The DNA of Success of IBM & US best-run companies
The DNA of Success of IBM & US best-run companies
Frank Li, Dec. 22, 2011 Updated, Jan, 22, 2016, March 25, 2026
http://www.kwcg.ca/bbs/home.php?mod=space&uid=61910&do=blog&id=3798
https://blog.creaders.net/user_blog_diary.php?did=NTQ0OTUx
The philosophers have only interpreted the world, in various ways; the point is to change it. --- Theses On Feuerbach, Karl Marx in the spring of 1845
Whether like it or not, communism is the way of life for humanity; nothing else is.
Learn to IBM, to rescue Canada's manufacturing is extremely easy.
I hope that President of University of Waterloo Dr. Bill Rosehart will rescue the democracy making power to social garbage ruined Canada; rather than wasting a key human position doing inhuman.
May 18, 2016, in viewing 2012 disappointed reports Canada manufacturing plants disappearing at twice pace of U.S., and Canada's productivity lags U.S. in 'virtually every instance', etc., I once wrote article How to save Canada's manufacturing from disappearing to have indicated that:
“In the Era of market economy, living space has changed into market space from the geographic space of agricultural economy; the decline of manufacturing industry is in destructing the living space of Canadians.”
In past 15 years (Since 2011), I have been making efforts to promote my ideas as enjoyable true; it was in not only rescuing manufacturing; but also rescuing Canadians from dying of long wait no treatment available; but all failed.
Recently; I learnt that Dr. Bill Rosehart was appointed as the next President of the University of Waterloo. Then I Googled that Dr. Bill Rosehart has held several senior leadership positions at the University of Guelph and Calgary, where he made many groundbreaking reforms; which showed his ability for rescuing the life of Canadians.
Also; University of Waterloo provides a best platform for Dr. Bill Rosehart exerting his talent; which is as the President of UofW, he gained right to engage in equal dialogue with government officials and the leaders socially.
The essence of leadership is to drive and optimize social resources — material, intellectual, human resource, etc, and all of the practices need to dialogue with government top officials for policies and funds supporting.
Due to that in 134 BC, China outlawed schools of thought to respect Confucian only. Today all of the toxic ideologies came from the West and used to establish a large number of disciplines in universities.
Considering human survival, over 50% of majors are useless. 99% of professors in the social sciences are making living by taming kids into parasites led shortage of labors for manufacturing life necessaries.
Dr. Bill Rosehart must be aware of the fact that must avoid time wasted uselessly and must put energy and time on the promotion of the projects that are able to save Canada and improve the life of Canadians.
1...Rescue Canadians from dying no treatment available
2...Rescue democracy destroyed manufacturing industry
3...Rescue democracy dysfunctioned social governance
To rescue Canadians from dying no treatment available, please see my Feb 2026 article A cure for the dementia of Hollywood Icon Bruce Willis.
Here; I focus on discussing solutions to rescue democracy ruined manufacturing industry and democracy dysfunctioned social governance.
I update 2011 article with the hope of providing feasible approaches for Dr. Bill Rosehart rescuing Canada and set a model for following; thereby rescuing the democracy makes power to psychos destructed world.
IBM was founded in 1911, now on the wreckages of numerous sunken enterprises during the past century; the 115 years old IBM is still full of vibrant as the leading company in global manufacturing.
The success of IBM should attribute to the written institutionalized regulations, wise corporate culture with the contribution linked reward mechanism, especially in the patent inventions related rewards.
IBM appreciates employee as "working capital"; due to outstanding contributions; a man from PR China was 4 times promoted within 9 years to be highest technical leader position from the grassroots.
Viewed human weaknesses; the managers easily abuse power for corruption; IBM established an arbitration system to allow dissatisfaction with leaders to be addressed to the higher level management, until to top.
Such as, in a company; the patent is production related; it is unable to break free from the support of the leaders; in such a state of confusion; the leaders easily seize the fruits to stifle employees' enthusiasm for invention. But the invention is just by the people in the daily production, not the people in the office.
No one will deny the fact that IBM has developed wise humanized management approaches for successfully running a company to be outstanding.
But the companies of Canada are just taking the opposite approaches. See my 2014 article titled The Fatal DNA failed RIM & Canadian Enterprises.
However; the final killer is democracy & its relied ideologies. it was such antihuman stuffs destroyed the manufacturing of Canada and democracies.
The democracy makes antihuman ones in power; to please voters, they advocate human rights; to legally encourage union culture and regards that strikes for more by doing less in unearned gains as justice in line with human rights; otherwise is slave labor against justice and human rights. By such an antihuman play; they corrupted quality of labor and uprooted labor productivity; now union culture is in uprooting the efficiency of government, hospitals and everything.
Please look at those antihuman social garbage fabricated thoughtful names for making livings by playing democracy: Hawks, Dovish, Donkey, Elephant, Left wing, Right wing, Extreme right, Extreme left, Green Party, Tea party, Liberal party, Conservative Party, Democratic Party... No one will believe such social garbage in reckless quality are able to make human policies.
Human suffered tragedies were made by the antihuman democracy.
Nowadays, social governance has evolved as that lawmakers make policy as orbit; and society runs on; which is the lawmakers making the power of State Apparatus as executable and it is the lawmaker playing govern role.
We must learn the Technocratic Democracy of China by quality entrepreneurs, scientists, engineers, professors, etc., in part time self reliance work as lawmakers. But in Canada, in unrest concern; we must keep the political body as it is; and then form a civil legislature taking 30% of voter right to parallel run with the Gov-one to kill the beasts of the democracy.
In this regards, President Dr. Bill Rosehart is able to play a leading role.
Please discuss with PM Mark Carney and Goldy Hyder, the CEO of Business Council of Canada - BCC, then sets an Eoffice in UofW, by BCC's 170 member CEOs of top companies and the Professors of UofW as the civil lawmakers; then enlarges the numbers towards whole Canada.
The civil legislature does not confront or replace the ruling party, but supports the right legislation. With 30% of the vote right, under the run of democracy, the civil legislature will still be able to play a leading role.
With the non-partisan advantage of civil legislature, it needn’t care about pleasing voters, and it needn’t care about the political correctness; which is able to get rid of the fatal harm of democratic politics; so that the civil legislature is able to propose some policies that populism politicians dared not proposed.
In this roundabout way, without touching the political body, without causing unrest; by people respected professors and social elites in part time self reliance work as lawmakers, the formation of the civil legislature will be no one dared oppose; which is the only feasible way that will be widely acceptable.
In this way, we will set a convincing model, and then people globally will be eagerly to follow and rescue ruined world. Thus we can rescue Canadians by the civilization of China and Dr. Bill Rosehart will play a great role.
For a long time; people over the world are searching for a way to survive, but there is no bloodless way to reach it; while the civil legislature is the only way that is able to avoid bloodshed and will be widely accepted.
Content
In memory of Mrs. Joyce
Management is the art of playing human nature
Motivation of topic
1... The 26-years’ IBM career
1.1...Mr. Kenneth Chang and his creative works
1.2...The plateau increased patent reward in IBM.
1.3...The work dispute adjudication system
1.4...IBM invented Corporate Identity System - CIS
2... In search of excellence: lessons from the US best-run companies
3. The reason of poor - a story happened in Canada
4...The quality of people decides the quality of a country
4.1...China cultures people as human, the West as beasts
4.2...The people of Chine developed highest IQ scores
4.3...The social significance of the highest IQ scores
5...The promoter of the manufacturing of China
6...The democracy killed manufacturing of democracies
6.1...The killer of Canadian manufacturing industry
6.2...The killer of Japanese manufacturing industry
6.3...The killer of German manufacturing industry
6.4...The killer of the US manufacturing industry
6.5...The killer of the UK manufacturing industry
6.6...The killer of French manufacturing industry
In memory of Mrs. Joyce
Today, March 25, 2026, I add section in memory of Mrs. Joyce.
Mar 1, 2008, I once wrote article titled Canada's Corporate Management & Reducing Psychological Pressure in Workplace: I think of Mrs. Joyce, she was the landlord of my colleague, I visited my colleague in her home in 2005 summer. She eagerly talked to me about 20 minutes, and then she returned to her bedroom. When I am ready went away to say goodbye to her in front of the door of her bedroom, she asked us in, I found her lying on the bed. She said welcome me come again and said sorry for that she cannot get up to see me off with a weak voice.
When I went back home; I immediately called my colleague, knew that Joyce once works as accountant for a company in liver cancer and has been a week without eating foods. Since then, I called every day. A few days later, she was admitted to the hospital, and after a period of time, she was gone forever.
More than 21 years past already, I still remember Joyce because her sound: “Ten years ago, Canada had a lot of big companies, but now has few; most of them have been sold to other countries.” This is the only time I heard such a far-sighted comment. It showed worries from a cancer sufferer; and who has already known that she would say Goodbye forever soon.
Over the years, I always regret for that day I did not find she was a patient and consumed too much of her strength that maybe shortened the valuable time of her staying in this world. Now, I am tearful again.
Since then I pay attention to the management and development of the companies of Canada and being psychologically tortured.
Below were some of my writings; you will be shocked by the ignorant plays in the corporate management. It was just the childish plays in the management to have destroyed manufacturing industry of Canada.
Jan 27 2014, The Fatal DNA failed RIM & Canadian Enterprises
Mar 19 2016, How to save Bombardier from the road-dust of failed RIM
May 18 2016, How to save Canada's manufacturing from disappearing
May 28 2012, The DNA of the Success of German Manufacturing --- Frank Li March 25, 2026
Management is the art of playing human nature
People are inborn selfish instinct; suppose that it is without the selfish instinct, babies would be unable to suck nipples naturally, and humans would starve to die from birth. If there is no inborn hormone driven sexual attraction between men and women, humans would be unable to breed.
The most of human activities are for survival. The selfish instinct driven survival seeking activities are the essential driving force in supporting the development of economy; and thereby supporting the existence of society. No survival seeking activities of people, no economy and society.
Therefore; humans can never escape the unfortunate fact that the developing and improving of governance and the realization for the better life are all inseparable from the driving force of human selfish instinct.
However, human selfish survival seeking activities are often conflict and encounter against with common social collective interests.
2014, in Management is the Art of Playing Human Nature, I indicate that: “Human behaviors determined by dual natures: The cultural nature of acquired altruistic quality, and the natural (animal) nature of inborn selfish instinct.
The Management is to finish purposeful tasks with culture nature driven by meeting animal nature with payment under enforcement of regulations. So that management is the Art of playing human natures.
Whether the Corporate Culture or the Organizational Culture, they all should be composed of the measures that are able to motivate the maximum exertion of employee’s cultural nature with minimum play of employee’s animal nature to maximize the production efficiency.
The success of any enterprise is the result of good played human nature. Successful entrepreneurs are thinkers, philosophers, strategists and so on, who are growing up in the practice and should serve as national policy makers.
The failure of Socialist-Bloc is due to it over relied on cultural nature by suppressing the animal nature, while the failure of the Capitalist-Bloc is due to it over relied on animal nature; China is good at the best use of both.
Do not simply use so-called morality to cover up human animal nature, do not simply use of so-called value to perform social governance.
The US management consultant Peter Drucker said: the purpose of an organization is to make ordinary people do extraordinary things.
Management is efficiency; management is profit.
The great economists, the entrepreneurs, the philosophers are profound insight into the human nature. For example:
Noted economist Adam Smith, his own favorite book was The Theory of Moral Sentiments, while Keynes wrote The end of laissez-faire, I think, they were analysis of the impact of human nature to social progress.
The greatest spiritual teacher Dale Carnegie who wrote Human weakness, human nature and the advantages of communication arts.
Scottish philosopher David Hume wrote A Treatise of Human Nature, strove to create a total naturalistic science of man that examined the psychological basis of human nature.
A well understanding of human nature is significance for effectively improving corporate management.
Motivation of topic in 2011
Recently, there was a report that Buffett's firm buys $10.7 billion of IBM stock. People may be curious to ask that what caught the attention of the most successful investors in the world to have self-broken his long rule of refusing to invest in technology companies due to his thought that is difficult to predict which tech applications or hardware will prosper in the long run.
“But he said he recently changed his view of IBM (International Business Machines) based on what he read in the company's annual reports. He said he should have realized years sooner that the heart of IBM's business is providing service and equipment to information technology departments.”
As my view, Warren Buffet seems to has ignored the micro details. A micro, but is the key issue – It was that where does the vitality of IBM come from? What is the reason of an over one hundred years old Big Blue keeping in prosperity among the wreckages of failed enterprises.
I think, it was that IBM emphasizes people-oriented, and takes the staff as "working capital" as same as that of doing in German Companies.
Now let us to go into IBM with Mr. Kenneth Chang.
1... The 26-years’ IBM career
Mr. Kenneth Chang, who emigrated from Hong Kong to United States in 1958 when 40 years old, after 4 years’ work on the production of semiconductor chip from a beginner in GI Company, he transferred into IBM in 1963, and in the following nine years period, he was promoted 4 times and reached the highest technical position of IBM due to his creative works with many innovations and inventions, which shocked all people in IBM.
After worked 26 years in IBM, when he was preparing for retirement, his immediate executive requested him to summarize his achievements as archives for retaining in IBM. So the prototype of the book <26-years’ IBM career> was born.
Later, under the request and the help of his youth's classmate friend in China, the prototype was further detailed and refined into a 158 pages’ book to have published 5100 copies. The book was not only introduced his achievements, but also involved great details of incentive method of IBM for encouraging employees to make creative job. It revealed the secret of IBM growing into Big Blue.
Oct. 7, 1995, I fortunately discovered it in a heap of the used books at a book stall in a Saturday Flea Market in North East China.
Since then I take it as valuable treasure. In the past 16 years, I have it with me. In this period, I once several times moved home, even when immigrating to Canada, the entire family property have to be compressed into a few suitcases and weighed accurate to grams, in this process, I have to throw away a lot of favorite books, however, I never consider to discard this book.
Because of I deeply believed that the successful experiences of well organized manufacturer are significant for helping other manufacturers’ stable running. It is not only important for whole society, but also for any individual, since it is the preconditions that can provide a stable and peaceful community, in which that people can work and live to enjoy a prosperous life.
Following are the photos of the author and the book cover.
As that of sophisticated lattice on the cover of the book, the task of Mr. Kenneth Chang was researching the way that links the diodes, transistors, resistors, capacitors and so on to be fixed in the designed point on a set of lattice.
As a common person, I never understand that how can integrated tens of millions of elements on a silicon wafer of only a square millimetre.
1.1....Mr. Kenneth Chang and his creative works
He was with an Aeronautical radio background, before one week when he stepping on the job position of researching the manufacture of flat diode and triode in GI company of United States, he bought a book on semiconductor knowledge. That was the initial start of his knowledge on semiconductor.
In the summer of 1962, when he was on vacation leave, a phone call asked him immediately return back to the company because the production was completely paralyzed with producing a large number of defects’ silicon chips.
The reason was that, in order to ensure the production smoothly in his leave period, GI Company hired a senior engineer from the large company - Texas Instrument Corp (TI) to work on his position. The senior engineer changed the production methods by copying the methods of TI, but totally failed.
Kenneth fixed the production line with his own methods and explained the reason that he improved the production with the methods that looks simple, unscientific but were effective than that of being believed as highly advanced ones used in other companies, because of his methods were explored out from constantly trial and error in the practice of daily production. And, he illustrated with the comparison between the samples made in two ways. Since then, his popularity surged in GI company.
We may have the personal experience of that, in daily life, there are many actual objective results are contrary to the common sense of us with unfounded subjective judgments. Unfortunately, most people are always acting according to own subjective judgments, rather than based on the objective results from the practical trial.
His excellent work in GI helped him applied a position in IBM. When he submitted his resignation to the executive of the GI, the executive committed to increase his wage to 20% higher than that of IBM did and plus 5,000 shares of GI stock. Later, the stock rose to $40 per share, in which 5000 shares become $200,000, thus his friends felt regret for him. However, until retirement, he still believed that left GI into IBM was a right choice.
Another example of the harm of the unfounded subjective judgment happened in IBM.
In the process of semiconductor chips’ manufacturing, silicon chips need to go through hundred of processing In which, a step is to thoroughly dry the photosensitive coatings on the silicon chips, otherwise, in the subsequent process would produce defects. According to the common sense of unfounded subjective judgment, for preventing from the dust in the process of drying, production technology designed to put the coated silicon chips into the metal box, and covered with lid before baking to dry. This technology was unstable, easily impacted by personal operation or environmental temperature or humidity, often resulting in defects, sometimes was a lot.
After careful observation and analysis from the operations, Kenneth changed the production technology with the test that dried several coated silicon chips by keeping the metal boxes open, he found that drying effect was perfect. He increased the number of silicon chips for testing, the results were satisfied. The method was promoted to the large scale production, and to be welcomed by warming. An immediate executive who wrote that, on the notebook for two shifts’ transfer, “Chang led us out of the forest.”
Later, he simply designed aluminum plate to replace the metal box. Thus largely facilitated the operation, and greatly improved the production efficiency.
IBM internal Daily News published an interview report about him. The article introduced his experiences and deeds, including his extensive hobby, bridge, tennis, and the play of gongs and drums of Chinese opera. Finally, the article said that, whatever to do, Mr. Chang will devote himself to hard study and to be outstanding.
1.2... The plateau increased patent reward
Accumulates one point on each published being approved article regarding science and technology on the Science and Technology Bulletin.
For each patented patent, the inventor will accumulate 3 points. The bonus for first patent is $1,500, plus souvenirs and gold-plated pins, etc.. For each subsequently patented patent will award cash $500.
For each accumulation of 12 points, issue a Plateau Award $ 3600 with publishing the names and photos of the winner in company publications. Another accumulation of 12 points with another Plateau Award, and so on. Company may also give quota of awards depending on the circumstances from $10,000 to $100,000. It is very few of people who could achieve third Plateau Award.
Kenneth Chang entered the IBM in 1963, but until 1968, by the reminding of others, he began to pay attention on the reward system of IBM. And since then he achieved seven patented patents, published 9 papers, gained 30 points, and one patent was on pending.
The incentive policy of IBM largely promoted the inventive activities of employees. The report of U.S. patent awards surge in 2010; IBM still tops is the vivid proof.
The number of U.S. patents awarded jumped significantly from 2009 to 2010 among the 10 companies that got the most. IFI Claims
I think those mentioned above are main reason that IBM can grow into the Big Blue taday and outstanding in the forest of the world leading Companies.
The success of IBM has benefited from its unique corporate culture. The success of Kenneth Chang also benefited from the corporate culture, which is emphasizing people-oriented, and taking the staff as "working capital" with a incentive system that encourages the employee to creatively work.
Suppose that Kenneth Chang was working in some of Canadian Companies, he would be ousted in weeks due to his self-determined to do innovation, and straightforward proposals for improvement.
Because of under different corporate culture, facing the proposals, in most of the bosses, supervisors, or colleagues, the first sense were that of they have been despised, the first psychological reaction is uncomfortable.
Thus they would make everything possible even by despicable way to squeeze out the thorns from their eyes.
They never care about the benefit would be gained from those proposals. This is not the nonsense; it was the personal experiences of mine in some Companies.
This year, 2011, Mr. Kenneth Chang will be 91 years old. I'm sure that, as a man of active thinking and unceasingly enterprising, he will be still in health, because he has basic conditions for healthy, which is the mental health first.
Now, I have an idea that is to contact with him and get permission for translating the book into English. Since that I have deeply felt out the old-fashioned and poor on the management in most of local enterprises of Canada compared with that of most of multinational corporations.
1.3...The work dispute adjudication system
Any business is made up of people, it is inevitable conflict between each other; especially in the scientific activities.
R & D management is a dark field; it is difficult to control balance. Because, in the process of research and implementation of R & D project, will involve cooperation of many sectors, in particular, the need for leadership in coordinating role.
So, the distribution of the bonus created by R & D need to take care of all aspects, especially, the main management may take big share. Finally, the prize money into the hands of the actual developers will be rarely.
For dealing this thorny but important issue, IBM set up a complaints system. If someone feels unfairly, he or she can manage up a complaint to higher level management, if it is not satisfied with the results, it allowed continuing to appeal to a higher level of, until reaches to top management.
As my view, besides complaint, for solving this problem, company should regulate the prize money as two parts, one for administrative staff, other one directly put on the hands of researchers.
Perhaps the inventor of the inventive concept has no ability to conduct implement, however, because the breeding process of the concept of invention is a special intellectual work, it is not that any person can do, therefore, the inventor of the concept should get of 50 % above in total bonus.
The purpose for doing in this way is to encourage people to innovate, rather than that of only sit back waiting to share the fruits of others.
1.4...IBM invented Corporate Identity System - CIS
IBM, Apple, McDonald, Coca-Cola, Sony, and Canon, etc., ares the world well known brands. It is that the design of Corporate Identity System (CIS) helps them being identified out easily from the huge number of companies.
As a complete corporate image design system, Corporate Identity System is considered to originate from IBM. In mid-50s, the chairman and CEO of IBM, Thomas John Watson, Sr. who led IBM to have conducted CI design under the guideline of "presenting the advantages and features of IBM through certain designs, making the designs unified in application".
Thomas John Watson oversaw that company's growth into an international force from 1914 to 1956. Watson developed IBM's distinctive management style and corporate culture, and turned the company into a highly-effective selling organization.
“In early 60s, some large and medium-sized enterprises in America began to apply factors that can build up and represent the company image to effectively publicize the CI, which involve the whole publicity strategy and methods that can penetrate all fields.
After a long period, this complete plan and design were widely accepted and labeled as corporate identity system. Imported to Japan in 70s, CIS theory was employed by a few far-sighted companies and helped to make great profits.”
2... In search of excellence: lessons from the US best-run companies
In 1982, American Thomas Peters, the uber-guru of business and Robert Waterman, the bestselling author of The Renewal Factor, Adhocracy, and What America Does Right, who jointly published book In Search of Excellence: Lessons from America's Best-Run Companies.
The book studied forty-three of America's best-run companies from a diverse array of business sectors, In Search of Excellence describes eight basic principles of management:
2.1...A bias for action – a preference for doing something—anything—rather than sending a question through cycles and cycles of analyses and committee reports
2.2...Staying close to the customer – learning customers' preferences and catering to them
2.3...Autonomy and entrepreneurship – breaking the corporation into small companies and encouraging them to think independently and competitively (aka, "split-up")
2.4...Productivity through people – creating in all employees the awareness that their best efforts are essential and that they will share in the rewards of the company's success
2.5...Hands-on, value driven – insisting that executives keep in touch with the firm's essential business
2.6...Stick to the knitting – remaining with the business; "The company knows best."
2.7...Simple form, lean staff – few administrative layers, few people at the upper levels
2.8...Simultaneous loose–tight properties – fostering a climate where there is dedication to central values of the company combined with tolerance for all employees who accept these values.
1982, it sold three million copies in its first four years, and was the most widely held monograph in United States OCLC libraries from 1989 to 2006.[1] The book explores the art and science of management used by several companies in the 1980s.
Michael Gering commented the author as“Tom Peters is widely credited with having created the management guru industry.”
Here, the “Autonomy and entrepreneurship.” and the “Productivity through people” is focused on emphasizing people-oriented, and takes the staff as "working capital".
The success of IBM demonstrates the importance of a comprehensive incentive system. The physical and intellectual level is similar between modern people. They are lazy or industrious depending on the effective incentives measure.
The ignorant and lazy employees from the poor managed Companies into German Companies; they will become smart hard-working employees.
The smart hard-working employees from German Companies into poor managed Companies; they also would become ignorant and lazy, because they do not have the opportunity to demonstrate their talents.
On other hand, they must blindly follow the stupid directing with closed mouth; otherwise, they will be ousted soon.
3...The reason of poor - a story happened in Canada
In 1843, in the A Contribution to the Critique of Hegel’s Philosophy of Right, Karl Marx indicated that "Religion is the sigh of the oppressed creature, the heart of a heartless world, and the soul of soulless conditions. It is the opium of the people."
As the opium of the people, religion badly dehumanizes the quality of people.
Mr. Jayant Bhandari was born in India and educated in Britain. He recognized that British colonialists made Indian society and the people ignorance.
Please search Mr. Jayant Bhandari on YouTube. He said that Indian values consider it is wise to commit crimes without being caught. Indian social culture lacks concepts of honor, contracts, friendship, and respect. India is a country without a sense of honor; you absolutely cannot trust anyone.
Such ignorant culture was rooted in the unique history. India willingly been swept by foreign civilizations several times, it has accumulated all of the garbage of the world's civilizations. Various absurd ideologies and religions are rampant, and itself is good at creating more ignorant local ones, which dehumanized the quality of people; so that the bridges they built to be collapsed, the dams they built to be crumbled, and whatever they do has ruined.
Here, I think of a story that happened in Canada 23 years ago. It can make us understand the dehumanizing effect of religion.
In 2003, I met an old man who came from India. I asked his views on Canada. He seemed to be angered by my question and answered loudly, Bill! Bill! Too much bills. Working! Working! Every day working!
Obviously, his answer had somewhat charm for poetry and which aroused me to think of some of the scenes about his mother country.
Some people are praying for the happier life by hands clasped together, some people says they are praying for the next time, because of they have brainwashed for that everything is predestined by the pre-existence.
There some people are not praying, but squatting in the side of street to watch streetscape; due to they don't care about for the life of next time.
The facts made me clear the reason of that why are the living standards of the people in his mother country seems to have been in marking time.
Although, there are some reports on the progress of this country, but the majority of them are the cajoling from abroad or narcissistic from domestic. It can not cover up the reality of ignorance and poverty of India.
I wonder whether the incentive of IBM can work for those people who addicted in the spiritual opium and satisfied the status quo.
Mr. Jayant Bhandari said that; in India, the intelligent and well-educated people are eagerly getting away from their homeland. In a sharp contrast, the people of China are just eagerly returning to their homeland.
The West has been praising India as the most populous democracy, a large young population, full of hope; however, the reality is the opposite: it is just the democracy making low quality ones in power ruining India.
4...The quality of people decides the quality of a country
A country is composed of people; therefore it is the quality of people in deciding the quality of the social governance and which decides the quality of life.
4.1...China cultures people as human, the West as beasts
China develops ritual and Confucian cultures people as human in collective self discipline and do not do to others what you would not have them do to you; in collectivist values and peace seeking genes, which created collectivist civilization with the elements that are suitable for human survival.
It was just due to the doctrine of “do not do unto others what you would not have them do unto you”, China built Great Wall to avoid wara. Zheng He Fleet (1405-1433) 7 times around the world, besides fair trade, did not carry out colonial ruling; but presented large amount books to Italy and Europeans accepted Chinese ideas, discoveries, and inventions. The understanding and learning of China inspired the creativity of the Renaissance and formed the foundation of European civilization.
But the West fabricates feud Gods to brainwash people as sworn enemies mutually killing and regarding that loot-kills others for being No.1 as a matter of course; in individualist values and war seeking genes; and made Western individualist civilization with the elements destructing human survival.
This was the reason that in 59 years later, after Zheng He's fleet ceased its great voyages. Columbus discovered the New World; since then the countries in West swarmed out, occupied, plundered, and slaughtered the entire world. They are sill killing in Ukraine and Middle East.
2000 years ago, China explored the Silk Road, today updated as the Belt Road to survive people in the West, but they kill at home; then world widely, until this moment still kill in Middle East & Ukraine.
Due to that since ancient times, China chooses learned people in power, even develop Imperial Examination. Europe missionaries call it elite constitution by value merit over birth giving power to scholar.
4.2...The people of China developed highest IQ scores
Just as computer memory stores, the neurons in the human brain, acting as the memory of human intelligence. in China benefit from a good living environment and adequate nutrition, promoted people in neurons healthy development.
In contrast, the chaotic life of other countries badly impacted their people in the development of brain cells, so that thier IQ scores are lower.
Dec. 23, 2011, article Optimal IQ's for Various Groups, BY ROBERT A. LINDSAY, (it has lost link).
Average IQ of various countries: China 112-118, Europe 92-102, India 92-96, Africa 85.
Below is a map of the average IQ of different races around the world, made by Western enthusiasts.
Image source: https://www.reddit.com/r/Maps/comments/1garakk/global_iq_map/
Reflecting on man-made tragedies, it is the level of intelligence that determines the behavior of different races:
[1] China, purposefully cultures people as quality human, so that it has been world leading economy, explored Silk Road in 2,000 years ago to survive the people in West mutually killings. Now, the Silk Road updated as Belt and Road Initiative, bringing billions of marginalized people into the world economy, raising their lives from $2 to $10-15 per day, making them live in dignity as human.
[2] Europe, never cultures people as human, but making feud Gods brainwash people as sworn enemies as beasts in killing from past to this day. It made democracy to grant power to social garbage, it made values, and human rights, using them as excuses to constantly provoke wars. It designed its society as a bullring, and tamed people into bullfighting bulls; and looking for target attacking in parliament, society and world widely, they stirred their own country and the world as boiling pot, bubbling.
[3] India, willingly been swept by foreign civilizations several times, it has accumulated all of the garbage of the world's civilizations. Various absurd ideologies and religions are rampant, and it is good at creating more evil local ones. Dehumanized people as animals and recognized cows as ancestors. Bridges built collapsed, Dams built crumbled, and whatever they do has been ruined.
[4] Africa has never been properly humanized. Without the wisdom to build a habitable home, it has always been in a semi-cave state. People were captured and sold into slavery to Europe and America. Later, they voluntarily wandered to various parts of the world. Unable to make a living normally, but they are good at crimes and good at makes livings by putting stockings over their heads.
The IQ of the above-mentioned countries is only an average. There are people with higher IQs in all of country. Unfortunately, people with low IQs cannot consider the bad consequences. Therefore, they are bold and reckless; and often occupy the leadership positions.
4.3...The social significance of the highest IQ scores
April 2023, the President of European Commission Ms. von der Leyen indicates that: “for centuries China have helped to shape world civilization; and in the last decades, they have really transformed the economy of their country, lifting more than 800 million people out of poverty in the last 45 years and transformed into a modern-day economic powerhouse, key global player and a leader in many of the cutting-edge technologies that will certainly shape the next decades of global civilization and progress.”
Please remember that the achievements of China were made based on the destroyed ruins with huge war reparations from a century long killing and looting of Western allies and US tamed Japan; which started since 1840 British armed selling opium after government of China banned opium trade that started in 1773.
Sep. 16, 2020, the founder and co-chairman of Bridgewater Associates, Mr. Ray Dalio who published article Changing World Order, Chapter 6: The Big Cycle of China and Its Currency; in which, he pointed out the different quality of people between China and the US: “Chinese leaders study history to learn lessons that help them plan for the future and deal with the cases at hand. Believe me, the lessons learned from these histories are now guiding Chinese leaders’ decision making.”
“While the most of Americans focus on particular events, especially those that are now happening, most Chinese, especially their leaders see evolutions over time and put what is happening in the context of them. While Americans fight for what they want in the present, most Chinese strategize how to get what they want in the future. As a result of these different perspectives the Chinese are typically more thoughtful and strategic than Americans, who are more impulsive and tactical.”
“The Chinese government is run from the top down (like a family) and optimizes for the collective while the American approach is run from the bottom up (e.g., democracy) and optimizes for the individual.
5...The promoter of the manufacturing of China
Now, China is replacing Germany as the crown jewel of manufacturing; it should attribute to that China has well developed the German rationalization proposals (RP). The majority of wages come from being tied to the profits generated. More profit created more wages gained without cap.
For those who can be assessed on a piece-rate basis, pay them wages on a piece-rate basis.
For tasks that cannot be assessed on a piece-rate basis, the profit is assessed on a team basis; thus the members who work is bad will be kicked away by other team members.
Thus the managements avoided the headache of lay off people.
Also there is bonus for individuals, such as, patent inventions related rewards, and suggestions related rewards.
6...The democracy killed manufacturing of democracies
It is just the players of democracy advocating of human rights to have killed manufacturing by corrupted labor quality; the left of quality WWII generation took labor productivity away, and democracies lost foundations for making life necessaries.
The manufacturing of democracies in the west can never be restored due to it uprooted in culture. Politicians need the cultural poison of human rights pleasing voters, union culture cannot touch, labor quality cannot update.
Supposed that no labors from China, there would be no Atlantic Railway in the United States, and without mad in China no one lives well. Thanks to the high-quality generation that cultured from the hardships of WWI and WWII to have laid foundation for West democracies today; now new generation even lost ancestral skills to bomb world.
The leaders of democracies have all vowed to make own country great again; vowed to bring manufacturing back; however, the fact is that not only they can never to bring manufacturing back or develop new manufacturing, but also the existing manufacturing is in destroying; due to society filled in low quality labor under destructing culture.
6.1...The killer of Canadian manufacturing industry
Canada once has world class leading manufacturers; they have been suicidal declined.
Nortel Networks was a dominant Canadian telecommunications equipment manufacturer, founded in 1895 as Northern Electric employed 94,000 people globally with groundbreaking inventions; but it filed for bankruptcy in 2009; and was liquidated by 2017, marking one of Canada's biggest corporate failures.
Research In Motion - RIM, later renamed as BlackBerry Limited; it was a Canadian software company specializing in cyber-security. Founded in 1984, it originally developed the BlackBerry brand of interactive pagers, smartphone and tablets. In the global smartphone industry, RIM can be called as originator and pioneer; but now, the most of people may don't know it anymore; it was a sadness of Canada manufacturing industry.
Bombardier Inc. was founded in 1942; a Canadian aerospace manufacturer which produces business jets. During the 1970s and 1980s, the company diversified into public transport vehicles and commercial jets, grew particularly fast at the end of the 1980s, and it became a multinational corporation.
However, the launch of the CSeries aircraft sent Bombardier into deep debt, pushing it to the brink of bankruptcy by 2015. As a result, the company sold nearly all of its operations except business jet manufacturing.
The uproot of Canada's manufacturing industry was the result of wrongfully dealing with human nature; which is by democracy grants power to reckless ones and then the reckless ones play human rights cheating voters to support union culture encouraging people lazy to have uprooted labor productivity.
Also, in the companies of Canada; in terms of management, it is lack of attention to incentive mechanisms and the wages are not linked to work performance; which is going on the dead path that has destroyed socialist country.
For example, a road repairs in China can be completed in one night. However, in Canada, the road is left to ripped open and exposed to the sun shine for six months. Meanwhile, the workers lie at home counting the money they earned from the neglected work.
In my 2014 article The Fatal DNA failed RIM & Canadian Enterprises, I cited an example An RIM senior exec has to express opinion by Open Letter.
I read an article Open letter to BlackBerry bosses: Senior RIM exec tells all as company crumbles around him Jun 30, 2011. The article wrote that: “We have received an open letter to Mike and Jim from a high-level RIM employee (whose identity we have verified), and in an amazingly honest and passionate plea, this letter gives fascinating insights into what RIM must fix, and fast. RIM did not immediately respond to a request for comment.”
The start of the open letter and the 8 suggestions as follow:
“To the RIM Senior Management Team:”
“I have lost confidence.”
“While I hide it at work, my passion has been sapped. I know I am not alone — the sentiment is widespread and it includes people within your own teams.”
“Mike and Jim, please take the time to really absorb and digest the content of this letter because it reflects the feeling across a huge percentage of your employee base. You have many smart employees, many that have great ideas for the future, but unfortunately the culture at RIM does not allow us to speak openly without having to worry about the career-limiting effects.”
The 8 suggestions:
1) Focus on the End User experience.
2) Recruit Senior SW Leaders & enable decision-making.
3) Cut projects to the bone.
4) Developers, not Carriers can now make or break us.
5) Need for serious marketing punch to create end user desire.
6) No Accountability – Canadians are too nice.
7) The press and analysts are pissing you off. Don’t snap. Now is the time for humility with a dash of paranoia.
8) Democratise. Engage and interact with your employees — please!
The proposals are not only pointed out the problems, but also offered workarounds, especially reconstruction of management, interaction with employees to be managed in accountability. It shows the writer's honesty in deep concern for RIM's future, and well thought out.
From above 8 suggestions, we could feel that chaotic in the management.
Above 8 suggestions were all to hit on the root cause of the failure of RIM and perfect suitable for any businesses.
However, RIM’s responds to open letter was not only with no thanks, instead, was somewhat hatred condemnation, the first paragraph is as follow:
“An “Open Letter” to RIM’s senior management was published anonymously on the web today and it was attributed to an unnamed person described as a ‘high level employee”. It is obviously difficult to address anonymous commentary and it is particularly difficult to believe that a “high level employee” in good standing with the company would choose to anonymously publish a letter on the web rather than engage their fellow executives in a constructive manner, but regardless of whether the letter is real, fake, exaggerated or written with ulterior motivations, it is fair to say that the senior management team at RIM is nonetheless fully aware of and aggressively addressing both the company’s challenges and its opportunities.”
I once talked with an employee who is working in the lab of RIM as a material scientist. She said that she once wrote a suggestions’ letter to the management of RIM, but without any response. She felt that the corporate culture of RIM is not worthy for appreciation.
Besides above, I once called my friends who were working in RIM at that time.
The one who works in the service department said that their work efficiency has a lot of room for improvement.
Obviously, in RIM, it has no normal channels for facilitating the communication between subordinates and superiors to promote the development with the wisdoms of all employees.
This is the same game in the democracies of the West.
6.2...The killer of Japanese manufacturing industry
Japanese manufacturing once dominated the world for decades, but now its glory has long been faded.
Dec. 4, 2014, I once wrote Why did Keynesian fail in saving Japan's economy: the Bubble Economy has rewritten the code of the DNA of Japanese people, from enthusiastic in hard working into enamoring in greedy speculating, thus, further affected the social moral and national’s spiritual, thereby caused the decay of Japan.
People keen to make living by speculating instead of hard working and less concerning on the interest of own company and most of Japanese people have lost the sense of responsibility.
This is why those corporate executives of Japanese leading companies are constantly bowing and apologizing for their falsifying data in the process of manufacturing.
In essence, the national is the decisive factor for economy; the decline of economy is the decline of the quality of the nationals; which is as same as that of the democracies in the West; Japan has also decayed hopeless.
6.3...The killer of German manufacturing industry
May 28, 2012, I once wrote The DNA of the Success of German Manufacturing to indicate that for decades, German manufacturing has been the crown jewel of global manufacturing; which should attribute to the rationalization proposals (RP) - to point out the existing problems with solutions; then company extracts bonus to contributor from the net cost savings in the first year.
Since Mr. Friedrich Alfred Krupp of German ThyssenKrupp AG firstly coined the management concept of RP in 1872, since then German companies have been the practices of management on RP. Today the RP is not only a key component of HR, but also is the corporate culture of enterprises.
They have established a sound management system of RP with corresponding incentive policies and accumulated a lot of valuable experiences. Such as, set up specialized department and specialized personnel to manage RP, the employees can easily input and query the contents and the implemented results of RP through corporate network system.
As the saying goes, if we hope horse running faster, we must feed it with grass. If we hope hen laying more eggs, we must feed it with grains. In the same way, the activity of RP can continue to develop in German enterprises; the reward in bonuses or materials plays a key role.
The award criteria for RP are basically same in different German companies. It is according to the net cost savings after implementation of RP in the first year. It divided into several grades, specifically, the annual net cost savings within the 2,500 EUR, according to the following standard bonuses:
Annual net cost savings | Bonus |
250 Euros | 20 Euros |
251-750 Euros | 75 Euros |
751-1750 Euros | 150 Euros |
1751-2500 Euros | 250 Euros |
Annual cost savings are more than 2500 EUR, then, the bonus is 25% of the actual amount of net cost savings. For example, net cost savings is 5000 EUR, and then the prize money amounted to 1,250 EUR.Some RP cannot estimate the direct economic benefits, but can play an important role in improving safety, preventing accidents, protecting environment, improving product quality and enhancing corporate-image, and thus can make indirect economic benefits, then, according to the grade of lowest, low, medium and high respectively give 20, 75, 150 and 250 EUR or material reward. In accordance with "Personal Income Tax Law" of Germany, material reward is tax-free. The taxes of bonuses are paid by enterprises.
But now, German manufacturing ruined by democracy grants power to social garbage; to play green card; Chancellor Friedrich Merz destroyed advanced nuclear power plants, the Ex destroyed the advanced coal-fired power plant, paid war of Ukraine got return destroyed cheap natural gas pipelines.
Democracy is a detroyer destroying everything by granting power to antihuman social garbage; they abuse the power exerting evil instinct.
Please look at the democratic destroyers destroyed German Berlin and the whole Europe follow the camera of the vBlog of the couple from Irish.
Berlin 2025 is Falling Apart (Germany’s Zombie Capital).
After returning from China, faced with once deeply beloved their own homeland has destroyed by representative democracy left them in despair.
Disaster of Germany rooted in erroneous ideology
Merz criticized China for violating human rights, but China, in just a few decades, has lifted 800 million people out of poverty. The people of China can walk alone on the streets late at night without worrying about their safety. In contrast, in Germany, however, the country is declined unlivable, falling back into poverty, and people are losing even the most basic guarantees of personal safety.
Merz criticized China for being no freedom of belief, no freedom of religion; but he did not carefully consider about the fact of the cause of manmade disasters was rooted in religion by their purposefully fabricated Gods brainwashing people as sworn enemies as beasts in the instinct of looting & killing.
European made western civilization dehumanized people addicting in democracy; but lost sense for the purpose of establishing government.
6.4...The killer of the US manufacturing industry
2018, in book Destined for War: Can America and China Escape Thucydides's Trap, the American political scientist Graham Allison has indirectly proved that the United States has lost essential vitality along with the loss of social productivity.
The silver line of the Washington Metro began planning in 1968, officially launched in 2000, but began the construction until in 2009. The first phase of the project was completed in 2014, which was 46 years later from the start of the planning, but, that only completed 5 stations of planned 34.
The professor sighed that it’s even harder to know when the second phase of the connection to the Dulles Airport will be completed.
The professor introduced another project that was the bridge across the Charles River between the Kennedy School and Harvard Business School in a distance that can be seen from his office window.
In 2012, the State of Massachusetts said they were going to renovate this bridge, and it would take two years. But it was finished until 2017 with three times over budgeting.
As sharp contrast, the professor introduced a project in Beijing China; a much bigger bridge called the Sanyuan Bridge was renovated within 43 hours. The Professor disappointed said that now China completed project in hours is more than that of the United States completed in years.
6.5...The killer of the UK manufacturing industry
2016, Professor Hulya Dagdeviren, University of Hertfordshire, Britain, who wrote article How did Britain fall out of love with privatisation to disappointed indicate that, privatization was supposed to reduce the burden on the taxpayer and force these sectors to become more competitive, efficient and deliver better value for customers. But over the long term, it has become clear that private services do not deliver good value.
For the ticket of 35-minute railway journey, in Britain was ￡358 monthly, but in Italy was ￡37 only. The most recent data show that for Department of Health projects which delivered over ￡11 billion of capital investment, the undiscounted cost of the unitary charges to be paid until the end of these projects was around ￡80 billion.
Professor said that the leader of Labor Party vows to renationalize their failed infrastructure again.
I think that the renationalize is not willingly, but have to; this was in repeating the same business. The Britain was the country that flips its economy upside down twice likes baking cake; and now is ready to bake once failed side.
Obviously, the economic thoughts of the great sons of the Britain, Adam Smith and John Keynes, were all beaten by own ancestors kindly coined ideologies and failed in saving the lives of own countrymen by saving their economy, even if their micro and macro economics have been in conducting world economy by complementary of each other.
Briton YouTube comments with that the cost of finished project in China cannot finish budgeting in Britain.
6.6...The killer of French manufacturing industry
Feb. 2013, the article French minister hits back at 'three hour day' attack reports that: "Arnaud Montebourg, minister for industrial renewal in France, was subject to a written barrage of abuse from Maurice Taylor, chief executive of US tyremaker Titan, after the French politician appealed for financial support for an ailing Goodyear factory."
"Mr. Taylor berated French workers for putting in just "three hours" a day, and said his company would be "stupid" to invest in the loss-making tyre plant in Amiens, northern France." "'The French workforce gets paid high wages but only work for three hours. They get one hour for breaks and lunch, talk for three and work for three. I told this to the French union workers to their faces. They told me that's the French way!' Mr. Taylor wrote."
An on line survey, there were 81 percent of French people said support the view of American boss.
How IBM Became A Multinational Giant Through Multiple Business Transformations
From a scammy amalgamation of companies to one of the world's most respected technology firms, IBM’s story is a testament to business transformation and self-reinvention.
By Tefi Alonso December 5, 2022
Table of contents
Humble beginnings: How did IBM start?
IBM's Golden Period: the strategy and tactics
IBM used to penetrate the computer industry
The decline during the last decade and IBM's enterprise strategy to return to the top
Here's what you'll learn from IBM's strategy study:
How an accurate diagnosis of your organization’s most pressing challenge can help you form a coherent strategy to overcome it.
How developing your strategic instinct to recognize change early and decisively transforming your business rely on unifying your organization towards a single direction.
How focusing on short-term financial gains is putting your long-term survival and profitability in jeopardy.
IBM stands for International Business Machines Corporation and is a multinational technology corporation with over 100 years of history and multiple inventions that are prevalent today. Its headquarters are in Armonk, New York, but it operates in over 170 countries.
Institutional investors own over 55% of IBM, while around 30% belongs to mutual funds, and individual investors own less than 1%. Since 2020, IBM’s current Chairman and CEO is Arvind Krishna.
IBM’s market share and key statistics:
Source: Pete McClymont, CC BY 2.0, via Wikimedia Commons
Humble beginnings: How did IBM start?
IBM was founded in 1911 as the Computing-Tabulating-Recording Company (CTR) in Endicott, New York, United States.
CTR was the product of three and a half amalgamated companies:
The Tabulating Machine Company
The International Time Recording Company
The Computing Scale Company
The Bundy Manufacturing Company
The company’s founding was very well-timed. It coincides with the profound shift of the United States’ agricultural economy to an industrial one. At that time, inventions and innovations were introduced at an unprecedented rate, evolving people’s way of life and defining our modern lifestyle.
Hollerith 1890 tabulating machine with sorting box | Source: Jennifer, CC BY-SA 2.0, via Wikimedia Commons
The company’s success at these times was due to the wide range of products it offered that were in high demand in industrializing economies from time recording clocks and commercial scales to various mechanical data handling systems, tabulating machines.
But it was CTR’s corporate culture and managerial practices that enabled it to pioneer and serve that demand.
IBM’s scammy and problematic birth
The birth of IBM was the result of the vision and leadership of CTR's first president, Charles Ranlett Flint.
Flint was notorious for combining companies, creating monopolies, and having other people manage them while he simply owned stocks. That’s what he intended to do with the creation of CTR as well.
Here are the companies that formed what later became IBM:
In 1900, Flint bought The Bundy Manufacturing Company, the inventor of the “punch card” that allowed factories to convert working hours into salaries. The company was quite successful due to increased demand from emerging factories and the founder’s acute business skills. Flint merged the company with the International Time Recorder (ITR).
ITR was the core of CTR. By the time Flint created CTR, ITR was already a business group and an established player in selling and maintaining time recorders with an international presence. Flint had bought out almost all of his competitors, effectively creating a mini-monopoly.
The next company that formed CTR was the Computing Scale Company. A marginally profitable company that had created a commercial scale for small merchants like butchers and cheesemakers. It was part of Flint’s vision of mechanical data handling.
The fourth and last company that formed CTR was The Tabulating Machine Company. The main product of the company was the punch card tabulating equipment that automated parts of a manual and very labor-intensive process. It sped up “data entry,” increased accuracy, and reduced costs dramatically. It was Herman Hollerith’s invention, the second founder of CTR.
The merging of these three and a half companies didn’t make “business sense” at the time, nor was it the result of a careful business strategy.
At least not in the way we mean it today. It was a technical scheme that would allow Flint to protect his investment even if one of the companies wasn’t profitable and he had to sell it. Because, as it turns out, ITR was prosperous, and the tabulating business was slowly growing even though it required huge capital reinvestments. But the computing part of CTR was dying.
As a result, the child of this amalgamation was overvalued by twice its actual value.
This inflated value was supported by a loose argument of “economies of scale” since all these businesses were “measuring stuff.” From its very first days:
The stock was overvalued
The company was heavily in debt
There were a lot of internal clashes
The three businesses had no synergy
There was little attention to innovation
The board of directors only cared about profits
The customer and employee treatment was poor
In short, IBM was born with some of the worst conditions for any company.
IBM’s coherent business strategy that got it out of the pit
Just three years after its creation, in 1914, the company changed its culture, executive team, and product line.
In ten years, it went through an astounding business transformation.
The move that initiated this transformation was the hiring of Thomas J. Watson Sr. as general manager for the company. The previous leader of the company was simply a credibility mark that Flint had implanted to draw investors. Watson’s influence on the company, however, is so monumental that he is considered the third founder of CTR, who shaped it into IBM.
IBM President Thomas J. Watson 1920s
Watson carried out a series of initiatives that laid the foundation for what would later become America’s largest technology company of the previous century:
He built a mighty salesforce and a training program called “Sales School” that every salesperson had to graduate from.
He brought clarity of purpose with frequent communication of goals and performance measures.
He aligned daily actions with measurable targets that were part of the company’s strategy. He effectively created a culture of execution.
He created a new line of products in the data-processing industry.
He implemented initiatives to bring people from the three different divisions close together.
He improved efficiencies by bringing product developers and manufacturing staff into the same building enabling cross-functional support and information exchange.
He cultivated a system of shared beliefs and practices that empowered employees to make decisions that were consistent with the company’s priorities.
He trained customers on how to use their products, gaining valuable feedback and ideas.
Watson spent half of his career as a valued employee of the National Cash Register Company (NCR), where he learned everything he knew about running a business. When he came to CTR, he brought all of his knowledge with him. It included: the development of the salesforce, budget and personnel practices, and even some executives that worked for his previous employer.
Watson was a highly motivated, optimistic, and conservative man of principle. During his tenure, CTR grew and consistently developed its product lines to cover a wide range of business machinery.
He took CTR from a scammy amalgamation to a respectable and healthy organization giving it a new name: International Business Machines (IBM).
Key Takeaway #1: Diagnose the challenge and tackle it with a coordinated strategy
When Watson became general manager, the company was rotten. However, he was ambitious and driven. His approach transformed the firm and affected the company’s journey for many generations. It can be summarized into two distinct steps.
When faced with a crumbling organization:
Diagnose the most important challenge.
Make an honest swot analysis. Watson found that CTR had a dying division (weakness), a profitable one (strength), and a promising one (opportunity). He based his approach on these findings.Devise a coherent and executable strategy.
Create a strategic plan that addresses this challenge and coordinates resources. Watson applied all his expertise to developing a salesforce to seize the opportunity he found while internally reforming the company.
Watson practically transformed IBM’s culture into an improved copy of NCR’s culture. His experience fitted like a glove in IBM’s challenges. Some could argue that he happened to be a hammer who found its nail. Others that he found a nail and shaped himself into a hammer.
Whatever is true, his results were undeniable.
IBM’s Golden Period: the strategy and tactics IBM used to penetrate the computer industry
IBM went through the Great Depression and came out of it stronger, wealthier, and healthier.
It also went through World War II, which gave the company an explosive push that was hard to maintain once the war ended. IBM’s activities during WWII were plentiful and… complicated. One thing is certain, among the most important initiatives of Watson was the financial support of every IBMer’s family who went to join the fight and the promise that once the war was over, they would regain their job in the company.
As a result, once WWII ended, the company had more than 25% increased workforce at its disposal while a huge part of its revenue-generating business vanished nearly overnight: the military contracts.
Here’s how IBM faced these new challenges.
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IBM System 360 Model 30 central processor unit (CPU): one of the greatest products in history
IBM’s corporate strategy against an increased workforce and a vanished revenue stream
Watson recognized the problem from the beginning. His strategy may have been simple, but the flawless execution made all the difference since it wasn’t without obstacles.
The strategy had two key pillars, both focusing on technological advancement:
Improve, marginally, current products whose demand was still high. The strategic objective was to expand sales on those product lines to generate immediate cash and keep the business floating.
Invest in R&D of advanced electronics, a new technology that wasn’t fully understood nor ready to be commercialized. This was a necessary bet for the future of IBM.
It was obvious to Watson that the company should, one way or another, lead or at least ride a new wave of innovation and technological advancement. And that wasn’t possible with the company’s current product lines, internal structure, and culture.
IBM's Deep Blue: the first computer to win a match against a world champion.
The technological and business transformation that IBM went through was an undertaking that few high-tech companies have managed to pull off. Especially when so many stakeholders’ survival is dependent on the company’s well-being. Shareholders, banks that had provided loans, and employees were all highly incentivized to keep the status quo as is and fight against the transformation. “Since we’re selling, why change?” they thought.
This kind of resistance is typical when industry-reshaping technology emerges. Kodak went through the same but, unlike IBM, succumbed to stakeholder resistance, retained its status quo, and eventually died.
IBM’s strategic pivot faced a list of major challenges:
The best minds in advanced electronics were not working at IBM.
Advanced electronics was a relatively new industry that nobody could really understand or predict what problems it would solve and what use businesses would find in it.
New and strong players emerged while old rivals were still actively competing. Remington Rand was an old and active foe while researchers were leaving universities to start new companies and develop systems for the U.S. Army like ENIAC. The reason was that the US government was issuing funding programs investing millions in this new technology. Whoever demonstrated enough expertise and promise was winning the funding, conducting research, innovating, and reaping the benefits.
Sales resisted the new technology, clinging to its old and tested practices and propositions. In other words, sales and engineering weren't aligned.
The tactics IBM implemented to overcome these challenges and not only survive but also transform as a business in a record time are numerous. Since we can’t really know every single one of them, we’ll go through some of the most important events and principles that enabled the company to devise the solutions it needed.
How IBM overcame the challenges of its strategic pivot
The event that marked IBM’s transformation and sealed its strategic pivot was Watson’s son, Tom, entering the business.
Tom was a bright and ambitious young man who, with the help of his father’s influence and a series of chance events, became IBM’s Executive Vice President at the age of 33.
Tom understood the emerging new technology, and so he led that part of the business. On the other hand, Watson didn’t understand how it worked, so he focused on the more familiar, traditional and still revenue-producing product lines. The two clashed regularly and intensely on many issues. But it’s important to mention that their arguments were never focused on whether IBM needed to transform and adopt advanced electronics. They agreed on that part. They clashed only on the cadence of the transformation and the policies they put in place.
This distinction is crucial because it reveals that the company wasn't divided at its core, the direction everybody moved was the same. The clash between the old and the new was extremely productive because:
The company started building critical mass in electronics by reinvesting earnings and rental cash flow. It didn’t rely on government funding, but rather it developed its capacity slowly and safely.
In order to catch up with the industry’s velocity with its bootstrapped approach, IBM’s advanced electronics department had to do things differently. So it cultivated a culture of transparency and accountability where information flowed freely.
The 604 Electronic Calculating Punch, the world's first mass-produced electronic calculator, was IBM’s first highly profitable product that came out of this approach.
The firm used its active customer network to understand customer needs and prioritize improvements on the data processing machines. Thus it created machines with validated demand.
The whole process enabled IBM to create “an infrastructure of knowledgeable customers, salesmen, and servicemen for electronic computers.”
As soon as the 1950s came, IBM entered the electronic computing market and became a highly competitive player. After that, it changed its strategy, took on larger computer projects, and became more dependent on federal funding to offset the associated risk.
It continued to accumulate knowledge and expertise, improving its processes and products.
Key Takeaway #2: Develop your strategic instinct and adapt fast
Develop your ability to recognize change and quickly transform your business to respond to it. To perform a successful business transformation, unite the organization towards a single direction.
If the need for change is clear at the top, it’s a matter of implementation and policies. It’s not easy, but it’s far more successful to lead a united organization than a two-headed one. So when you perform a business transformation:
Define the direction or destination as clearly as possible.
Align senior leadership with the desired direction.
Build guiding policies that take you from the old to the new. Don’t simply kill the old, transform it.
Treat the transformation as an idea worth spreading. Take advantage of your strengths and apply the Law of Diffusion of Innovations.
The decline during the last decade and IBM’s enterprise strategy to return to the top
IBM slowly but surely started shifting its business model again in the late half of the past century and the following decades.
This time, the strategic pivot was more fundamental. The company shifted from “components to infrastructure to business value.” In other words, it shifted from manufacturing computers and new technologies to offering IT consulting and integration services.
This is reflected in its revenue percentages by segment. In 1980, 90% of IBM’s revenue was generated from hardware sales. By 2015, the company was generating over 60% of its revenue from services and less than 10% from hardware sales.
However, the journey wasn’t as smooth as in past transformations.
The challenges of the consulting industry that has left IBM behind in the last decade
The shift, this time, was taking place less effectively.
The company was selling fewer and fewer pieces of hardware each year while its revenues from consulting services weren’t increasing as fast. The company wasn’t investing as much in R&D, and it entered the new era of computing with an extreme focus on financials.
In 2006 and in 2010, the company's leadership announced “Roadmap 2010” and “Roadmap 2015,” respectively. These were financial goals that were mistakenly used as strategic guiding policies. And to the company’s detriment, they dictated decision-making on every level.
Here are key facts that indicate this extreme financial focus was a terrible strategy at the worst timing:
IBM’s new CEO, Virginia Marie “Ginni” Rometty, didn’t enjoy employee support. Due to her merciless tactics and her relentless focus to please the stakeholders, employee morale, and thus productivity, was at an all-time low.
Revenue was decreasing year over year.
“Rebalancing the workforce,” AKA layoffs, became a regular quarterly tactic to make the numbers.
Current and ex-IBMers were losing faith and becoming less and less content with leadership.
Despite the lack of growth, stocks continued rising, paying dividends and high Earnings Per Share (EPS). That was the result of “financial gimmicks” like massive stock buybacks or stashing assets and profits outside of the US to avoid taxes.
Extreme focus on cutting back costs. Using overseas “global delivery skills,” AKA cheaper workers and even docking 10% of salaries to offer training to employees while charging high-end prices for IBM’s services.
But you can only cut costs for so much and save that much. There is a limit to how much cost-cutting you can do until you hurt operations and production. And IBM reached that limit well before 2015, the year “Roadmap 2015” was promising $20 EPS.
By the end of 2014, the company had amassed a huge debt, its hardware profitability had taken a nosedive, its margins had declined, the executive leadership forwent their personal annual incentive payments for 2013, and it abandoned the Roadmap.
To save the company, leadership had to come up with a radically different strategy. And it did. The 5 “imperatives” strategy was much more attractive to all the stakeholders and would prove to be much more effective.
IBM’s 5 imperatives and its strategy to recovering its past glory
IBM’s biggest weaknesses in the first one-and-a-half decade of the current century have been financial performance and strategic blunders.
But if it had no strengths to leverage, then it wouldn’t be alive today. And its size is one of them. IBM is huge. For example, as of 2018, the company employed around 378.000 people and commanded one of the largest collections of PhDs in computer science and technology. IBM generates over $50 billion in revenue annually with consistently large profits. In 2017, the company had over $8 billion in cash.
The “five imperatives'' were a strategy that focuses on actual performance and not financial engineering to be successful.
The five imperatives were:
Analytics
Cybersecurity
Cloud computing
Social networking
Mobile technologies
The company made several acquisitions to close the competitive gap in all of those focuses while it shifted resources to support those initiatives. As a result, it surpassed its competition with analytics software and its capabilities to manage and analyze massive bodies of data. With a $2 billion acquisition of SoftLayer, it caught up with cloud computing and extended its services to include cybersecurity. A partnership with Apple Computer offered the promise of portable computing and app development platforms lodged in cloud servers. Finally, IBM offered management consulting as much as software services through its social networking focus.
Source: IBM Research, via Flickr, CC BY-ND 2.0 DEED
IBM's Strategy has focused even more in recent years, integrating the imperatives into two major pillars: hybrid computing and Artificial Intelligence (AI).
It puts everything under the umbrella term: Digital Transformation.
IBM’s focus on digital transformation propels it into the future
IBM’s future looks promising, and its strategy is putting it back at the center of computers and technology. In January 2018, the company announced its first quarter of YoY revenue increase since 2012.
AI-powered autonomous labs | Source: IBM Research, via Flickr, CC BY-ND 2.0 DEED
It focuses once again on delivering value to its customers by addressing the crucial challenges that accompany every digital transformation:
Managing the increased complexity of heterogeneous enterprise IT environments.
Extracting valuable insights from available data.
Sustaining operational competitiveness against disruptive market changes.
Increased cyber threats and increasing cost of cybersecurity.
A cohesive end-to-end execution of solutions that address all of these matters.
The way IBM addresses these challenges and chooses to differentiate itself is by adopting a platform-centric hybrid cloud approach paired with advanced AI capabilities. The infrastructure relies on Linux, containers, and Kubernetes as the architectural foundation.
In layman’s terms, the value proposition of the company is the sustainable and accelerating transformation of their client’s businesses and processes through:
Hybrid cloud that develops ability and speed.
Tailored and trustworthy data governance respecting privacy and generating data-driven business insights.
AI-driven decision-making that automates enterprise processes.
Consistency, security, and compliance.
The company is rapidly growing its ecosystem, enhancing client experience while driving value and innovation with its open-source technologies.
Key Takeaway #3: To succeed long term, focus on developing business capabilities instead of financial returns
Ambitious goals and financial promises are not strategies. They might provide some returns in the short term but ultimately set the company up for future failure. Cutting costs is not an infinite-returns-yielding tactic.
When the industry changes, new trends and technologies emerge, and your competitive advantage won’t be serving you for much longer:
Make a thorough analysis of the environment. Spot the most promising emerging trends in technology, customer expectations, and markets.
Perform an internal analysis to define your strengths, weaknesses, and current capabilities that power your competitive advantage.
Develop a strategy that takes advantage of your current capabilities, develops adjacent ones, and mitigates weaknesses to seize the opportunities you spot.
Until your new strategy is performing and your competitiveness relies on it, ensure cash flow and sustainability through your current healthy lines of products.
Why is IBM so successful?
IBM’s success over its long history can’t be attributed to a single cause.
In each distinctive phase, IBM demonstrated the qualities that enabled it to thrive and pioneer in technological advancements. One consistent quality that allowed IBM to stand the test of time has been its decisive adaptability, the ability to spot new trends and transform its business in time to lead change.
Its corporate culture of respect and hard work has been the cornerstone of every single one of its achievements.
Growth by numbers
Year
Year | |||
Total consolidated revenue | $104,5 b | $79,1 b | $57,3 b |
Total consolidated gross profit | $50,3 b | $36,2 b | $31,5 b |
Number of employees | 434,2 k | 366.6 k | 282.1 k |