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2/10/2011
05:40 PM
Bob Evans
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Global CIO: Sam Palmisano Reveals Secret Behind IBM's Century Of Success

IBM's chairman describes the power of culture and long-term thinking in his inaugural speech commemorating IBM's 100th birthday.

We all know IBM used to make PCs--but did you know they also used to make clocks?

And cheese slicers?

Yes, IBM—currently the largest private-sector employer of mathematicians in the world—used to make cheese slicers. Sam Palmisano said so himself.

In the first of what will become a global lecture series that's part of the IBM Centennial, Palmisano used the cheese-grater anecdote to underscore the core values and principles that have not only enabled the company to survive for a century, but also to enter its second hundred years more financially sound and better able to continue innovating than at any time in its storied history.

Speaking to students at his alma mater, Johns Hopkins University, Palmisano spoke broadly about the sometimes-painful efforts IBM has had to undertake over its lifetime to adapt to profound shifts in not just technology but also demographics, global dynamics, societal expectations, and the obligations that must be embraced by a company with 400,000 employees in 170 countries.

Whether you admire or dislike IBM, and whether you think it's more or less innovative than it used to be, Palmisano's reflections on the company's remarkable experiences over that century, as well as his more-personal observations on his own leadership of IBM for almost all of the past decade, offer some marvelous insights into how today's organizations can exploit rather than fear the sweeping changes impacting our lives.

So about those cheese slicers: in sharing that anecdote, Palmisano revealed the simple but profound secret behind IBM's success:

"People who are familiar with our history are often struck not merely by our longevity, but with the fact that we have continually changed," Palmisano said.

"We started off making clocks, scales and cheese slicers, in addition to the punched-card tabulator. After that, it's a blur: typewriters, vacuum tube calculators, magnetic tape, the first disk drive, the memory chip, FORTRAN, fractals, ATMs, mainframes, mini-computers, personal computers, supercomputers, services, software, analytics. Also, we've gone from operating in one country to more than 170. In some respects we're only now becoming a truly global enterprise."

The deeper secret—and one that each of us should scrutinize rigorously within our own organizations—was revealed in Palmisano's explanation for why IBM didn't expand from its cheese-slicer roots into specialty maker of kitchen gadgets:

"It is a constant reminder never to define ourselves by the things we make, no matter how successful they are today."

That's a marvelous thought: simple to grasp, and apparently obvious. But those "obvious" things are often not obvious at all until someone else brings them to light. For each of us, in our own organizations: can we say, with clear consciences, that we never "define ourselves by the things we make, no matter how successful they are today"?

That comment from Palmisano takes on even more significance when juxtaposed against the comments of a former IBM CEO, Thomas Watson, Jr., who was quoted by Palmisano as having said this 50 years ago:

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