connection between
the apparent chaos of the Web and the disciplined world of
large-scale corporate computing. Senior staffers and newly
appointed executives are often good translator candidatesthey’re usually hungry for an agenda to call their own.
7
t Win small, win early, win often. None ofyour
organizing efforts is worth anything if you can’t
demonstrate that your ideas actually work. You need
results. Start small. Unless you harbor kamikaze instincts,
search for demonstration projects tbat won’t sink you or
your cause if they should fail-for some of them will fail.
You may have to put together a string of successful projects before top management starts throwing money your
way. You have to help your company feel its way toward
revolutionary opportunities, step by step. And as your
record of wins gets longer, you’ll find it much easier to
make the transition from an isolated initiative to an integral part of the business. Not only will you have won the
battles, you will have won the war.
HARVARD BUSINESS REVIEW
July-August 2000
Waking Up IBM • BEST PRACTICE
techtioJogy adviser, who agreed to
tnake him available for a demo of
the prospective IBM corporate Web
site. When Gerstner saw the mockup, his first question was, “Where’s
the buy button?” Gersttier wasn’t
a quick study-he was an instant
study. But Grossman and Patrick
knew that an intrigued CEO wasn’t
enough. There were thousands of
others who still needed to get the Internet rehgion.
Their first chance for a mass conversion came at a meeting of IBM’s
top 300 officers on May 11, 1994.
Having schemed to get himself on
the agenda, Patrick drove his point
home hard. He started by showing
IBM’s top brass some other sites
that were already up and running,
including ones done by HewlettPackard; Sun Microsystems; the
Red Sage restaurant in Washitigton,
D.C.; and Grossman’s six-year-old
son Andrew. The point was clear: on
the Web, everyone could have a virtual presence.
Patrick ended the demo by saying,
“Oh, by the way, IBM is going to
have a home page too, and this is
what it will look like.” He showed
the startled executives a mock-up of
www.ibm.com, complete with a
36.2-second video clip of Gerstner
saying, “My name is Lou Gerstner.
Welcome to IBM.”
Still, many IBM old-timers remained skeptical. Recalls Patrick:
“A lot of people were saying, ‘How
do you make money at this?’ I said, ‘I
have no idea. All I know is that this
is the most powerful, important
form of communication both inside
and outside the company that has
ever existed.'”
Shortly after the May meeting,
Patrick and a few colleagues showed
up at one of the first Internet World
trade conventions. The star of the
show, with the higgest booth, was
rival Digital Equipment. Like Grossman’s before him, Patrick’s competitive fires were stoked. The next day,
the convention’s organizers auctioned off space for the next show,
scheduled for December, and Patrick
signed IBM up for the biggest display, at a cost of tens of thousands of
dollars. “It was money I did not
have,” admits Patrick, ” but I knew
HARVARD BUSINESS REVIEW
I could find it somehow. If you don’t
occasionally exceed your formal
authority, you are not pushing the
envelope.”
Now that IBM’s name was on the
line, Patrick had a rallying point for
all of the company’s various Internet-related projects. Here was his
chance to seed his message across
the entire company. He sent letters
to the general managers of all the
asked him about his organization, he
replied, “You’re looking at it, and
there are hundreds more.”
Throwing Hand Grenades
Patrick was a relentless campaigner,
spreading the good word about the
Internet in countless speeches inside and outside IBM. “Somebody
would invite me to talk about the
ThinkPad,” he recalls, “and I would
Like dissidents using a purloined duplicator in
the old Soviet Union, Patrick and Grossman used
the Web to build a community of Web fans that
would ultimately tr …
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