https://www.linkedin.com/pulse/ibm-even-blind-squirrel-finds-occasional-nut-peter-e-greulich
IBM Revenues Have Dropped from $107 Billion to $80 Billion in Five Years.
By One Measurement, IBM’s 2016 Revenues Should Have Been $147 Billion …
… or IBM Should Have Produced $80 Billion with 188,895 Fewer Employees.
IBM Is Not Maximizing Shareholder Value.
What Is Wrong?
Twenty-One Quarters of Declining Revenue
Last week, IBM announced another quarter of declining revenues. Even if it had broken its string of revenue declines, it would have been reminiscent of what IBM salesmen would tell a rookie after they closed their first deal and started strutting around the office like they were hot stuff. After letting the salesman enjoy the moment, one of the thirty-plus-year IBM reps would tap the salesperson on the shoulder and say, “Enough son, even a blind squirrel finds the occasional nut. You need to go out there and do it again and again for the next thirty years to have a career with this company.”
Based on the most recent quarterly results, some analysts are performing a search-and-replace of twenty quarters with twenty-one quarters, planning ahead for twenty-two quarters, and increasing the intensity of their “woe-is-me” adjectives. Other analysts are finding hope in the growth of IBM’s strategic initiatives and believe that the repetitive, quarterly misses are because of poor “sales execution” or a company “in transition.” A few analysts are challenging IBM to provide transparent numbers on its strategic initiatives—like Watson.
IBM, though, is a blind squirrel that has been unable to find the occasional revenue nut because of two decades of misplaced investment dollars and abysmal human relations practices.
It is a corporation wasting away from malnutrition.
THINK Again! IBM
The story of what is wrong at IBM will be published on September 1, 2017 with the release of THINK Again: IBM CAN Maximize Shareholder Value. To market the book, Peter E. Greulich will be publishing a series of seven articles on LinkedIn. (if any website/blog/individual/press would like to republish these LinkedIn articles, interview the THINK Again author, or publish a set of eight, unpublished articles that are already written reach out to us here) Many of these articles are excerpts from the book: like them, dislike them, comment on them and forward them. Make a difference.
The first article will be published on LinkedIn on August 30, 2017. The title is, “In One Chart: Why Work at Home Failed at IBM.”
Those of you who have worked at IBM, and those of you who are currently working there understand all too clearly what the problem is; and the “who” to fix it is not currently sitting in the corner office. She has proven herself to be an executive clone of her predecessor. IBM deserves better.
THINK Again describes the type of leader, based on a historical perspective, that IBM will need to lead it through a new century. Each of the IBM Board of Directors should purchase and read the book. We would send them a free copy but, as an IBM Sales Branch Manager once said, “Giving stuff away creates work, provides no revenue, and the recipient rarely appreciates the gift. To get someone’s buy-in, cost-justify the pulling of a few dollars out of their wallet for a desired benefit. Now go sell!”
Hopefully these articles on LinkedIn—with your support—will convince each of the members of IBM’s board to invest a few dollars for a historical look at how IBM, at one time, maximized shareholder value and help them find a new twenty-first-century leader. It is painfully obvious that IBM’s executive officers are failing its customers, its employees and its supportive societies; and, because of this, maximizing shareholder value never had a chance.
To make the point that IBM’s CEO shouldn’t be running the company, here is a short excerpt from one of the coming articles (September 13, 2017): “In One Chart: IBM’s Financial Engineering Revealed – Workload Rebalancing.”
If IBM’s 414,400 employees were as productive in producing revenue at the end of 2016 as in 1999 (in inflation adjusted dollars), the corporation would have attained revenues of $146.9 billion instead of $79.9 billion. To state it in terms that even a twenty-first-century IBM CFO could understand—a reduction in headcount rather than increased revenue—the corporation could have achieved its $79.9 billion in revenue with 188,895 fewer employees.
Based on information from THINK Again: IBM CAN Maximize Shareholder Value
With this realization, it doesn’t take much management intuition to realize that there is a long-term, business-execution problem at IBM, not a short-term, sales-execution issue.
IBM’s Roadmaps Have Failed to Maximize Shareholder Value
To wake up the long-term shareholders, it is necessary to be brutally honest and hit them right where it hurts: in their long-term returns. It can be shown "In One Chart" (thus the common title of this LinkedIn Series of articles) that IBM is on the wrong path. IBM’s three, twenty-first century chief executive officers have invested $166 billion dollars since 1999 in their own stock (paper) and have returned less value than an equivalent investment in low-risk index funds that track either the Dow Jones Industrial Average (DJIA) or large-company stocks.
All stakeholders should be wondering if IBM spent $166,000,000,000 of the shareholders’ money wisely. IBM’s history reflects that instead of investing in paper the corporation’s executives should have invested in people, processes and products.
How a Corporation Attempts to Maximize Shareholder Value Matters
A study of IBM’s successes and failures at maximizing shareholder value reveals an almost non-intuitive truth: the path to maximize shareholder value is a two-way road that must be shared between a stakeholder community of customers, employees, and shareholders who maintain supportive economic and political societies that allow a business to maximize its profits. In other words, it wasn’t the goal that was wrong at IBM, but its chosen path—best exemplified in its two, five-year, earnings-per-share roadmaps that left employees strewn along the roadside like roadkill.