Emerging Business Opportunities at Ibm

Introduction.

Founded in 1911, IBM was for many years the world's dominant computer company. But by the time when Louis V. Gertsner obtained the CEO position at the above corporation it was in a very problematic situation. At the press many analytics described the case like deep depression. Most prominent were two men – Charles Morris and Charles Ferguson – who had written a book, "Computer Wars", which took a grim view of IBM's prospects. They stated: "There is a serious possibility that IBM is finished as a force in the industry. Bill Gates, the software tycoon whom everybody in the industry loves to hate, denies having said in an unguarded moment that IBM ‘will fold in seven years.' But Gates may be right. IBM is now an also-ran in almost every major computer technology introduced since 1980…Traditional big computers are not going to disappear overnight, but they are old technology, and the realm in which they hold sway is steadily shrinking. The brontosaurus moved deeper into the swamps when the mammals took over the forests, but one day it ran out of swamps." Their book concluded that "the question for the present is whether IBM can survive. From our analysis thus far, it is clear that we think its prospects are very bleak."

Even though the view of these two authors was too grim, many other journals and newspapers at that time observed the future of IBM in quite a pessimistic way. "The Economist", for example, stated: "In an industry driven by rapid technological change and swarming with smaller, nimbler firms, can a company of IBM's size, however organized, react quickly enough to compete? And can IBM earn enough from expanding market segments such as computer services, software, and consulting to offset the horrifying decline in mainframe sales, from which it has always made most of its money? The answer to both questions may be no."

The title of Gertsner's book about IBM reflects the above two questions. "Who Says Elephants Can't Dance?" he asks and tries to prove the opposite point of view.

Gertsner's performance at the CEO position at IBM was probably a ring-buoy for the corporation. He led the "great enterprise through dramatic change". But still a large number of problems remaining now at IBM. We are willing to discuss them.

Kea Features.

FORTUNE 500 (1955-2005) states: "Since 1995, more than 1800 companies have appeared on the FORTUNE 500. Many of these companies have changed names over this period, owing to mergers, acquisitions, and bankruptcies".

Every day and every hour all over the world the new ideas appear. Tomorrow some of them will provide leadership to company who catch them, the latter will kick IBM from business because of new products, new technologies, new approaches.

In order to survive IBM must create a system, which is able to FIND, SELECT, SUPPORT new business opportunities and TURN THEM INTO PROFITABLE BUSINESS.

In our research we accepted the terminology of three horizons developed by McKinsey consultants in their article "The Alchemy of Growth". The article provides an idea that a firm should work out three types of businesses at the same time: H1 – "CASH COW" or core business, H2 – "STAR" or rapidly growing business, and H3 – "QUESTION MARK" or real options and ideas of new business directions.

IT industry where IBM is currently working is rapidly growing and changing substance. Changes in IT industry can completely remove the old product, old technology, and old business approach. It is IBM's need to work out a dozen of STAR businesses at Horizon 2 in order to have one effective CASH COW business at Horizon 1. It is IBM's need to work out hundreds QUESTION MARKS businesses at Horizon 3 in order to have a dozen successful STAR businesses at Horizon 2.