When Sam Palmisano became IBM’s chief executive in 2002, he succeeded a superstar CEO, Lou Gerstner. In 1993, Gerstner turned around the sinking company, declaring, “The last thing IBM needs is a vision.”
By 2002, however, Palmisano felt IBM needed a vision. So he articulated one—and followed through for the 10 years he was at the helm.
He figured that what differentiated IBM was its ability to customize solutions to fill its commercial clients’ needs. So he sold business units that didn’t fit his vision (such as IBM’s personal computer division) and spent heavily to acquire PricewaterhouseCoopers’ consulting business.
He also overhauled the culture to encourage the company’s 440,000 employees in 170 countries to collaborate. Soon after becoming CEO, he hosted a global online event—a “values jam”—with IBM’s entire workforce. For 72 hours, they discussed how to craft IBM’s values for the 21st century and identified three principles: dedication to every client’s success, innovation that matters and trust and personal responsibility in all relationships.
As a result, IBM employees around the world bought into Palmisano’s strategic vision and used the three values they helped define to guide their decision-making. When he urged far-flung managers to adopt a client-focused, agile structure tailored to fill client needs, they responded enthusiastically.
An engaging but blunt communicator, Palmisano constantly reminded employees that customers come first. If a meeting ran long, he’d step outside to call clients.
His impatience carried over to. Rejecting a long, formal appraisal process, he preferred to huddle briefly with employees, give targeted feedback and isolate key areas where they could grow.
— Adapted from “How IBM’s Sam Palmisano Redefined the Global Corporation,” Bill George, www.billgeorge.org.