Sometimes you can get lost in the marketing rhetoric and lose track of what the real strategy is. It doesn’t help that vendors often don’t share it or that marketing departments are far removed from strategy sessions. But at IBM CEO Ginni Rometty’s investor talk today it was clear that IBM had a secret agenda that I don’t think most people understand. It is tied to the company’s desire to create an immortal company. IBM has uniquely recognized that if it creates and ties tightly to smarter customers, the firm will never die. In a world defined by tactical vendors, where lock-in remains a common way to assure revenues, and vendors that last a decade are considered old, IBM’s over a century of life is unique and, apparently, it is focused like a laser on making sure this remains the case.
Let’s talk about IBM’s secret Smarter Customers initiative and what it means for you.
Rometty’s Brilliant Talk
When a CEO speaks, even at an analyst event, they still have three audiences. Even though, at this event, the primary audience is analysts that have investors as clients, customers and employees are also listening in and affected. If you forget this, and for instance focus on cutting costs and increasing prices, which would make investors happy, you’ll likely find your company failing because the employees and customers flee the company. Finding that happy medium is not obvious or easy.
However, all three parties generally come together on anything that has to do with growth, advancement, and happy customers because investors see growth, employees see career opportunities, and customers kind of like the extra attention. On this, Rometty was on point and much of the talk was focused on showcasing IBM as a customer-focused entity. By this last, I mean where each part of the company fit with each other part and where the firm had demonstrated a history of getting rid of things that no longer made sense, and acquiring things that finished solutions that the changing market was looking for.
This is agility, and we’ve heard it before, but not only is IBM clearly walking the talk, the unique aspect of this that has been underplayed is “Smarter.”
Steve Jobs and Why Smarter Customers Matter
It is easy to get so lost in the “Smarter” trees that you miss the “Smarter” forest. IBM has Smarter Computing, Smarter Cities, and Smarter Planet as initiatives. It has the unique and amazing Watson platform that almost seems artificially intelligent, and it has the most R&D dollars of any non-defense vendor focused on neural computing. But what I didn’t really get until I listened to the speech is that what it is really after is Smarter Customers.
You see, the problem is that most customers don’t know what they want today. They have a loosely defined problem from some line organization that doesn’t understand technology and they have to choose a vendor to solve it. Steve Jobs spoke of this lack of clarity in abstract. At Apple, he had to become a customer proxy because he recognized that even in the consumer electronics market, people had no idea what they wanted but could be made to believe they wanted an Apple product if Apple could turn the abstract problem into something more real and push a product like the iPhone or iPad at it. This is risky because if your proxy, in this case, Steve Jobs, can’t be replaced or gets it wrong, the product line will fail.
But if you can create Smarter Customers who know how to define problems and who can intelligently articulate what their organizations want, you don’t need a customer proxy like Jobs. You have real intelligence to work from.
The tools IBM is giving customers, from Pure Systems to Watson, are designed to learn from each other and help customers make smarter decisions with regard to solutions, and tie the decision process back into IBM for future products, services and organizational changes.
This isn’t the often parasitic relationship where the vendor mines the customer’s money. It is a symbiotic relationship where over time the partnership between ever-smarter customers and IBM contributes to products and solutions that not only increase IBM’s competitive edge but wed IBM more tightly to the customer. Not through lock-in, but as a result of mutual benefit.
This becomes a massive competitive advantage because the related ease of customer movement enables future customers, upon seeing the success of their peers, to more easily move into IBM’s customer base.
Wrapping Up: Building an Immortal Company
Listening to Ginni Rometty’ s speech should be a required CEO course because it accurately describes how to create a company that could be immortal. You create a symbiotic relationship with your customer rather than the more typical parasitic one, so that both the customer and the vendor benefit from it near equally. You focus not only on making sure the company you run can evolve but that it has the customer information it needs to evolve correctly and you make sure the customer has this same ability, recognizing that the best way to survive is if you assure your customers can evolve and survive as well.
In addition, and this is even more subtle, the smarter the customer is, the less likely they will be tricked by a parasitic competitor who is trying to trick them into making a decision they’ll regret. In short, the immortal company insures its customers are smarter, then listens to these customers to become smarter itself, ensuring this cycle continues by being flexible and agile because that in turn assures immortality.
That’s not just smarter, that’s brilliant.