The normally taciturn Sam Palmisano, the chief executive of IBM, aligned himself this week with those who predict a backlash against large multinational companies, such as IBM itself.
In what the Financial Times described as "a rare public intervention", Palmisano expounded on the theme that multinationals need to change and indeed stop being multinational companies, in order to prosper.
Palmisano's remarks came less than a week after IBM announced a massive $6bn (£3bn) investment in India.
In his open letter, published on Monday, Palmisano called for "a new kind of organisation — at IBM we call it 'the globally integrated enterprise'," something he prefers to multinationals, which many "mistakenly project onto 21st century global reality".
"I believe the globally integrated enterprise is a better and more profitable way to organise business activities," said Palmisano, who went on to outline his plans for this new kind of organisation, although he was short on specifics.
Shifting to this model, Palmisano says, "presents big challenges for leaders". He outlined two of them. The first is skills, where Palmisano says the biggest problem will be "securing a supply of high value skills".
Secondly, "a company's standards of governance, transparency, privacy, security and quality need to be maintained even when products and organisations are handled by a dozen different organisations".
The latter challenge is one that IBM has come across before, such as when it faced the public humiliation of seeing executives in subsidiaries, in different parts of the world, facing corruption charges over government contracts.
As Palmisano pointed out, "the alternative to global integration is not appealing: left unaddressed, the issues surrounding globalisation will only grow... People may ultimately choose to elect governments that impose strict regulations on trade or labour, perhaps of a highly protectionist sort".
IBM's employees may scratch their heads in wonder at this latest intervention from Palmisano, who has overseen a downgrading of their pensions during his time in office.
Palmisano has portrayed himself as the quiet man of IBM. He rarely speaks in public and even more rarely speak to journalists. When he has wanted to give a piece of his mind in the past he has used the same technique that he used this time, talking only to one newspaper and then with no journalists present.
Talkback
IBM was a more exciting, better paid and place to work in the 1960s and 1970s -- i.e. before the arrival of the so-called 'globally integrated enterprise'.
How Palmisano can believe that a future without this new beast is unappealing defeats me.
They should fire all CEO's anyway ..
They are a serious waste of good money.
When they actually get to make some decision about the course of a firm they usually fuck up, which in the worst case means the end of the company.
Palmisano’s comments are noteworthy for several reasons.
First, he chose the Financial Times and Foreign Affairs—not BW, HBR, WSJ, NYT, or ZDNet—to air his ideas. Message: this is a big deal, and about a lot more than just the business of daily business.
Second, two issues he addressed in the FT article were the need for skills—no surprise there—and the need for trust. Trust? Why? And compared to what?
As to why, his case is simple and powerful. In an increasingly interconnected, flat, horizontal, wired world, everything connects to everything. It is becoming infeasible for companies to “compete with” their employees or customers, or even to look at customers as just objects of profit (when you hear “customer focus” these days, it usually means the customer focus of a vulture—this idea’s days are numbered). Increasingly, everyone is related to everyone—if you treat another badly, what goes around comes around. Palmisano is recognizing that.
But what’s most intriguing is Palmisano’s model for trust creation. You’d think the head of a global tech empire would be fascinated with “scaling trust,” or looking to online network models derived from eBay, Amazon, mySpace, or LinkedIn.
Instead,Palmisano flatly states that the way to increase trust is through shared values. And it’s not because he’s gone soft. The truth is, you can’t scale trust without diminishing its scope. True trust is personal at both the giving receiving ends It needs high bandwidth, personal, interactions to establish. Palmisano recognizes this.
As perhaps an “expert” in the area—I wrote Trust-based Selling and co-wrote The Trusted Advisor—I think he’s dead on. His view of the future isn’t wishful thinking: it’s being driven by economic and technical shifts. It’s coming. It will look very different. And it’ll also be very personal, and very trust-based. Like the man said.
Charles H. Green
Trusted Advisor Associates
www.trustedadvisor.com