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?

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