- IBM: Then and Now
Until the early eighties, IBM was the leader in its market. However, Its success
became a breeding ground for intelligence complacency that ultimately contributed to the
$20-billion loss suffered between 1990 and 1993.
In 1980, CEO John Opel invited Bill Gates to develop an operating system for
IBM-PC. He did not want IBM competitive intelligence staff to monitor Microsoft, which he
described as merely "Mary Gates’ boy’s company."(1) Overconfidence
also led IBM to fast track the production of several ill-fated machines without sufficient
intelligence on established competitors (Atari, Apple, Radio Shack and Commodore) who mounted
successful counter-attacks that forced IBM to withdraw both the Portable PC and the PC Junior.
During the same period, IBM faced a barrage of anti-trust hearings in
Washington. Yet, it had less resources devoted to tracking anti-IBM forces than its smaller
competitors or any company of comparable size. Without sufficient intelligence to act early
when issues pertaining to its business were still in incubation stage, IBM "concentrated
on vindicating itself in court" generating over 50,000 tons of legal documents to win a
costly victory. Rather than focusing on innovation, production and marketing, IBM executives
wasted countless hours on the so-called defense-posture meetings. They raised unprecedented
barriers to research. IBM’s "chief scientist at the time recalled being forbidden from
even purchasing the machines made by competing manufacturers in order to study how they
worked."(2)
Furthermore, capitalizing on IBM complacency, "Oracle was founded on a
database technique, called SQL, that IBM researchers described in a technical paper. Oracle
beat IBM to market with software using the technique and has since grown to $6.7 billion in
revenue… as that technique came to dominate mainframe databases."(3)
IBM was not alone in turning a blind eye on emerging trends and on the rise
of dark horses. Digital and other computer manufacturers were also running strategic
intelligence without world-class talent or significant budgets and only one had an
intelligence committee in its board of directors. As a result, they underestimated the
brilliant strategic moves of Intel and Microsoft. Many have either gone bankrupt or been
taken over by newcomers such as Compaq and Silicon Graphics (SGI).
Thanks to Lou Gerstner, however, IBM has since rebounded and is now clearly
an agile intelligence-centric enterprise like Intel and Microsoft. Bruce Harreld, a
successful entrepreneur and a war-room expert who joined IBM senior management in 1995, has
also played an instrumental role in building IBM intelligence team and operations. Before
joining IBM in 1993, Gerstner led companies where competitive intelligence is a common
practice. The IBM he left in 2002 has a premier research pipeline, and is either first or
second in the IT markets where it has chosen to compete.
Important
A detailed coverage of intelligence, counterintelligence, strategy, risk,
F-Scale and strategic negotiations is the subject of the management seminar:
Strategy, Risk, Negotiation
& Leadership.
For seminar objectives, outline and upcoming sessions in the US and Canada, contact
www.executive.org.
Footnotes
1. Robert Levering, Michael Katz, Milton Moskowitz:
The Computer Entrepreneurs, New American Library, New York, 1984.
2. David Hart: Red and White and Blue All Over: The Political Development
of IBM, John F. Kennedy School of Government, Harvard University, Faculty Research
Working Papers Series, January 2001, RWP01-003
3. Paul Carroll (Editor in Chief): Spy Counter-Spy, Virtual Horizons,
Context Magazine Archives, Digital Partners, Chicago, IL, Summer 1998.
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