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MGMT 56056
Leadership Research Paper
Introduction:
Ginni Rometty became the first female CEO of IBM in 2011. During these six years as the leader of one of the largest technology companies in the world, Rometty has faced significant challenges as she shifted the company’s focus away from hardware and into cloud computing and artificial intelligence. This paper will discuss “The Leadership Challenge” principles she practices including examples of how she applies these principles into the culture of IBM and how these practices have contributed to the innovation of the company. The specific “TCL” practices she displays include: “inspire a shared vision”, “challenge the process”, and “enabling others to act”. Rometty is quoted as saying, “Never protect your past, never define yourself by a single product, and always continue to steward for the long-term. Keep moving towards the future”. This paper will demonstrate how Rometty puts these words into action at IBM and how under her leadership, IBM is paving the way for future technology.
Thesis: Ginni Rometty, IBM CEO, demonstrates “The Leadership Challenge” practices of “inspire a shared vision”, “challenge the process”, and “enabling others to act” and these behaviors have impacted the innovation at IBM.
Historical Background
The Shaping of a Leader
Ginni was born on July 29, 1957 and grew up in what she describes as “a very middle class, average” family in the Chicago area (Bort, 2015). The eldest of four, her parents divorced when she was 15 and this greatly impacted her family dynamic. Up until the divorce her mother stayed home with the children. After the divorce, her mother had no choice and was forced to work multiple jobs in order to support her family. Even though these were challenging times, her mother persevered and went to college, attending classes during the day and working during the night. Ginni spent a lot of time babysitting her siblings during these years. Ginni speaks fondly about her mother and the role model she was saying, “she sacrificed everything, she got her degree, and never complained. She set out and made it all OK for us.” Ginni describes how her mother’s example impacted her in a profound way saying, “from that I saw that there’s no problem that can’t be solved” (Bort, 2015). Ginni says from this situation her mother also taught her that, “you do not let someone else redefine you” (Gurdus, 2017).
Ginni attended Northwestern University on a scholarship from General Motors and graduated in 1979 with honors and dual degrees in Computer Science and Electrical Engineering (Bloomberg, 2017). While attending college and completing an internship at the age of 19, Ginni met Mark Anthony Rometty. Three years later they would be married. Ginni gives credit to her husband Mark for his support in her rising career. An investor for an oil company, Mark avoids the spotlight even though he’s married to a high-profile female executive who has been named on both Fortune and Forbes lists of “most powerful women in the world” for numerous consecutive years.
Ginni began her career after graduation at General Motors in 1979. She didn’t stay long, however, and accepted a position at IBM as a systems’ engineer in 1981 and has been there ever since. During her tenure at IBM her role has evolved and grown in her rise to Chairman and CEO. While there is not much written about her early years with IBM, there is evidence that even then, Ginni realized that just improving your technical skills wasn’t enough to move forward in business; that it’s important to look outward beyond technical issues in order to truly understand the client and their challenges. It was this client centered focus that was the foundation of Ginni’s reputation as a leader who looks outward for innovation. Ginni believes in the importance of one word, “inclusion”. She describes inclusion as reaching out beyond your usual scope to find diversity of thought which leads to bolder and more creative ideas. And it is through this “inclusion” that innovation happens.
Ginni transitioned from systems’ engineer to manage and lead in various other areas of the company. These include General Manager of Insurance Industry Group, General Manager of Americas for Global Services, supervisor of operations for IBM’s Insurance Research Centers in locations around the globe and “was in charge of IBM’s insurance solutions development worldwide” (Bloomberg, 2017).
In 2002, IBM looked to Rometty to head the integration of PriceWaterHouseCoopers Consulting into IBM’s giant services business unit. The leadership team believed that Ginni’s ability to lead a diverse group effectively would be a huge asset as they faced a potential culture clash that often happens in an acquisition. It was during these years that Ginni successfully built and blended these teams using their differences and talents as fuel for high performance. Rometty didn’t want the central question to be “my way” or “your way” (Forte Foundation, 2015). Rather, guiding the team toward a new possibility to develop and provide a new level of value for clients that hadn’t existed before. This transition required management and leadership focused on individual respect in order to grow and transform. Today, this sector of IBM’s business known as IBM Global Business Services, is an industry leading consultancy unit that employs more than 100,000 consultants and experts worldwide. During her time in this sector of IBM, Ginni served as General Manager of Strategy, Marketing and Sales Operations, Managing Partner and was named Senior Vice President in 2005 and held this position until 2009 (Bloomberg, 2017).
From 2009 – 2010, Ginni served as Senior Vice President of Global Sales & Distribution and as Senior Vice President of Group Executive Sales and Marketing and Strategy from 2010 – 2012. Ginni became IBM’s first female CEO on January 1st, 2012 and has also held the position of Chairman since October 1st, 2012 (Bloomberg, 2017). Ginni also serves on many other boards and councils. These include the Council of Foreign Relations, the Board of Trustees of Northwestern University, and the Board of Overseers and Board of Managers for of Memorial Sloan-Kettering Cancer Center. She leads IBM’s diversity initiatives which include the Women in Technology Council and the Women’s Leadership Council. Ginni was the recipient of the Carl Sloane award in 2006 and frequently speaks at industry business conferences around the world (Bloomberg, 2017).
The State of IBM
On June 11, 1916 in the state of New York, IBM became a corporation named the Computing-Tabulating-Recording Company (C-T-R). This corporation formed as a result of the combination of three separate companies merging. This original company sold commercial scales, tabulators and punch cards, meat and cheese slicers, and time recording machines. Additionally, C-T-R employed around 1300 and had offices and plants located in various locations in the Eastern US and Canada. In 1914, Thomas Watson, Sr. joined C-T-R as the general manager at the age of 40. Watson, with a successful background in sales, implemented strategies and business tactics that would increase sales, improve employee morale and become known for his favorite slogan, “think”. Under Watson’s leadership, the company’s focus shifted to large scale, custom-built tabulating machines for businesses and away from other small office products. He was promoted to president within his first year and more than doubled the company’s revenues in 4 years. Additionally, he opened business locations in Europe, Asia, Australia, and South America.
In the 1920s the company broadened their products through engineering advancements and the leaders decided their company name was too limited and no longer fit their portfolio. On February 14, 1924, the company formally changed its name to International Business Machines Company (IBM for short). In the 1930s the company flourished through the Great Depression while other industries suffered. It was during these years that Watson opened one of the first research and development labs as well as the IBM Schoolhouse which was a training and educational facility for employees. In the 1940s the company moved into computing developing what it called the “Selective Sequence Electronic Calculator” (IBM.com, 2017).
The 1950s saw numerous technological advancements and changes for the company. In 1952, Watson Sr. passed the torch of president to his son, Thomas Watson, Jr. Additionally, during this year, the company introduced the IBM 701, a large vacuum tube computer that could execute 17,000 instructions per second. In the mid-50s, the IBM 7090 came to market as “one of the first fully transistorized mainframes” performing 229,000 instructions per second (IBM.com, 2017) and making the vacuum tube model obsolete. It was also around this time (1957) that IBM introduced the first computer disk storage system called the “Random Access Method of Accounting and Control” or RAMAC for short. The company also introduced the FORTRAN which “is a computer language based on algebra, grammar and syntax rules” and became one of the most widely used language for computer technical work.
Watson, Jr., also a visionary, saw the future role that computers would play in business. It was under his direction in the 1960s that the company moved away from tabulating machines and typewriters to a leader in the computer industry. It was also during this time that the marketing of the company shifted and IBM began offering its hardware, software, and services in an “unbundled” fashion allowing consumers to purchase items individually. This was the dawn of IBM’s software and services industries, of which they are still a world leader today.
The 1970’s marked the end of the Watson leadership era with Watson Jr. stepping down in 1971. After an interim leadership period, in 1973, Frank T. Cary assumed the role. During this decade, the floppy disk took over as the standard of computer storage and IBM’s computers were installed in grocery store checkout stations across the country utilizing glass prisms and lasers to read product prices.
John R. Opel accepted the role of CEO in 1981 and it was during this decade that the IBM personal computer or PC was introduced to the market. The IBM brand began entering homes, businesses and schools as IBM partnered with Intel for the processor and Microsoft for the operating system. This was also a period marked with research achievements when a heavier focus was placed on this area in 1985 when John F. Akers became CEO. These investment breakthroughs would lead to 4 Nobel prize winners in physics for expanded computing capabilities. Additionally, IBM laid the foundation of networking by allowing computers to share information, printers, and files.
During the late 1980’s and 1990’s IBM went through a period of turmoil as the computer revolution changed the way consumers bought and utilized the technology. During this time IBM wasn’t well integrated and the company lost focus on its customers as purchasing decisions weren’t left to the proper management channels. Reporting a record $8 billion in losses in 1993, the company considered splitting off its different business units into separate companies.
Recognizing the need for a significant shift in focus, the board looked outward and hired Louis V. Gerstner, Jr. as the CEO. With previous experience as the CEO for Nabisco and a top executive at American Express, Gerstner brought with him a “customer-oriented sensibility and strategic-thinking expertise” (IBM.com, 2017). And, he had to act quickly with dramatic changes to save the company. Gerstner’s desire to keep the company together and place a focus on its integrated solutions’ capabilities would prove a smart move but also came at a price. In order to achieve stabilization, Gerstner had to reduce costs, decrease the company’s workforce, and rebuild the product line. When the rise of the internet shifted the entire industry, IBM was better prepared. With their emphasis now on networking and the client/server field, IBM was able to deliver solutions and technology that met their customers’ needs. Gerstner shared IBM’s networking vision in an address at an industry trade show in Las Vegas in 1995. He accurately predicted the importance network computing would play in the growth of the industry and aligned IBM’s strategy to meet the need.
In 1997, IBM introduced its Deep Blue to the market. A super computer, Deep Blue became well known when it beat the World Chess Champion, Garry Kasparov, in a chess match raising public debate on computer versus human intelligence. As the 90’s close, IBM has once again established itself as an industry leader and information technology innovator under the superb leadership of Gerstner.
The 2000’s began with the dotcom bust, but IBM persevered and introduced the e-Server providing infrastructure support for e-business. During this decade, Sam Palmisano becomes President and CEO succeeding Gerstner. It was also during the early part of this decade that Rometty was moving up in the ranks of IBM and showing her leadership capabilities. She would assume the role of CEO after Palmisano stepped aside in 2011.
“The Leadership Challenge” Practices Defined
The Leadership Challenge is a framework of leadership development based on over 30 years of data gathered from more than 2.5 million managers and non-managers surveyed. Authors Jim Kouzes and Barry Posner analyzed all of the information gathered from their extensive research which includes case studies and in-depth interviews seeking personal best leadership experiences. The authors then used a “triangulation of qualitative and quantitative methods and studies” (Posner, undated) to develop what they define as The Five Practices of Exemplary Leadership. These five practices are: Model the Way, Share an Inspired Vision, Challenge the Process, Enable Others to Act, and Encourage the Heart. Validation studies conducted over the years have confirmed the accuracy of the research which represents multicultural demographics, and diverse business and organization settings, in a variety of countries. All great leaders demonstrate these practices in one form or another within their organizations. The following explanations and definitions of Inspire a Shared Vision, Challenge the Process, and Inspire Others to Act are, I believe, leadership practices demonstrated by Ginny Rometty.
Inspire a Shared Vision
According to The Leadership Challenge text, a leader who exemplifies inspiring a shared vision is able to accomplish this in two ways. They: “envision the future by imagining exciting and ennobling possibilities,” and “enlist others in a common vision by appealing to shared aspirations” (Kouzes & Posner, 2017). This type of leader knows their business well and has the natural ability to see the direction their company needs to move in order to grow and prosper. It’s not only important to have this vision, the second piece is communicating and articulating this exciting vision to the rest of the company. Having the vision isn’t enough. In order to gain the momentum needed for change to reach future goals, a leader’s fellow employees must know the direction the company is headed and work to support that mission. The book states that “you can’t authentically lead others to places they don’t want to go” (Kouzes & Posner, 2017). It’s vital to share in the mission and gain the excitement of company constituents which gives purpose and meaning to their work. A leader who is able to accomplish this successfully understands the hopes and aspirations of their employees because they have listened and connected with their ideals. They reinforce the power of each individual and raise them up to motivate and inspire their work and let them know that their aspirations matter.
The book further describes this type of leader as accomplishing six crucial things. First, this type of person knows what drives their own passion and cares deeply about the type of future that passion can provide which drives them forward. This leader outwardly expresses their passion showing it’s an integral part of who they are. Secondly, they properly utilize their own personal experiences to understand what is worthwhile in their life. 3rd, they listen and talk to others, focus their attention outwardly to understand trends that may cause discontent and pay attention to the conversations that are driving others. 4th, they spend a significant amount of their time thinking about the exciting possibilities the future holds. 5th, they listen to others to better understand what gives their lives meaning in order to help understand their hopes and dreams for the future. This helps the leader articulate a bright future gained through purposeful work. And finally, they are inclusive and get others involved so the mission is shared instead of being a “top-down process” which validates the importance of every individual. These leaders can see and feel an exciting future and have a powerful ability to empower and include others in the journey showing this common vision is beneficial to the long-term interests of everyone.
Challenge the Process
Leaders who challenge the process practice two distinct behaviors according to The Leadership Challenge text. They “search for opportunities by seizing the initiative and looking outward for innovative ways to improve” and they “experiment and take risks by consistently generating small wins and learning from experience” (Kouzes & Posner, 2017). These leaders are constantly looking beyond the everyday scope of business in search of innovative ideas anywhere they can find it. They recognize that their business landscape will shift and they prepare by seeking innovation in an effort to be proactive. They look for ways to improve and are the change makers. They are never satisfied with the status quo and like to shake things up. However, it’s important to them that their constituents understand the purpose of the change in order to attain their commitment to the mission. These leaders are able to break the large goals down into smaller ones in order to move the process along. This allows their people to experience and take ownership of the small wins as they move toward the larger accomplishments.
The book further describes six crucial behaviors demonstrated by those who challenge the process. First, they work toward being a better version of themselves every day and break down large goals into smaller and attainable wins which allows them to easily see their progress. Secondly, they aren’t afraid to leave their comfort zone to improve their skills, learn and grow. 3rd, they consistently look for the next thing to accomplish and have a desire to learn what’s new. They look not only for personal growth but also for the growth of others and stay focused on the things they can control. 4th, they allow others to learn by taking risks and experimenting without fear of retribution. They appreciate the lessons learned from failure and seek purpose in challenges and difficult tasks. 5th, they seek a diverse perspective through asking questions and active listening and understand that in order to achieve personal fulfillment you should always challenge yourself to improve. And finally, they don’t like to be stuck in a rut, rather, they seek adventure, and experiment with new ideas by taking small steps toward a larger goal. These leaders understand that the “process” is important in attaining any goal that’s been established and aren’t afraid of the challenges or potential failures that may arise. Instead, they see these challenges and failures as opportunities to learn and grow and that will lead to improvement for tomorrow.
Enabling Others to Act
Leaders that enable others to act demonstrate this ability in two main ways according to The Leadership Challenge text. They “foster collaboration by building trust and facilitating relationships” and they “strengthen others by increasing self-determination and developing competence” (Kouzes & Posner, 2017). These leaders understand that within business, they cannot accomplish important, long term goals alone. They need the help of others, a team, to make extraordinary things happen. They have a natural ability to make others feel comfortable in collaborating and working together by promoting mutual dependence. That everyone is in it together and this is necessary for success. They foster relationships built on trust and the sharing of information and demonstrate their own trust in others before asking for trust in return. These leaders believe it’s important to strengthen others and develop them into leaders. They extend power and responsibility in an effort to aid the growth of others and compel action from them. This allows their constituents to be more creative in decision making giving them choices and more control. This breeds confidence, fosters action, allows individuals to think on their own, and own the results of their work. A leader who enables others to act invests in their people through coaching and support in an effort to strengthen them.
The book also outlines six important actions these leaders take. First, they extend trust first in an effort to earn trust in return and hand over power and control so their people are in control of their own circumstances. Secondly, they get to know their employees in an effort to better understand them and allow them to make choices in their work. 3rd, they show they care about the aspirations and concerns of their people and allow them opportunities to grow and develop to improve competency and self-confidence. 4th, they practice active listening and work to provide balance between a person’s skills and the challenges they face in the daily grind of their work. 5th, they work hard to establish shared goals, foster the importance of collaboration, and demonstrate their confidence in the ability of the individuals to achieve their goals. And finally, they build relationships through face-to-face interactions and by asking questions instead of giving answers. These leaders believe that the best way to facilitate action is by handing over power and responsibility. They believe in the importance of establishing relationships based on mutual trust and that strengthening the competencies of their constituents is beneficial to the overall organization.
Analysis and Examples
Rometty as an Inspirer
Ginni Rometty displays the characteristics of an inspirer as she delivers the future of IBM’s technologies to the world. Using these qualities helps her achieve support from business executives, political figures, and industry leaders in the products IBM offers. In a recent on stage two-day interview, Rometty spoke confidently, generated excitement, and discussed the responsibility that comes with powerful technology. Specifically, she addressed IBM’s Watson, and its most recent move into oncology. Watson analyzes data and is “an IBM supercomputer that combines artificial intelligence (AI) and sophisticated analytical software for optimal performance as a “question answering” machine. The supercomputer is named for IBM’s founder, Thomas J. Watson.” (Rouse, 2016). During this two-day interview, Rometty touted the vast capabilities of Watson while at the same time, addressing concerns that this form of artificial intelligence would displace human workers completely.
By engaging the individuals at the forum, she was able to paint a picture where IBM’s future is bright regarding the company’s advances in technology and the contributions this technology will make to healthcare. She explained that Watson “was fed textbooks, medical journals, and possible treatments and then trained on cancer causes. As a result, Watson is now able, in some instances, to spot cancer better than a panel of human experts—an outcome that points to AI's (artificial intelligence’s) potential to "find solutions to the world's most unsolvable problems," Rometty said.” (Zillman, 2017).
Rometty Challenging the Status Quo
Searching for new opportunities is especially valuable for IBM as Rometty faces many challenges. Seeking innovation and recognizing shifts in the industry are extremely important as Rometty works to build IBM’s brand back up from years of poor performance and declining revenue. As IBM posted its most recent quarterly financial earnings, the report indicates that the “technology company has now suffered 19 straight quarters of declining year-over-year total revenues” (Grogan and Balakrishnan, 2017). With Rometty at the helm, the company “has mounted an uneasy transition away from operating systems and equipment, and toward "strategic imperatives" like business services, artificial intelligence and cloud” (Grogan and Balakrishnan, 2017). With IBM’s Watson being at the center of their focus, Rometty is quoted as saying “In 2016, our strategic imperatives grew to represent more than 40 percent of our total revenue and we have established ourselves as the industry's leading cognitive solutions and cloud platform company” (Grogan and Balakrishnan, 2017).
The enthusiasm behind IBM’s advancements was catching and gained the attention of important business people such as Warren Buffet who began investing in the company in 2011. Over the last several years Buffet has increased his investment to a nearly 8.6% stake in the company (Grogan and Balakrishnan, 2017). Buffet is quoted as saying “he likes the stock because IBM has a "stickiness" within corporate IT departments, and is the best of big companies when it comes to laying out a road map” (Grogan and Balakrishnan, 2017). This means he approves of the roadmap that Rometty has established. Other major industries have also embraced IBM’s technology. Watson is said to have “hit major milestones over the last several months, IBM's cloud now powers the U.S. Army, while Watson is in a new car infotainment system” (Grogan and Balakrishnan, 2017).
Rometty Empowering her Constituents
Rometty understood early on that in order to move forward, honing her own technical skills wasn’t enough and she needed help from experts in the industries of their clients. Rometty is quoted as saying, “It comes down to one word: Inclusion. You have to leave boundaries behind. By going outside your usual scope, you find diversity of thought and experience. Those differences make people bolder, more open to ideas, more willing to explore the provocative. That’s where innovation happens.” (Ginni Rometty – IBM: Look outside the bubble to ignite innovation and spark profits, 2015). It is this approach to leadership that fosters collaboration and builds relationships. Rometty believes that diversity in thought breeds innovation and in managing this appropriately, you’re able to build teams of people who will inspire and create. Rometty also believes that it shouldn’t be “my way” or “your way” but instead, “allowing people to see a new kind of possibility” (Ginni Rometty – IBM: Look outside the bubble to ignite innovation and spark profits, 2015). It is understanding that through respect and collaboration each person and group can bring something unique to the table.
As a leader of a company with markets all over the world, Rometty sees the world becoming more globally connected through technology. Because of this she understands the importance of taking a more diverse approach as cultures and markets blend. She also encourages her people to have skills that are valued externally. Rometty is quoted as saying, “if you are doing something that’s only relevant to your company, the paradox is that you will eventually become irrelevant. You always want to have skills that are valued in the marketplace.” (Ginni Rometty – IBM: Look outside the bubble to ignite innovation and spark profits, 2015). Through her engagement with clients all over the world, Rometty has learned the importance of looking outward for growth, ideas, and innovation.
The Future of IBM
A Vision of Technologies for the Future
As stated earlier, under the direction of Rometty, IBM’s focus has shifted from operating systems and equipment to cloud computing and artificial intelligence. IBM’s artificial intelligence has significantly impacted many industries. Examples include healthcare, banking, automotive, education, retail shopping, and insurance (Stockwell, 2016). The development of Watson has allowed humans to interact more naturally with computers. Watson analyzes the data it’s fed and aids humans by lessening the amount of time normally used in research. Rometty is quoted as saying “it is a partnership between man and machine,” (Grogan et al., 2017).
In a request for more information on artificial intelligence by the US government, IBM responded with their vision of the impact artificial intelligence will provide the world over many different industries. In their response, they prefer the phrase “augmented intelligence” instead of artificial intelligence. A phrase which IBM feels more accurately describes a system that “assists people with well-defined tasks” (IBM, 2015). Simply stated, you can ask Watson a question, using normal language including terms in slang, and Watson will provide an answer. The answer provided is based on the database of information Watson has stored. This information comes from the nearly endless stockpiling of digital information available. Virtually everything has been digitized; medical journals, literature, the movement of every type of transportation, and finances, to name a few. Watson can assist in diagnosing and treating a disease, answering tax questions, assist students and teachers in learning styles, ensure compliance with government regulations, and support vehicles with driver assistance.
The potential impact Watson can have will be global. Rometty and IBM predict Watson will allow increased productivity, higher earnings, and have significant social capabilities.
Additionally, Rometty has pledged to hire approximately 25,000 workers in the US over the next four years (Grogan et al., 2017). She describes a new type of worker, not blue or white collar but “new collar” that works succinctly with the new technology.
Conclusion
Under the leadership of Ginni Rometty, the innovation of IBM has blossomed and moved the company in the direction of artificial intelligence with data analytics and cloud. Even though the company has reported decreased revenue quarter-over-quarter, as well as a lower stock value, Rometty continues to be backed by her Board who believe in her vision for IBM and the bet she has hedged on Watson (Vena, 2017). As the company continues to partner with businesses and developers to deliver products and apps powered by Watson, it becomes clear that her strategic initiative is trusted in spite of the earnings reports. These factors demonstrate a leader who has the ability to “inspire a shared vision”, “challenge the process”, and in turn, is “enabling others to act”.
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