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June 16, 2011

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Lessons from IBM’s 100th Birthday

By Larry Walsh

Cake and ice cream will be had by all at IBM as Big Blue celebrates its centennial birthday. It becomes one of the few companies in the world to reach the century mark, and has done so through the continual reinvention of itself through a mix of conservative business principles and progressive innovation.

Officially, today is the day that the company we now recognize as IBM was incorporated under the name “Computing-Tabulation-Recording Company.” Its roots go back even further, though. In the 1880s, the U.S. census needed a way to more expeditiously tabulate the country’s population. Herman Hollerith responded with his Electric Tabulation Machine – essentially a punch card reader that sped up the counting. It was on this day in 1911 that Charles Ranlett Flint consolidated a number of fledging technology companies that made employee time card readers and measuring scales into the company that would become Big Blue. The name International Business Machines didn’t appear until 1924.

IBM can take credit for a number of inventions and innovations. It is an idea powerhouse. It brought us electric typewriters, personal computers, Web servers, microprocessors, mainframe supercomputers, nanotubes and, most recently, an artificial intelligence system (“Watson”) that beat human competitors on Jeopardy. IBM remains the world’s top producer of patents – more than 5,000 patents filed and approved last year alone.

On the business management side of the house, IBM was equally progressive. Thomas Watson, the company’s first true chief executive, invented the “open door policy” through which employees could air their grievances and ideas directly to him. IBM was also the first to train women as engineers. And IBM was amongst the first companies to advance the careers of minorities through equal opportunity policies. For its 100th birthday, IBM is asking employees and partners to donate their time to charity and community groups – a program that has already committed 2.5 million man-hours.

What IBM has done most successfully over the years is reinvent itself. Unlike other centurion companies like Exxon Mobile or General Electric, IBM has changed core focus many times over. The company has shed seemingly profitable and potentially big businesses – such as its PC business to Lenovo – in favor of concentrating on future opportunities.

People may think of IBM as a computer company or a more generic “technology” company. It’s much more than that. Over the last 20 years, IBM has reinvented itself as a software and services organization. Now more than half of its revenue comes from professional services provided through its consulting and integration arm. Its software drives enterprise businesses around the world, and it’s leading the way in developing new enterprise-class socializing, collaboration and intelligence applications to make other businesses more productive.

More than anything, IBM learned from its near-death experience in the early 1990s, when the company was falling on hard times and investors were calling for its breakup. Then CEO Lou Gerstner removed the veil of arrogance that was weighing on IBM and focused the company’s rich portfolio of resources on building products and services that customers wanted to buy. The strategy worked, and Gerstner’s legacy continues today as IBM is one of the biggest and most valued companies in the world.

The lesson to learn from IBM’s 100th birthday is persistency and reinvention result in longevity. As Big Blue proves, it doesn’t matter where you start, it’s that you remain focused on the goals ahead that matters.

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2 Comments
  1. Aug 26 2012

    The internet of thngis is a phenomenon that is already happening and well under way from many more players than just IBM. I think this is actually a fairly realistic suggestion of the next few decades of technological development. With nine billion people we should have the creativity and manpower to both rebuild our industrial infrastructure and continute technological and social innovation. These are not mutually exclusive. Actually Gov 2.0 people are deeply interested in how technological integration can ease some of the troubles of government. Private-sector companies like Google are providing public services like accurate public-transportation maps and schedules on our phones without asking a dime from our taxes.

  2. Aug 27 2012

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