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The emergence of new technologies leads to numerous business opportunities for many organizations, both public and private. Consequently, change has become a common phenomenon in the majority of organizations. Companies are struggling to come to terms with the fact that they must be ready to embrace the concept of change management. The failure to do so may lead to the bankruptcy of the businesses. D’Ortenzio and Wallace (2010, p. 33) state that “change remains difficult to pull off, most organizations have had low success rules, and the brutal fact is that about 70% off all change initiates fail”. Likewise, change implementation in organizations is an extremely challenging task that requires appropriate strategies to facilitate a smooth and successful transition. From time to time, a wave of changes, and more so, disruptive innovation, is sweeping across a number of industries. If well-planned and strategized, these changes can prove successful. While the technology and consulting corporation, IBM, has gone through a series of disruptive changes, this IT giant has been able to overcome all the challenges because of innovation and efficient managerial strategies.
International Business Machines Corporation (IBM) is a multinational technology and consulting corporation based in New York. IBM was established in 1911 as a computing tabulating recording company (CTR) through the consolidation of the Tabulating Machine Company Limited, time recovery company, the computing scale company, and the manufacturing company Bundy (Sarkar, Datta, Mukherjee, & Hannigan, 2015). IBM deals with the manufacture and distribution of computer hardware, middleware and software, in addition to offering infrastructure, hosting and consulting services in nanotechnology. Since its inception more than one hundred years ago, IBM has reinvented itself many times shifting from a country-based company to a global brand.
Earlier on, the emergence of personal computers threatened IBM’s primary business model, which integrated hardware, software, and intense sales as well as support capabilities. At that time, customers embraced personal computers and technologies resulting to serious disruption of IBM’s Big Blue business. Concurrently, IMB’s customers had to cope with a greater complexity because computers and computing platforms within the organization were being proliferated. IBM faced the problem that accrued from the fact that the company could not offer personal computers. To remedy the situation, the IBM’s CEO Lou Gerstner ignored a suggestions to break IBM into smaller independent organizations and decided to build a large computer services business (Sarkar et al., 2015). Apparently, this decision worked in favor of IBM as half of its revenue came from the new business.
Furthermore, IBM transformed itself in several other ways, including refocusing its hardware business on high-end PCs, as opposed to mainframes. Later on, IBM sold its PC business and concentrated on corporate software solutions. In 2014, IBM switched to a rapidly expanding adoption of cloud, analytic mobile, and social technologies (Minelli, Chambers, & Dhiraj, 2012). The company’s management believed that these technologies presented a big opportunity for business growth. This trend of conforming to changes enabled IBM to withstand the ever evolving IT market having successfully adopted a variety of digital innovations.
Disruptive change is an innovation that creates an entirely new market through the introduction of a new type of service or product. Comparatively, the changes at IBM are disruptive as they eliminate an existing product and replace it with a new and more sophisticated one. To begin with, personal computers were subject to a disruptive change when they were replaced with the mainframes from minicomputers. Apparently, PCs were incapable of running computer applications that existed when they were introduced. These changes failed to help gain market share, since they did not consider the needs of the next generation. Similarly, the emergence of new market applications was necessary, and it led to an improvement of the innovation, which ultimately addressed customers’ needs in the streamlined markets.
IBM responded to the change dynamics by changing conditions. Its focus was based on an open standard-based IT environment. In order to attain it, IBM combined business processes, knowledge and technology through more flexible options. This decision further enabled IBM to increase its productivity and focus on innovation in order to differentiate its offerings and capture new markets. For example, IBM’s acquisition of Rolm Telecommunications Company in 1984 was a positive decision that solidified the company’s quest to remain relevant in the IT business (Minelli et al., 2012). Rolm offered no new resources for IBM, but its approaches to developing and exploring new markets for PBX products were significant for IBM at that time.
To maintain success in the constantly changing IT industry, IBM needed a strategy that would sustain its strong position in the market, anticipate any change, and keep the company ahead of its rivals. Therefore, IBM decided to use the following financial strategy. First, a clear purpose and the need for change was established and effectively communicated to the stakeholders in order to avoid resistance (D’Ortenzio & Wallace, 2010). Bearing in mind that the strategy was just but a theory until the resources were allocated, it aimed at financing major innovations at appropriate times aiming to access market before its competitors. The company always made sure to balance resource among departments. The allocation of sufficient funds then propelled IBM towards realizing the success of its innovations.
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In the same fashion, the breakthrough strategy ensured a lean production system coupled with the use of advanced technology. The strategy was based on the availability of resources. The company managed to build its essential competences and exceed the industry practices. As a result, IBM created new and attractive markets. Similarly, it also managed to acquire new and important markets. These strategies helped IBM maintain its top position in the global IT industry.
Davila (2014) affirms the need for change agents to go beyond theoretical paradigms in order to explore the implications of change at a more fundamental level. From the employee’s perspective, any type of organizational change has an impact on personal life, whether direct or indirect. Likewise, all stakeholders of IBM felt the implications of change in the course of the company’s massive innovations. First, the employees’ working conditions changed. More specifically, they were required to work under different conditions and have new skills when it came to handling equipment. IBM also had to embrace emerging technology in order to make its production processes more effective.
Secondly, the company’s stakeholders were exposed to the benefits of changes and future aspirations. The innovations of IBM assured the most important groups of stakeholders of future expansion of the company, bearing in mind numerous successes it had already achieved. With this mindset, stakeholders were assured of growth prospects as far as technology was concerned.
When implementing changes, IBM was aware of the fact that human beings are prone to resistance. Therefore, several steps were established to address possible opposition. The company communicated clearly why the change was needed to all stakeholders. All adjustments in the way tasks would be performed in the company were communicated to the employees in detail. What is more, the company used internal facilitators to engage employees in group discussions.
Responding to rapid disruptions is not easy process, which often has implications for various departments within the company. Economic costs are incurred in the course of operations, especially if change is involved. Concerning IBM, its internal departments were affected by the change significantly whenever an innovation from competitors hit the market. Every department had to change its operations to reflect the alterations within the industry. Budgets were enlarged to cater for the changes which required new technological equipment and highly skilled labor. Additionally, employees were constantly trained so that their skills would remain relevant and up-to-date.
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With the acquisition of Cognos in February 2008, IBM expanded its interdepartmental collaboration (Minelli et al., 2012). Mid-level managers and individual contributors were required to shift their attention towards diagnosing, fixing and improving operations in order to meet or exceed the expectations of the company. Of course, it was a strenuous task, but given early notice of IBM’s intentions concerning future innovations, they successfully met their targets.
With the constantly changing global trends in the technological industry, IBM saw the need to adequately prepare for the inevitable changes. To begin with, together with its business partners, IBM was equipped with knowledge and technology that allowed to offer more flexible options to the buyers. Thus, the customers from different financial and technological backgrounds could make use of their products. In order to achieve this goal, the company embraced resilience. IBM prepared for the innovations by considering economic, political and natural calamities as potential threats. IBM further developed a commitment plan to prepare for possible shocks that could negatively impact its business operations.
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With massive changes at hand, some of IBM’s strategies worked to the company’s advantage. Refocusing their portfolio, for instance, proved successful. The company shifted its focus towards products that would benefit from disruptive change, which allowed to reduce attention paid to vulnerable business areas. Ever since, this strategy has kept IBM on top of the global IT innovations.
However, some of IBM’s strategies were not achieved as well as expected due to the challenging nature of innovation. For instance, IBM’s aim of adopting a lean operation strategy did not work simply because the company was acquiring businesses and changing their operations. IBM had hoped that new entrants would not be able to withstand cost reduction caused by increased efficiency in the industry. However, the opposite happened, as the company needed to rely on the experience of old employees.
The success of a change initiative of any magnitude lies within the employees’ understanding of the value of innovation and the need for new strategy implementation. Therefore, change initiators within IBM ought to appreciate the fact that the implications of change do not only affect the organization, but its employees as well. Having over 400,000 employees in 175 countries makes digital success not an easy task for IBM, as there is a need for a shared vision among all the workers (Minelli et al., 2012). In order to improve in this sphere, the management can merge innovation processes that include employee needs together with organizational goals.
Moreover, new business strategies should be developed for more effective operations and responses to market dynamics. The market does not care about the constraints that companies face when adopting the desired changes. The difficulties involved in the process of implementing change require an organization to be stable and equipped with solid objectives (Davila, 2014). Apart from the existing strategies of IBM, there is a need for a speed strategy to increase the rate and capacity of successful transformations. Thus, IBM should provide a detailed description of what is appropriate in a particular location. A clear and realistic idea about the capabilities of the company will drive IBM at a higher speed towards digital innovations.
In essence, the success of companies that navigate through disruptive changes is highly dependent on decent governance, efficient managerial skills, and employee commitment. These factors, coupled with appropriate strategies, enable an organization to withstand challenges faced by the whole industry in the current era of globalization. Identifying the need for change early helps companies to innovate timely, thus retaining more customers than those companies that embrace changes later on. This strategy has been effective at IBM, and the company has been able to identify the digital needs of customers at appropriate times. As a result, they were effectively implemented based on effective strategies. Companies focusing on disruptive innovations should, therefore, emulate IBM in order to succeed in changing their business processes.