When Louis V. Gerstner stepped down as CEO of IBM in 2002 and talked about the vertiginous changes he had to implement to save the company from bankruptcy and to turn it into a leader in the Information Technology Industry, he acknowledged that the most complicated he had to do was not transforming a software and hardware company into a global services company, which could offer to its customers solutions based on IBM platforms or any other of its competitors.
Or bet on a future of networked computers, «in the cloud,» when the Internet was not in the minds of almost anyone and there was a world dominated by PC’s and their local networks.
No, the most difficult thing was, without any doubt for him, to change the culture of more than 300.000 employees IBM had at that time.
As Gerstner said, culture is not an important aspect of the game. It’s the game itself!
A powerful culture shared by all the employees is what transforms a good company into a great company, a company that makes history in its industry.
You can say that IBM created the telecommunications industry from scratch as we know it today. At its peak, it produced 70% of all computers in the world and was bigger than its seven main competitors together (in the sector they were called Snow White and the Seven Dwarfs).
The causes of death of large companies
But a powerful culture is also what kills a large firm.
The essential elements of a corporate culture are its core values, which are generally a reflection of the business DNA of the founders or top managers.
In 1962, the president of IBM Thomas Watson Jr, son of one of the founders, established three core values that were very clear and easy to remember:
– Excellence in all we do
– Superior Service to the Customer
– Respect for the individual
These values have been reflected for years in various areas of the company: employee compensation and benefits systems, training programs, marketing campaigns or different ways to support customers.
Values are everything, but by themselves, they are nothing, abstract concepts only.
They have to be turned into more concrete things to have some effect. In some companies (but also in families and communities) values are translated into common practices, which will lead, over time and persistence, to similar behaviours of their employees.
Many companies of striking success have foundational values that may remain valid, but they get «stuck» in obsolete practices: successful ways of proceeding in the past that have not been renewed and adapted to the current context.
Large companies like Kodak, Xerox or General Motors, surely saw the powerful changes that were going to disrupt their industries (in fact, Kodak created the first digital camera in 1975), because no one can doubt that the talent was bubbling inside them: they were all big companies, aware of the importance of having the best employees and who, in addition, could pay and attract them.
Certainly, the people who worked in those large firms developed strategies to face the enormous changes. Therefore, at their best, they had the talent and money to spare to act accordingly.
But it was their inability to react, to modify the ways they performed, their fear of changing and adapting to a new world, which led them to ruin or to non-transcendence.
Probably all this occurred because of the inertia installed in a conservative upper management that fired its luck to the old way of doing things. To continue doing more of the same … when it turns out that everything had changed.
A dress code
In the case of IBM, the basic beliefs we have seen were translated, among other things, into behaviours such as the dress code of commercial teams. IBM workers were recognized because they always wore dark suits and white shirts. Well, this could just be anecdotal. Or not.
Surely this practice was tremendously effective when launching the basic belief of offering a superior customer service.
How? Identifying themselves with the client: at a time when top managers and system directors dressed always like that, it was, of course, a sign of empathy and respect for the customer to dress in a similar fashion. This behaviour certainly helped to close many sales, beyond the extraordinary quality and innovation of the company’s products.
However, there was a time when it stopped being that way. None of the customers was dressed that way anymore, but IBM´s people still did the same. Because that was its way of doing things! Something, probably, far removed from the initial motivation of Thomas Watson Jr. to connect in a superior way with the customers…
How many companies you have worked for have yet obsolete practices and behaviours but continue doing them stubbornly and persistently?
The way to survive
That’s why companies have to act more like the artist Madonna, whose music I do not appreciate as much as her ability to survive in the market.
Madonna has reinvented herself «n» times, since taking over the music market back in 1984 with the single «Like a Virgin». Adapting to the public changes of taste and to the different musical styles. Trying new things, risking many times and sometimes failing, but always going forward, not standing still.
Madonna is always the same, but always different. She retains her provocative essence, but she also adapts: if she had to do theatre, she did theatre, if she had to dance, she danced, if it was good to go out to the stage alone with a guitar, so she did…
Has anyone wondered what would have become of her if she still disguised as a provocative teenager from the ’80s?
In the end, the most important thing is not the values themselves: many companies have similar values – excellence, teamwork, innovation … – but we see that they do not translate into behaviours.
The most important is putting them into practice and the ability to adapt them to the context of each moment.
The natural conclusion that stands up, what I think is the best way to achieve survival when you are at the top of your success would be:
1) Be clear about your values, respect them because they are your foundational DNA; without them, you will possibly be «disoriented» in such a fast changing world.
2) But constantly and courageously check if the initiatives and behaviours associated with them, the «coding» of those values, are the best way to get them started today. These common practices and behaviours need to be considered as a «light and detachable» superstructure, mounted on the foundations that our basic values or beliefs are.
In the end, it is what Darwin alleged: survival is based on adaptability. Do not survive the strongest (the most successful companies, today Apple or Google), but the ones that best adapt to the environment.
Dinosaurs did not disappear directly from the impact of a meteorite on Earth or from a series of volcanic eruptions but from the ominous effects of any of those causes on what made them reign, that was their big size. And also, by their inability to adapt to the new biological environment that was created.
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