I have heard some representatives of big companies saying that it is easy to change small companies, but changing a big one is difficult to do. Still there are several big companies like Best Buy, Apple, Microsoft, Google and IBM that are huge and still succeeding well. One thing that is common to them is that they are managing their customer expectations actively.
So, maybe it is not impossible to make big companies change their course also?
IBM is an interesting player on the market, since some years ago it sold its laptop business to Lenovo and decided to start focus their business more to higher profit margins by expanding aggressively overseas, seeking sales, low-cost engineering talent and quicker organizational response.
That did not happen by itself; big credit goes to Samuel J. Palmisano, who functioned nearly a decade as a chief executive in IBM. His time in IBM has been a textbook case of how to drive change in a big company (and there are many books and blog articles about him). Mr. Palmisano has explained in interviews that his guiding framework has been these four simple, but important questions:
- Why would someone spend their money with you? What is unique about you?
- Why would somebody work for you?
- Why would society allow you to operate in their country?
- Why would somebody invest their money with you?
Mr. Palmisano formulated those questions in the months after he became CEO in March 2002. In meetings after he took over, Mr. Palmisano told colleagues that IBM was still good, but that it was not the standard-setting corporation that it had been when he joined in 1973.
The four questions, he explains, were a way to focus thinking of the company beyond its comfort zone and to make IBM pre-eminent again. He presented this four question framework to the company’s top managers at a meeting in early 2003. He said: “This needs to be our mission and goal, to make IBM a great company”, according to executives who attended the gathering.
The pursuit of excellence in those four dimensions shaped the strategy of IBM. To focus on doing unique work, with its higher profits, meant getting out of low-margin businesses that were fading. IBM’s long-range technology assessment in 2002 concluded that the personal computer business would no longer present much opportunity for innovation, at least not in the corporate market.That is why they sold their PC business to Lenovo in 2004. They were not anymore the biggest PC provider in the world, but they made up elsewhere. That included acquiring other companies like PWC Consulting and others. Today they are doing bigger business than ever!
“The hardest thing is answering those four questions”, Mr. Palmisano says, “You’ve got to answer all four and work at answering all four to really execute with excellence.” These four questions are important for smaller companies also, but they are crucial for bigger companies to change their course. And as IBM has shown, it is possible. Steve Jobs did the same for Apple and it is easy to see the similarities in customer focus of these companies. If you start to focus on the customer in big organizations, that will eventually turn the big ship around.