When IBM's Chairman Took Over, He Asked A Very Interesting Question

ibm samuel sam palmisano

Photo: Wikimedia Commons

IBM released its annual report this weekend, and Sam Palmisano took the opportunity to get a little nostalgic.Palmisano stepped down as CEO last year, handing the reins to Virginia Rometty, but he’s still the chairman of the company.

In his letter to shareholders, he explains that he was recently looking over his notes from his first meeting as chairman back in 2003. He was surprised to see how little he wrote. At the top of the page, he had only four questions:

  • Why would someone invest in us?
  • Why would customers buy from us?
  • Why would someone work here?
  • Why would society allow us to operate?

The first three questions are pretty standard — every company cares about investors, customers, and employees.

But the phrasing of the fourth one was a little surprising. A lot of companies talk and act as if they have an absolute right to do business — consider Microsoft’s belligerent tone back in the 1990s as its antitrust trial was getting underway, or Google’s increasingly defensive tone against its critics.

Palmisano realised that’s not true. If a business is seen as having no benefit to society, eventually that business will wither and die.

He wasn’t necessarily talking about government intervention, although IBM certainly had its problems with antitrust regulators back in the 1960s — as Microsoft did in the 1990s and Google is close to experiencing now.

It’s larger than that. If you don’t serve a purpose, eventually society will decide that you’re not worth its resources — investors and customers will put their money elsewhere, and potential employees won’t waste their time with you.

So why does society allow IBM to operate? Palmisano thinks it’s because its people try to solve big problems.

Pamisano says, “Over the past decade, we have increasingly sought to address the world’s biggest problems, driven by the idea of building a smarter planet. Without question, we do this in pursuit of large new profit opportunities. But it is more than that. It represents the fusion of IBM’s business and citizenship goals …. We hear again and again from schools, governments, nongovernmental organisations and communities that the thing they value most is the expertise of IBMers—more even than donations of cash or technology (although those are also welcome, and plentiful).”

Good food for thought for any company that wants to last. 

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.