IBM CEO Ginni Rometty faced investors on Thursday to unveil a new roadmap for the company since she was forced to abandon the old one, which was not achieved, back in October.
One analyst asked: did she learn anything from that failure?
“I’m a big believer in lessons learned. Constantly with the team we go over why, why, why? What did you learn and what would you do different, right? The only bad mistake is a mistake you don’t learn from,” she said.
For herself, she had two takeaways from the failure of IBM to hit its years-long promise of $US20 earnings per share by 2015:
No. 1. The enterprise tech world is changing faster than she thought it would.
These days, companies are spending their money on a whole bunch of new technologies like cloud computing, mobile, social, and big data. That means they are spending less on old-fashioned computers, expensive software, and consulting services to install and manage that stuff — which is where IBM makes most of its money.
“There’s quite a lesson learned about predicting that change is going to happen, and it happened at an unprecedented rate, and to allow for things that you don’t yet see to happen. That’s my biggest learning,” she said. “We didn’t project at that time that there would be that industry change.”
So now, as IBM makes business plans, everyone is forced to defend. “As we make assumptions about our strategy, we are constantly challenging them, right? Why will that remain true?” she says, adding.
No. 2. She wasn’t watching how consumer technology was invading the workplace.
Rometty didn’t predict how consumer tech was being brought to work, giving employees increasing control over what apps they use and how they want to work.
“I also learned to watch [the] consumer [trends]. And by the way, I do remember the time when some of you were saying, come on shouldn’t you be looking more at consumer? It wasn’t about going into consumer. My goodness. We spent a lot of time getting out of consumer. We sold the Thinkpad. We sold the PC business to Lenovo. But, we then had to learn to say, it wasn’t about the device, it was about how it would actually transform work. That was a learning,” she says.
(Red Hat CEO recently talked to Business Insider about this. He said the IT departments these days are in a fight for their lives.)
To recap the reason why someone would even ask her this question:
In October, Rometty told investors it would not achieve its years-long promise, made by her predecessor, to hit $US20 earnings per share by 2015, a plan internally called Roadmap 2015.
When Rometty bailed on Roadmap 2015, she sent the stock into a tailspin from which it has yet to recover. We argued at the time that giving up this goal was ultimately good for the company. IBM needed to stop killing itself with layoffs and financial manoeuvring to hit an arbitrary profit number at an arbitrary time. It needed to be focused on the land grab going on in the hot new enterprise markets that were quickly overtaking the stalwarts like IBM.
Rometty told investors on Thursday that this is exactly her new plan.
IBM will spend $US4 billion to grow $US40 billion in revenue in what it calls strategic areas like cloud computing, mobile, and big data by 2018. That will nearly double what IBM is making on these areas now. And that’s on top of the $US7 billion she’s already committed to spend on cloud, computer storage, and microprocessor R&D. And that doesn’t include any acquisitions, big or small.
“This is not the fist time IBM reinvents itself and won’t be the last,” Rometty said.
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