IBM’s Success Highlights Four Questions For All Execs

In case you’ve missed it, IBM is a hot commodity; during 2011 its stock rose from $147/share to $184/share.

A lot of the credit has to go to Samuel J. Palmisano, who just stepped down as IBM’s CEO after nearly decade of leading the IT behemoth.

Mr. Palmisano led the company using a framework based on four questions. According to Palmisiano, these four questions were a way to focus thinking and prod the company beyond its comfort zone and to make I.B.M. pre-eminent again:

  1. Why would someone spend their money with you — so what is unique about you?
  2. Why would somebody work for you?
  3. Why would society allow you to operate in their defined geography — their country?
  4. And why would somebody invest their money with you?

Palmisiano used this approach to redefine IBM as a smaller, more profitable company by divesting businesses like PC and disk drives and acquiring PricewaterhouseCoopers Consulting among others.

My take: I like Palmisano’s questions; they point to an overarching theme: Value creation. I find that too many executives forget to ask themselves and their people about how they really create value. Even if they had a good idea of the answers to Palmisiano’s questions at one point in time, the world changes and they need to continue to ask — and answer — those four questions.

But there’s another key component to this type of framework: honesty. It’s tempting to view the world through the eyes of optimisim, but this gets in the way of good decision making. That’s why I often refer to a key lesson that I learned from Jack Welch during my days at GE:

Deal with the world as it is, not how you’d like it to be

The bottom line: Be honest: how will your company create value in the future?

Don’t Get Distracted By Shareholders

I’ve learned a lot from Jack Welch, especially during my tenure at GE when I first heard him say: “Deal with the world as it is, not how you’d like it to be.” Once again he’s said something that every executive should hear:

On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy… Your main constituencies are your employees, your customers and your products.

Welch’s words are consistent with one of my key themes: “Don’t let profits replace purpose.” This misplaced focus on shareholder value is one of the main reasons for my new mini-book: The 6 New Management Imperatives: Leadership Skills For A Radically Changed Business Environment

The bottom line: Make shareholders happy by ignoring them

Recession Leadership: Be Real, Communicate, And Look Ahead

Fast Company has an interesting Q&A with Ram Charan (author and management guru) about leadership in an economic downturn. My first post about managing in a recession, Lead Your Company Out Of A Downturn, was based on an article in Fortune Magazine by Charan.

I really liked Charan’s answer to the question: What is the biggest difference between the leaders who will be able to pull through and those who won’t?

There are three differences in the leaders in these circumstances. The first and foremost is defining realism, and then taking the actions now and not postponing them. The second thing is orienting people on the new reality with superb communications–internally and externally. And the third, coping with the toughness of the existing environment, but positioning the business to change the game after the storm.

My take: Take to heart the three things Charan prescribes for leaders in a recession: realism, communications, and future-orientation. It captures the essence of these great quotes by GE CEO’s:

The bottom line: Recessions require even more leadership.

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