THE IBM WAY BUCK RODGERS

A book review by Ajit Sridharan Alpha 43 MMS I Jamnalal Bajaj Institute of Management Studies

About the Author The IBM Way is written by Buck Rodgers, the ex-CEO of IBM, who spent over 40 years in the company. Buck Rodgers is a respected management consultant, an advisor to several companies and also a visiting faculty at some of the leading Business schools in the USA. Under Buck Rodgers, IBM grew from being a $10 billion company to a $50 billion company. He has been instrumental in introducing a lot of innovative marketing concepts and motivating employees at IBM. Buck Rodgers fine tuned the wonderful culture of IBM and turned it into a totally customeroriented and customer-driven company. In fact, under his leadership, IBM was rated Americas most admired company. This book talks in great detail about the organization, culture, values, people and philosophy that go into making one of the largest and most successful organizations in the world. It talks of how IBM behaves behind closed doors, what goes into the decision making, what it deems important and how it prioritises activities, why lakhs of IBM employees never had a union and why students recruited from colleges never leave IBM. It provides a great perspective into building an excellent customer oriented organization. Let us now turn to various concepts introduced by the author. 1. The Beliefs and Commitments of IBM IBM was founded in 1914 by Thomas J. Watson, Sr. Like any successful entrepreneur, he wanted his company to be financially successful, but he also wanted it to reflect some of his personal values. These values became the foundation for the company and anyone who worked in the company. IBM conscientiously drives home these philosophical messages at meetings and in internal publications. The management also demonstrates, by personal deeds, what these beliefs mean. The three important commitments made by Thomas J. Watson, Sr. are: a.) The individual must be respected: Tom Watson wanted his people to feel good about themselves and their work. No one could be paid enough money to be compensated for being made uncomfortable and unhappy by his supervisors. IBM tries to let every person know that he/she can make a difference. For instance, there are no titles on any doors or desks, no bathrooms for executive use only, no reserved parking spaces and no executive dining room. The author quotes his personal experience where Tom Watson allowed him to skip a crucial training program to be with his pregnant wife and later also sent flowers to the hospital where the wife delivered a child. b.) The customer must be given the best possible service: IBM is a totally customer-oriented company. Every operation and every job description is related to providing the best possible service to customers, prospects and vendors. Any complaint by a customer is responded to, if not

resolved, within twenty-four hours of its receipt. When a customer requests a service call, the response is frequently within an hour. Also, understanding that quality of service depends upon the training of its employees, the hours logged in the classroom by every IBM employee exceed those spent in any major university. c.) Excellence and superior performance must be pursued: Watsons third mandate is excellence the pursuit of all tasks with the idea that they can be accomplished in a superior fashion. IBM ensures excellence by picking the best students from the best colleges, imparting the best education and training and creating a highly competitive environment that nurtures excellence. IBM believes that the principles of an organization are sacrosanct. No matter what the nature or size of its business, a company needs certain bedrock beliefs to serve as a guiding force. Paying attention to detail, doing things right the first time, practicing good human relations and being market driven separate the leading organizations from the rest. 2. Leadership A leader must promote an atmosphere of healthy competition among his subordinates, without being insecure about his own position. The most successful leaders feel good about themselves, are people-oriented, like to assume responsibility and solve problems. Good leaders delegate responsibility and provide subordinates with freedom to make decisions, knowing that responsibility and accountability go along with leadership. At times, people are required to implement decisions taken by superiors, which they do not necessarily agree with. It is important that once a decision is made, a leader must follow it as if it were his own and must not be apologetic about it to his subordinates. Prioritising work is another crucial aspect of a leaders qualities. He cannot spend inordinate time on tasks that add very little value to the organization. He also needs to have integrity, be perceived as a genuine person who keeps his word under all circumstances. Balancing professional and private life is important because anything done in excess is exhausting and tired people cannot be most efficient. So, people need to find ways to express themselves outside their work, perhaps through music, art, or social work. While a leader is always there to give advice, he is also unafraid to approach others when he needs advice. He has no compunctions about approaching juniors or peers if they can help. Keeping in mind that people like to be given credit for significant contributions and at the same time, people feel humiliated if criticized in front of colleagues or juniors, a good leader always praises in public and criticizes in private. 3. Every employee is responsible for sales A company may deal in goods or services. However, it is not merely the sales force that is responsible for sales. Long lasting relationships with customers are what every organization strives for. For a customer, every employee of a company, from the salesperson, to the development team, to the

receptionist, to the CEO, is merely a representative of the company. Recognizing this, good companies create a totally sales-oriented environment, where every employee understands that the customer is responsible for his pay cheque, and so every job is oriented towards providing the best possible service and the highest customer satisfaction. At IBM, it is mandatory for every employee, at some time, to accompany salespersons in order to understand customer needs. It is also important that employees who go that extra distance to make a customer feel special should be appreciated and rewarded. A company could also have periodic reviews of all its major accounts, and schedule meetings with clients to discuss shortterm and long-term action plans. The success of a sales force depends to a large extent on the amount of office support it receives. The training imparted by IBM to its sales force is very rigorous and it follows a pattern where classroom sessions are followed by real-life practice in terms of assisting sales representatives, followed by further classroom sessions to consolidate their learning. After training on the products and communication techniques, trainees make their first presentation to veteran salesmen, who provide them with constructive criticism to sharpen their skills. A customer does not judge a salesman on what he knows, but rather by his communication of what he knows. The best salesmen must be part of the training process because not only do they understand selling techniques; they have the best marketing acumen and keenest perceptions. In addition, IBM also involves customers in its training sessions. This provides trainees with a first hand experience of what customers look for in a salesman. The top management of IBM is also very conscious about keeping in touch with the sales force and with customers. It is also important for an organization to communicate changes, policies and information quickly to all the employees. It is very frustrating for a sales representative to hear information from a customer about his company, which he is not aware of. It is vital for all levels of management to have some form of one-to-one communication with its sales force. This keeps the sales force motivated, while providing first hand information on happenings in the market. A manager must not have too many people reporting to him. It makes it impossible for him to maintain discipline and recognition. Also, it is most frustrating to work for a manager who does not have adequate time for his staff. An open-door culture, wherein every employee can freely express himself to his manager as well as higher levels of authority is very desirable. The employee knows that someone other than his manager is aware of his accomplishments. IBM believes that anyone who stops learning goes backward. Hence, there is continuous training and learning that takes place. Each week, the company announces on an average ten new products plus new programs, so the marketing people must deal with a continuous flow of information. Training is undergone at every stage, after every promotion. Promising people are made assistants to high-ranking executives, so that they get a tremendous amount of exposure, which enables them to assume managerial responsibilities pretty early in their careers. Future managers are also sent to attend

educational programs at institutes like London School of Economics, MITs and Stanfords Sloan Program etc. 4. Managing the future The best organizations always plan ahead of their times, trying to understand unfulfilled needs of customers and trying to innovate products to satisfy those needs. While one must be aware of his short-term targets, a successful manager keeps an eye on the future and tries to relate todays tasks with long-term objectives. Often, Marketing managers fall into the trap of being too concerned about yearly profits and in the effort to enhance the bottom line, they may pursue marketing programs that are detrimental in the longterm. Short-term marketing only achieves erosion in the market share in the long run. Every business, no matter how well organized, does face unexpected external factors over which it has no control, e.g., government policies, market slowdowns etc. When a strategic plan is developed, the management needs to look as far into the future as possible and build as many safeguards as possible. Of course, it is impossible to build safeguards for factors that cannot be predicted. But, it is important to have people who are sensitive to environmental changes and can react quickly in unexpected circumstances. Threats can also be internal to an organization. A company needs to look out for signs of trouble, such as changes in employee attitudes, motivation and performance. When developing products, a company would do well to involve customers through the development phases. Interaction with customers provides valuable insights, which may prevent products from failing. Sometimes, businesses suffer from business myopia. This could be due to a company losing focus from its core competence or a company getting complacent and resting on past glories. Pioneering is challenging and requires a lot of resolve to implement. People often say if it aint broke, dont fix it, but companies with vision continue to come up with revolutionary products even when older products are doing well in the market. This requires an understanding of changing values, changing needs and an understanding of the pulse of the market. Sometimes, companies have to undergo radical changes, such as change in operating style, change in the distribution channels and change in policies. These become requisites for survival and many good companies have undergone massive changes, without ever compromising on the core values or principles that were the foundation of the company. 5. Sell solutions, not products Customers do not buy products, rather, they buy solutions to needs or problems. A company must therefore focus on providing solutions rather than push its products. In order to do this, the sales force needs to be knowledgeable about the customers business and trends emerging in that business, besides being thoroughly knowledgeable about the companys solutions. Only thorough knowledge of the customers needs would help in designing appropriate solutions. Customers usually appreciate it when a sales

person shows interest and knowledge of their company. A company must also stand by its customer after selling the solution by efficient and prompt service. IBM trains its sales persons by conducting role-plays where a sales representative acts as a customer. This way, the sales persons realize the difference in perceptions as a buyer and as a seller and are able to relate more easily with customers needs. The best salesmen are usually those who listen to customers, help them verbalize their problem and work together with them in developing a solution. Sometimes, when a customer is unable to visualize the gains from the solution, it is a good idea to demonstrate the solution at work in an existing customers business. There is nothing better than having a satisfied customer talking about how the solution improved productivity and increased savings. In addition to offering quality products, it is essential that a company provide value-added services. Quality should only be the tip of the iceberg. It is important to make a customer feel that signing a contract is the beginning of a long-term relationship. Also, it is not enough if a company has the capability to provide tremendous value added services. It is also vital that this capability is communicated to the customer. When competing brands offer products of similar quality, it is often value addition that sways the decision in favour of one brand. In this age of supermarkets, we often miss the simple human touch, which a traditional grocery provided. This being the case, companies that can provide that human touch are the ones that are patronized. It costs much more to gain a new customer than to retain a loyal customer. Very often, little things are responsible for a lost customer, such as not returning a telephone call, being late for an appointment or failing to say thank you. It is often the little things that make excellent companies doing a thousand things one percent better rather than doing one thing a thousand times better. No matter how big or small a customer is it is imperative that he be treated with the same consideration and respect as the biggest customer. There are times when a company might have to go out of its way and put in an extra effort for a customer. It might even cost a lot of money, but these are investments that pay off many times over in the long run. A company that stays in touch with customers is not surprised by sudden problems and it is important to maintain contact with a customer even between two successive sales. Customers repose their faith in companies that show genuine concern, and that are available when problems surface. 6. Everybody wants service, but most do not want to give it Selling and servicing, though different in meaning, are inseparable as far as a marketing function is concerned. The most reliable contributor in building a solid sales-base is top class service. Providing convenience is almost expected of a company in this day and age, but convenience alone is not sufficient. To elucidate, a customer may not have to leave his armchair in order to get a product delivered to his home. But, it wouldnt be too convenient for a customer if the product came in hundreds of pieces with assembling instructions loosely translated from Chinese. This is where customer friendly service, and being available when a customer is in need make a huge difference. While it does cost to service a customer, a company

must treat it as an investment for the future. All it takes is a strong resolution on the part of the company. Service has got to be a part of the product development process, from the very inception. This can be achieved by following an interlock process, wherein engineering, manufacturing, marketing and servicing are integrated. Preventive maintenance programs are another way of showing reliability and concern for the customer. Sometimes, it pays to perform regular check-ups at customer sites, even when there are no complaints, as these could avert major disasters and severe downtime for a customer. All said and done, however, it is the top management that has to drive the culture of caring for the customer and putting the customer first, always. If the management is apathetic towards customers, it cannot expect its representatives to be any different. Good service is like the water drop principle. Every act, no matter how insignificant it may seem, is tremendously important.

7. Employee Welfare Having invested vast amounts of money in recruiting and training a highly skilled workforce, it would be foolish if the potential of this workforce is wasted because the compensation package promises more than it delivers. The money paid to an employee must be fair to him, as well as to the company. A good pay package must: - make the employee feel secure - include strong incentives and motivation - reward deserving employees The appraisal system must be absolutely fair and an employee must be given total freedom to express his ideas, grievances and suggestions. Employees could be rewarded if good ideas prove to be profitable when implemented. A company starts off because of an original idea, a dream and a willingness to take risks. This spirit needs to be retained even when a company grows. Often, entrepreneurs lose their sense of adventure once their business reaches a respectable stage. At this stage, people focus more on minimizing risks, rather than capitalizing on opportunities. That is why risk-takers are important not only at the top, but, at all levels in an organization. Besides, good people need room to develop. The most talented employees need to find and express their own voice. Their growth is stunted if they are strictly supervised. The best managers quickly step aside once they delegate tasks to their best workers. In order to grow, people need exposure to the various aspects of a business, be it in line roles or staff roles. That is why the best companies follow a job rotation policy where every employee spends time in all functions in the organization. In addition to the performers, a company does need its share of cynics and critics. Such people often point out flaws in existing systems, even though

they may not provide solutions to these issues. In fact they should be encouraged to express their opinions, as these might lead to better products and services. 8. In Conclusion To summarize, an organization needs to essentially be customer driven and customer focused. It must provide the best quality products and the best possible service to its customers, both before and after a sale. It must recognize that the customer is the most important part of the business. Besides, it also needs to care for the welfare of its own employees, impart continuous training and encourage continuous learning. Finally, a company needs to have a set of values, which it adheres to under all circumstances and which forms the basis of its existence.