Ibm – Strategic Mangement And Leadership Case Solution
IBM stands for “International Business Machines”. IBM is considered as one of the largest information technology company in terms of revenues. (See Appendix 1) The products offered by IBM include application software, hardware and software for business line servers, personal computers, distributed computing, low-cost microchips etc. The report has been prepared on the strategic management and leadership perspectives followed by IBM.
Seminal and Contemporary Theories – IBM’s Strategic Management and Leadership
Strategic management and leadership plays a crucial role in an organization. It refers to the continuous planning, analysis, monitoring and assessment of all measures, needed by an organization to meet its strategic goals and objectives. It is because the fact that the changes in the business environment require an organization to assess its strategic alternatives on a periodic basis. The strategic management requires an organization to look into its present scenarios and determine possible future strategies, which could be deployed and implemented to achieve the overall organizational objectives. (Tech Target, 2020).
The strategic management provides different financial as well as non-financial benefits to the organization. The leaders are only able to plan for the long term existence of the organization, due to the strategic management processes. These processes enable the organization to set directions for the employees as well as the whole organization. The effective strategic management plans lead towards a greater operational efficiency, profitability and market share.
On the other hand, strategic leadership refers to potential of a manger in setting up the vision for the whole organization and implementation of the same by using different leadership styles. Strategic leadership also refers to the utilization of strategy for the employees’ management. The strategic leadership enables the manager to motivate the employees and influence them to bring the desired organizational change. (Management Study Guide, 2018)
IBM has been a subject to different executive succession. Executive succession, on the other hand, is considered to reflect the political, economic, social changes and shifts in the market dynamics. Different eras require different skill sets of different executives, which leads to the selection of new leaders by the board of directors. The executive succession does not highlight any problem rather it’s a usual fact of life. As organizations are posed to different market, economic and environmental challenges, it becomes necessary for the organization to select an appropriate, who could strive to achieve the organizational objectives. IBM has been an excellent example of leadership succession as it recently announced the retirement of new Chief Executive officer i.e. Ginni Roomette and appointment of Arvind Krishna as the CEO.
Different leaders come up with different variations in their leadership and the management styles. The possible types of executive leadership founded in IBM’s succession included
The transformational leadership refers to leading by example. The main focus of transformational leader is to increase the employee motivation, engagement and commitment towards achieving the organizational values, goals and objectives. Such leadership works in situations of status quo, whereby the resources are limited for high end projects and it require utmost effort of a leader to get the employees out of the status quo and perform their work.
Traditional leadership refers to a process whereby the leader leads the organization on the basis of past traditions. The objective of the leader is to maintain consistency and bring the same financial performance over years, i.e. they aim to bring sustainable and reliable results for the customers and the shareholders.
Transitional leadership refers to the leadership type, whereby the objective is to tackle a corporate challenge by an executive or board member, specifically brought in the organization with a defined purpose and direction (Personnel Today, 2005). The major transformations include initiating and acquisition, starting a new division, sale turnarounds and company restructuring.
Leadership Types, Strategic Challenges and IBM
The recent CEOs hired by IBM are the best examples of the leadership types already defined. First of all, IBM reported its biggest lost in history of $8 billion in 1993, perhaps the largest loss in the United States history. In order to cater such scenario, IBM hired a transformational leader i.e. Lou Gerstner. He brought a strategic turnaround in the company, by cutting costs to a substantial level, focusing the integration of systems and bringing the technology based consulting services in the company. These strategic changes led to revived financial performance and competitive health of the company.
Moreover, Sam Palmisano – who was hired in place of Lou Gerstner, was a traditionalist who brought the company’s focus towards services and drove consistent financial results by growing the company into a tech industry powerhouse.
It refers to an adaptive leadership style, whereby the leaders take different variables at workplace, into consideration and choose the leadership style which best fits the situation and the organizational goals. According to Ken Blanchard, leaders can’t dictate employees as a boss and based on their positional power in the organization.
Situational and Transformational Leadership – IBM GTS IS & NewCo
IBM has been moving into a transition phase by investing $1 trillion in a hybrid cloud opportunity. By following this opportunity, the company plans to make its GTS segment a san independent company, named as “NewCo” (Krishna, 2020). The company’s CEO, Arvind Krishna, said that the demands of clients have been diverging as they consider hybrid cloud as more valuable than public cloud, which in result, has increased the demand of clients for the company’s existing capabilities and expertise.
Currently, the services account for IBM’s 60% revenue and the majority of revenue will be generated through software and solutions if New Co becomes independent. This situation requires a significant change in the IBM’s business model.
At IBM, situational leadership is followed according to situations and variables inside the workplace. The IBM’s CEO believes that the leadership needs a perpetual reinvention. It needs to be based on innovation. The independence of GTS as NECo, requires the company to question its existing traditions and it requires the leaders to take a transformational approach in motivating the employees and discouraging towards achieving the desired organizational goals and objectives……………….
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