IBM Follows Microsoft Best Practice with New CEO

    IBM just got a new CEO, and I believe it was the best choice from what is arguably the deepest CEO candidate pool in the Tech industry. IBM has a formal process to mentor, and train CEOs (something I expect a lot of us wish our governments had for Presidents), which generally allows these CEOs to better hit the ground running than their peers usually can demonstrate.

    The skillset of Arvind Krishna, IBM’s latest CEO, is in many ways as aligned with IBM’s future as Satya Nadella’s skill set was against Microsoft’s future and, I think we can anticipate the same positive result.

    Let’s explore that this week.

    And The Angels Sang

    When Microsoft replaced Steve Ballmer, who is credited with creating the company but struggled as CEO, with Satya Nadella, it was like the sky opened, and angels started singing both inside and outside the company. The issue was that as dedicated and hardworking as Steve was, he just wasn’t technical enough to run the company. I remember him as fun to be around before the promotion, and, after it, he didn’t seem remotely happy, so I doubt it was good for him either (he is much happier now).

    Ginni Rometty, like Ballmer, was dedicated, hardworking and capable but the executive that seemed to be first in line for the job, Bob Moffat had been fired for insider trading (and this in and of itself was sad because Bob was a good guy and got scammed by an expert). Besides, Sam Palmisano had been very effective at cutting IBM to the bone, but he too seemed to lack a strategic direction, so Ginni was handed firm that had been weakened, lacked direction, and she wasn’t the ideal person to supply it. Given both Steve and Ginni’s shortcomings, they both did amazingly good jobs. But both Microsoft and IBM needed someone with the vision and technical knowledge to take their respective firms to where they could go. Microsoft got Satya Nadella, and IBM just got Arvind Krishna.

    And both Satay and Arvind start with similar problems. Siloed companies that have been performing below expectations and likely supported by executives, many of which think they should have gotten the CEO spot. In this, I think Arvind is in better shape because IBM has the stronger CEO mentoring process, which should allow Arvind to avoid many of the initial organizational backstabbing that Satya likely experienced in the early years (offset by Bill Gate’s backing).

    The Vision Thing

    Louis Gerstner is famous for not having a vision for IBM. He was brought on board to save the company from going under and was successful in that effort, but his lack of technical background led to him making some rather impressive mistakes. One was being tricked into supporting OS/2, another was in letting Jerry York go and try to take Chrysler over (York was driving the turnaround operationally), and the third was not properly assuring Sam Palmisano understood the importance of marketing (Sam, Louis’s successor, wiped out what was at the time arguably the best marketing organization in tech).

    It was the only time I saw IBM’s CEO selection process catastrophically fail. But to carry a company forward, the person at the top must have enough depth in the technology to be able to not only come up with a viable vision of the future but to execute against it. This dual capability is what Satya Nadella brought to Microsoft and what Arvind Krishna brings to IBM, and the result should be, after he comes up to speed and can fully execute with the power of the entire company, incredibly positive.

    Wrapping Up

    As Executive Chairman Ginni Rometty remains as the top executive in IBM until year-end. An Executive Chairman has operational responsibility but, given IBM’s process, I expect the responsibility for the day to day operations will transfer to Arvind rather quickly, but Ginni will be around to help ease him into the new role while he transitions out of his old responsibilities.

    Arvind is well regarded both technically and interpersonally, and he has that important ability to both develop and execute against a vision. He is what results when IBM’s process works and over much of its existence, the CEO succession process has been one of the best in the industry. This selection is yet another reminder of the importance of having a strong succession process and in making sure the person selected, like Microsoft’s Satya Nadella, can both imagine a successful future for the company and execute against that vision.


    Rob Enderle
    Rob Enderle
    As President and Principal Analyst of the Enderle Group, Rob provides regional and global companies with guidance in how to create credible dialogue with the market, target customer needs, create new business opportunities, anticipate technology changes, select vendors and products, and practice zero dollar marketing. For over 20 years Rob has worked for and with companies like Microsoft, HP, IBM, Dell, Toshiba, Gateway, Sony, USAA, Texas Instruments, AMD, Intel, Credit Suisse First Boston, ROLM, and Siemens.

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