IBM’s ‘Smarter’ Growth Strategy – From Big Blue to Big Green?
April 19, 2009 by Raj Sheelvant
IBM, a premier computer hardware company, I think is known for reinventing itself successfully. First after being outsmarted by Microsoft in late1980s, IBM reinvented itself. Lot of people believed, IBM cannot survive. Read the details of the turnaround by the then CEO Louis Gerstner in his book titled ‘Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround’. Under Gerstner’s leadership, IBM began to diversify into software and services, two ancillaries to computer hardware. IBM was then able to ride the internet wave along with the others computer makers in the historic dot com bubble of 2002. Since the bursting of dot com bubble, IBM has continued to globally diversify under the new CEO Sam Palmisano. IBM has since globally diversified itself and has continued to outgrow its competitors.
Now with the latest credit bubble, biggest drop in industrial production and productivity, future growth for IBM and other computer hardware companies is tough. Hardware is discretionary spending for most of the companies and this recession we have seen double digit drop in PC and Servers. But, IMB has continued to strategically reduce it exposure to hardware and have continued to diversifying into software and services. But that is not enough. IBM needs to reinvent itself again. Sam Palmisano in his letter to share holders for the year 2009, writes that ‘IBM believes that technology in the last two decades has made the planet smaller and flatter. In the next two decade we will see it become smarter – i.e. infusion of intelligence into the way the world works. Through pervasive instrumentation and interconnection entire society can be more productive, efficient and responsive.’
What is exciting is IBM has identified a growth area where it can extend its core competencies to carve out a niche to itself. IBM is focusing on the the need by people, government and nongovernmental organizations to create a sustainable global growth model to ‘smartly’ utilize existing resources with minimal waste. Here are the 7 areas IBM intends to focus on for the coming couple of decades
Smarter Traffic: smart traffic system encompasses tolling, embedding sensors and large scale simulation to predict traffic flow.
Smarter Grid: automated meter management system to tackle growing environmental concerns.
Smarter Health Care: to lower cost, reduce errors and empower patients
Smarter Food: tackle inefficiency and quality issues that plague the global food supply chain
Smarter Money: to enable a safer and more transparent global economy
Smarter Telecommunication: to develop next generation digital platform to enable people to join global economy
Smarter Oil: optimize oil well performance and protect the environment
I think, IBM, with its history in turnaround is well positioned long term to exploit these new trend in sustainability and Green IT.
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