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IBM: 100 Years Later — The Ideas that Shaped a Century and a Company

GUEST AUTHOR BLOG: It’s Time to Reinvent the Modern Corporation by Steve Hamm, co-author of Making the World Work Better: The Ideas that Shaped a Century and a Company.

Corporate leaders are at a crossroads.

The financial meltdown, the forces of globalization, the rise of Asian economies and the disruptions brought on by the revolutions in social networking and mobile communications have radically altered the business environment in these early years of the 21st century. The modern corporation, which arose and evolved over the past 100 years, is under considerable stress.

Those pressures are forcing leaders to reexamine their assumptions and rethink the way they’re doing business.

Last year, in the run-up to its centennial celebration in 2011, IBM launched an exploration of its 100-year history. One of the goals was to discover what it takes to survive and make progress over a long period of time. The exercise produced a new conviction about the future of the organization and work—plus a prescription for acting on it.

The conviction is that it’s time to reinvent the modern corporation. IBM emerged onto the scene just as the concept of the modern corporation was taking shape one century ago. And, since then, the company has played a significant role in its evolution. Today, the enlightened modern corporation is respectful of employees, trustworthy to investors and customers, and responsible to the communities in which it operates. Those characteristics are fundamental. They shouldn’t change. However, based on the profound disruptions sweeping the business landscape today, organizations need to change the ways in which they instantiate those fundamental precepts. They must change how they define and manage themselves, how they create value, how they operate globally and how they engage with society.

Redefine the organization:

Today, many corporations possess deliberately created corporate cultures, grounded in shared values, which guide employees in their day-to-day decisions and which survive no matter who is the leader. IBM was a pioneer in this approach to doing business. In the future, the challenge for business leaders will be to create ultra-flexible organizations made up of empowered professionals who can anticipate and prepare for change rather than merely sense and respond to it.

Create value in new ways: Over the decades, the way value is created has shifted significantly. Raw materials, manual labor and financial capital remain cornerstones of the global economy, but, increasingly, the largest financial rewards go to organizations and people who are able to gather information and use it effectively. At the same time, in response to the emergence of the globally networked economy, innovation is increasingly open and collaborative. The do-it-all organization is fast becoming an anachronism.

"In the future, the challenge for business leaders will be to create ultra-flexible organizations made up of empowered professionals who can anticipate and prepare for change rather than merely sense and respond to it." -Co-Author, Making the World Work Better, Steve Hamm

Become a truly global organization: Over the past decade, corporations came to see the world not just as a vast market for goods and services but as a source of valuable talent. Now they’re under intense pressure to change how they operate globally. They need to establish and enforce a set of core business practices while at the same time empowering local leaders to experiment and create new ways of developing their markets and cultivating talent. Employees everywhere must be trained to think of themselves as global citizens.

Engage with society more deeply: Once, businesses answered only to their shareholders. Philanthropy was a personal matter. Over the course of the 20th century, the most enlightened organizations began to recognize their responsibility to be good citizens in the communities where they operate. Now, vanguard corporations realize that engaging with society has become an essential part of doing business, woven into nearly every decision they make. This way of thinking is an imperative not only for their own success but for the sustainability of the planet.

IBM’s evolution over the past 100 years—including its near-death experience in the early 1990s—has made it a vastly different company from the one that existed in 1911. IBMers today know all too well what can happen if an organization loses sight of business fundamentals and fails to respond aggressively to satisfy its customers’ deepest needs and to shifts in economies and technologies.

Each organization has to chart its own path, but IBM’s leaders understand that in today’s business climate, what’s required to survive and thrive long term is nothing less than continuous transformation. IBM is still reinventing itself—and it knows that the process will never be finished.

Steve Hamm is co author of Making the World Work Better: The Ideas that Shaped a Century and a Company. He was formerly an editor at BusinessWeek magazine.

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