IBM: From Inventor to Innovator
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Case Details:
Case Code : BSTR136
Case Length : 11 Pages
Period : 1970 - 2004
Organization : IBM
Pub Date : 2004
Teaching Note :Not Available
Countries : USA, Global
Industry : Information Technology
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Background
IBM was incorporated in 1911 as the Computing Tabulating Recording Corporation (CTR), which manufactured punch card data processing equipment. On February 14, 1924, CTR changed its name to International Business Machines Corporation.
The company's founder and President Thomas. J. Watson believed that the new name
was more in keeping with its growing business portfolio and wider range of
business-related products. IBM set up its first research facility in 1945 in
Manhattan.
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IBM Research occupied a very important position within the company.
Over the years, IBM
Research invented products that became the foundation of the IT industry.
FORTRAN, Reduced Instruction Set Computer (RISC) architectures, relational
databases, token-ring networking, the cursor and magnetic disk storage were all
developed at IBM Research.
However, IBM marketed very few of these products. In
1969, the US government started an antitrust inquiry on the premise that IBM was
trying to monopolize the markets for general-purpose electronic digital computer
systems and specifically, the market for computers designed for business.
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This inquiry continued until 1983 and left the IBM weakened by acting as a
distraction and clouding its decision-making.
Some analysts felt that IBM would have been able to see the potential in many of its inventions, had it not been for the inquiry. The company was also afraid to take bold decisions for fear that these decisions may compound the charges against it.In
the 1980s, IBM's culture, reflected bureaucracy and rigidity.
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The company
took a very limited view of its market and business activities and
operated within this narrow sphere. There was also lack of communication
and understanding between the research wing and the business side of the
company. Due to this, IBM lost a number of opportunities and failed to
commercialize many of its inventions.
The 1980s were a period of decline
for IBM, and by the early 1990s, analysts had begun writing off any
chances of revival. In 1993, IBM posted a loss of $4.97 billion for the
year 1992, which was at that time, the largest single-year corporate
loss in US history. |
In 1993, Gerstner took over as CEO from John Akers (Akers).
Under Gerstner, IBM made a number of changes in its business operations and
culture...
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